GOVERNMENT POLICY UPDATE

GOVERNMENT POLICY UPDATES

CANADA’S ENERGY POLICY LANDSCAPE

This latest feature of the newsletter will be published on a bi-monthly basis. The update serves as a recap and reference point for our members on the latest policy impacts on the energy market. We will continue to monitor and communicate any changes in policy directly to members as it happens. As this is the first in our bi-monthly series, we have backdated our updates to capture policy directives as of July 2020.

WHAT'S NEW? NATIONALLY

Feds table net-zero plan while Supreme Court of Canada adjourns carbon tax hearings without decision

In September, following a brief two days of hearings for and against the federal government’s carbon tax, the Supreme Court of Canada adjourned without a decision. The high court is to deliver a ruling on three separate legal challenges of the carbon pricing policy — launched by the provinces of Saskatchewan, Ontario, and Alberta — at an unspecified future date.

Against this backdrop and to show it is doubling down on their pursuit of a green, post-pandemic recovery the federal government tabled the Canadian Net Zero Emissions Accountability Act on November 19, 2020. The Act provides a legally binding process for the government to set national targets, bringing forward

climate plans on a rolling five-year basis after 2030, with the goal of meeting net-zero emissions by 2050. It does not, however, provide specific emissions targets. The expectation is the Minister of Environment will provide a plan to Canadians that sets national targets before the end of the calendar year.

WHAT'S NEW? PROVINCIALLY

Québec announces Green Economy Plan while renewable fuel mandate still pending publication

With a $6.7 billion funding envelope over the next five years, Premier Legault looks to make electrification the bellwether of his mandate. Key among the plan is the setting of a minimum standard of 10% renewable natural gas by 2030 and a promise to eliminate the sale of new gas-powered vehicles by 2035.

Meanwhile, Québec’s draft renewable fuel regulation, published in the Official Gazette last October 2019, has yet to be passed into law.

British Columbia adjusts renewable and low carbon fuel requirements regulations for 2020 and sets new ZEV targets

In response to COVID-19 and ongoing pressure on the oil and gas industry, the government of British Columbia adjusted their renewable fuel target from 10% to 9.1% over the summer.

In addition, the province announced new rules for meeting 100% electric-vehicle sales by 2040. The regulations follow the Zero-Emission Vehicles (ZEV) Act that was passed last year. The new ZEV regulation sets phased-in annual targets and other compliance measure to incent automakers to increase the quantity of EVs they sell.

Ontario gets federal endorsement for its Emissions Performance Standards Program, announces subsidies for EV manufacturing, inches towards Gas and Dash Bill, updates Cleaner Transportation Fuels regulations and pitches hydrogen strategy

With the federal government’s approval, Ontario can now move forward with its Emissions Performance Standard (EPS), replacing the Federal Carbon backstop. As an alternative to the federal output-based pricing system, the EPS will regulate greenhouse gas emissions by large industrial facilities, with stringency measures phased in over time so industry can respond accordingly.

On the ZEV front, Ontario has partnered with the federal government, announcing $295 million each to support production of electric vehicles at Ford’s plant in Oakville, Ontario. This signals an important evolution in the Ontario government’s environmental strategy, with subsidies flowing to industry as opposed to consumers through previously cancelled credits.

As of November 18, 2020, Member of Parliament Anand Deepak’s Private Member’s Bill 231, Protecting Ontarians by Enhancing Gas Station Safety to Prevent Gas and Dash Act, 2020, has been carried through second reading. The Bill seeks to amend the Occupational Health and Safety Act by requiring customers to prepay at the pumps as well as requiring employers to provide safety training to workers. The Bill will proceed to the Standing Committee on Justice Policy at a yet, undisclosed date.

The Province has also issued an update on the new Cleaner Transportation Fuels regulation (O. Reg. 663/20) which will see renewable content requirements for gasoline increase to 11% in 2025, 13% in 2028, and 15% in 2030. In addition, in response to the impacts of COVID-19, the ministry is extending the current 2020 compliance year into a two-year compliance period (2020-2021).

In addition, Ontario has just released a discussion paper for consultation that will inform the creation of the province's first hydrogen strategy – one they hope will create more jobs in the province while helping reduce greenhouse gas emissions using low-carbon hydrogen.

Nova Scotia and New Brunswick launch next round of margin reviews

The Utility Boards in Nova Scotia and New Brunswick continue their margin review process. CIPMA is engaged as an intervenor for both with the goal of advocating for more predictability in the review process and greater engagement of smaller independents.

New Brunswick carbon pricing system accepted by Feds

The federal government recently announced acceptance

of New Brunswick’s carbon pollution pricing system. While the transition dates have yet to be finalized, the provincial government has unveiled a framework to help develop an output-based pricing system for large industrial emitters of greenhouse gases. This system, an alternative to the federal government’s backstop plan, aims to reduce emissions while ensuring the province’s industries are not competitively disadvantaged.

Alberta reaches milestone agreements on methane emissions and Keystone XL, lays groundwork for hydrogen hub

Alberta has been busy this fall, working to strike a balance between energy job recovery and decarbonization of the economy. In October, Alberta released its Natural Gas Vision and Strategy, positioning Alberta as the go to hub and a global supplier of clean, responsibly sourced natural gas and hydrogen products. In November, the province saw two significant milestone agreements reached. The first with the federal government which will see an Alberta-led methane regulation. Alberta’s target is to reduce methane reductions by 45% from 2014 levels by 2025. Most significantly, the province is championing the historic agreement between TC Energy and Indigenous owned, Natural Law Energy for a future equity investment of up to $1 billion in Keystone XL.

Manitoba applies green levy to transportation fuel and works to amend biofuels mandate

As of July 1, 2020, Manitoba began applying a green levy at a flat rate of $25 per tonne of carbon dioxide equivalent emissions. It applies to gas, liquid, and solid fuel products. With regards to transportation fuels, the green levy will be collected and remitted to the province through the existing fuel tax system. As it stands, the levy is being applied as follows: Gasoline 5.30 ¢/L; Diesel 6.74 ¢/L; Natural Gas 4.74 ¢/m3; Propane 3.87 ¢/L.

In addition, the government of Manitoba is currently working to amend three regulations under the Biofuels Act. The amendments include increases to the required renewable content in gasoline to 10% and the required renewable content in diesel to 5%, effective January 1, 2021.

AT A GLANCE: CANADIAN CARBON PRICING LANDSCAPE (as of November 2020)

British Columbia Carbon Tax – 8.89 ¢/L (effective as of April 2019)

Alberta Repealed Carbon Levy – Federal Carbon Backstop took effect January 2020. Increasing to 6.63 ¢/L (as of April 2020)

Saskatchewan Federal Carbon Backstop – Increasing to 6.63 ¢/L (as of April 2020) Manitoba Flat Green Levy – 5.53 ¢/L (July 1, 2020) Newfoundland and Labrador Carbon Levy For consumers – 6.63 ¢/L (effective November 7, 2020) For companies – Provincial performance-based system applies

Québec Cap and Trade Program (effective as of January 2013)

Ontario Emissions Performance Standard to replace federal backstop PEI Carbon Levy For consumers – 6.63 ¢/L (effective April 1, 2020) For companies – Federal output-based system applies

Nova Scotia Cap and Trade Program (effective as of January 2019)

New Brunswick Carbon Levy For consumers – New 6.63 ¢/L (effective April 1, 2020) For companies – Federal output-based system applies until transition to provincial system