following options to satisfy annual emissions that exceed their sector-based emission intensity benchmark:11

  1. pay the excess emissions charge;12

  2. submit surplus credits issued by the federal government (“Credits”);13 or

  3. submit eligible offset credits (“Offset Credits”).14

11 Output Based Standards are included for each industrial activity in Schedule 1 of the Output Based Pricing System Regulations https://laws-lois.justice.gc.ca/eng/regulations/SOR-2019-266/page- 15.html#h-1185036

12 Excess emission charge is the carbon price in $/tCO2e as outlined in Table A-1. Rates of charge applicable from 2019-2022 are outlined in Schedule 4 of the GGPPA.

13 Credits are issued by the federal government to facilities that achieve annual emissions volumes below their annual output-based emissions limit. Each credit represents one tCO2e, can be banked for future use against emissions or traded, has a useful life of five years from the period following the year for which the credits were issued and will be tracked using a centralized system.

14 Offset Credits represent greenhouse gas emissions reductions or removal enhancements generated from Canadian voluntary project-based activities that are not subject to carbon pricing and that would not have occurred under business as usual conditions (i.e. the reductions go beyond legal requirements and standard practice). Details of the proposed federal offset credit program were made available in June 2019 through a discussion paper entitled Carbon Pollution Pricing: Options for a Federal GHG Offset System ( https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing- pollution-how-it-will-work/federal-offset-system.html ) and in July 2020 through a discussion paper entitled Carbon Pollution Pricing: Considerations for Protocol Development in the Federal GHG Offset System ( https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it- will-work/output-based-pricing-system/carbon-pollution-pricing-considerations-protocol- development.html ). The federal GHG offset regulation is anticipated to be published in draft in the Fall of 2020 and finalized in 2021.