Canada: Ontario Moves Ahead With Clean Air Plan For Industry

The Ontario government’s Clean Air Plan for Industry aims at reducing smog gases (NO_x and SO₂) from non-electrical industrial sources. As part of a consultation process initiated in October 2001, aimed at reducing smog gases, the Ontario government recently released a "Discussion Paper" on its Clean Air Plan for Industry (the "Plan"). The Discussion Paper is based on discussions between the Ministry of the Environment ("MOE") and various industry stakeholders and proposes a direction for moving forward on six key issues, ultimately leading to the development of new air regulations. The issues identified in the paper are set out below.

Determining Industry’s Reasonable Contribution to Reducing Ontario’s Emissions of Nitrogen Oxide ("NO_x") and Sulphur Dioxide ("SO₂")

The MOE proposes that industry sub-sectors pursue all technically feasible reductions that are economically achievable. This approach will supposedly ensure that NO_x and SO₂ emissions are reduced while not jeoparidizing industry’s competitiveness.

To provide the greatest assurance to both the public and government that emission targets will be achieved at the lowest cost, the MOE proposes that emission limits (i.e., annual tonnage limits) be set for the years 2004, 2007 and 2010. The limits would be established for individual plants within industrial sub-sectors, while providing for the use of emissions trading to achieve the limit requirements.

It is recognised that emissions thresholds alone do not encourage small, inefficient emitters to improve performance, nor do they provide incentive to improve performance once an emitter is within the emission threshold. Accordingly, the MOE proposes that a combination of emission thresholds and design capacities be used to identify facilities for NO_x and/or SO₂reductions.

The Paper notes that emission limits may be based on tonnage (e.g., tonnes NO_x /year), intensity (e.g., NO_x /unit of output or input), or concentration (e.g., percentage of sulphur in fuel). For both NO_x and SO₂emissions, the MOE proposes a mix of emission limits. Where appropriate, an intensity-based limit can be used with a clawback provision if the industry budget is exceeded.

The Paper notes, however, that in some industry sub-sectors it is not possible to determine the appropriate intensity limit without performing site-specific assessments. In other cases, emission intensity is highly variable and not necessarily linked to units of output or production. Thus, in such cases where an intensity metric is inappropriate or difficult to determine, the MOE proposes that annual tonnage limits be used. Large SO₂ emitters are specifically mentioned as candidates for tonnage limits.

As with the form of emission limits, the MOE proposes a mix of emission measurement techniques. The technique used would vary according to industry, emission levels, and equipment type. It is proposed that continuous emission monitors ("CEMs"), a rigorous but costly measurement method, be mandatory for large sources (i.e., boilers and process heaters and other combustion sources that are 250 mm BTU/hr heat input and greater). This would, however, be contingent on the availability of an appropriate CEM standard for the affected sources.

Although the Discussion Paper does not propose a direction with respect to the current emissions trading system, it does identify issues for further discussion and consultation. Specifically, it is recognised that allowing facilities outside Ontario to generate emissions reduction credits ("ERCs") would, if the facilities are operating under less stringent limits, risk putting Ontario facilities at a competitive disadvantage.

The MOE also notes that the use or purchase of ERCs was originally introduced in Ontario, because only a limited number of facilities were subject to emissions limits. Thus, if regulated limits are extended to additional sources, the need for ERCs may be reduced.

Finally, the MOE asks if it should consider limits on the use and discounting of banked allowances, or the elimination of ERCs in order to harmonize with the U.S. emissions trading programme.

Although the Discussion Paper alludes to emission limits for 2004, 2007, and 2010, it does not propose a formal implementation schedule. Rather, the MOE will consider comments on the paper from stakeholders before formalizing the Plan and developing a timeline for implementation. The paper does, however, identify industry sub-sectors with significant NO_x and SO₂ emissions.

Significant contributors to NO_x emissions include:

• Cement Manufacturing
• Chemical ¹
• Glass Manufacturing
• Iron and Steel
• Petroleum Refining
• Pulp and Paper

• Carbon Black
• Cement Manufacturing
• Iron and Steel
• Non-Ferrous Smelting
• Petroleum Refining
• Pulp and Paper

Further information on each sub-sector’s emission trends, potential control technologies, and emission reduction scenarios is available in the Appendix to the Paper.

While not a firm target, it is likely the MOE will attempt to implement the Plan by 2004. Already a number of contentious issues have been identified and meetings are continuing between industry and government representatives. An interesting fact that limits the effectiveness of the Plan is that 62% of Ontario’s NO_x emissions are from transportation vehicles and much of the smog experienced in southern Ontario originates beyond our borders in the U.S.