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CB's Federal Backstop S&D Report Shows Compliance Instrument Deficit for Upcoming Program

Canadian emitters to face 12 Mt shortfall under OBPS in 2019 -analysts

Large Canadian emitters to be regulated by the federal government’s output-based pricing standard (OBPS) from 2019 will face a compliance unit deficit of nearly 12 million tonnes during the market’s inaugural year, according to a new report released Monday.

Starting Jan. 1, an estimated 133 facilities with emissions above 50,000 tonnes of CO2e annually from seven Canadian provinces and territories will be regulated under the OBPS component of Ottawa’s ‘backstop’ carbon pricing plan.

To comply with the OBPS, regulated entities that exceed their relevant emissions-intensity standard can pay the appropriate carbon price in line with the backstop rate – rising from C$20 in 2019 to C$50 in 2022 – surrender tradable and bankable performance credits issued by the government, or use offsets.

Although Ottawa has not yet finalised its industry production benchmarks or offset eligibility criteria, Toronto-based consultants ClearBlue Markets predicted that emitters will face an 11.8 Mt shortfall in compliance units in 2019, though that gap could decrease in the following years.

Read full Carbon Pulse article here

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