Cap and Trade in Ontario - Avoiding the EU's Pitfalls

 P. Jason Kroft and Sam Dukesz - 

The European Union Emission Trading System (EU ETS) is the world’s largest cap and trade system, covering all countries in the European Union. It is also one of the world’s most troubled, as it has largely failed to live up the expectations of emissions reductions that it was initially touted to bring about. This blog post analyzes the impediments to the success of EU ETS, and then provides a forward-looking analysis of the applicability of those impediments to the proposed Ontario cap and trade program. 

A Snapshot of the EU ETS: Program Design and Implementation Problems

The EU ETS was initially implemented in phases, with a pilot Phase I from 2005-2007, followed by a Kyoto Phase II from 2008-2012 and a number of subsequent phases. The initial system covered approximately half of EU CO2 emissions across 31 EU countries. The system was limited to certain sectors, as many sectors, such as transportation, were exempted because of concerns about competitiveness with non-participating jurisdictions. 

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Welcome clarity for Quebec's oil and gas industry: the new Petroleum Resources Act is introduced

Erik Richer La Flèche -

Mindful not to repeat the mistakes of its predecessors, Premier Couillard’s government continues very deliberately to lay down a modern and comprehensive framework for hydrocarbon exploration and production in Quebec.

After many studies and considerable consultation, Energy and Natural Resources Minister Pierre Arcand tabled Bill 106 before the National Assembly on June 7, 2016. Bill 106 (An Act to implement the 2030 Energy Policy and to amend various legislative provisions) does three things:

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Six Months and Counting for Ontario Cap-and-Trade - Are You Ready?

A Mining Sector Primer

Canada is turning a new leaf on climate change and this will have a real impact on consumers and business. Ontario’s cap-and-trade program, expected to launch January 1, 2017, will require certain emitters to obtain allowances equal to their total emissions. There is some skepticism around this date. Regardless of when introduced, carbon pricing (placing a real cost on the emissions created by business and consumers) is a new reality for those operating in Ontario and elsewhere in Canada

What does this all mean for you?

  • The Ontario provincial government is beginning to implement a program to limit carbon and similar emissions by business.
  • Over time most businesses will need to consider the financial burden (and opportunity) presented by the cap-and-trade regime in Ontario (and similar regimes elsewhere in Canada).
  • The program begins with the largest emitters and gradually increases the scope to include most businesses in the Province with fewer exemptions and ultimately an increased cost.
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Over the First Hurdle and into the Sharks: The NEB Recommends Approval of the Trans Mountain Pipeline Expansion Project

Allison Sears - 

1.The NEB’s Findings

After reviewing tens of thousands of pages of evidence during a hearing process that had 1650 registered participants (400 of which had full intervenor status) and lasted 686 days (including two lengthy pauses in the legislatively mandated review timeframe),[1] the NEB has handed Kinder Morgan its first victory on the long road toward the twinning of its existing Trans Mountain pipeline system between Edmonton, AB and Burnaby, BC (the Project). In OH-001-2014,[2] the NEB recommended that the Cabinet approve the Project, which will nearly triple the system’s capacity to ship oil from 300,000 bpd to 890,000 bpd, as being in the national public interest subject to 157 conditions. In this regard, the Board placed “significant weight” on the economic benefits of the Project. Particularly, the considerable benefits to national and regional economies associated with providing producers with increased flexibility and optionality in getting their product to market, as well as with the jobs created across Canada. The Board also noted the considerable benefits to regional and local economies associated with significant spending on pipeline materials.

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Key Developments in Canadian Private Markets Law | Oil & Gas Focus - Q1 2016

Jennifer McPherson and Chip Johnston - 

The following is an overview of key developments in Canadian law and regulatory practice applicable to private M&A in the oil and gas industry from January 1 to March 31, 2016.

Oil & Gas Regulatory

The NEB approved, for the first time, a 40-year liquefied natural gas export licence for the Shell-led LNG Canada Development facility in Kitimat, British Columbia.

Alberta’s NDP announced a summary of a Modernized Royalty Framework it intends to implement. While important details have yet to be worked out, industry’s preliminary reaction has been positive

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Ontario's "Transformational" Climate Action Plan

Jason Kroft and Luke Sinclair -

As January 1, 2017, the day which marks “ground zero” for climate change reform in Ontario draws near, the provincial government is scrambling to put into place a structure of reforms and incentives that will support its sweeping climate change promises. As you’ll recall from our previous posts, Ontario’s goal is to have a live cap-and-trade plan as of January 1st, and the Province is expecting allowance auction revenues of upwards of $1.8 billion per year. In an effort to inspire confidence and relieve industry tension, the provincial cabinet leaked some details of their “transformational” Climate Action Plan, which contains a detailed strategy on how Ontario plans to achieve its future climate change goals.

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Energy East: Quebec's Gordian knot

 Erik Richer La Flèche - 

Energy East, when all is said and done, will serve as a fascinating case study for many decades to come. In the meantime, the project once publicly dubbed “pharaonic and utopic” by the CEO of a major energy corporation will continue to polarize Canadians. This division is nowhere more profound than in Quebec.

Quebec opposition to Energy East comes from every quarter and is concentrated along three axes:

  1. Canada and Quebec must fight climate change and prioritize de-carbonization. The pipeline will increase western Canadian oil production and related greenhouse gas emissions, thus making it more difficult for Canada to transition away from oil and meet its environmental objectives and international obligations.
  2. Pipeline accidents occur and big pipelines have big accidents. Energy East is projected to have a daily capacity of 1.1 million barrels, making it one of the largest pipelines in North America. Damage from spills will be amplified because Energy East is expected to cross more than 850 rivers and other bodies of water. An accident could therefore have serious consequences, including adversely affecting potable water sources.
  3. Quebec does not need the oil from Energy East. It is an export project that will produce little lasting economic benefit for Quebec and the 65 municipalities along the project’s path. 
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Cap in Hand - Are you ready for the Ontario Cap and Trade Regime?

P. Jason Kroft and Luke Sinclair - 

The Ontario government has introduced a carbon cap and trade regime expected to go live in January 2017. The cap and trade program will have real impacts for consumers and business. Click here to see a high level summary of the program with initial estimates of the costs. We are also available for consultation if you want to see how this program may impact your own business. We will continue to monitor the development of the program with practical insights for business.

"Pétrole social": What's That?

Erik Richer La Flèche - 

On April 7, 2016, Premier Philippe Couillard and four of his ministers unveiled Quebec’s 2030 Energy Policy. As discussed in our April 8 overview post, this initiative is a “green” policy that sets ambitious de-carbonization goals.

The last chapter of the Policy deals with fossil fuels (pages 57 to 62). Page 58 refers to “social oil”. What is social oil? A quick search of the internet does not show prior uses in French or English. The expression appears to be the work of a clever government wordsmith.

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Quebec releases its Energy Policy 2030

Erik Richer-La Flèche - 

On April 7, 2016, the Government of Quebec released its much-anticipated Energy Policy 2030 before 500 guests at Montreal’s Place des Arts.

Since its election on April 7, 2014, Premier Philippe Couillard’s Liberal government has issued a steady stream of economic and industrial policies that would put dirigiste France to shame. In the last 18 months, it has issued policies, strategies, guides and papers on a broad range of subjects. To name only a few, these include the Maritime Strategy, the Quebec Aluminium Development Strategy 2015-2025, the Strategic Vision for Mining Development in Quebec, the 2013-2020 Action Plan on Climate Change, the Plan Nord toward 2035, 2015-2020 Action Plan, and the Green Paper on Social Acceptability.

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