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Canada - New Brunswick Output-Based Pricing System

ETS Status
in force
Jurisdictions
New Brunswick
Start of operation (year)
2021
Sectoral coverage
Industry
Power
Allocation
Free Allocation
GHGs covered
CO2, CH4, N2O, SF6, HFCs, PFCs
Average secondary market price
CAD 65 (USD 48.15)

General Information

New Brunswick transitioned large industrial emitters from the federal output-based pricing system (OBPS) to a provincial OBPS from January 2021. It is an intensity-based ETS in which each covered entity must surrender compliance units for emissions that exceed the facility’s annual emissions limit. The annual emissions limits are based on emissions intensity benchmarks, which are derived from historical emissions data. The system applies to the same sectors and gases as the federal 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 125.93) per tCO2e in 2030.

In 2023, the government developed and implemented a New Brunswick OBPS Industry Fund, which returns proceeds collected from fund credit transactions to participants to support GHG emission reduction projects. All proceeds are allocated via a merit-based process.

The New Brunswick OBPS price rose to CAD 65 (USD 48.15) per tCO2e in 2023 and increased to CAD 80 (USD 59.26) per tCO2e in 2024, in line with the federal OBPS pricing trajectory.

Industry
Power

Emissions & Targets

11.9 MtCO2e (2021)

By 2030: 46% reduction below 2005 levels (New Brunswick’s Climate Change Action Plan)

By 2050: Net-zero emissions (New Brunswick’s Climate Change Action Plan)

CAD 65 (USD 48.15)

Size & Phases

6.20MtCO2e
CO2, CH4, N2O, SF6, HFCs, PFCs

The total emission limit under the New Brunswick OBPS is the sum of the annual emissions limits based on emissions intensity benchmarks for all individual covered entities. The limit is therefore not set ex-ante and is only known after the compliance period ends. 

SECTORS: Power and industry

INCLUSION THRESHOLDS: Coverage is mandatory for facilities with emissions exceeding 50,000 tCO2e/year. Smaller emitters (exceeding 10,000 tCO2e/year) may also be covered by the system, on an opt-in basis.

Point source (power, industry)

15 (2023), including voluntary opt-in market participants

Allowance Allocation & Revenue

Allocation is determined in relation to annual emissions limits based on emissions intensity benchmarks. Entities that emit less than their emissions limit receive compliance units, free of charge, corresponding to the number of tCO2e below the limit. This is similar to free allocation based on benchmarks. These compliance units can be sold to entities that emit more than their emissions limits (see below for more details). 

Benchmarks are calculated by applying a performance standard reduction factor to a facility-specific emissions intensity baseline. The baselines are calculated by averaging the total annual quantity of regulated emissions resulting from production during a reference period.

In 2023, the government developed and implemented a New Brunswick OBPS Industry Fund, as an additional stream of the New Brunswick Climate Change Fund, which returns proceeds collected from fund credit transactions to New Brunswick OBPS participants to support GHG emission reduction projects. All proceeds are allocated via a merit-based process.

Flexibility & Linking

Banking is allowed for performance credits for up to seven years.

Borrowing is not allowed.

The use of offset credits is not allowed as a compliance option in the initial years of the system. 

The New Brunswick OBPS is not linked with any other system. However, covered facilities can become eligible for certain exemptions from the Canada federal fuel charge. 

Compliance

One year.

REPORTING: GHG emissions reports must be submitted by the beginning of June of the year following the reporting period, and compliance reports are due by 15 December of the year following the compliance period.

VERIFICATION: Reports must be verified by an accredited verification team.

FRAMEWORK: The rules for reporting GHG emissions are outlined in New Brunswick’s “Reduction of Greenhouse Gas Emissions Regulation” and “Reporting and Reduction of Greenhouse Gas Emissions Standard”.

Covered entities that fail to fulfill a compliance obligation must pay the unfulfilled amount with interest at a rate set out in the New Brunswick Regulation 84-247 under the “Revenue Administration Act” (currently ~0.76% per month compounded monthly or 9.5% per year). All revenue from interest payments goes into the New Brunswick Climate Change Fund.

If a compliance credit is retired and later found to be invalid, the covered entity must fulfill the compliance obligation within 60 days of receiving notice of the invalid credit.

Administrative penalties are laid out in the Administrative Penalties Regulation Act (New Brunswick Regulation 2021-44 under the Climate Change Act). Administrative penalties are set at CAD 1,000 for first time violations, CAD 5,000 for second time violations, and CAD 10,000 for third and subsequent violations.

Market Regulation

MARKET PARTICIPATION: Compliance entities including mandatorily and voluntarily covered entities (for inclusion thresholds see ‘Sectors and Thresholds’ section.)

MARKET TYPES:

Primary: Compliance units are currently not auctioned. 

Secondary: Covered entities may purchase performance credits (compliance units) from other covered entities that have outperformed their compliance obligation. Transactions are conducted via a registry that is managed by the Minister of Environment and Climate Change.

INSTRUMENT NAME: Climate Change Fund (price ceiling)

Triggers: Covered entities can purchase and surrender credits from New Brunswick’s Climate Change Fund to compensate for emissions exceeding performance limits. 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 125.93) per tCO2e in 2030. A covered entity cannot obtain more fund credits than required to fulfill its compliance obligation for a compliance period.

Other Information

New Brunswick Department of Environment and Local Government: Responsible for reviewing and implementing the regulatory framework in New Brunswick.

New Brunswick Minister of Finance and Treasury Board: Oversees the Climate Change Fund and potential investments of its funds.

The Minister of Environment and Climate Change will undertake the revision of New Brunswick’s Climate Change Act every five years or at any shorter interval that the Minister considers appropriate.

Climate Change Act

Reduction of Greenhouse Gas Emissions Regulation (Regulation 2021-43 under the Climate Change Act)

Administrative Penalties Regulation (Regulation 2021-44 under the Climate Change Act)

Reporting and Reduction of Greenhouse Gas Emissions Standard

Performance Credit Standard

New Brunswick Regulation 84-247 under the Revenue Administration Act

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