Clean Air Regulatory Agenda - Regulatory Framework for Industrial Air Emissions Climate Change Hub – NB Lung Association June 29 th, 2007

Page 2 Federal Aspects—Legislation GHGs were added to CEPA 1999 List of Toxic Substances (Schedule I) Nov The Notice of Intent (October 21, 2006) publicly stated the Government of Canada’s commitment to develop a regulatory framework for air emissions

Page 3 Regulatory Framework for 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 –Nationally consistent regulations –The basis for negotiations with our international partners Regulatory Framework, including targets, to be reviewed every 5 years (first review in 2012).

Page 4 The industrial sectors are: – electricity – oil and gas – forest products – smelting and refining – iron and steel – some mining – cement, lime and chemicals Sectors within the Regulatory Framework

Page 5 Framework Consultations Work underway: –Validate sector-specific air pollutant targets by June 2007, including their date of coming into force –Develop sector-specific air emissions regulations –Translate greenhouse gas target structure into sector-specific regulatory targets –Define the scope of offsets system and the administration of technology fund Finalize air pollutant regulatory framework by fall 2007 Begin publication of draft regulations by spring 2008

Page 6 Section 71 notice To support the development and implementation of regulations, comprehensive and consistent baseline data for 2006 will be required from facilities in the regulated sectors To this end, the government will require facilities in regulated sectors to report 2006 emissions and other relevant data under a notice issued under section 71 of the Canadian Environmental Protection Act,1999 (CEPA 1999)

Air Pollutants

Page 8 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

Page 9 Air pollutant emission targets Targets NATIONAL CAPS for 2012 to 2015 (% reduction from 2006 emissions)  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 JUNE 2007, INCLUDING THE DATE OF COMING INTO FORCE ,000 1,500 2,000 2,500 Nitrogen Oxides (NOx) SulphurOxides (SOx) Volatile Organic Compounds (VOC) Particulate Matter (PM) -40% 600kt -55% 840kt -45% 360kt -20% 160kt kilotonnes 2006 Industrial Air Emissions 2015 Projected Industrial Air Emissions with proposed targets

Page 10 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

Page 11 Air Pollutants Targets – Pulp and Paper and Electricity Sectors Electricity Generation Produced by Combustion Pulp and Paper * PPAQF: Pulp and Paper Air Quality Forum

Page 12 Air Pollutants Targets – Petroleum Refining and Wood Products Petroleum Refining Wood Products (Flakeboard, Plywood, Sawmills etc.)

Page 13 Health Benefits will be significant Health Benefits (2015) Value ($ 2006 millions) Deaths 1,200$6,000 Chronic Bronchitis Cases Hospital Admissions and Emergency Visits 1,260 3 Child Acute Bronchitis Episodes 5,600 2 Asthma Days 170, Restricted Activity Days 1,000, Minor Restricted Activity Days 210,000 5 Minor Symptom Days 3,400, TOTAL $6,400 Estimated health impacts indicate that benefits will occur across a range of health conditions sensitive to air quality These benefits include an estimated 1,200 fewer premature deaths per year as a result of the air pollution reductions foreseen under regulations. Avoided deaths also account for the lion’s share of the $6.4 billion in monetized benefits of regulating clean air, with an expected annual value of $6 billion by 2015

Page 14 Health Benefits follow regional differences in population and air quality Total health benefits generally follow the distribution of population across provinces On a per capita basis, benefits are highest for residents of Quebec (about $225), Saskatchewan ($260) and Alberta ($200) Health Benefits 2015

Greenhouse Gases

Page 16 GHG targets Existing facilities  18% reduction from 2006 emission intensity by the end of 2010  2% annual improvement thereafter until 2020  brings us to a 38% reduction from 2006 emission intensity levels by end of 2020 New facilities  3 year grace period  Clean fuel standard  2% annual improvement after 3 year grace period Compliance YearReportingTrue-upPenalties January – December 2010 January – March 2011 April – June 2011 July

Page 17 GHG compliance options Ways to comply 1. In-house reductions 2. Climate Change Technology fund: one fund/two components  Deployment & Infrastructure: focus on opportunities for near term emission reductions  Research & Development: focus on new transformative technologies  Explore credit for certified project investments  Contribution rate to funds: $15/tonne , then $20/tonne in Thereafter escalates with GDP rate of growth 3. Trading  Domestic inter-firm trading  Access to domestic offsets  Access to the Clean Development Mechanism (no more than 10% of firms’ total target)  Linkages with other countries 4. Credit for early action  One time credit; 15Mt total with a maximum of 5Mt any given year

Page 18 Estimated Sector GHG reductions in 2010

Page 19 Transportation Auto –Currently a voluntary agreement by auto industry to reduce sector emissions by 5.3Mt by 2011 –In 2011, a fuel-efficiency standard will come into effect under the Motor Vehicle Fuel Consumption Standards Act. –the regulations will be published by end of 2008 Rail –Currently has a voluntary agreement, will be regulated after that (2011) under the Railway Safety Act Marine –Adopting international standards for emissions (developed by the International Maritime Organization) and will apply under the Canada Shipping Act Aviation –Currently a voluntary agreement to improve fuel efficiency and reduce GHGs –International Civil Aviation Organization developing standards and recommended practices for reduced air emissions (both GHG and air pollutants) –Standards would be regulated under the Aeronautics Act

Page 20 Consumer & commercial products Amendments to Energy Efficiency Act –new energy performance standards for 18 currently unregulated products (e.g. commercial clothes washers, large air conditioners) –more stringent requirements for 10 currently regulated products (e.g. dehumidifiers, dishwashers) Performance standards for lighting –Phase out incandescent light bulbs in common (but not all) applications by 2012 consultations underway to determine exemptions

Next Steps

Page 22 Section 71 notice To support the development and implementation of regulations, comprehensive and consistent baseline data for 2006 will be required from facilities in the regulated sectors To this end, the government will require facilities in regulated sectors to report 2006 emissions and other relevant data under a notice issued under section 71 of the Canadian Environmental Protection Act,1999 (CEPA 1999)

Page 23 Continued engagement Series of meetings over the next several months –Sectoral discussions to Validate air pollutant targets, including timeframe for their entry into force Implement the GHG target structure by sector –Discussions on cross-cutting regulatory provisions Trading Offsets Credit for early action Technology fund Materials will be available on-line

Thank you / Merci In-depth Technical Briefing available at: or