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Turning the Corner: An Action
Plan to Reduce Greenhouse
Gases and Air Pollution
Regulatory Framework for
Industrial Air Emissions
October 2007
The Government announced the
Regulatory Framework for Air Emissions
• On April 26, 2007, the federal government announced
Turning the Corner: An Action Plan to Reduce
Greenhouse Gases and Air Pollution and made public
the regulatory framework for air emissions
• The regulatory framework for air emissions presents
mandatory and enforceable reductions in emissions of
greenhouse gases and air pollutants from industrial
sectors
• Consultations and formal comments on the Notice of
Intent (October 21, 2006) were instrumental in
shaping/refining this Regulatory Framework for Air
Emissions
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The Regulatory Framework provides a nationally
consistent approach to reduce air emissions
• Responding to
– Uneven effort across the country to reduce air emissions
– Inconsistent messages to industry
– Insufficient action to protect health and the environment
• This approach provides
–
–
–
–
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Tangible benefits for Canadians and their environment
Nationally consistent regulations
Continued competitiveness of our economy
A level playing field across Canada
The basis for negotiations with our international partners
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Greenhouse Gases
Greenhouse gas emission targets
Target
0%
 6% improvement each year
from 2007 to 2010, giving an
enforceable 18% reduction
from 2006 emission intensity
in 2010
 2% annual improvement
thereafter
New facilities
 3 year grace period
 Clean fuel standard
 2% annual improvement
% Change from 2006 Intensities
Existing facilities
2006 Emission Intensity Level
-5%
-10%
-15%
-20%
Total Industrial
Target
-25%
-30%
-35%
2010
2015
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2020
Greenhouse gas compliance options
Ways to comply
In-house reductions
Climate Change Technology fund: one fund/two components
 Deployment & Infrastructure: focus on opportunities for near term emission reductions:
access as % of total target over 2010-2017 period - 70%, 65%, 60%, 55%, 50%, 40%, 10%,
10%
 Research & Development: focus on new transformative technologies: access over 20102017 period - 5 Mt annually
 Explore credit for certified project investments
 Contribution rate to funds ($/tonne over 2010-2017 period) - $15, $15, $15, $20, $20
escalating with GDP
Trading




Domestic inter-firm trading
Access to domestic offsets
Access to the Clean Development Mechanism at 10% of firms’ total target
Actively explore Canada-US linkages
Credit for early action of 15 Mt
 With a maximum of 5Mt any given year
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Air Pollutants
Air pollutant targets are aligned with
the best in the world
• Benchmarking to other jurisdictions
– Examined the most stringent standards for each pollutant in
each sector in Canada (provinces), in the U.S., and
internationally
– Where no benchmark exists, targets developed based on
specific activities and equipment in similar sub-sectors (e.g.:
oilsands)
– Adjustment to Canadian circumstances where appropriate
• Identified sectoral targets based on these stringent
regulatory emissions requirements
• Calculated national caps for the four main smog-forming
pollutants
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Air pollutant emission targets
Targets
(% reduction from
2006 emissions)

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NOx – 600 kt Cap (~40%)
SOx – 840 kt Cap (~55%)
VOCs – 360 kt Cap (~45%)
PM – 160 kt Cap (~20%)
+
SECTOR SPECIFIC CAPS for 2012
to 2015
ALL TO BE VALIDATED BY SPRING
2008, INCLUDING THE DATE OF
COMING INTO FORCE
2006 Industrial Air Emissions
2015 Projected Industrial Air Emissions with proposed targets
2,000
kilotonnes
NATIONAL CAPS for 2012 to 2015
2,500
1,500
-55%
1,000
-40%
500
600kt
840kt
-45%
360 kt
-20%
160 kt
0
Nitrogen Oxides Sulphur Oxides Volatile Organic
Compounds
(NOx)
(SOx)
(VOC)
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Particulate
Matter
(PM)
Air pollutant compliance options
Ways to comply
In-house Reductions
 Fuel switching
 Equipment and Process Upgrades
 Control technologies
Domestic Trading for NOx and SOx
 Cap and trade system
 Feasibility of offsets will be assessed
Pursue discussions on Canada- US trading for NOx and SOx
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Anticipated Impacts & Benefits
of Regulating Industry
National economic impacts will be
manageable
• Total package (regulations and eco-Action initiatives) has impacts
that are below -0.5% of GDP for any given year throughout the
forecast period
– Costs are highest in post-2015 period when package is mature
– Regulatory package for climate change and air pollutants the largest
contributor to GDP impacts
• Compliance options provide the time and flexibility to meet targets
through technology improvements rather than output changes
– Complements normal capital turnover cycles
– Permits relatively cost-effective roll-out of major technologies such as
carbon capture and sequestration by 2016 or so
• As a result, GDP impacts in the pre-2015 period in particular are
somewhat offset by increased investment activity
– Energy efficiency savings dampen cost impacts throughout the
forecast period
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Consultations and
Next Steps
Section 71 notice
• The government will require facilities in sectors to be regulated to
report 2006 emissions and other relevant data under a notice issued
under section 71 of the Canadian Environmental Protection
Act,1999 (CEPA 1999)
• Section 71 data will be used to:
– validate the baseline data and inform the allocation considerations for
the sector caps
– assist in the development of the reporting requirements
– inform the detailed regulation design
– enhance the level of detail in the current inventories
• The Section 71 notice will be published in Canada Gazette this fall
• Facilities will be required to report back by spring 2008
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Intensive consultations followed release
of Framework in April
• Immediately following the release of the regulatory
framework, work commenced with provinces and
territories, industry sectors, and with non-governmental
organizations on:
– Validation of sector-specific air pollutant targets including their
date of coming into force – priority issue
– Allocation of air pollutant and implementation of GHG targets
within each sector
– Broad parameters of compliance mechanisms (scope of offsets
system, governance of technology fund, etc.)
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What we’ve heard: Greenhouse
gases
• Industry generally accepts the stringency and structure of the
targets
– Doable if compliance options not too constrained
• Some provinces and NGOs feel targets not stringent enough and
would prefer different approach (cap and trade)
• Technology fund may be most controversial issue – differing views
– Industry concerned over phase-out and investment constraints
– Some fear the fund will interfere in market trading
• Credit for early action
– Concern that 15 Mt not enough
– Criteria for allocation may be too restrictive
• Other outstanding issues
– Definitions: Clean Fuel Standard, New Facilities
– Scope and timing of Offsets System
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What we’ve heard: Air pollutants
• Timeline for validation of air pollutant targets too short
• Air pollutant targets not based on local air quality
conditions
• Potential for overlap/duplication with provincial regimes
• Differing views around stringency of targets
• Questions around benchmarking approach
• Differing views around trading
• Questions over how air quality objectives will be
developed and used
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Moving Forward
• Fundamental issues have been raised on air pollutant
framework -- consultations will be extended to Spring
2008
– Allows continuation of joint federal/provincial/territorial work
through CCME
• Finalize the Greenhouse Gas Regulatory Framework by
December 2007
• Finalize negotiation strategy for PM Annex by November
2007
• Begin to publish draft regulations in Spring/Summer
2008, to be amended later for air pollutant provisions
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