British Columbia is working towards reducing its emissions by 80 percent by 2050. To achieve this, the provincial government is implementing a new industrial carbon pricing system designed to reward companies which meet or exceed GHG emissions intensity thresholds while penalizing those which don’t.
The BC Output Based Pricing System (BC OBPS) is BC’s new industrial carbon pricing system intended to reduce GHG emissions across the province. The BC OBPS came into force on April 1, 2024, replacing the CleanBC Industrial Incentive Program (CIIP).
The BC OBPS looks to incentivize industrial emission reductions by setting industry-wide thresholds for emission intensity – that is, emissions per unit of production. These thresholds are used to assess whether an industrial emitter will owe emission credits or be awarded with emission credits based on their annual performance.
Planning for how this program will impact your industry in the following years can have a significant impact on how it affects your business.
The BC OBPS is a carbon pricing model which has some parallels to the federal industrial carbon pricing structure and provides incentives for industrial emitters to reduce their emissions through a performance-based system. The program provides operators with options such as using BC carbon offsets or earned credits to meet their compliance obligations.
Facilities reporting under the BC OBPS are not required to pay the carbon tax on fuels and combustibles but will pay the carbon price for the portion of their emissions above the product-specific emissions limit instead.
The BC OBPS is mandatory for any industrial facility which emits 10,000 tonnes of carbon-dioxide equivalent (tCO2e) or more per year and produces a regulated product under the program (see Table 2 for a list of eligible products). Operators are required to continue reporting for their facility until it is non-operational or emissions are less than 10,000 tCO2e for three consecutive years.
Facilities that emit less than 10,000 tCO2e can elect to opt-in to the program. This would give these opted-in facilities access to the same competitiveness supports as the larger emitters in their sector.
Changing the historical reporting threshold from 25,000 tCO2e to 10,000 tCO2e means that there are approximately 80 facilities across BC that are being re-classified as large emitters. Each of these facilities will be required to meet the reporting and verification requirements for large emitters.
The BC OBPS weighs your site’s performance against others producing the same products. If your site releases fewer emissions than the target set by the BC OBPS, it will generate emission credits, and if your site releases more emissions than the target, it will owe credits. Earned credits can either be sold or saved for use in future years, when you may owe credits.
The value of these credits is generally correlated to the compliance prices set by the program and are set to change annually as outlined in Table 1, below.
Table 1: BC OBPS Credit Pricing Schedule
Calendar Year |
Compliance Charge Rate per tCO2e |
| 2024 | $80 |
| 2025 | $95 |
| 2026 | $110 |
| 2027 | $125 |
| 2028 | $140 |
| 2029 | $155 |
| 2030 | $170 |
The prices listed are per credit, where each credit represents 1 tCO2e of emissions. The credit prices are set to increase significantly over the next several years. This can be beneficial for companies able to reduce their emissions below target but result in large compliance costs for companies unable to meet their target annual emissions.
As part of the BC OBPS, facilities can claim carbon tax exemption after April 1, 2024, for fuel by registering for the BC OBPS and applying for a BC OBPS Regulated Operation ID (BORO ID). Note that registration can take several weeks, so applying early will help make your reporting process smoother.
While the BC OBPS has a lot of similarities with its predecessor, CIIP, there are some key differences which should be acknowledged.
When reporting annual emissions to the Greenhouse Gas Industrial Reporting and Control Act (GGIRCA), Linear Facilities Operations (LFOs) from the oil and gas sector are required to disaggregate their emissions, fuel usage, production, and other information into different types of reports:
Large and Medium Facility reports require information to be specified at the facility level, while the Small Aggregate report is specified at an operation level. Some information that is required for a Large Facility or Medium Facility report is not required for the Small Aggregate report and more can be found in sector specific guidance.
We are expecting to continue to receive updates from CleanBC as we approach the end of the first compliance period (Dec 31, 2024) and the subsequent reporting deadline (May 31, 2025). Beyond that, there are expected to be changes in the program as it progresses and the provincial government receives more data each year.
August 1, 2024 was the deadline set to apply as an opted-in operation for the 2025 compliance year. If you plan on participating in the program next year and have less than 10,000 tCO2e annual emissions, make sure to apply before next year’s deadline in 2025!
On July 23, 2024, BC released draft guidance for the BC OBPS including methodologies for the different sectors required to report under the program. If you need help understanding the newly released guidance or how to use the sector-specific calculation methods reach out to us or look forward to further updates to this blog.
If you have any questions about the BC OBPS or are interested in having Brightspot Climate provide consulting or verification services for you, please feel free to reach out to Sheldon Fernandes (sheldon.fernandes@brightspot.co) or Duran Drego (duran.drego@brightspot.co) for more information.
Table 2: Products Regulated under the BC OBPS
Product Name |
Sector |
Products Eligible for BC OBPS |
|
| B.C.-specific refinery complexity throughput | Petroleum Refineries |
| Cement equivalent | Cement |
| Chemicals: Pure hydrogen peroxide | Chemicals |
| Compression, centrifugal – consumed energy | Oil and gas |
| Compression, positive displacement – consumed energy | Oil and gas |
| Processing sour gas – oil equivalent | Oil and gas |
| Processing sweet gas – oil equivalent | Oil and gas |
| Gypsum wallboard | Gypsum |
| Steel wire: HDG-process (hot dip galvanization) | Steel Wire |
| Steel wire: Non-HDG | Steel Wire |
| Lime at 94.5% CaO and lime kiln dust | Lime |
| Limestone for sale | Limestone |
| Sugar: Liquid | Sugar Refining |
| Sugar: Solid | Sugar Refining |
| Mining: Coal | Mining |
| Mining: Copper equivalent, open pit | Mining |
| Mining: Copper equivalent, underground | Mining |
| Mining: Gold equivalent | Mining |
| Pulp and Paper: Paper (except newsprint and tissue paper) | Pulp and paper |
| Pulp and Paper: Tissue paper | Pulp and paper |
| Pulp and Paper: Chemical pulp | Pulp and paper |
| Pulp and Paper: Non-chemical pulp | Pulp and paper |
| Rendering and meat processing: protein and fat | Rendering |
| Smelting: Aluminum | Aluminum smelting |
| Smelting: Lead-zinc | Lead-zinc smelting |
| Sold electricity | District energy |
| Sold Heat | District energy |
| Wood products: Lumber | Wood products |
| Wood products: Medium density fibreboard | Wood products |
| Wood products: Plywood | Wood products |
| Wood products: Veneer | Wood products |
| Wood products: Wood chips (including hog fuel) | Wood products |
| Wood products: Wood pellets | Wood products |
| Renewable diesel | Renewable fuels |
| Liquefied Natural Gas | LNG |
Products NOT eligible for BC OBPS |
|
| Cannabis-growing area | Greenhouses |
| Eligible plants-growing area | Greenhouses |
| Decontaminated fuel | Petroleum products |
| Delivered heat | District energy |
| Purchased electricity | District energy |
| Purchased heat | District energy |
| Emissions from EIOs | District energy |
| Fat, oil, and grease refining and storage | FOG refining |
| Forged steel balls < 3.5 inches | Forged Steel Balls |
| Forged steel balls > 4 inches | Forged Steel Balls |
| Upstream oil/gas: Other | Oil and Gas |
Duran Drego is a Consultant with Brightspot Climate, based out of Vancouver, BC.
We respectfully acknowledge that we predominantly live and work on the ancestral lands of the xʷməθkʷəy̓əm (Musqueam), Sḵwx̱wú7mesh (Squamish), səlilwətaɬ (Tsleil-Waututh) Nations, the Blackfoot Confederacy (Siksika, Kainai, Piikani), the Tsuut’ina, the Îyâxe Nakoda Nations, the Métis Nation (Region 3), and all nations who make their homes in the Treaty 7 region of Southern Alberta. We thank these First Peoples who have cared for the land since time immemorial and recognize that this land was never surrendered, relinquished, or handed over in any way.
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