Canada: Federal Government Releases Notice Of Intent To Amend Output-Based Pricing System Regulations Due To COVID-19 Pandemic

On April 8, 2020, the federal government announced an intent to amend the Output-Based Pricing System Regulations, SOR/2019-266 (OBPS Regulations), enacted under the Greenhouse Gas Pollution Pricing Act, SC 2018, c 12, s 18. The Act is the centerpiece of the federal government's efforts to combat climate change and is comprised of a fuel charge and an Output-Based Pricing System (OBPS). If a province does not have a carbon pollution-pricing program that meets the stringency requirements of the Act, the federal government can step in and impose a fuel charge and the OBPS within that province.

Governments in Canada have had to undertake unprecedented measures such as physical distancing, self-isolation and travel restrictions to reduce the spread of COVID-19 and protect the health of Canadians. Within the notice of intent, the federal government references the fact that these measures affect the capacity of persons responsible for facilities to meet the requirements of the OBPS Regulations, making reporting and compliance more challenging. As such, the Minister of Environment and Climate Change intends to develop regulations amending the OBPS Regulations that would relax reporting requirements during the COVID-19 pandemic.

Change to Deadline for Submission of Annual Report

Section 173 of the Act and section 13 of the OBPS Regulations require the person responsible for a facility covered under the Act to submit an annual report for each compliance period by June 1 of the calendar year following the end of the compliance period. This report must be verified by a third party in accordance with section 52 of the OBPS Regulations. The annual report for 2019 was required to be submitted by June 1, 2020. However, the amending regulations will postpone this deadline by four months, making the annual report for the 2019 compliance period due by October 1, 2020.

Changes to Deadlines for Regular-Rate and Increased-Rate Compensation Deadlines

Section 174 of the Act requires a person responsible for a facility covered under the Act to provide compensation for GHG emissions by the increased-rate compensation deadline. This section also allows compensation to be provided by the regular-rate compensation deadline. For the 2019 compliance period, the current regular-rate compensation deadline is December 15, 2020, and the current increased-rate compensation deadline is February 15, 2021. The amending regulations plan to delay these deadlines by four months. The new regular-rate compensation deadline will be April 15, 2021, and the new increased-rate compensation deadline will be June 15, 2021.

Changes to Alberta OBPS Legislation

The changes to the federal legislation follow Alberta's recent relaxation of GHG emission reporting deadlines. The Technology Innovation and Emissions Reduction Regulation, Alta Reg 133/2019 (TIER Regulation) came into force on January 1, 2020, replacing the Carbon Competitiveness Incentive Regulation, AR 255/2017 (CCIR). As the CCIR applied in 2019, sections 36(8) and 36(9) of the TIER Regulation imposed requirements on some facilities to submit a CCIR compliance report and a CCIR emissions reduction plan for 2019 by March 31, 2020. On March 30, 2020, the Alberta Minister of Environment and Parks issued a Ministerial Order extending these deadlines from March 31, 2020, to June 30, 2020. The change of these deadlines was due to reporting challenges stemming from the COVID-19 pandemic.

Changes to British Columbia Carbon Tax

On April 1, 2020, the Government of British Columbia announced changes to their provincial carbon tax in response to COVID-19. Specifically, British Columbia's carbon tax rate will remain at $40 per tCO2e until further notice and will not be subject to the scheduled increase on April 1, 2020. Further, deadlines for provincial carbon tax payments have been extended to September 30, 2020.

Takeaways

The COVID-19 pandemic has caused the federal and some provincial governments to extend the timelines related to certain regulatory compliance reporting. However, organizations must continue to comply with any related compliance obligations that are unaffected by the extended timelines.

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