Name of Instrument
Newfoundland and Labrador PSS
Subnational - State/Province ETS
Implemented in 2019
Newfoundland and Labrador
Baselines (Intensity-based)
Price ceiling
All
Point Source
Not permitted
Covered Sectors
- Covered
- In principle
Description
Newfoundland and Labrador’s Performance Standards System (PSS) came into effect in 2019. It is an intensity-based ETS for large industrial emitters, in which each covered entity must surrender compliance units for emissions that exceed each facility’s annual emissions limit. Each facility’s annual emissions limit is based on a combination of historical emission intensity, actual production activity data, and an annually decreasing reduction factor. Special provisions are in place for offshore petroleum facilities which must reduce emissions by an equivalent percentage in absolute terms (regardless of production). The system applies to the same sectors and GHGs as the federal Canadian system, and follows the same price trajectory, rising CAD 15 (USD 11.11) each year until 2030, resulting in a price of CAD 170 (USD 125) per tCO2e in 2030.
Recent Developments
In line with the federal OBPS pricing trajectory, the 2023 price rose to CAD 65 (USD 48.15) per tCO2e and will increase to CAD 80 (USD 59.26) per tCO2e in 2024.
Coverage
The mandatory inclusion threshold is set lower than in the Canadian federal system, applying to facilities in covered sectors with emissions exceeding 25,000 tCO2e/year and with a voluntary opt-in option for smaller emitters (emitting any amount greater than 15 tCO2e/year).
Operators can earn performance credits if their emission intensity is below the target level, and sell these credits to other covered operators or bank them for future compliance cycles.
Pricing and allocation approaches
The scheme includes a price ceiling called the Greenhouse Gas Reduction Fund. Covered entities can purchase and surrender credits from Newfoundland and Labrador’s Greenhouse Gas Reduction Fund to compensate for emissions exceeding performance limits. These (fund) credits cannot be banked, transferred, or refunded. The price ceiling is aligned with the federal minimum carbon price (CAD 65, USD 48.15, in 2023). The price ceiling increases by CAD 15 (USD 11.11) each year until 2030, resulting in a price of CAD 170 (USD 126) per tCO2e in 2030. Output-based. Allocation is determined in relation to annual emissions limits based on emissions intensity benchmarks. For onshore industrial facilities, baseline emissions intensity is determined with reference to units of output. For mobile offshore industrial facilities, baseline emissions intensity is determined with reference to hours of operation. Entities that emit less than their emissions limit receive credits, free of charge, corresponding to the number of tonnes of CO2e below the limit. This is similar to free allocation based on benchmarks. These credits can be banked or sold to entities that emit more than their emissions limits. The total emission limit under the Newfoundland and Labrador PSS is the bottom-up combination of the absolute emission baseline for each covered facility.
Compliance Approaches
Point source. Operators are liable for reporting the emissions covered under the Newfoundland and Labrador PSS at a facility level and meet their compliance obligations for the emissions above the emission intensity target (onshore facilities) or absolute emissions target (offshore facilities). For onshore facilities, this is equivalent to the actual production activity level multiplied by the difference between the actual and baseline emissions intensity. The approach excludes purchased electricity and scope 3 emissions. Operators need to meet their compliance obligations on an annual basis. The use of offset credits is not allowed as a compliance option.
Relation to other compliance CPIs
The Newfoundland and Labrador PSS is not linked with any other system. However, covered facilities can become eligible for certain exemptions from the Canada federal fuel charge.
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
