Name of Instrument
BC OBPS
Subnational - State/Province ETS
Implemented in 2016
British Columbia
Point Source
Yes, unlimited
Covered Sectors
- Covered
- In principle
Description
Starting in April 2024, the B.C. Output-Based Pricing System (B.C. OBPS) replaced the province’s carbon pricing mechanism for industrial operators, which had included the provincial carbon tax and a baseline-and-credit system under the CleanBC Program for Industry. The CleanBC Program for Industry had been in place since April 2019 and included the CleanBC Industrial Incentive Program (CIIP) and the CleanBC Industry Fund (CIF); the CIIP will be discontinued, and the CIF is under review and will continue under the new mechanism. The B.C. OBPS follows the Canadian federal carbon price path and ensures a price incentive for industrial emitters to reduce GHG emissions through a performance-based system. Facilities that emit under their annual emission limit earn credits. For facilities that emit over their emission limit, the B.C. OBPS provides flexible compliance options to meet compliance obligations. Flexible payment options include using earned credits, B.C. offsets, or making a direct payment. Banking is allowed. Borrowing is not allowed.
Recent Developments
IIn 2023, British Columbia announced the transition to an OBPS for large industrial emitters with its official implementation starting in April 2024.
As part of “Budget 2023”, British Columbia announced the increase of B.C.’s carbon price to CAD 65 (USD 48.15) per tCO₂e for 2023, increasing by CAD 15 (USD 11.11) each year until it reaches CAD 170 (USD 125.93) in 2030; with this increase the province’s carbon price now meets the Government of Canada’s carbon price path.
Coverage
Participation is mandatory for producers of certain regulated industrial products under the “Greenhouse Gas Industrial Reporting and Control Act” (GGIRCA) emitting ≥10,000 tCO2e/year. Industrial operations within regulated sectors under this threshold with annual emissions of ≥10,000 tCO2e/year are permitted to opt-in to the B.C. OBPS on a voluntary basis; those that do not opt-in remain subject to the B.C. Carbon Tax.
The BC OBPS covers energy utilities, electricity import operations, greenhouses, waste management, and remediation services To compensate for emissions exceeding the facility’s annual emissions limit, a facility can use direct payments (compliance charge) to meet the facility’s compliance obligations at the full carbon price for that year. This price acts as a price ceiling and is aligned with the federal benchmark carbon price (CAD 80 [USD 59.26] in 2024). The price increases by CAD 15 (USD 11.11) each year until 2030, resulting in a price of CAD 170 (USD 125.93) per tCO2e in 2030.
Pricing and allocation approaches
To compensate for emissions exceeding the facility’s annual emissions limit, a facility can use direct payments (compliance charge) to meet the facility’s compliance obligations at the full carbon price for that year. This price acts as a price ceiling and is aligned with the federal benchmark carbon price (CAD 80 [USD 59.26] in 2024). The price increases by CAD 15 (USD 11.11) each year until 2030, resulting in a price of CAD 170 (USD 125.93) per tCO2e in 2030. Industrial facility’s emissions are assessed against a facility-specific emission limit, which is based on a product-specific performance standard. Facilities that emit less than their emissions limit receive credits (compliance units), free of charge from the government of British Columbia, corresponding to the number of tonnes CO2e below the limit. These earned credits can be banked or sold to entities that emit more than their emissions limits (see below for more details). Earned credits do not have an expiry date.
Tightening rates ensure a yearly gradual increase to the OBPS’s stringency. The B.C. OBPS tightening rate is set at 1% on all emissions for all products except for industrial process emissions; the tightening rate for industrial process emissions is set at 0% for all sectors. The total emission limit under the BC GGIRCA is the bottom-up combination of the emission intensity baseline for each covered facility.
Compliance Approaches
Point source. Participation is mandatory for producers of certain regulated industrial products under the “Greenhouse Gas Industrial Reporting and Control Act” (GGIRCA) emitting ≥10,000 tCO2e/year. Industrial operations within regulated sectors under this threshold with annual emissions of ≥10,000 tCO2e/year are permitted to opt-in to the B.C. OBPS on a voluntary basis; those that do not opt-in remain subject to the B.C. Carbon Tax.
Operators need to meet their compliance obligations on an annual basis. Operators can use eligible offsets to meet their compliance obligations. Only offsets from projects that are approved, validated, and verified through the B.C. Carbon Registry are allowed as compliance option. Under the B.C. OBPS, offset units are limited to those generated within three years of the beginning of the compliance year.
Relation to other compliance CPIs
BC also imposes a carbon tax. Under the B.C. OBPS, instead of paying the carbon tax on fuels and combustibles that they use or burn, industrial facilities in the system will face a carbon price on the portion of their emissions that are above a product-specific emissions limit
A subset of B.C. OBPS offset types are recognized as compliance units under the Canadian (federal) output-based pricing system
Covered Emissions
Price range:
in 2023
Indicates instruments with multiple price levels. Only the main rate is shown for these instruments. Data last updated on 1 April 2023
