Emissions Reporting for Energy Users Expected to Grow

June 2010

• Greenhouse gas emissions reporting requirements have been established by Ontario Regulation 452/09, which is seen as a first step in a progression toward wide-spread tracking of greenhouse gas emissions, and the eventual pricing of emissions.
• Initially, the regulation is expected to impact 200 to 300 facilities with direct emissions of 25,000 tonnes or more of CO2-equivalent per year.
• Over time, the scope of emissions that must be reported, and the number of emitters who must report, can be expected to grow.

Federal and Ontario government policy on climate change and greenhouse gas emissions continues to evolve. In Ontario, greenhouse gas emissions reporting requirements have been established by Ontario Regulation 452/09. This regulation is seen as a first step in a progression toward wide-spread tracking of greenhouse gas emissions, and the eventual pricing of emissions, likely through some form of cap-and-trade mechanism.

Ontario's new regulation is expected to impact 200 to 300 facilities across the province. It applies to facilities with direct emissions of 25,000 tonnes or more of CO2-equivalent per year. A "facility" represents a collection of buildings or emitting sources that are located on one property. A facility consuming about 510,000 GJ per year of natural gas would be expected to generate about 25,000 tonnes of CO2 per year.

Ontario Regulation 452/09 will require such facilities to report their emissions for calendar 2010 no later than June 1, 2011. Direct emissions (also called Scope 1 emissions) are those from the facility itself; for example, emissions from natural gas combustion at several points on an industrial site, or in the central plant of a university campus. Scope 2 emissions are emissions associated with purchased inputs where the emission occurs elsewhere. So, for example, Scope 2 emissions would be associated with the electric power purchased by the facility from the grid, or with thermal energy purchased from a district energy system. In the regulation, the emissions associated with electric power distributed on the grid would be reported by the generator (for whom they are Scope 1 emissions) and not by the consumer (for whom they are Scope 2 emissions).

Another form of indirect emissions, Scope 3 emissions, are emissions associated with travel; for example, the emissions generated by business travel.

The regulation does not require reporting of Scope 2 or Scope 3 emissions.

Within an eventual cap-and-trade system, emitters will be required to provide third-party verification of their emissions levels. Ontario Regulation 452/09 says that third-party verification is voluntary for the reporting of 2010 emissions. However, verification will be mandatory for the 2011 emissions report, which must be submitted by June 1, 2012. Verification of that report must be submitted by September 1, 2012.

Smaller emitters, with annual direct emissions of between 10,000 and 25,000 tonnes, are not required by the regulation to report their emissions, but they are encouraged by the Ministry of Environment to report on a voluntary basis "so that they are prepared to adapt to emerging North American-wide requirements with which Ontario may align."

Over time, the scope of emissions that must be reported, and the number of emitters who must report, can be expected to grow. Ontario is part of the Western Climate Initiative (WCI), along with Quebec, Manitoba, British Columbia and several western U.S. states. The Ontario regulation is generally consistent with the WCI approach to measuring and reporting emissions.

Canadian government policy on greenhouse gas emissions is to follow the US lead, and the WCI is helping to establish a direction for that policy development.

The US is heading toward a cap-and-trade model for pricing carbon emissions. In that model, market forces determine the price for carbon emissions, but near term prices are expected to be in the $15-20 per tonne range. The National Round Table of the Economy and the Environment has estimated that a carbon price of about $100/tonne is required to meet emissions reduction goals for 2020.

While Ontario Regulation 452/09 has narrow initial impact, the direction for future developments is clear, and all significant energy users should take note.

Ontario Regulation 452/09 Read more »

Greenhouse Gas Policies: Taking Centre Stage Read more »