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.
Continue Reading...

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.

Continue Reading...

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

Continue Reading...

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.

Continue Reading...

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. 
Continue Reading...

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.

Continue Reading...

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.

Continue Reading...

Federal Budget addresses the taxation of Emissions Allowances

Doug Richardson and Julie D’Avignon -

Prior to the federal budget of March 22, 2016 (Budget 2016), the tax treatment of emissions allowances was governed by general principles of income tax law.  Budget 2016 proposes to introduce a specific regime that applies to emissions allowances.

Pursuant to Budget 2016, emissions allowances will be treated as inventory.  However, due to the potential volatility in the value of such allowances, the allowances will not be subject to the “lower of cost or market” method for the valuation of inventory.  Any free allowances received by a regulated emitter will not be included in income.  The emitter will be entitled to a deduction for an accrued emissions obligation to the extent that the obligation exceeds the cost of any emissions allowances acquired by the emitter and used to settle the obligation.  If a deduction is claimed in respect of an emissions obligation that accrues in one year (for example, 2017) and that will be satisfied in a subsequent year (for example, 2018), the amount of the deduction will be brought back into income in the subsequent taxation year (2018) and the taxpayer will be required to evaluate the deductible obligation again each year, until it is ultimately satisfied.  The amount of the deduction will be equal to the cost of the emissions allowances acquired by the taxpayer and which can be used to settle the emissions obligation, plus the fair market value of any emissions allowances needed to full satisfy the obligation

Continue Reading...

Key Developments in Canadian public markets law for the oil and gas industry - Q4 2015

Chip Johnston and Andrew Beamer - 

The following is an overview of key developments in Canadian public markets law applicable to the oil and gas industry from October 1, 2015 to December 31, 2015.

Mergers and Acquisitions

  • In CB Gold, a target was subject to a hostile bid and subsequently agreed to a friendly deal which was combined with a placement of 4% of the target’s stock to the second bidder.  The BCSC cease-traded the pre-bid rights plan so as to allow for a 72 day bid period, but did not offer a view on the propriety of the placement.  The first bidder continues to acquire shares of the target.

  • In Canadian Oil Sands, a target was subject to a hostile bid and adopted a rights plan.  The ASC cease-traded the rights plan so as to allow for a 90-day bid period.  The bidder extended and then reached a friendly deal with the target and completed the acquisition of the target
Continue Reading...
View Archives / Tags