Ontario EPS Program Update: New Exit Option Proposed for Voluntary Participants

  • Ontario EPS Program Update: New Exit Option Proposed for Voluntary Participants
Published On: June 24, 2025Categories: News & Events

Ontario’s Ministry of the Environment, Conservation and Parks (MECP) has recently proposed significant amendments to the province’s Emissions Performance Standards (EPS) program, offering voluntary participants a new opportunity to exit the program. The proposal, outlined in Environmental Registry posting ERO #025-0394, was announced on June 20, 2025, and is designed to provide flexibility and reduce administrative burden for smaller emitters in response to evolving federal carbon pricing policies.

Understanding Ontario’s EPS Program

Ontario’s EPS program, introduced in 2019, is a performance-based carbon pricing system specifically targeting large industrial emitters. Its primary objective is to encourage emissions reductions while maintaining economic competitiveness. Facilities that emit 50,000 tonnes of carbon dioxide equivalent (CO₂e) or more annually are mandatory participants, while facilities emitting between 10,000 and 50,000 tonnes CO₂e annually have the option to voluntarily participate. Historically, voluntary participation allowed smaller emitters to benefit from carbon market incentives and demonstrate proactive environmental leadership.

Details of the Proposed Amendments

The proposed changes by the MECP offer a structured exit option for eligible voluntary participants:

  • Eligibility Criteria: Facilities voluntarily participating in the EPS program, emitting between 10,000 and 50,000 tonnes CO₂e per year, may request an exit if they continue to meet the opt-in eligibility criteria at the time of the request.
  • Timing of Exit:
    • Requests submitted by December 31, 2025, will result in an exit effective April 1, 2025.
    • Requests made after December 31, 2025, will result in an exit effective December 31 of the year in which the request is approved.
  • Compliance Requirements: Facilities choosing to exit the EPS program must continue to fulfill all compliance obligations under the EPS until their effective exit date.
  • Re-entry Restriction: Once exited, facilities will not be permitted to voluntarily rejoin the EPS for a period of five years unless their emissions subsequently increase, requiring mandatory participation.
  • Expansion to include petroleum‑ and coal‑product manufacturing into mandatory EPS coverage.

Why is this Change Happening?

This regulatory adjustment coincides with a broader shift in Canadian federal carbon policy. The Government of Canada has announced the reduction of the federal fuel charge to zero starting April 1, 2025. This major policy shift substantially changes the financial implications and strategic incentives associated with participation in carbon pricing programs for smaller emitters.

With the consumer fuel charge dropping, many voluntary participants will likely reassess the cost-benefit balance of remaining in the Ontario EPS.

Broader Context and Historical Background

Since the introduction of the EPS in 2019, Ontario’s carbon pricing approach has evolved significantly, shaped by federal-provincial dynamics and industry feedback. Initially created to replace Ontario’s participation in the federal output-based pricing system (OBPS), the EPS has provided industry-specific performance standards.

Over the past several years, the EPS program has expanded and adapted, integrating more sectors and adjusting performance standards to encourage ongoing emissions reductions. The latest proposed amendment reflects the MECP’s recognition of the evolving needs of Ontario’s industrial sectors, especially smaller emitters who face disproportionate administrative burdens.

Next Steps and Stakeholder Feedback

The public consultation on the proposed amendments remains open until July 20, 2025. Stakeholders are encouraged to review the details carefully and provide comments. Industry feedback will play a crucial role in shaping the final form of these regulatory amendments.

How SCV Consulting Can Support Your Business

SCV Consulting specializes in carbon pricing, regulatory compliance, and strategic environmental management. Our expert team is available to assist your facility in evaluating these regulatory changes and identifying the most beneficial strategy for your specific circumstances. We can support you by:

  • Reviewing the proposed amendments for financial impacts to your business.
  • Modeling financial impacts and compliance obligations associated with exiting.
  • Developing strategic recommendations to navigate regulatory changes effectively.

Contact SCV Consulting today to discuss how your facility can strategically respond to these regulatory amendments and optimize your sustainability and compliance approach.