Name of Instrument
Nova Scotia OBPS
Subnational - State/Province ETS
Implemented in 2019
Nova Scotia
0
Not permitted
Covered Sectors
- Covered
- In principle
Description
The Nova Scotia Output-Based Pricing System for Industry (Nova Scotia OBPS) is part of the province’s approach to reduce GHG emissions from large industrial facilities.
The Nova Scotia OBPS was approved by the Canadian federal government in November 2022 and began operating in 2023. It replaced Nova Scotia’s cap-and-trade program, which had been in place since 2019 but was officially phased out after the final compliance deadline in December 2023.
Covered entities must surrender allowances (compliance units) for emissions that exceed the facility’s annual emissions limit. The annual emissions limit is based on an emissions intensity benchmark. If a facility’s emissions are below its limit, it earns performance credits (compliance units), which can be banked for future use or sold.
Recent Developments
The Nova Scotia OBPS began operating in 2023, replacing Nova Scotia’s cap-and-trade program which had been in place since 2019. While the cap-and-trade program set an overall cap on emissions each year, the OBPS allows emissions to increase over time if production increases. However the OBPS standards will become more stringent over time.
Coverage
The Nova Scotia OBPS sets facility-level emissions-intensity standards (performance standards) for electricity generators and large industrial emitters.
The Nova Scotia OBPS is mandatory for facilities with annual emissions equal to or more than 50,000 tCO2e. Other facilities under this threshold with annual emissions of ≥10,000 tCO2e/year have the option to voluntarily join the system. If not, they would be subject to the Canada federal fuel charge. Covered entities must surrender one compliance unit per tCO₂e that exceeds the facility’s annual facility-level emissions-intensity standards set by the Nova Scotia OBPS.
A facility can meet its compliance obligations by paying into the Nova Scotia Climate Change Fund to obtain fund credits, purchasing and remitting performance credits from other regulated facilities or using offset credits.
The price of the fund credits and of the performance credits follow the federal government’s backstop carbon price, which is CAD 80 (USD 59.26) in 2024, and will increase by CAD 15 (USD 11.11) annually until it reaches CAD 170 (USD 125.93) per tonne in 2030.
Pricing and allocation approaches
The scheme includes a price ceiling. To compensate for emissions exceeding the facility’s annual emissions limit, facilities can pay into the Nova Scotia Climate Change Fund to obtain fund credits. The price paid into the Fund acts as a price ceiling and is aligned with the federal minimum carbon price (CAD 65 [USD 48.15] in 2023). 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. Allocation is determined in relation to annual emissions limits based on facility-level emissions-intensity standards (performance standards) set by the Nova Scotia OBPS.
Emissions up until the benchmark do not require payment, with only the surplus triggering the compliance obligation. Entities that emit less than their emissions limit receive performance credits (compliance units) free of charge, corresponding to the number of tonnes of CO2e below the limit. This is similar to free allocation based on benchmarks. These performance credits can be banked as a way to meet future obligations, or they can be sold to other regulated entities that emit more than their emissions limits (see below for more details). The total amount of emission allowances is determined top-down and decreases annually.
Compliance Approaches
Point source (industry, power).
The compliance cycle is based on a four-year compliance period. Operators have to submit their emissions reports on an annual basis. Operators need to meet their compliance obligations by December 15 in the year after the compliance period ends. The use of offset credits is allowed to fulfil a facility’s compliance obligation. Regulations still need to be finalized.
Relation to other compliance CPIs
The Nova Scotia Cap-and-Trade program meets the federal carbon pricing requirements and the federal backstop is therefore not applied.
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
