Canada not planning to renew Kyoto Protocol targets: update from Durban

Annie Pyke -

Canada is moving away from its historical positions on climate change at the 17th Conference of the Parties to the United Nations Framework Convention on Climate Change, currently being held in Durban, South Africa. Canada, which signed on to the original Kyoto protocol in 1997, has stated that it will not commit to any further emission reduction targets after the expiry of the first commitment period in 2012. The Kyoto protocol sets legally binding emissions cuts for most major economies but exempts developing nations, including China, India and Brazil, from such cuts. Japan and Russia have also indicated that they do not intend to commit to any further targets under the Kyoto protocol. The European Union, Australia and New Zealand continue to support the Kyoto protocol. Canada instead has chosen to endorse the 2009 Copenhagen accord, which would require commitments from all major emitting countries, not just developed nations. Although many countries have released targets, the Copenhagen accord has yet to become a binding treaty. Canada has also raised concerns over the planned $100-billion per year climate fund. The climate fund, which was agreed upon during last year’s climate change negotiations in Cancun, Mexico, is meant to help developing countries adapt to climate change, but the design of the fund has yet to be agreed upon. Canada’s positions are in line with those of the United States, which has refused to sign on to any binding emissions reductions that do not require the major emerging countries such as China, India and Brazil, to be required to reduce emissions.

Ontario Private Member's Bill seeks to amend Green Energy Act

Annie Pyke -

A bill introduced by Todd Smith, MPP for Prince Edward – Hastings, proposes amendments to the Green Energy Act, 2009 (the Act) to allow municipalities to regulate green energy projects through by-laws. The bill, which has been titled the Local Municipality Democracy Act, 2011, would amend the sections of the Act which make by-laws inoperative with respect to designated green energy activities and would provide that by-laws respecting “…health, safety and well-being of persons or respecting public assets of the municipality…” would continue to apply to designated green energy activities. Currently, municipalities participate in the planning process for green energy activities through the Renewable Energy Approval process, which requires municipal and local authority consultation. The bill received its first reading on November 28, 2011 and is expected to receive its second reading on December 1st, 2011. While private members' bills rarely become law in a majority government, the fact that Ontario currently has a minority government may increase the chances of success for private members' bills. 

Keystone XL rerouted to bypass Sandhills region

On Monday, TransCanada Corp. announced that it reached an agreement with the Nebraska state government to amend the route of the proposed Keystone XL pipeline to bypass the Sandhills region, an environmentally sensitive area that sits atop the heavily-utilized Ogallala Aquifer. As part of the agreement, the state will fund studies to evaluate alternative routes.

Today, the Nebraska state legislature will consider the proposed law that will direct the Nebraska Department of Environmental Quality to prepare a supplemental environmental impact statement for the Nebraska Governor.

This development follows last week’s U.S. State Department ruling that required TransCanada to examine new routes, as well as an earlier announcement by President Obama indicating that the decision whether to approve Keystone XL would be delayed until after the 2012 Presidential elections. A U.S. State Department spokesman indicated that any agreement between the state of Nebraska and TransCanada will not alter the review process undertaken by the federal agency.

Alberta Provincial Court issues creative sentence for water use violation

On October 31, 2011, the Alberta Provincial Court ordered an oilsands operator to fund an online training course in water diversion best practices that will be administered by the Canadian Association of Petroleum Producers (CAPP). Statoil Canada Ltd. plead guilty to the charge of breaching the terms of its temporary water licence by using water from unapproved sources, using unauthorized intake screens and under-reporting the volume of water diverted from a lake source.

The offences, which occurred from December 15, 2008 to May 29, 2009 near Conklin, Alberta, resulted in 19 charges that were reduced to one charge under a plea deal. The Provincial Court ordered a fine of $190,000, of which $5,000 will be paid outright and the remaining amount will be held in trust by CAPP to establish the industry training course.

This latest example in creative sentencing falls on the heels of the Alberta Provincial Court’s 2010 decision (discussed here) to issue a $3 million penalty against Syncrude Canada Ltd. to fund studies on bird deterrence and to restore migratory bird habitats.

Export License granted to Kitimat LNG Terminal

On October 13, 2011, the National Energy Board (NEB) granted Kitimat LNG a 20-year license to export liquefied natural gas (LNG) from British Columbia. Apache Canada Ltd., EOG Resources Canada Inc., and EnCana Corp. are the proponents of the $5 billion project that would provide Canadian producers access to markets where LNG prices trade at between 3 and 4 times North American natural gas prices.

The license will allow Kitimat LNG to export 10 million tonnes of LNG a year. Apache and EOG’s shares of this volume represent more gas than Apache currently has in established reserves, and over the 20-year term, will use up almost all of EOG’s current reserves. Concerns over gas shortages, and the effect on gas prices in North America were addressed by the NEB, stating that “the export of the proposed term volume is unlikely to cause Canadians difficulty in meeting their energy requirements at fair market prices.” In support of their statement, the NEB cited EnCana’s reserves, which are substantially greater than its export commitment, and the development of shale gas resources as sufficient gas sources to satisfy the increase in demand from the Asian market.

Australian carbon tax plan becomes law

Annie Pyke -

Further to our October 19, 2011 post, Australia’s carbon tax legislation was passed by the upper house Senate, officially making it the second major economy, after the European Union, to pass such legislation. New Zealand has a similar plan, while China and South Korea are currently working on trading programs and South Africa plans to put a limit on carbon emissions by top polluters. The legislation includes a fixed carbon tax of A$23 a tonne on the top 500 polluters from July 2012, with a move to an emissions trading scheme in July 2015, but provides that emission-intensive export industries will receive 94.5% of carbon permits for free during the initial three years. The $A23/price is almost double the current European cost of between $8.70 and $12.60/tonne. In an effort to spur clean energy investment, the legislation allocates A$13 billion in funding for renewable energy and low emissions projects. The Australian government is hoping that the passage of this legislation will help encourage the creation of a global agreement on emissions at the Conference of the Parties to the United Nations Framework Convention on Climate Change, to be held in Durban from November 28 – December 9, 2011.

Ontario Energy Board amends licence for new transmitter

Patrick Duffy -

The Ontario Energy Board has ordered that the transmitter licence for TransCanada Transmission (TCT) be amended to change the effective date to the earlier of: (i) the date on which TCT is designated as a developer of transmission assets in Ontario pursuant to a Board designation process: or (ii) the date on which TCT applies for approval to own and/or operate specific transmission facilities in Ontario.

The order is effectively a reversal of the Board’s earlier decision denying TCT an exemption to certain obligations under the Board’s Affiliate Relationships Code for Electricity Distributors and Transmitters (ARC). TCT was particularly concerned with a requirement in the ARC that prohibited it from sharing employees that have access to confidential customer information with other TransCanada affiliates. TCT argued that this requirement drove-up costs and was unnecessary as newly licenced transmitters do not yet have any customers in Ontario. 

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UK proposes lowering FIT rates

Matthew Cameron -

Announced the same day as the Ontario Power Authority’s review of the Ontario Feed-in Tariff program, the UK Department of Energy and Climate Change (DECC) announced the start of its review of its Feed-in Tariffs scheme (FITs) on October 31, 2011 by releasing a comprehensive review document and requesting responses in respect of its solar PV program.  The review is open for responses until December 23, 2011.

The review document proposes to reduce the prices offered to solar PV generating projects under 250kW commissioned after December 12, 2011 (projects between 250kW and 5MW will continue to be offered 8.5p/kWh, subject to adjustment per the Retail Price Index). Solar PV has led the FITs in terms of volume deployed and has had a substantial increase in the pipeline of potential FITs projects. That, coupled with the dropping cost of solar PV components and the rising cost of energy, has led to returns beyond the 5% originally envisaged which, in the DECC’s view, is not sustainable and thus requires a revised price.

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Ontario Government Announces FIT Review

On October 31, 2011, the Ontario Government announced its first review of the FIT program. The review, which will be led by Deputy Minister Fareed Amin, aims to tackle issues including price reduction, long-term sustainability, job creation, new technologies and local consultation.

Ontarians are invited to participate in the review during the consultation period from October 31, 2011 to December 14, 2011. The OPA will also be holding a webinar tomorrow, November 2, 2011 at 10 a.m. in order to provide additional information.

Any FIT contracts awarded subsequent to today’s announcement will be subject to the new rules and pricing schedule that result from the review. Existing contracts will not be affected. The OPA is offering to refund application fees for those who wish to withdraw their application as a result of today’s announcement.