Update from the Sussex Environment Team (#2)

It has been eight weeks since the federal and provincial governments issued orders to shelter in place and for non-essential businesses to close physical operations—just in case anyone has lost count. Over the past week, all provinces have put forth some sort of strategy or threshold criteria for reopening their jurisdiction guided by science mixed with cautious optimism.

While COVID-19 response efforts remain the overwhelming priority for all levels of government, work on some significant non-coronavirus files has resumed. In many cases where the work has not fully resumed the responsible government has provided updates to keep interested stakeholders informed. Several of these updates include environmental priorities in Ontario and at the federal level.

Below is a high-level status update on key environmental files. As always, should you have any comments, questions, or concerns, please contact our team at any time.

Stay healthy!

Ontario

Environmental Registry of Ontario‍

Ontario has temporarily exempted all ministries prescribed under the Environmental Bill of Rights from the 30-day minimum consultation requirement to post proposals for acts, regulations, policies, and instruments to the Environmental Registry of Ontario (ERO) for COVID-19 related activities. The purpose is to ensure the government can respond quickly and act accordingly to the needs of regulated businesses that may be impacted by the public health crisis. Regular, non-COVID-19 proposals are still expected to be posted with public consultation opportunities. The temporary exemption will be in place until 30 days after the provincial Emergency Declaration ends.

Resource Recovery and Waste‍

Waste Services Deemed Essential
‍On the advice of Ontario’s Chief Medical Officer of Health the provincial government ordered the physical closure of all non-essential workplaces to help curb the spread of COVID-19. Waste management related activities such as collection and recycling, sewage treatment and disposal, the operation of landfills, and environmental management/monitoring and spill clean-up, are on the list of essential businesses permitted to continue operations and the delivery of services during the COVID-19 crisis.

Wind-Up of Existing Waste Diversion Programs
The wind-up of existing waste diversion programs and the transition to producer responsibility remains an important priority. There has been a substantial amount of activity on this file over the last several weeks.

In light of COVID-19, Stewardship Ontario (SO) postponed consultations on the Blue Box Transition Plan and requested an extension on submitting the plan for approval to the Resource Productivity and Recovery Authority (RPRA). The Minister granted this extension which allows SO to submit the Transition Plan to RPRA by August 31, 2020 instead of June 30, 2020. All other Blue Box wind-up requirements and timelines set forth in the Minister’s August 15, 2019 direction letter remain the same. Make-up dates for the postponed consultation have not been announced.

In early April, the Minister issued direction to SO to amend the Municipal Hazardous and Special Waste (MHSW) Wind-Up Plan regarding the disposition of surplus funds for MHSW material categories managed by Industry Stewardship Organizations (ISOs). The amendments would facilitate a lump sum transfer of material-specific surplus funds to the ISOs for the purpose of administering fee reductions to ISO stewards. SO will host consultation webinars for MHSW stakeholders on May 12 & 13. Per an additional letter from the Minister issued on April 29, the amendments must be submitted to RPRA for approval no later than June 5, 2020 and RPRA is to approve the amendments no later than June 25, 2020.

The MHSW Wind-Up Plan amendments do not pertain to surplus funds associated with MHSW materials managed exclusively by SO (single-use batteries and pressurized containers). The single-use batteries program will wind-up and cease operation on June 30, 2020.

In late April, the Minister issued direction to the Ontario Tire Stewardship (OTS) Liquidator to amend its wind-up plan to facilitate the distribution of the Used Tire Program surplus funds to stewards. The amendment is to be submitted to RPRA for approval within 10 weeks of a final ruling from the Canada Revenue Agency regarding OTS’ tax rebate. The Minister’s letter indicates an expectation the returned surplus funds will be used to offset the cost of collecting and managing used tires under the current producer responsibility framework set out in the Tires Regulation (O. Reg 225/18).

Transition to Producer Responsibility
‍The Ministry of Environment, Conservation and Parks (MECP) continues to consult (virtually) with members of three working groups representing producers, municipalities, waste service providers, and packaging manufacturers, on the development of a Blue Box producer responsibility regulation. It is anticipated a draft regulation will be published on the Environmental Registry of Ontario in the summer for public consultation. Affected stakeholders can review the regulatory proposal at that time and provide feedback to the MECP. The regulation is still expected to be finalized by end of 2020/early 2021.

Work on the producer responsibility regulation for Electrical and Electronic Equipment (EEE) has also continued during the provincial lockdown. This regulation is farther along in the development process as the draft was first published in April 2019. The timeline for finalizing this regulation is not certain but anticipated over the next few months. The existing waste diversion program for Waste Electrical and Electronic Equipment operated by Ontario Electronic Stewardship will cease operations on December 31, 2020 and producer responsibility will begin January 1, 2021. To facilitate a smooth transition a final regulation is required several months in advance of these key dates.

Ontario’s Hazardous Waste Program
In April, the Minister issued direction to RPRA to create a digital reporting service for Ontario’s Hazardous Waste Program. The decision to amend RPRA’s mandate for this purpose was made as part of the government’s Better for People, Smarter for Business Act. The government will consult with stakeholders on proposed regulatory and guidance amendments and reporting service changes to improve the existing Hazardous Waste Program. Once completed, RPRA will develop a digital reporting service and set/collect fees for obligated participants. The service will be available January 1, 2022 with registration beginning on or before July 1, 2021.

Food and Organic Waste
The MECP is looking at ways to implement key recommendations from the Steering Committee on Food and Organic Waste and to deliver on commitments in the Made-in-Ontario Environment Plan. Proposals for 2020 activities are being considered.

Permitting and Approvals

In April 2019, MECP released a discussion paper that sought feedback to help inform the modernization of Ontario’s environmental assessment program. Since then, MECP amended the Environmental Assessment Act to exempt low-impact projects, such as roadside parks and adding bike lanes, from requiring an environmental assessment. In January of this year, MECP began working with holders of Class Environmental Assessments (Class EA), starting with a proposal to create a screening process that would exempt low-impact waterpower projects. We anticipate further proposals coming forward for other Class EAs as well as for Individual EAs later this year.

Emission Performance Standard

Ontario’s proposed Emission Performance Standard (EPS) for large emitters, a mechanism to make polluters accountable for greenhouse gas emissions, is still under consideration by the federal government. Federal law dictates all provinces and territories have a system in place for pricing carbon that is equivalent in stringency across the country. Should a province not develop their own system the federal government will implement its own program. The federal program is currently in effect in Ontario as Ottawa continues to evaluate the EPS.

The validity of this federal law is being challenged by several provinces including Ontario. An upcoming decision by the Supreme Court of Canada will have a significant impact on the future of the proposed EPS in terms of which level of government will be responsible for setting compliance obligations for large emitters as well as how the revenue from the given system will be used.

Ontario/Federal

Carbon Pricing

At the end of April, the Supreme Court of Canada announced it would hear appeals in September from Ontario and Saskatchewan over cases that upheld the federal government’s right to impose a carbon price on provinces. The hearings were originally scheduled to take place at the end of March but were postponed in light of COVID-19 initially to June and are now set to move forward in September 2020 on dates to be confirmed.

Federal

Single-Use Plastics

At the end of March, Environment and Climate Change Canada (ECCC) extended the public consultation period on the Draft Science Assessment of Plastic Pollution by 30 days in light of COVID-19. Interested stakeholders had until May 1, 2020 to submit their comments. The Science Assessment is intended to guide future scientific and regulatory activities in support of Canada’s action on zero plastic waste and commitment to banning harmful single-use plastics. The intent to ban harmful single-use plastics as part of Canada’s climate change plan was reiterated in a statement issued by Minister Wilkinson on Earth Day (April 22, 2020).

Clean Fuel Standard

In light of COVID-19, ECCC has postponed the publication of proposed regulations for the liquid fuel class of the Clean Fuel Standard (CFS) to fall 2020. The CFS is intended to incent the innovation and adoption of clean technologies in the oil and gas sector and the development and use of low-carbon fuels throughout the economy in support of Canada’s national emissions reduction target.

Work on the CFS will continue and ECCC plans to reengage with the CFS Technical Working Group in the summer. The proposed regulations will be published in Canada Gazette I for a 75-day public comment period in the fall. It is anticipated the regulations for the liquid fuel class will be finalized in late 2021 and come into force in 2022. The gaseous and solid streams will follow a similar development path but delayed by one year. Regulations are targeted for finalization in late 2022 and will come into force in 2023.  

Carbon Pricing: Output-Based Pricing System

Driven by the COVID-19 crisis, ECCC has formally signaled its intent to delay by four months the reporting and payment requirements for facilities subject to the Output-Based Pricing System (OBPS) in Saskatchewan, Manitoba, Ontario and New Brunswick. Most notably, this would push carbon payments under the system well into 2021. Specifically,

• The deadline for the submission of annual reports is proposed to move from June 1, 2020, to October 1, 2020.
• The deadline for the submission of regular-rate compensation is proposed to move from December 15, 2020, to April 15, 2021.
• The deadline for the submission of increase-rate compensation is proposed to move from February 15, 2021, to June 15, 2021.

Federal regulatory processes have been temporarily expedited due to COVID-19, which likely points to the swift passage of this intended regulatory amendment.

The delay in revenue collection will necessarily delay re-investment under the program. The mechanism for this re-investment of funds has not yet been established. ECCC continues to consult on this topic, and discussions can be expected to ramp up again over the summer and into the fall.

Carbon Pricing: National Offset System

The Government of Canada is continuing to develop a federal GHG offset system to provide additional compliance options under the federal Output-based Pricing System. The federal GHG offset system will encourage cost-effective domestic GHG emissions reductions or removal enhancements through voluntary activities that are not covered by carbon pollution pricing, in sectors such as forestry, agriculture and waste.  

Publication of proposed regulations was originally targeted for June 2020. Given the COVID-19 pandemic, Environment and Climate Change Canada is postponing the targeted publication of the draft regulations to fall 2020. In the interim, the Government of Canada intends to publish a discussion paper in late spring 2020 to seek input on specific aspects of the proposed federal GHG offset system, including which project types should be prioritized in the first phase of protocol development.

Funding for Energy Sector Environmental Initiatives

On April 17th the Prime Minister announced a stimulus package for Canada’s oil and gas sector. With a price-tag of $2.5 billion, the package was much smaller than the $15 billion anticipated by some in Alberta and largely focused on environmental outcomes. Specific measures include:

• $1.7 billion to clean up orphan and abandoned wells in Alberta, Saskatchewan, and British Columbia.
• $750 million towards an emissions-reduction fund, with a focus on methane, including $75 million to help the offshore industry cut emissions in Newfoundland and Labrador.

In addition, the Government is working with EDC and BDC to help small and mid-size energy companies. The Government estimates that the orphan wells and methane initiatives will help maintain 10,000 jobs.

Green Stimulus and Economic Recovery Efforts

The government’s primary focus continues to be on containing the spread of COVID-19 and supporting the Canadians and businesses most affected by the crisis. As attention begins to shift to reopening the economy, some Ministers and other senior officials have begun to turn their attention to recovery stimulus.

To this end, over the past several weeks senior officials have been collecting ideas for stimulus programs and building lists of possible projects that might be enabled or accelerated with the right government support. While still early in the process, the plan for economic recovery will soon be top of mind.

It is likely that projects, programs, and funding streams with a climate-focus will feature prominently in the government’s economic recovery plans. This presents an opportunity for stakeholders to start consulting with government on ideas for accelerating and expanding existing funding programs as well as developing new ideas and creative solutions that will help businesses, communities and households reduce GHG emissions and become more resilient to the effects of climate change while creating jobs and putting Canadians back to work.

Contact Us

Robyn Gray – Vice President, Environment
rgray@sussex-strategy.com

Christina Marciano – Senior Associate, Environment
cmarciano@sussex-strategy.com

Devin McCarthy – Vice President, Federal
dmccarthy@sussex-strategy.com

Roberto Chavez – Associate, Federal
rchavez@sussex-strategy.com