Climate Change, Carbon Pricing and Corporate Disclosure

Jason Kroft, Jonathan Drance and Luke Sinclair -

The Paris Accord proposes to regulate global carbon emissions and is premised on the belief that limiting the impact of climate change requires that the global average increase in temperature remain below 2°C, relative to pre-industrial levels. In Canada, the federal government has proposed to implement the Paris Accord principally through the pan-Canadian carbon price framework, which requires that each province implement its own carbon pricing regulations. These must be in place by January 1, 2018, with a mandatory minimum floor price of $10/tonne in 2018, rising to $50/tonne in 2022. As of January 1, 2017, each of Quebec, Ontario, Alberta and British Columbia have a carbon pricing regulatory framework in place, with the remaining provinces promising to follow suit prior to the January 1, 2018 federal deadline.

The proposed federal pricing will make Canada one of the highest carbon pricing jurisdictions globally. Still, doubt remains whether a carbon price of $50/tonne will be sufficient to allow Canada to meet its commitments under the Paris Accord and Canada is not alone in this regard. Many other countries could have difficulty implementing a carbon price sufficiently high enough to allow them to meet their commitments under the Paris Accord. All of this suggests that, absent a global shift in climate policy, we could well experience a steady increase in the price of carbon over the coming years. Suncor, for example, anticipates carbon prices will rise to $65/tonne by 2035.1

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The Relevance (and Likelihood) of Action on Carbon in a Post-Trump World

Jason Kroft, Jonathan Drance and Luke Sinclair -

The election of Donald Trump and his recent cabinet nominations of individuals who have been described in the mainstream U.S media climate skeptics, including Scott Pruitt (Environmental Protection Agency), Rick Perry (Department of Energy) and Rex Tillerson, the former CEO of ExxonMobil (Department of State), has many questioning the integrity of proposed domestic and international carbon pricing schemes. As a result of the election, the conversation has turned away from the recent momentum of post-Paris climate mandates, to the ramifications if the United Stated decides to abandon its climate commitments. In light of Trump’s inauguration as the 45th president of the United States, it is worthwhile to examine the outlook for carbon regulation and pricing in a post-Trump world. Many market analysts initially expect that the direction of the Trump administration on climate change will have potentially far-reaching implications. We will examine this topic and the sub-themes we identify below in follow-up blog pieces in the weeks ahead.

Federal Action and State Actors

In the United States, the federal government’s ability to influence climate change regulation is largely accomplished through the conduit of the EPA and the Clean Air Act. The new U.S. Federal government will certainly have an impact on the direction of the EPA and the administration and implementation of the Clean Air Act. Many of the obstacles that have prevented environmental regulation in the past (and which critics have cited as reasons for slow action at the federal level in the U.S. on climate change and similar matters) will work against reversing the regulation and regulatory landscape in place in the future. In a recent interview, Ms. McCarthy (the current head of the EPA under the Obama administration), stated that just as she had to provide a scientific foundation for her regulations to curb carbon dioxide emissions, the Trump administration would be required by the Clean Air Act to show that any attempt to tear up the regulations is supported by science. In other words, an onerous standard of proof can act as a double edged sword, one that makes change difficult in either direction.

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Determining the Effective Price of Carbon

Jonathan Drance, Jason Kroft and Luke Sinclair - 

Background to Canada’s National Carbon Policy

The recent federal plan for a national Canadian carbon price – rising to $50/+ CO2e by 2022 – has increased interest in carbon pricing policies and has highlighted the need to go beyond an initial headline number to determine the effective price of carbon. In light of a forthcoming national price on carbon, business, individuals and government must understand the “all-in costs” associated with carbon pricing in order to make sound strategic decisions. Our federal government should be mindful of the different ways in which a carbon price may impact the different regions of Canada and how different carbon levels may impact consumer and business behavior in different regions of Canada.

Ecofiscal Commission Report

Canada's Ecofiscal Commission has issued a timely report – which raises questions about the complexity, transparency and fungibility of carbon pricing policies. The Commission suggests looking beyond the headline number in order to determine the collective price imposed under a proposed carbon tax or a cap-and-trade emissions trading system (ETS).

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Pan-Canadian Carbon Plan

Jason Kroft, Jonathan Drance and Luke Sinclair - 

What does it mean for you 

As of January 2018, all Canadians will be paying a price for carbon.

The Announcement

After much anticipation, Justin Trudeau recently announced that Canada would implement a national price on carbon by 2018. The announcement was met with significant media fanfare and a touch of provincial dramatics, but a closer look reveals that Trudeau’s carbon plan may uncover more questions than answers.

The following will highlight what we know and, almost as importantly, what we don’t know about Trudeau’s Pan-Canadian Approach to Pricing Carbon Pollution (the Plan).

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Climate file update

Jason Kroft and Luke Sinclair - 

These continue to be busy times for those interested in the business and policy of carbon in Canada and elsewhere.  Below is a snapshot of some recent developments of note.

NY Climate Week

This week marks the eighth annual climate week in New York City and government officials, academics, industry representatives and other interested parties are meeting to discuss the global transition to a “low-carbon” economy. In the past, the rhetoric around climate change has often been muted. However, the recent ratification of the December, 2015 UN Paris Agreement on climate change matters by both the U.S. and China has brought climate change and in particular, the issue of carbon pricing, into the forefront of both government and industry discourse. The general acceptance of some type of carbon pricing scheme has transformed the key question from “will there be a price on carbon?” to “what will the price on carbon be?” This question of the level or quantum of carbon price will be a central item in the debates in Canada for the months and years to come.

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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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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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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.

Examining California, Quebec and Ontario's cap-and-trade systems

 Jason Kroft and Luke Sinclair

In this post we will more closely examine the details of Ontario’s recently announced draft cap-and-trade system in combination with its counterparts in California and Quebec. You will recall that last year we suggested that Ontario's system would follow closely in the footsteps of the existing cap-and-trade systems found within California and Quebec. The link to the May 2015 piece can be found here.

As a result of Ontario’s desire to join the Western Climate Initiative (WCI) and the benefits of a harmonized approach to the salient details of a cap-and-trade system that Ontario would introduce with the programs in Quebec and California, we suggested that any proposed cap-and-trade system must follow the detailed policy architecture of the WCI and accordingly, would mimic to a large extent the content, scope and design of the systems within Quebec and California. We further hypothesized that, based on existing public disclosure, the Ontario government had already effectively committed to joining the WCI and the recently released details of the proposed Ontario system have confirmed our predictions to be accurate. 

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Ontario's long awaited cap-and-trade plan

 Jason Kroft and Luke Sinclair - 

Yesterday, the provincial government released its 2016 Ontario Budget and with it came the details of their much anticipated cap-and-trade plan. The plan, which will be governed by the Climate Change Mitigation and Low Carbon Economy Act, will be linked to existing cap-and-trade systems in Quebec and California under the Western Climate Initiative. The provincial government anticipates that the cap-and-trade plan will cover a broad range of industries, which, in aggregate, account for nearly 82 per cent of the province’s total emissions. The plan is expected to generate proceeds in excess of $1.8 billion through the sale of carbon allowances and is intended to do most of the heavy lifting necessary to enable Ontario meet its greenhouse gas reduction target of 37% below 1990 levels by 2030.

Details of the cap-and-trade plan can be parceled into three primary sections: the plan itself; the cost of the plan; and investment of the proceeds.

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Canadian Carbon Politics Part Three: Canada after Paris

Jason Kroft, Allison Sears and Jonathan Drance[1]

The conclusion of the Paris conference, which has resulted in what has been described as the world’s first comprehensive climate agreement ( referred to often as the Paris Agreement) arguably marks the beginning of a global concerted action against climate change. International delegates from around 195 countries officially signed off on an agreement with an aim to keep the worldwide temperature increase well under the 2 degree Celsius threshold, surmised by some as a key limit necessary to avert disaster. The Paris Agreement also contains language which encourages member states to “pursue efforts” to limit the temperature increase to below 1.5 degrees Celsius, which has received support from scientists as the goal necessary to reduce many of the risks associated with climate change.

While the Paris Agreement contains no specific emission commitments, automatic sanctions or regulatory mechanisms to enforce compliance, it does require state parties to develop, file and adhere to their own emission schemes, which are defined in the Agreement as “Nationally Determined Contributions” or NDCs. Critics warn that the ambitious goals contained in the Agreement do not properly correlate with the individual NDCs made by each of the participating states, which, if left unaltered, would result in a global temperature increase well above the two degree limit. 

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Canadian carbon politics redux: climate change following a Liberal majority win

P. Jason Kroft, Allison Sears and Jonathan Drance - 

On October 7th we provided you with a snapshot of the campaigns of each of Canada’s Federal political parties and each of their respective carbon policies.  With the election of a Liberal majority, everyone seems to be asking the question, where do we go from here on the climate change front?

Recall that, during the campaign, the Liberals proposed a “medicare” style approach to combating carbon emissions, which allows the provinces to design their own emissions platform within the confines of a national target and Federal oversight. The Liberals coined this plan as not too hot, not too cold, but just-right, striking an appropriate balance between the economic diversity inherent across the provinces and Canada’s need to take a tougher stance on emissions. With Prime Minister Trudeau currently enjoying wide support during his post-election honeymoon period and the Paris climate change conference on the horizon, it appears that the Liberal government is employing an “all hands on deck” strategy in an effort to develop some consensus as to strategy and broad principles prior to the meetings in Paris. Certainly, there is an appearance of cohesion, at least outwardly, among the provinces and the Federal government as we approach the Paris conference. For businesses in Canada, it is important to anticipate where the Federal emissions target will be set and to begin to consider the effect such a target may have on the individual Canadian provinces.

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Alberta Announces new Climate Change Policy

 Allison Sears - 

On a sleepy Sunday afternoon (yesterday, that is), Premier Notley unveiled her new Climate Leadership Plan for Alberta. In addition to making available the full report of her Climate Change Advisory Panel (Climate Leadership – Report to Minister), Premier Notley outlined four policies that will be implemented to reduce greenhouse gas emissions in Alberta:

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Federal Election 2015:The Campaigns and Canadian Carbon Politics

P. Jason Kroft and Luke Sinclair

As election mania heats up in Canada, it is becoming increasingly important to analyze and contrast how the three front-running parties, the Conservatives, the Liberals and the NDP, intend to deal with key electoral issues. Two of such issues involve the economy and the environment, of which energy, and specifically carbon emissions, make up a fundamental piece. In response, each party has released its own platform aimed at tackling carbon emissions in an effort to fight climate change. When questioned, each party gives the impression that its own policy represents the best balance between economic stability and curbing emissions and to vote for any other platform would ensure economic collapse on one end, or environmental destruction on the other. However, a closer look at each policy actually reveals more similarities than differences. Obviously, more useful and relevant than campaign policies and promises will be examining what the successful party (assuming a majority government) or parties (in the event of a minority coalition) implement after the election is complete. We will return to this topic after the election to examine where policies and promises diverge in practice.

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Changes to the regulation of greenhouse gas emissions in Alberta: the Government of Alberta announces first step in new climate change strategy

Allison M. Sears

An end to Alberta’s stigmatizing inertia on climate change policy was announced yesterday.  The new Minister of Environment and Parks, Shannon Phillips, announced that the Specified Gas Emitters Regulation (SGER) will be renewed for a period of two years with significant amendments she described as “interim measures” until such time as an advisory panel chaired by Dr. Andrew Leach, a professor at the University of Alberta, can undertake a comprehensive review of the province’s climate change policy and provide advice on a permanent set of measures. The review is intended to include broad consultation with the public, industry, First Nations, academia, and government, but must be concluded within three months as Premier Notley has indicated that she wants the report in hand in time for the Government to act upon it and make a further policy announcement prior to the meeting of the Conference of the Parties to the UN Framework Convention on Climate Change in Paris in December 2015.

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Examining California and Quebec's cap-and-trade systems

P. Jason Kroft and Jonathan Drance -

In our latest blog piece covering Ontario’s planned adoption of a cap-and-trade system that will be linked with the existing systems in Quebec and California, we described some of the major recent developments in Ontario and the United States to help put the province’s cap-and-trade efforts in context. These developments include: the successful implementation of legislation and market mechanisms to curb sulfur dioxide and nitrogen oxide emissions in the 1990s and early 2000s, the development of the Western Climate Initiative, the signing of a Memorandum of Understanding with respect to a provincial and territorial cap-and-trade initiative between Ontario and Quebec, and the introduction of enabling cap-and-trade legislation in Ontario. In this piece, we illustrate the key elements of Quebec and California’s linked cap-and-trade regime with a view towards anticipating how Ontario may choose to design its system over the coming months.

While the content, scope and design of Ontario’s cap-and-trade system has yet to be determined, there is already a significant congruence between the California and Quebec regimes. For example, both systems cover the same greenhouse gases and sectors, set the same emissions thresholds and have virtually identical allocation methods. Several other similarities are also evident when comparing Quebec’s relative population size and gross regional product to those of California (21% and 16%, respectively). For example, Quebec’s Allowance Budget, Maximum Emissions Covered, Emissions Target and Offset Use Limit (as illustrated in the table below) are all between 15% and 16% of California’s, closely mirroring their differences in population size and economic activity. On this basis, with a population of 13.6 million (35% of California) and a gross regional product of US $570 billion (30% of California), Ontario’s cap-and-trade system may well yield similar relative results. Naturally, however, other factors will come into play as Ontario implements cap-and-trade, and we will follow these developments closely.

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Ontario's cap-and-trade system in context

P. Jason Kroft and Tamir Birk -

As we recently discussed here, on April 13, 2015, Ontario Premier Kathleen Wynne formally announced plans to create a cap-and-trade system for greenhouse gas emissions in Ontario, to be linked with the systems already in place in Quebec and California. This is not the first time Ontario’s government has announced intentions to implement cap-and-trade in the province; prior efforts have lacked the political will and determination to bring cap-and-trade to fruition. In this blog post, we highlight some of the major recent cap-and-trade developments in Ontario and the U.S. to help put the re-launching of the province’s cap-and-trade efforts in context.

The Acid Rain Program (ARP), established under Title IV of the 1990 Clean Air Act (CAA) Amendments, was the first federal U.S. law to adopt an emission trading system on a large scale and was a precursor to a similar regime that was established in Ontario shortly thereafter. The ARP was a market-based initiative taken by the United States Environmental Protection Agency (EPA) beginning in 1995 to reduce atmospheric levels of sulfur dioxide (SOx) and nitrogen oxide (NOx), the primary precursors of acid rain, from the power sector. The program set a permanent cap on the total amount of SOx that may be emitted by electric power plants in the country, with allowances being bought and sold in secondary markets. Reductions in NOx emissions were also required and were mainly achieved through retrofits to coal-fired plants. The program was largely hailed as a success, significantly reducing SOx and NOx emissions in the U.S. In Ontario, the first air emissions trading program was introduced in 2001. The program includes the Emissions Trading Code, which was intended to supplement Ontario Regulation 397/01, which governs emissions trading under the Ontario Environmental Protection Act. The program introduced the use of a market-based system for reducing emissions of NOx and SOx in the province.

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Premier Kathleen Wynne officially announces Ontario cap-and-trade regime

P. Jason Kroft and Tamir Birk -

As anticipated, Ontario Premier Kathleen Wynne formally announced plans Monday morning to join Quebec and California in building a cap-and-trade system for greenhouse gas emissions. Calling climate change “one of the greatest challenges mankind has faced”, Ontario will soon impose sector-specific limits on emissions. Once the details are finalized over the next six months, the Province will sell or auction permits to companies that represent the right to emit a stated volume of pollution. Companies that pollute more than their limit must purchase permits from other companies that plan to emit less. As such, proponents of cap-and-trade argue that market forces incentivize businesses to adopt cleaner and more efficient practices. “The action we take today will help secure a healthier environment, a more competitive economy and a better future for our children and grandchildren,” Wynne said.

Opponents of the system argue that cap-and-trade is simply a carbon tax by another name. Increasing costs to businesses, they argue, will invariably lead to consumers paying more for a wide variety of goods and services. The University of California Berkeley, for example, estimates that cap-and-trade will add 2.6 cents per litre to the price of gasoline in Ontario.

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Ontario to implement cap-and-trade system

P. Jason Kroft and Tamir Birk -

As recently reported to the Globe and Mail newspaper by government sources, Ontario Premier Kathleen Wynne is preparing to implement a cap-and-trade system for greenhouse gas emissions as part of the Province’s strategy to combat climate change. The initiative would be tied to Quebec and California’s existing cap-and-trade system, which held its first joint auction of greenhouse gas allowances in December, 2014, and its second in March, 2015. An official announcement is expected by Ontario Environment Minister Glen Murray in the near future, with further details to come later this spring and summer.

Under a cap-and-trade system, Ontario would limit the amount of carbon that can be emitted by certain businesses and raise money by selling or auctioning emissions permits that represent the right to emit a specific volume of carbon. Permits are then traded on secondary markets. Companies that wish or need to emit more carbon than the regulated cap or than the permits they then hold must purchase permits from other companies that plan to emit less than the limit. Proponents of a cap-and-trade system will note that forward looking businesses can adopt cleaner or more efficient energy uses and thus profit under a cap-and-trade system by holding excess emissions permits that are available for sale. Under the current joint Quebec-California program, companies are able to trade carbon allowances across jurisdictions to comply with local greenhouse gas emission limits. A Quebec company, for example, could purchase allowances from a certified greenhouse gas emissions reduction project in California in order to comply with its own Quebec provincial targets, and vice versa. Initial estimates indicate that a cap-and-trade system in Ontario could raise between $1 billion and $2 billion per year which would then likely be invested in green programs.

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Ontario appoints John Godfrey as special advisor for climate change, creates climate action group

P. Jason Kroft and Tamir Birk -

On March 9, 2015, former Liberal MP John Godfrey was appointed special advisor to the Ontario government on climate change and chair of the government’s new climate action group. Godfrey’s role will include providing strategic advice and recommendations to Glen Murray, Minister of the Environment and Climate Change, to help Ontario meet its greenhouse gas emission targets and transition to a prosperous, low-carbon economy. 

As discussed here, Ontario is currently in the midst of a 45-day public review and comment period on climate change, following the government’s release of its climate change discussion paper. The paper, which identifies the risks and challenges associated with climate change in Ontario, and the public comment period will help inform the government’s decision on its climate change strategy, as it weighs which carbon pricing mechanism to adopt in the province. Currently, Quebec utilizes a cap-and-trade system while British Columbia has a carbon tax.

Ontario releases climate change discussion paper

P. Jason Kroft and Tamir Birk -

On February 12, 2015, the Ministry of the Environment and Climate Change released Ontario’s Climate Change Discussion Paper (the Paper), which identifies the risks and challenges associated with climate change and the threat it poses to Ontario. The Paper also outlines Ontario’s long-term visions for reducing greenhouse gas emissions, most notably by establishing a carbon pricing policy in Ontario. “A well-designed carbon pricing system is the most cost-effective approach to reducing greenhouse gas emissions,” the Paper states. “Carbon pricing reduces greenhouse gas emissions as businesses and households incorporate the cost of emitting carbon into their decisions, encouraging companies and consumers to move away from fossil fuels and towards cleaner and more efficient ways of going about their business.” The Paper outlines four approaches to carbon pricing:

  1. A Cap-and-Trade System, which places a cap, divided into permits, on the amount of greenhouse gases that can be emitted in a given period. Emitters must acquire enough permits to match their emissions, and those that have reduced emissions can sell extra permits to those that require more. The auctioning and trading of permits establishes a carbon price, which fluctuates over time.
  2. A Baseline and Credit System,where a baseline intensity is determined for each emitter, which is then required to improve its efficiency by a set amount (i.e. reducing greenhouse gas emissions by 10% per barrel of oil produced). Emitters that overachieve can obtain credits that can be sold to other businesses that exceed their limits.
  3. A Carbon Tax, where a charge is applied to each unit of greenhouse gas emitted.
  4. Regulations and Performance Standards, requiring businesses to meet standards or targets or to use specific technologies to reduce greenhouse gas emissions.
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Quebec and California hold first joint auction of greenhouse gas allowances

P. Jason Kroft and Tamir Birk -

On November 25, 2014, the California Air Resources Board and Quebec’s Ministry of Sustainable Development, Environment and the Fight against Climate Change held the first joint auction of greenhouse gas allowances since the two governments linked carbon markets on January 1, 2014 (the Auction). The joint Quebec-California program allows companies to trade carbon allowances across jurisdictions to comply with greenhouse gas emission limits. For example, a Quebec company could purchase allowances from a certified greenhouse gas emissions reduction project in California to comply with provincial targets, and vice versa. Supporters of the program expect the linkage will improve trade liquidity in both markets.

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U.S. and China reach historic deal

P. Jason Kroft and Tamir Birk -

On November 11, 2014, U.S. President Barack Obama and Chinese President Xi Jinping announced an ambitious plan to reduce greenhouse gas emissions (the Plan). In what is being touted as a significant step forward in the fight against climate change, the U.S. will aim to reduce its emissions by 26%-28% below its 2005 levels by 2025. China will use its best efforts to achieve peaking carbon dioxide emissions by 2030 or earlier, and will aim to increase its share of non-fossil fuel energy generation to around 20% through clean energy investment in sources like solar and wind. To do so will require the deployment of 800-1,000 gigawatts of clean energy, nearly equal to the entire electricity generation capacity of the U.S.

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Saskatchewan unveils world's first commercial-scale carbon capture & storage project

P. Jason Kroft and Tamir Birk -

On October 2, 2014, SaskPower unveiled the world’s first commercial-scale carbon capture & storage (CCS) project at its Saskatchewan Boundary Dam facility. The project is expected to reduce emissions by one million tonnes of CO2 per year, the equivalent of taking 250,000 cars off the road. Some of the carbon released by the plant will be liquefied and sold to oil companies to help extract more crude from the ground (known as enhanced oil recovery), while captured sulphur dioxide will be sold for industrial use. The remaining CO2 will be injected through a steel pipeline more than 3km underground where it is to be stored permanently. Of the $1.4 billion spent to retrofit the Boundary Dam facility, the federal government provided $240 million.

Proponents of carbon capture and storage cite the approximate 7,000 coal-fired turbines worldwide that provide much of the planet with reliable electricity. Since world electricity demand requires these facilities to operate well into the foreseeable future, investments in CCS technology can significantly help reduce the harmful impacts they have on the environment. Ian Yeates, Vice President – Carbon Capture & Storage Initiatives at SaskPower, for example, stated that “we are going to be burning fossil fuels as a world economy for many many decades if not a century or two as energy demands grow…[and as such] something like carbon capture and sequestration will be of value to deal with that.” Undoubtedly, CCS technology has the potential to help governments and project managers meet increasingly burdensome regulatory environments and developing climate change legislation. Yeates and others believe that the unveiling of the CCS project at the Boundary Dam facility may pave the way for others around the world to explore CCS technology and implement it into their operations. Indeed, strengthening environmental regulations and rising carbon prices will help justify steep investments in CCS technology.

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Ontario to Become First Government in Canada to Issue "Green Bonds"

P. Jason Kroft and Tamir Birk -

In just a few weeks, Ontario is expected to become the first government in Canada to issue “green bonds” (also known as climate bonds), a new and burgeoning type of security that raises capital to finance projects that help fight climate change or protect the environment. The offering, expected to be up to $500 million in size, will help fund the Eglinton Crosstown LRT in Toronto and will be initially aimed at institutional investors. According to a Government of Ontario news release, “Green bonds will help Ontario finance transit and other environmentally-friendly infrastructure projects across the province, supporting job creation and strengthening the economy.” As such, Ontario green bonds will be reserved for projects that lower carbon footprints and enhance environmental conditions.

The Government of Ontario is relying on investors to buy the bonds out of a desire to curb climate change and help the environment. According to Ontario Minister of Finance Charles Sousa, there is pent-up demand among investors for green bonds and sustainable investment opportunities, which will enable his government to pay lower interest rates as compared to other types of bonds. Green bonds also provide a diversification opportunity for investors, by providing them with exposure to renewable and green infrastructure projects. Indeed, the world market for environmentally friendly bonds is growing at a rapid pace, with approximately $40-50 billion worth of green bonds expected to be sold in 2014, up from $11 billion in 2013 and $3 billion in 2012. Some analysts predict those numbers could jump north of $100 billion in 2015.

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Glenn Murray to lead new Ministry of the Environment and Climate Change

P. Jason Kroft and Tamir Birk -

In announcing her new cabinet on June 24, Ontario Premier Kathleen Wynne appointed Glen Murray as Minister of the renamed Ministry of the Environment and Climate Change (formerly the Ministry of the Environment). According to Wynne, the expanded portfolio “will ensure Ontario can protect the gains it has made in fighting climate change, lead Ontario's mitigation and adaptation efforts to extreme weather and strengthen its position as a leader in clean technology.” Murray will leave his previous post as Transportation Minister and replace Jim Bradley, Ontario’s longest serving member of the legislature.

Ontario’s emphasis on reducing greenhouse gas emissions is nothing new. The province recently shut down the Thunder Bay coal-generating plant, for example, becoming the first jurisdiction in North America to eliminate coal as a source of electricity. However, Murray’s appointment and the revamped Ministry elevates the climate change issue to the cabinet level for the first time, reflecting the province’s increasing recognition of climate change as a central challenge.

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Obama's Climate Change Policy Presented

P. Jason Kroft and J.B. Elliott -

During President Obama’s State of the Union address on January 28th, he made his intentions clear that he would use his authority to continue to push forward new standards and regulations that would curb the amount carbon pollution US power plants are allowed to dump into the air. Further still, Obama stated that the United States must “act with more urgency” citing continuing climate changes which have seen droughts and floods affect North American cities in recent years.  Canadians must watch these developments for potential implications for business.

In furtherance of these positions, Obama has directed the EPA to issue a draft of a regulation that would set new national standards for carbon pollution by June 1st of this year. It appears the brunt of these changes will target coal-fired power plants, likely forcing hundreds of plant closures throughout the country, and, as such, coal-heavy states have lobbied the EPA extensively with respect to the stringency of the standards to be set in the impending regulation.

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Initiative for Sustainable Forest Landscapes emerges from UN climate talks

J.B. Elliott and Michael Nilevsky -

The United Nations recently held climate change talks in Warsaw, Poland which resulted in a $280 Million forests initiative being launched by the UK, the US and Norway. The plan, known as the Initiative for Sustainable Forest Landscapes, is to be managed by the BioCarbon Fund, a public-private sector program housed within the Carbon Finance Unit of the World Bank, and is primarily aimed at providing further funding to the Reducing Emissions from Deforestation and Degradation plus pro-forest activities (REDD+) program.

The REDD+ program is an effort to create a financial value for the carbon stored in forests and is designed to help developing countries reduce emissions from deforestation and invest in low-carbon paths to sustainable development through financial incentives provided by developed countries. Further, the initiative is designed to work with the private sector to promote the sustainable use of forest products and has received support from industry participants such as Unilever, Mondelez and Bunge.

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Action Partners Climate Change Event

Stikeman Elliott LLP is pleased to be a lead sponsor at the Action Partners climate change event presented by Rethink Sustainability. The event being held at MaRS Discovery Centre in Toronto on November 20, 2013 is a meeting of senior industry leaders, entrepreneurs and sustainability and innovation experts addressing key sustainability challenges facing our world, with a focus on reducing carbon emissions and strengthening the resilience and future readiness of business, buildings and cities. For more information about the event, click here or speak to Jason Kroft or another member of our National Emissions Trading and Climate Change practice group.

Hyperloop: the solar powered mass transit solution of the future?

P. Jason Kroft and Tamir Birk -

On August 12, 2013, Elon Musk, CEO of Tesla Motors and SpaceX, unveiled his much-anticipated preliminary design for a “Hyperloop” system that he hopes will revolutionize mass transit and significantly reduce transportation-related carbon emissions. As Mr. Musk explains, existing conventional modes of mass transit between cities consist of three main types, each with its own pro and con matrix:

  1. Rail – expensive, slow, often environmentally sound
  2. Road – inexpensive, slow, not environmentally sound
  3. Air – expensive, fast, not environmentally sound

Instead, Mr. Musk is proposing a new mode of transport that combines the benefits of rail, road, and air without any of their negative aspects. With its inspiration derived from pneumatic tubes used to send mail and packages within and between buildings, the Hyperloop would transport people and cargo between cities inside low-pressurized tubes travelling at speeds in excess of 1,000 kilometers per hour. The tubes would be elevated on columns and run between high traffic city pairs that are less than 1,500 kilometers apart. This would make travelling between cities like Los Angeles and San Francisco possible in about 30 minutes. Most notably, the Hyperloop system is emissions-free as it would draw 100% of its required energy from solar panels mounted across portions of the tube.

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President Obama unveils much anticipated climate change plan

P. Jason Kroft, Jonathan Drance and Tamir Birk -

On June 25, in a much anticipated speech at Georgetown University, U.S. President Obama unveiled The President’s Climate Action Plan, a comprehensive strategy to reduce greenhouse gas emissions and prepare for the impacts of global warming. Frustrated by partisan gridlocks in Congress, Obama is using his executive powers to advance the policy landscape on climate change.

This blog post aims to highlight some of the salient aspects of the Plan. We will publish further posts on this topic as the Plan develops in the coming months.

The Plan rests on three key pillars: cutting carbon pollution, preparing the U.S. for the impacts of global warming and leading international efforts to combat climate change.

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U.S. Government increases the social cost of carbon emissions

P. Jason Kroft, Jeff Hershenfield and Tamir Birk -

In May 2013, the United States government significantly altered a key economic measure used to assess the damage caused by carbon emissions and the benefit of carbon reduction, increasing the “social cost of carbon” (the SCC) by over 60% from U.S.$22 to U.S.$36 per tonne of CO2. This figure is meant to approximate externalities, such as property damage from extreme weather or changes to agricultural productivity and human health, associated with carbon emissions and global warming. In fact, the Sustainable Energy and Environment Coalition of the House of Representatives suggests that extreme weather events stemming from climate change in 2011 and 2012 cost U.S. taxpayers approximately U.S.$136 billion, or U.S.$1,610 per taxpayer.

The change reflects updated scientific and economic models of climate change and it is expected that it will have a large impact on the cost-benefit analysis of government action. Government policies or projects that lead to cuts in carbon emissions will appear more valuable, while those that lead to more carbon pollution will seem more costly. For example, the U.S. government states that recent changes to microwave efficiency standards are expected to generate total net benefits of U.S.$4.6 billion using the new SCC measure, compared to U.S.$4.2 billion using the previous figure. Even more significant is the way in which the new SCC value will impact proposed fossil fuel infrastructure projects.

Canada’s approach is largely consistent with that of the United States. Environment Canada uses an SCC value of Cdn.$28.44 per tonne of CO2 when conducting regulatory impact analysis or project reviews and is reported to be in the midst of an evaluation of this figure given the change south of the border. As such, industry participants on both sides of the border should carefully consider the impact of these changes on proposed projects.

Federal Environment Minister Expects New Oil and Gas Regulations by Mid-Year

On March 5, 2013, Environment Minister Peter Kent announced that environmental regulations for Canada’s oil and gas sector are in their final stages of development. The new regulations are intended to reduce greenhouse gas emissions in the oil and gas industry. The intention to regulate greenhouse gas emissions was first announced by the Federal government in 2008 with the new regulations to take effect in 2010; however, the regulations were never finalized. According to the Environment Minister, the new regulations will seek to reduce greenhouse gas emission from the oil and gas industry in order to help meet a 2020 target for a 17 per cent reduction in overall emissions from 2005 levels. The new regulations for the oil and gas industry are in addition to recently implemented regulations for the transportation and coal-fired electricity sectors.

Ontario to implement carbon reduction program

P. Jason Kroft and Andrew Sullivan -

Ontario’s Ministry of Environment (MOE) has released a discussion paper to support a dialogue on the elements of a potential Provincial greenhouse gas (GHG) reduction program (the Program). Greenhouse Gas Emissions Reductions in Ontario: A Discussion Paper (the Paper) considers, among other things, the following aspects of the Program: principles and goals for development; potential elements; scope; emissions reduction targets; certain compliance options; and public consultation.

Since 2009, the MOE has been collecting data on GHG emissions from large emitters. The Paper makes it clear that, moving forward, the MOE intends on implementing the Program with the intent to reduce GHG emissions. However, it is unclear, at this point, the exact form the Program will take. What is clear is that the public and stakeholders will be consulted with any further design of the Program.

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California's inaugural cap-and-trade auction declared a success

Andrew Sullivan -

On November 14, 2012, the California Air Resources Board (ARB) held its first auction for the purchase and sale of carbon allowances for its nascent cap-and-trade regime. ARB chairwoman, Mary Nichols, declared the auction a success. For a number of reasons, there is good cause to agree with her. First, a tonne of carbon for the 2013 vintage year sold for $10.09. That’s slightly above the $10.00 price floor set by the ARB. The highest bid was a whopping $91.13. Second, there were three times the number of bidders at the auction than actual buyers, indicating a healthy and competitive market. Additionally, 97% of allowances were purchased by entities required to participate in the regime indicating prices were not influenced by speculative buyers. Rather, it seems to indicate regulated entities are looking to retire allowances in anticipation of compliance. Finally and most importantly, the auction sold out. All 23,126,110 2013 vintage year allowances were purchased, raising approximately $233 million. The kickoff of this auction creates the largest carbon market in North American and the second largest in the world, behind only the European Union Emissions Trading Scheme.

As we have noted on this blog before, California is acknowledged as a leader in climate change initiatives. Undoubtedly, Canadian environmental regulators will look to California’s cap and trade model with great interest. This is particularly true of Canadian provinces that are partners with California in the Western Climate Initiative (WCI): British Columbia, Manitoba, Ontario, and Quebec. The WCI is a partnership between California and the aforementioned provinces to implement a joint strategy to reduce greenhouse gases. The success or failure of California’s cap and trade scheme is likely to influence any Canadian WCI member’s willingness to adopt a similar scheme.

Federal government introduces regulations to progressively phase-out coal plants

Andrew Sullivan -

On September 5th, the federal environment minister announced final regulations designed to reduce emissions from coal-fired electricity facilities. The objective of the Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity Regulations is to phase out high-emitting coal-fired generation and promote a transition towards lower or non-emitting types of generation.

The regulations will set performance standards for new coal-fired units and those that have reached the end of their useful life. Under the regulations, new units are those that start producing electricity on or after July 1, 2015. Units at the end of their useful life are those that have produced electricity for 50 years. Transitional rules apply to plants built before 1986. Performance standards will come into effect on July 1, 2015. However, regulated entities will be required to begin reporting emission levels two years in advance of that date.

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Australia and EU agree to integrate carbon trading scheme

Andrew Sullivan -

On August 28th, Australia and the European Union agreed to fully integrate their respective cap and trade schemes by 2018. Also, Australia has decided to drop its planned A$15 per tonne carbon credit floor price. The combined effect is that cheaper EU carbon credits will be available for Australian emitters. Under the integrated scheme, Australian business will be able to source 50% of their carbon liabilities from the EU, starting 2015. A similar allowance will be available for European emitters by 2018. 

This is a welcome announcement for the EU trading scheme. Problems with oversupply have driven the cost of carbon credits to record lows. Currently, EU carbon trades at around US$10 per tonne. Opening the market to Australian demand should alleviate this oversupply. With a carbon tax fixed at A$23 per tonne, Australian emitters are welcoming the integration which will offer them a cheaper alternative to the relatively high tax. However, the Australian government is standing by its projections that carbon prices will reach A$29 per tonne by 2015 and 2016. 

This formation of an international carbon trading bloc is of interest to other jurisdictions considering a carbon trading scheme, including Canada. If successful, it could serve as the model for other nascent international and regional cap and trade blocs, such as the Western Climate Initiative between California, BC, Manitoba, Ontario and Quebec.

California to run trial cap and trade auction

Andrew Sullivan-

On August 30th, the California Air Resources Board (the Board) is holding a trial auction for the purchase and sale of carbon permits in what will be North America’s first full-scale carbon market. This will give the Board and about 150 market participants an opportunity to become acquainted with the electronic trading platform before the first real auction, scheduled November 14.

California is acknowledged as a leader in climate change initiatives. Undoubtedly, Canadian environmental regulators will look to California’s cap and trade model with great interest. This is particularly true of Canadian provinces that are partners with California in the Western Climate Initiative (WCI): British Columbia, Manitoba, Ontario, and Quebec. The WCI is a partnership between California and the aforementioned provinces to implement a joint strategy to reduce greenhouse gases. The success or failure of California’s cap and trade scheme is likely to influence any Canadian WCI member’s willingness to adopt a similar scheme.

CRA denies tax deduction for Alberta Climate Change Fund Payments

Doug Richardson and Julie D’Avignon -

As emissions and cap-and-trade regimes develop, the tax issues relating to such regimes evolve and receive further consideration. One aspect of Alberta’s emission reduction regime is the Climate Change and Emissions Management Fund (the Fund). A greenhouse gas emitter that is subject to Alberta’s provincial emission reduction target may pay $15 per tonne into the Fund to the extent its emissions are in excess of the emissions target set by Alberta’s regime. The money collected by the Fund is intended to be invested into projects, initiatives and technologies relating to reducing emissions.

One of the tax issues relating to this type of regime is the nature of contributions to the Fund for tax purposes, and in particular whether the contributions are deductible for tax purposes. 

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Quebec 2013-2020 Climate Change Action Plan & Draft Amendments to Quebec GHG Regulations

Myriam Fortin -

On June 3, 2012, Quebec unveiled its “2013-2020 Climate Change Action Plan and the accompanying “Government Strategy for Climate Change Adaptation.

The new action plan and strategy intend for nearly $2.7 billion to be invested towards the government’s climate change goals. Revenues to implement the plan, which is intended to be self-funded, are expected to come from the carbon market, as well as charges on fossil fuels and combustibles which have been extended until 2014.

The transport industry is estimated to account for 43% of all GHG emissions in Québec. As such, two-thirds of revenues from the action plan will fund transportation measures such as public and alternative transit, as well as inter-modality and energy efficiency in freight transport.

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Alberta carbon capture and storage project cancelled

Lewis Smith -

Capital Power Corporation, Enbridge Inc. and TransAlta Corporation have decided to cancel Project Pioneer, a carbon capture and storage project that was proposed for Capital Power and TranAlta’s jointly-owned Keephills 3 coal-fired power plant located approximately 70 kilometers west of Edmonton, Alberta.

The project was intended to include: a carbon capture facility that would have removed CO2 from a portion of the Keephills 3 flue gas, a pipeline to transport CO2 to a sequestration site approximately 6 kilometers from the power plant, and a second pipeline to transport CO2 to an existing oil production facility in the Pembina oil field, approximately 75 kilometers from the plant. CO2 from the second pipeline, which would have carried the majority of the captured gas, was to have been used for enhanced oil recovery. Project Pioneer was intended to demonstrate the commercial scale-viability of carbon capture and storage technology.

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Mexican Legislature passes robust climate change law

Kim Lawton and Annie Pyke -

New Legislation

On Thursday, April 19, 2012, Mexico's lower and upper houses passed a sweeping climate change bill clearing the way for President Felipe Calderon to sign it into law. President Calderon is expected to sign it in the coming days. After three years of debate and revisions, the bill has very strong legislative support and overwhelmingly passed Mexico’s lower and upper houses (Chamber of Deputies and Senate, respectively).

The Mexican legislation is one of the strongest national climate change laws passed to date. The bill mandates several changes:

  • requirements that future governments meet regular emissions reduction targets with the goal of ultimately cutting carbon emissions 30% below business-as-usual levels by 2020, and by 50% below 2000 levels by 2050;
  • substitution of renewable sources for 35% of all electricity sources by 2024;
  • requirement of mandatory emissions reporting;
  • establishment of a carbon-trading market; and
  • creation of a commission to oversee implementation of the bill.
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ExxonMobil fined €3.3 million for failure to report emissions

Kim Lawton and Annie Pyke

In what is surely a strong reminder to companies around the globe to comply with green regulations, oil giant ExxonMobil has been fined €3.3 million (approximately $4.4 million CAD) for failure to correctly report its carbon dioxide emissions from a Scottish chemical plant. This is the largest fine for an environmental offence in British history.

The fine was imposed by the Scottish Environment Protection Agency (SEPA) under the European Union Greenhouse Gas Emissions Trading Scheme (EU ETS) that came into effect in 2005. Under the EU ETS, companies which fail to report their greenhouse gas emissions can be fined €100 per tonne for unreported emissions.

The fine was imposed in 2010-11, but was only just revealed by SEPA when it published its 2010-2011 enforcement report.

EU committee makes no decision on oilsands

Javier Gonzalez -

In a highly anticipated vote, a European Union committee of technical experts failed to reach a decision on whether to approve a European Commission proposal to classify oilsands crude oil as more harmful to the environment than other forms of fuel. The proposal will now go to a council of EU ministers, with a final decision expected by June.

The proposal by the European Commission, the EU’s executive arm, would constitute a revision of the EU’s Fuel Quality Directive, which aims to reduce carbon emissions by 6% from 2010 levels by 2020. The proposal would not ban oilsands crude oil, but it would assign it a greater carbon footprint than conventional crude oil. Under the proposal, oilsands crude oil would be deemed to emit 22% more greenhouse gas by weight than average crude oil.

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Greater fines and new administrative penalties for environmental violations in Quebec since February 1st

Myriam Fortin -

The final measures provided under Bill 89, An Act to amend the Environment Quality Act in order to reinforce compliance came into force this February 1st, giving the Ministry of Sustainable Development, Environment and Parks (Ministry) greater powers against contraveners.

Fines may now reach one million dollars for natural persons and six million dollars for legal persons for a violation of the Environment Quality Act (EQA).

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International round-up: climate change measures developing in 2012

Kim Lawton and Annie Pyke -

The past year was an eventful period in the area of emissions trading and climate change regulation and policy development and 2012 is showing no signs of slowing down. Globally, climate change measures are encountering both resistance and successes as the world’s nations struggle to control greenhouse gas (GHG) emissions.  This blog post contains a rundown of some key stories we see developing in the coming months and which we will monitor and describe from time to time in this blog.

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Quebec adopts greenhouse gas emission regulation

Jason Streicher -

On December 14, 2011, the Government of Québec officially adopted the Regulation respecting the cap-and-trade system for greenhouse gas emission allowances (the Regulation) which is based on the rules established by the Western Climate Initiative (WCI).

The Regulation will come into force on January 1, 2012. The first year of the system will be a transition year which will allow emitters and participants to familiarize themselves with how the system works. In 2012, emitters and participants will be able to register with the system, take part in pilot auctions and buy and sell greenhouse gas (GHG) emission allowances on the market. No reduction or capping of GHG emissions will be required during this transition year.

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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.

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.

New proposed amendments to the Quebec GHG reporting regulation

Myriam Fortin -

After the coming into force on December 30, 2010 of the Regulation amending the Regulation respecting mandatory reporting of certain emissions of contaminants into the atmosphere, a new draft regulation was published October 5, 2011 (English version / French version), proposing additional amendments intended to harmonize the regulation with requirements of the Western Climate Initiative (WCI), in order to allow a good functioning of the greenhouse gas (GHG) cap and trade system.

The draft regulation proposes emissions calculation methods for twelve industry sectors, being nickel and copper production, ferroalloy production, magnesium production, nitric acid production, phosphoric acid production, ammonia production, electricity transmission and distribution and use of equipment to produce electricity, carbonates use, glass production, mobile equipment, electronics manufacturing, and natural gas transmission and distribution.

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More details on Quebec's draft cap-and-trade regulation

As we previously reported here, Quebec’s draft Regulation respecting a cap-and-trade system for greenhouse gas emission allowances (the Regulation) will come into force on January 1, 2012, subject to amendments. 

The cap-and-trade system (System) will require the registration of “emitters,” which is broadly defined as persons and municipalities who produce more than 25,000 tonnes of CO2 equivalent per year at an establishment, and who i) conduct an enterprise in electric or natural gas utilities, mining, oil and gas exploration, steam and air conditioning supply, manufacturing or gas pipelines; ii) acquire electricity generated outside of Quebec, or iii) manufacture and distribute hydrocarbon fuels in Quebec.

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Quebec Releases draft Cap and Trade Regulations

On July 6, 2011, Quebec's Ministry of Sustainable Development, Environment and Parks announced that it has published a draft regulation on greenhouse gas (GHG) cap-and-trade based on the Western Climate Initiative (WCI) guidelines, for a 60-day public consultation.

Once the consultation period has expired, the regulation to be adopted will enable Quebec to be ready to set up the carbon market as soon as January 1, 2012. As noted in yesterday's blog entry, in order to synchronize with California, the first year of the program will be transitional. This will allow emitters and market participants to familiarize themselves with how the system works and enable them to transition to their obligations under the GHG cap-and-trade system that will come into force on January 1, 2013. They will be able to register as system users, take part in pilot project auctions and exchange (buy and sell) GHG emission allowances through the market.

Industrial sites that annually emit 25,000 or more tons of equivalent CO2 in greenhouse gas will be subject to the system for capping and reducing their emissions.

California delays start of Cap and Trade until 2013

Cora Zeeman -

On June 29, 2011, the California Air Resource Board announced that it is delaying the start of the state's cap and trade program until 2013, a year later than was originally envisioned. CARB will initiate the cap and trade program in 2012 but use that year to test various aspects of the program; no greenhouse gas (GHG) emissions reductions will be required until 2013. However, the 2014 reduction target of 6% below business as usual and the goal of reducing emissions to 1990 levels by 2020 are unchanged.

In the announcement, CARB Chair Mary Nichols said that the delay is necessary because it is so critical that the cap and trade regime be a success. CARB will be initiating all elements of the cap and trade program in 2012, including establishing market oversight mechanisms, conducting trainings, holding auctions and developing linkages with partners in the Western Climate Initiative (WCI), to ensure all aspects of the program operate as intended.

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New Democratic Party reintroduces bill to cap greenhouse gas emissions

On June 15, 2011, the NDP, Canada's main opposition party, reintroduced a bill that proposes to legislate stronger targets for greenhouse gas (GHG) emissions reductions in Canada.  Bill C-224, the Climate Change Accountability Act to cut GHG emissions by 25% below 1990 levels by 2020 and by 80% below 1990 levels by 2050. Canada's current target is based on a 2006 base level and seeks to reduce GHG emissions by 17% by 2020.  As we reported previously, the same bill was defeated in the Senate last year.

U.S. Supreme Court rules against greenhouse gas emissions lawsuit

In American Electric Power et al. v. Connecticut et al., six states, the city of New York and three private land trusts sought federal court orders to limit greenhouse gas emissions from power plants operated by private utilities and the Tennessee Valley Authority. The lawsuit was based in part on a federal common law claim of nuisance that argued that the emissions increased the risk to public health and infrastructure through the effects of climate change.

On June 20, 2011, the U.S. Supreme Court decided 8-0, with Justice Sotomayor recused, that the plaintiff's federal common law nuisance claims were displaced by the Clean Air Act, which grants authority to the U.S. Environmental Protection Agency to regulate greenhouse gas emissions.  However, the Supreme Court did not resolve the issue of whether the federal court has jurisdiction to hear greenhouse gas emissions lawsuits generally, or whether the Clean Air Act also preempts state court common law claims. As well, the Supreme Court declined to address the question of the causation of climate change.

The decision indicates that the Court will be reluctant to act in the place of regulators, especially for matters that already engage the government process.

Anti-wind turbine crusader's case comes to an end

Patrick Duffy

Ian Hanna, an Ontario anti-wind crusader, has been denied permission to appeal an earlier court decision that dismissed his judicial review application. 

Hanna’s application challenged Ontario Regulation 359/09 that governs renewable energy approvals in Ontario. The Regulation requires a 550 meter distance between wind turbines and noise receptors such as residences.

Hanna argued that there was no scientific basis for the 550 setback. He challenged the regulation on the basis that the Minister of Energy had not followed the necessary process required by Environmental Bill of Rights (EBR). Section 11 of the EBR requires the Minister to consider the Statement of Environmental Values (SEV) when making decisions that might significantly effect the environment. In turn, the SEV requires the Ministry to “use a precautionary, science-based approach in its decision-making”. Hanna argued the Ministry had failed to meet that requirement when it determined the setback distance.

Hanna’s application went before the Ontario Divisional Court and was dismissed in March 2011. The court was satisfied that the Minister complied with the process required by the EBR and SEV. In support of this, the court cited public consultation and a science-based ministerial review using World Health Organization reports and acoustic engineering experts. 

Hanna vowed to fight on and sought leave to appeal the decision to the Ontario Court of Appeal, but on June 20 the court denied his application.

CARB issues court-ordered alternatives to California's Cap-and-Trade Program

On June 13, 2011, the California Air Resources Board (CARB) released a Supplement to its Functional Equivalent Document (FED) (the environmental review document for its cap-and-trade program). CARB was ordered by the San Francisco Superior Court to remedy deficiencies in the initial FED's analysis of alternatives to the cap-and-trade program proposed in the AB 32 Scoping Plan (for more information on this cap-and-trade program, please see our  previous blog post).

This ruling was initially a tentative one, but was finalized on May 20, 2011. For more information on the Court's determination, please see our earlier blog post

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Germany's Nuclear Plan: A "bump in the road" or "end of the road"?

Andrew Sullivan -

Angela Merkel’s collation government has pledged to decommission all of Germany’s seventeen nuclear reactors by 2022. This historic announcement comes in the wake of a global reaction to the events in Fukushima, Japan. The crippled reactors have caused many governments to rethink their nuclear strategy.

Before the Fukushima disaster, resurgence in the popularity of nuclear energy had been characterized as “the nuclear renaissance”. The industry had finally recovered from the Chernobyl disaster, over quarter-century before. Around the world, nuclear energy appeared to be a viable solution in the effort to reduce greenhouse gas (GHG) emissions. Globally, 2010 saw fourteen new reactors under construction, compared with three in 2005. That number will assuredly fall this year as governments rein-in their enthusiasm for nuclear energy.

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Emerging trends in global carbon finance

P. Jason Kroft and Cora Zeeman -

Recent developments in international carbon finance have seen investors and carbon intermediaries moving away from the global carbon market and towards local initiatives, such asregional carbon trading regimes, as a means of participating in carbon reduction financing or achieving climate change objectives. This short piece identifies and begins to examine this trend away from global carbon market development and towards regional initiatives and some of the reasons for this movement.

At the 1997 climate change conference in Kyoto, Japan, 193 nations, including the European Union (EU), arrived at a global consensus on using financial measures to combat climate change. The Kyoto plan introduced restrictions on greenhouse gas (GHG) emissions by industrialized countries and the creation of credits to emit GHGs that would be tradeable in a global carbon market. Developing countries, including China and India, were not given GHG emissions limits and could sell credits based on their own GHG emission reductions to industrialized nations. When the Kyoto commitments entered into force in 2005 and, as a result, became a binding international commitment, they were taken up in earnest by the EU and were made mandatory under the EU Emissions Trading Scheme (ETS). An emissions trading system has the advantage of allowing companies to choose the most cost-effective means to achieve GHG emission reduction targets by either purchasing allowances or decreasing emissions.

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Lawsuit filed against U.S. Federal government over climate change

A lawsuit  filed last Wednesday against the U.S. federal government by a group called Our Children’s Trust alleges that key government agencies have failed to confront a human-induced global climate crisis and, by their actions, have caused, approved and allowed too many carbon emissions into the Earth’s atmosphere. No similar litigation has been attempted in Canada, though Canadian courts have previously declined to enforce compliance with Kyoto Protocol obligations.

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Election 2011: Canada's climate change future

P. Jason Kroft and Annie Pyke

With the federal election just a few days away, we thought it would be useful to our readers to identify what each major political party's published campaign platform says about climate change and Canada's role in curbing greenhouse gas (GHG) emissions. It is certainly fair to conclude that to the extent that there has been robust discussion of real substantive issues in this political campaign (a premise that is certainly not free from any doubt), the topics of climate change, cap and trade and implementation of international protocols to address GHG emissions (among other topics relating to the environment) have not been a focus of discourse for most of the major political parties. Whether climate change remains a topic that engages the voting public is an unanswered question for another day, but it is at least our proposition that most of the major political parties have not identified there to exist real political advantage to making the environment and climate change a major campaign focus. For present purposes, we are not questioning the sufficiency or merit of any plan, just letting you know what the plans are. Of course, we would like to hear from you as to you own views on these plans. 

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International Green Economy Conference

The London School of Economics and the American Bar Association's Standing Committee of Environmental Law will be hosting a conference Participating in the New Green Economy: The Challenge of Climate Change and the Opportunities for Clean Energy May 23-24 in London.

The conference will discuss the intersection of climate change policy and politics, and the incentives, economics, and finance for clean energy and go beyond how to navigate the complexities of policy and regulations to explore of opportunities available in a global green economy.

Topics will include:
• Financing a sustainable reduced-carbon future
• Regulations and incentives in emerging green technologies
• Energy efficiency
• Carbon marketplaces
• Renewable energy subsidies and trade
• Technology transfer
• REDD – Reduced Emissions from Deforestation and Degradation 

CCEMC announces $27.2 million in funding for industrial efficiency projects

Alberta's Climate Change and Emissions Management Corporation (CCEMC) announced that it will invest $27.2 million in six industrial efficiency projects in the province. CCEMC receives monies from Alberta's Climate Change and Emissions Management Fund, a creation of the Climate Change and Emissions Management Act.

The organizations receiving funds from CCEMC are Cenovus Energy Inc., EnCana Corporation, ConocoPhillips Canada, NRGreen Power Limited, Weyerhaeuser Canada Limited and Quantiam Technologies.

San Francisco Judge rules against California Cap-and-Trade system

In a recent case decided in the Superior Court of California, Association of Irritated Residents vs. California Air Resources Board et al, a San Francisco County judge made a tentative ruling against the California Air Resources Board (CARB) ordering CARB to postpone the implementation of regulations to reduce greenhouse gas emissions, including the creation of a cap-and-trade system. The judge ruled that CARB failed to properly consider alternatives to a cap-and-trade system and that alternatives should have been presented to the public for comment. If the ruling is finalized, it could impact both future and existing greenhouse gas regulation in California. Pursuant to the rules governing court proceedings in California, both sides have 15 days from January 21, 2011, the date of judgement, to file objections to be considered by the Court prior to the issuance of the final order. For more information on the proposed California cap-and-trade program, please see our earlier blog post.

Advisory Panel to Canadian Government recommends national Cap and Trade Program

In a report released yesterday entitled "Parallel Paths: Canada-U.S. Climate Policy Choices" , the National Roundtable on the Environment and Economy (NTREE) said that, given the uncertainty over U.S. climate change policies, the Canadian government should create its own national climate change regulations and then adapt to fit U.S. policies at a later date. In this report, the NRTEE reached four conclusions with respect to the relationship between Canadian and US climate policies:

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Manitoba seeks public comment on Cap-and-Trade system

As part of their 2009 commitment to move forward with cap-and-trade legislation, the Province of Manitoba is inviting public comment on the structure of any future cap-and-trade regime. Manitoba joined the Western Climate Initiative (WCI) in 2007 and is proposing to use the WCI as a framework for their cap-and-trade system and to integrate their market with that of other WCI members. The most recent Environment Canada data indicates that Manitoba's greenhouse gas emissions come from a large number of small sources, mainly in the agricultural, transportation and stationary combustion source categories Stationary combustion sources include commercial, institutional and residential heating, manufacturing and construction sources, among others. For more information, or to submit comments, please go to the Government of Manitoba Climate Change & Green Initiatives website.

U.S. EPA begins regulating GHG emissions from industrial facilities

The first phase of the U.S. Environmental Protection Agency's  (EPA) new permitting requirements under the Clean Air Act  for industrial greenhouse gas (GHG) emissions from major new and modified facilities took effect on January 2, 2011.  This first phase of the EPA's tailoring rule  applies to new sources of GHG emissions that must obtain a permit anyway based on their emission of other pollutants and will emit at least 75,000 tons per year of GHG emissions.  The second phase of these EPA GHG regulations will take effect on July 1, 2011 and will require new facilities that emit at least 100,000 tons per year of GHG emissions or major modifications to existing facilities that emit more than 75,000 tons of GHGs per year to obtain a GHG emissions permit.

Recently, the EPA took a second important step forward , introducing plans to regulate GHG emissions from all new and existing power plants and refineries. The move to establish standards for two separate source categories demonstrates that the EPA is moving forward carefully on GHGs, rather than proposing a broad cap-and-trade regime

COP16, UN climate talks in Cancun conclude

The 16th meeting of the Conference of Parties of the United Nations Framework Convention on Climate Change and the 6th Conference of Parties to the Kyoto Protocol (jointly “COP16”), in Cancun, Mexico, concluded on December 11th.

The negotiations in Cancun came almost a year after the summit in Copenhagen where high level negotiations fell short of producing a binding post-2012 pact on reducing greenhouse gas emissions and providing aid to developing countries.

With no expectation of a binding global treaty resulting from the conference, the Cancun summit concluded with the release of the Cancun Agreement, a United Nations backed deal that commits countries to increase their effort to battle climate change and preserve key principles of the Kyoto protocol. The Cancun Agreement, which endorses the view that climate change is “one of the greatest challenges of our time” which requires long-term and cooperative action in order to prevent devastating global impacts, commits all countries to boosting their efforts to reduce greenhouse gas emissions, and to allow for such plans to be scrutinized by the international community.

The Agreement also fleshes out the promise of developed countries in Copenhagen to provide $100 billion (U.S.) by 2020 to aid in greenhouse gas emissions reductions in the developing world. Under the Agreement, developed countries have agreed to set up a “Green Climate Fund” to manage the promised aid; set up technology-transfer programs to help developing countries adopt renewable energy technologies, and fund projects to reduce deforestation and encourage tree planting. The fund is to initially be managed by the World Bank.

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Alberta Carbon Capture and Storage Bill enters into force

Following our report in November, as of December 2, 2010, Alberta's Bill 24, the Carbon Capture and Storage Statutes Amendment Act, 2010 has entered into force. Bill 24 requires the Alberta government to accept long-term liability for carbon dioxide (CO2) that is sequestered underground by way of carbon capture and storage (CCS) projects. The bill proposes that the government assume liability from project operators by becoming the owner of the captured CO2 once it is provided with data proving the stored CO2 is contained. The bill also clarifies the definition of pore space and creates a post-closure stewardship fund for the costs of ongoing monitoring and remedial work. Alberta is the first province in Canada to pass comprehensive legislation for CCS.

UN climate talks in Cancun Nov 29 - Dec 10

The latest round of United Nations climate negotiations gets underway today in Cancun, Mexico, where representatives of approximately 200 countries will discuss the future of the United Nations Framework Convention on Climate Change and the Kyoto Protocol. The negotiations in Cancun come almost a year since the summit in Copenhagen where high level negotiations fell short of producing a binding post-2012 pact on reducing greenhouse gas emissions and providing aid to developing countries.  As a result of its commitments under the Copenhagen Accord, the non-binding agreement that came out of the negotiations last December, the Government of Canada has pledged to reduce greenhouse gas emissions by 17 percent from 2005 levels by 2020, but only if the United States takes comparable action.

Carbon traders focusing on California

Following the recent abandonment of a national cap-and-trade system in the United States and the winding-down of the Chicago Climate Exchange voluntary carbon-trading program, traders and exchanges are now focusing their efforts on California. A recent Wall Street Journal article describes estimates of the potential size of California's carbon market ranging from $3 billion to $58 billion, which has exchange operators competing with each other to become the dominant trading hub. Many in the exchange industry view carbon allowances and related derivative products as a key long-term asset with global potential. California currently has several operators interested in launching exchanges, the first of which could begin trading operations as early as next year.

Canadian Senate defeats Bill C-311, the Climate Change Accountability Act

On November 16, 2010, Bill C-311, the Climate Change Accountability Act, was defeated in the Senate by a vote of 43-32 with no debate held. The bill was passed by the House of Commons on May 5, 2010 and would have required the federal government to establish regulations to meet a greenhouse gas (GHG) reduction target of 25% below 1990 levels by 2020 and to set a long-term GHG reduction target of 80% below 1990 levels by 2050.

Chicago Climate Exchange to discontinue greenhouse gas cap-and-trade program

The Chicago Climate Exchange ("CCX") recently announced that they will discontinue the CCX emission reduction program at the conclusion of its Phase I and Phase II program at the end of this year.  Launched in 2003, the CCX emission reduction program was North America’s first voluntary greenhouse gas (“GHG”) cap-and-trade scheme. CCX Members made voluntary but legally binding commitments to reduce their annual GHG emissions by 6 per cent below their emissions baselines by the end of 2010.  Members who reduced emissions beyond their targets earned surplus allowances to sell, bank or trade with Members who did not meet their targets.

Carbon Financial Instrument (“CFI”) contracts were used to perform these trades.  The closing prices for a CFI contract fell to $0.05 in January 2010, from its all-time high of $7.40 in May 2008. Since February 2010, the CCX has had zero monthly trading volume.

In place of the emission reduction program, the CCX will create the CCX Offsets Registry Program, which will eliminate emission reduction targets in favour of a general marketplace for emission offsets.

"Fundamentally, with any program that relies on voluntary compliance for something not yet mandated into law, it makes it more difficult ultimately to have as vibrant a market as you'd want," said Bruce Braine, Vice-President of Strategic Policy at American Electric Power, one of the CCX’s founding Members.

Other CCX affiliate programs such as the European Climate Exchange and the Chicago Climate Futures Exchange will continue unchanged.

CSA issues guidance on environmental disclosure requirements

Cora Zeeman

As recently discussed on our securities blog, on October 27, the Canadian Securities Administrators (CSA) issued Staff Notice 51-333 – Environmental Reporting Guidance to provide guidance to reporting issuers on satisfying existing continuous disclosure requirements with respect to environmental concerns. Specifically, Staff Notice 51-333 is intended to assist issuers in determining what information about environmental matters needs to be disclosed by reporting issuers based on the requirements found in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) and National Instrument 52-110 Audit Committees (NI 52-110).

The Ontario Securities Commission’s (OSC) nascent focus on investors’ concerns regarding climate change considerations has been apparent for some time. In February 2008, the OSC released Staff Notice 51-716 – Environmental Reporting, which outlined the results of a targeted review to determine the degree to which reporting issuers were adequately disclosing “environmental matters”. Meanwhile, in December 2009, the OSC published Staff Notice 51-717 – Corporate Governance and Environmental Disclosure, which detailed the OSC’s plans to enhance environmental and corporate disclosure requirements of reporting issuers.

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Cap-and-trade get a boost

Further to our blog post on October 25, 2010 (California vote could hinder cap-and-trade efforts), Proposition 23 was defeated by California voters in the November 2 election. The proposition would have suspended California’s emissions-reduction law until certain economic targets, including a decline in the unemployment rate, were met.

As reported in the Globe and Mail (Globe and Mail Link =, the defeat of Proposition 23 could help boost the momentum behind the Western Climate Initiative’s proposed cap-and-trade market, which is schedules to launch in 2010. The Western Climate Initiative includes California, six other American states, Ontario, Quebec, British Columbia and Manitoba.

US elections provide divided result for western climate initiative

In yesterday's elections, California voters showed their continued support for the state's climate change policies, voting against a ballot initiative that would have suspended current climate change policies until certain economic targets were met and electing Democrat Jerry Brown as governor . The election results are an important milestone for the Western Climate Initiative ("WCI'), of which California is the largest participant, as the republican candidate had promised to revisit the state's climate change and cap-and-trade commitments.
Voters in New Mexico, another WCI participant, elected Republican Susana Martinez as governor. This could effect New Mexico's continued participation in the WCI as Martinez opposes a carbon emissions cap-and-trade program

Alberta government drafts Bill 24 to regulate CO2 storage

The Alberta government has recently drafted legislation, Bill 24, Carbon Capture and Storage Statutes Amendment Act, 2010, 3rd Sess., 27th Leg., Alberta, 2010 which clarifies ownership of pore space and that would, if passed, make Alberta the first province in Canada to enact comprehensive legislation to regulate large-scale carbon capture and storage (CCS) projects. Under Bill 24, the Alberta government would own subsurface pore spaces where carbon dioxide is stored and would assume long-term liability for injected carbon dioxide once project operators provide data that the gas is contained. Bill 24 would also create a special fund financed by CCS operators that would pay for future monitoring of underground carbon dioxide storage sites and any necessary remediation.

The Alberta Energy Minister, Ron Liepert, emphasizes that Bill 24 would ensure Alberta is on track to reducing greenhouse gas emissions and would also help to double Alberta’s conventional oil recovery which will generate billions of dollars for the province. In particular, the Alberta Carbon Capture and Storage Development Council estimates that carbon captured and used in enhanced oil recovery could produce an additional 1.4 billion barrels of oil from conventional reservoirs generating up to $25 billion in provincial royalties and taxes.

California vote could hinder cap-and-trade efforts

The viability of a California cap-and-trade program will hinge on the outcome of the state's November elections. Voters in California will decide on a proposition to delay action on climate change until certain economic targets are met, and the Republican candidate for governor has also promised to revisit the current climate change plan.

As reported in the Calgary Herald, this could potentially have a strong ripple effect on the developing North American carbon trading industry. British Columbia, Ontario, Quebec and Manitoba plan to join California and several other states in the launch of the Western Climate Initiative cap-and-trade market in 2012. While many observers are confident that the program will proceed regardless of the outcome in California, there is concern that the loss of the group’s largest economy could hinder the market's liquidity and efficiency.

Ontario proposes amendments to greenhouse gas reporting regulations

In response to the release of the Western Climate Initiative's ("WCI") Regional Program Design, the government of Ontario has proposed new guidelines and amendments to the Greenhouse Gas (GHG) Emissions Reporting Regulation (O. Reg. 452/09).

The proposed amendments are meant to align the regulations with the WCI program and also now include nitrogen trifluoride as a GHG.

The proposed amendments and guidelines have been posted on the Environmental Registry and will be open for comment for 45 days, ending October 25, 2010.

Western Climate Initiative releases proposal for Canadian provinces to harmonize reporting regulations

The Western Climate Initiative ("WCI") recently released a proposal for how the Canadian provinces can harmonize their reporting requirements with the U.S. Environmental Protection Agency's rules for greenhouse gas reporting.

The proposal will be open for comment until October 12, 2010.

The WCI expects that Canadian provinces will adopt the new proposal by incorporating it into their reporting regulations.

Alberta schedules stakeholder review session for GHG protocol development

The Government of Alberta has scheduled its second round Stakeholder Review session on the Greenhouse Gas Quantification Protocol Development for the Alberta Offset System for November 4th, 2010, in Edmonton.

The purpose of the session is to review submitted proposed protocols for consideration as potential eligible project types for use in the Alberta Offset System and consider mechanisms of quantification for eligible projects under the system.

For further information see

CIPO proposes amendments to spur green technology

In order to promote innovation in green technologies and help spur the development the green sector of Canada’s economy, the Canadian Intellectual Property Office(“CIPO”) has proposed amendments to the Patent Rules to accelerate the examination of green technology patent applications.

Currently, under the Patent Rules, the commissioner of patents has the authority to expedite the examination of an application upon request and payment of a fee. CIPO proposes to expand this authority by including a mechanism to accelerate the examination of patent applications related to green technologies. Under CIPO’s proposal, no fees would be required in order to advance the examination of eligible patent applications related to green technologies. Rather, in order to be granted access to the expedited examination service, the applicant would have to submit a declaration stating that their application relates to technology that if commercialized, could help resolve or mitigate environmental impacts or conserve natural resources.

CIPO’s proposal appears to be good news for green technology and green energy businesses that are actively engaging in research and development in Canada. Earlier patenting should result in benefits such as the earlier availability of financing and earlier access to patent enforcement steps. These benefits should in turn help ensure that environmentally beneficial products get to the market more rapidly.

If the proposal is accepted, Canada will join the United States in providing accelerated examination of green technology patent applications. The United States Patent and Trademark Office has had a green technology pilot program in place to accelerate green technology patent applications since December 2009. 

CIPO’s proposal will be recommended for publication for a 30-day consultation period in the Canada Gazette, Part I in fall of '10.

U.S. EPA's GHG regulations take effect in 2011, amidst growing legal challenges

In April, Senators John Kerry, Joseph Lieberman and Lindsay Graham announced their intention to pass legislation pre-empting the Environmental Protection Agency’s (“EPA”) regulation of greenhouse gases. 

However, since the recent abandonment of a Congress Energy Bill, the EPA’s regulations for stationary sources of greenhouse gas (“GHG”) emissions and new standards for light-duty vehicles remain scheduled to take effect on January 2, 2011.

The vehicle rules will apply to new passenger cars, light-duty trucks, and medium-duty passenger vehicles from model years 2012 to 2016, and will require these vehicles to meet an estimated combined average emissions level of 250 grams of carbon dioxide per mile in model year 2016. Automakers may meet these standards through improvements in fuel economy or air conditioning systems.

The auto industry is not expected to mount significant challenges to these rules, as it is speculated that the terms of the regulation were negotiated when loans were committed to the auto industry from funds from The Emergency Economic Stabilization Act of 2008.

On the other hand, the EPA’s regulation for stationary sources has prompted various proposed Bills in Congress seeking to restrict the EPA’s ability to regulate GHGs, as well as court challenges, most notably a lawsuit mounted by Texas Governor Rick Perry in the U.S. Circuit Court of Appeals.

The EPA’s stationary source regulation will operate under the Clean Air Act’s New Source Review Prevention of Significant Deterioration (“PSD“) and Title V Operating Permit (“Title V“) programs. Under these programs, industrial stationary source emitters who produce emissions above a set threshold are required to determine the Best Available Control Technologies (“BACT”) to limit their emissions. 

Prior to the EPA’s Endangerment Finding that determined that six established GHGs are “air pollutants” as defined by the Clean Air Act, the PSD and Title V programs applied only to criteria pollutants like lead, sulphur dioxide and nitrogen dioxide. The emissions thresholds for criteria pollutants are 100 and 250 tonnes per year, depending on the pollutant. 

For GHGs, the EPA has “tailored” the thresholds to be 75,000 and 100,000 tonnes per year of CO2 equivalent, depending on whether the facility is a new construction application or an existing facility undergoing modifications. Additional conditions apply as the EPA’s regulation will be enacted in two phases: one phase starting in January 2 to June 30, 2011; and the next phase, from July 1, 2011 to June 30, 2013.

At the heart of Governor Perry’s challenge is that the EPA does not have the authority to “tailor” the emissions thresholds set by the Clean Air Act. Governor Perry has also stated that in January, Texas will not comply with the stationary source regulations. Nevertheless, the White House Office of Management and Budget is reviewing an EPA rule that would allow the agency to install federal implementation plans if States do not comply with the regulations.

Saskatchewan to Release Draft Offset Program Plan

Saskatchewan is continuing to move forward with its proposed greenhouse gas (GHG) cap-and-trade program, with draft offset program methodologies expected to be released next month. The guidance documents will supplement the previously released draft regulations – The Management and Reduction of Greenhouse Gases Regulations– which are expected to gain final approval in fall 2010.

Saskatchewan has set a target of reducing GHG emissions to 20% below 2006 levels by 2020. The proposed emissions threshold for regulated emitters is 50,000 tonnes of CO2 equivalent in any year, and regulated emitters will be required to reduce emissions by 2% per year from 2010 to 2019 to meet the 20% reduction goal.

Regulated emitters will be able to purchase offset credits created from activities that have reduced and sequestered GHG in Saskatchewan and that occurred after January 1, 2006. In addition to offset credits, regulated emitters can make so-called “carbon compliance payments” to the Saskatchewan Technology Fund Corporation. Proceeds from this fund will be used to invest in GHG reduction initiatives and research.

The proposed Saskatchewan GHG cap-and-trade program is similar to that of Alberta, where the emissions threshold for regulation is higher at 100,000 tonnes of CO2 equivalent. In response to stakeholder comments regarding liquidity of the markets, the two provinces are considering linking their carbon trading programs.

U.S. Senate Democrats abandon scaled-back energy bill

Despite narrowing the scope of their proposed Energy Bill to home energy efficiency, development of natural gas vehicles, stricter offshore drilling regulations and the removal of the $75 million offshore oil spill liability cap, U.S. Senate Democrats failed to gather the 60 Senate votes necessary to break a Republican filibuster.

Moreover, in recent weeks, several Democrat Senators have expressed concerns about the job implications of subjecting offshore operators to unlimited liability.

Senate Republicans proposed an alternative bill that would raise the cap but keep it short of unlimited liability, and would only apply the raised cap to new leases. Further, it would lift the six month offshore drilling moratorium instituted by President Obama’s administration in May, and would offer coastal States a share of offshore royalties.

Senate Majority Leader Harry Reid (D-Nev.) stated that debate for any new Energy Bill would have to resume in mid-September after Congress’s summer recess.

British Columbia adopts new GHG emission limits - WCI Partners release details of cap-and-trade program

On July 27, British Columbia, along with four other Canadian provinces and seven U.S. states that are members of the Western Climate Initiative (WCI), released details of a proposed cap-and-trade program – set to begin in January 2012 – and other strategies designed to reduce regional greenhouse gas (GHG) emissions to 15% below 2005 levels by 2020, create green jobs and stimulate development of clean-energy technologies.

Fossil fuel production and other industrial sources account for approximately 35% of British Columbia’s annual GHG emissions, but unlike the carbon “consumption tax” imposed on businesses and individuals who use or purchase fossil fuels in the province, to date industry has not been subject to a GHG emission reduction program. With the introduction of the WCI program, any industrial operation emitting more than 25,000 tonnes of GHG per year will be subject to the proposed emission limits and penalties.

Among the WCI’s Canadian partners, British Columbia, Ontario and Quebec have implemented or are in the process of developing legislation that would enable cap-and-trade systems in those provinces.

See also: “B.C. adopts new limits for greenhouse-gas emissions with new ‘cap and trade’ system”

U.S. Senate ceases to pursue comprehensive climate change bill

Harry Reid, the U.S. Senate majority leader, announced on Thursday that the Senate Democrats would cease to pursue passing a comprehensive climate change bill.

Citing a lack of support from Republican Senators, Senator Reid stated that the majority would seek a more modest bill targeting offshore oil and gas drilling regulation, home energy-efficiency programs and incentives for natural gas vehicles.

The bill, planned for debate next week, also seeks to raise the $75 million liability cap for companies that are responsible for oil spills.

In June 2009, the U.S. House of Representatives passed the American Clean Energy and Security Act, also known as the Waxman-Markey bill, which mandated the cap on greenhouse gas emissions from most sectors of the economy, and would establish a national carbon market.  

Over the last year, Senate Committees discussed reducing the scope of the cap-and-trade system to the utilities industry. However, with only 59 Senators supporting the legislation, Senate Democrats lacked the 60 Senators necessary to overcome procedural hurdles that they expected would be launched by Senate Republicans. 

Senator Reid discussed the possibility reviving cap-and-trade legislation in September, or after the November Senate elections.

Prentice and Doer speak to Calgary Chamber of Commerce on cap and trade, protectionism

Speaking at a Calgary Chamber of Commerce event last week, Federal Environment Minister and Calgary Centre-North MP Jim Prentice once again reiterated that Canada will not go forward with a cap-and-trade system on its own.

Commenting on the fading prospects that that a cap-and-trade law will emerge from the from the US Congress Prentice stated that:

The Canadian market is not large enough, and when we harmonize climate, environment and energy policies, we do not intend to bring in a policy of cap-and-trade in circumstances where the U.S. does not.

The Minister related his belief that cap-and-trade is unlikely to be part of any energy or climate bill that might be passed before November.  He suggested that the regulatory route is increasingly the one Ottawa will take as it tries to cut greenhouse gas emissions by 17% below 2005 level by 2020 in order to meet Canada’s commitments under the Copenhagen Agreement.

The Government of Canada is clearly moving ahead with a regulatory approach, dealing with the transportation sector, which is 27% of Canada’s emissions...The electricity sector is another 19%, so, essentially, in Canada we (now) have close to 50% of our emissions in regulatory harness.

Canada’s Ambassador to the U.S. and former Manitoba premier Gary Doer reflected on the situation in the U.S. and the uncertainty that it creates for Canada. He speculated that it is likely that some form of energy law will emerge from congress in the near future, and that any Environmental Protection Agency climate change regulation will likely end up before the Supreme Court.  Doer remained clear on one point however, that Canada will continue to object to the imposition of any border measures by the U.S that may affect Canada’s energy flow to the U.S., given our clear intent to harmonize climate change policies:

We're saying, don't introduce any border measures against a country like Canada that is committed to the same reduction targets that you are...Don't take border measures against Canada's energy when we have a harmonized reduction target that was agreed to in Copenhagen and signed by the prime minister and environment minister...Countries like Canada that have signed on to the same agreement should not have artificial border measures that (represent) a Trojan horse for the issue of trade and access to Canadian energy.

Federal government to impose stringent standards on coal-fired generation

On June 23, 2010, the federal Minister of the Environment, the Honourable Jim Prentice, announced that in keeping with its commitments under the Copenhagen Accord to reduce GHG emissions by 17 percent below 2005 levels by 2020, the federal government will soon introduce legislation to regulate GHG emission in the electricity sector by applying performance standards to coal-fired electricity generation units.

Prentice announced that draft regulations to reduce GHGs from the electricity sector are expected to be published in Canada Gazette early in 2011 and final regulations will be published later that year. The proposed regulations will apply a stringent performance standard to new coal-fired electricity generation units and those coal-fired units that have reached the end of their economic life. 

Said Prentice, "Our regulation will be very clear — when each coal-burning unit reaches the end of its economic life, it will have to meet the new standards or close down," he said. "No trading, no offsets, no credits."

The proposed regulation may represent a shift in government policy, as the government has previously stated that it would coordinate emission reduction plans with U.S. legislation. 

Prentice also announced that the Government of Canada will invest $400 million in international climate change initiatives for the poorest and most vulnerable countries. This investment represents the 2010 portion of Canada's share of the fast-start financing promised by developed countries under the Copenhagen Accord.

Quebec proposes legislation to broaden greenhouse gas emissions reporting requirements

Jason Streicher

On June 2, 2010, Quebec's Ministry of Sustainable Development, Environment and Parks announced that it has published, for a 60-day public consultation, amendments to the Regulation Respecting Mandatory Reporting of Certain Emissions of Contaminants into the Atmosphere (the Regulation). The amendments are meant to harmonize the Regulation with the common policies adopted by the members of the Western Climate Initiative (the WCI). The partners of the WCI are comprised of 7 U.S. states, including California, and four Canadian provinces, namely British Columbia, Manitoba, Ontario and Quebec.

The current Regulation sets the greenhouse gas (GHG) emissions reporting threshold at 50,000 tons of carbon dioxide (CO2) equivalent per year. The amended Regulation would lower the threshold and require reports be provided by Quebec enterprises that have emissions of 10,000 tons of CO2 equivalent per year or more. If enacted, the amended Regulation would also prescribe the methods to be used to quantify emissions and would require emitters of more than 25,000 tons of CO2 equivalent per year to have their emission reports verified by an accredited organization.


BC introduces Clean Energy Act

Jonathan S. Drance and Phil G. Griffin

In the most recent Throne Speech the Provincial Government of British Columbia announced a policy to transform the province into a "Clean Energy Powerhouse" and to become a global leader in managing and responding to climate change.

On April 28, 2010 the Provincial Government introduced the Clean Energy Act in the legislature. The Act is designed to achieve three primary policy objectives. The first objective is to achieve electricity self-sufficiency for BC by 2016, while maintaining low electricity rates for BC consumers. The second objective is to harness BC's clean power potential to create jobs in all regions of the province. The third objective is to strengthen environmental stewardship and reduce greenhouse-gas emissions.

To meet those objectives, the Clean Energy Act provides a new regulatory framework for long-term energy planning, an enhanced commitment to renewable electricity generation, and measures to promote electricity efficiency and conservation. More specifically, the Act provides for the following:

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Carbon Capture and Storage - Identified challenges to implementation

Lanette Wilkinson

Carbon capture and storage (CCS) is interesting as a case study of a CO2 mitigation technology that maintains considerable political and fiscal support even though its long-term economic viability is dependent on high carbon prices and even though its implementation will in many cases require that U.S. states and Canadian provinces enact new legislation and regulations. This article considers the current legislative debate in the U.S. and examines the ways in which the absence of federal climate change legislation in the U.S. and Canada affects both the price of carbon and the implementation of carbon abatement technologies. It also identifies regulatory gaps that must be addressed before CCS can be widely implemented.

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SEC issues guidance on disclosure obligations associated with climate change

Lanette Wilkinson

Securities and Exchange Commission (SEC) rules require companies to disclose impacts or risks that are material to their business. In September 2007 and again in November 2009, a coalition of leading institutional investors petitioned the SEC to issue guidance on existing SEC disclosure obligations as they relate to climate change. Following this pressure, on January 27, 2010, the SEC approved an interpretive release that addresses when legislative or business developments relating to climate change trigger disclosure obligations. Although the interpretative release has not yet been issued, the SEC has indicated that disclosure obligations may be triggered when a company evaluates, and determines to be material to its business, (1) the impact of existing (or in certain circumstances, proposed) legislation and regulation relating to climate change; (2) the risks or effects of international accords and treaties relating to climate change; (3) the potential or actual indirect consequences of regulatory or business trends associated with climate change; or (4) the effects of actual or potential physical impacts of climate change.

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Québec announces target to reduce greenhouse gas emissions by 20% below 1990 levels by 2020

Alix d'Anglejan-Chatillon and Jason Streicher

On November 23, 2009, Québec's Minister of Sustainable Development, Environment and Parks announced Québec's target to reduce greenhouse gas emissions (GHG) by 20% below 1990 levels by the year 2020. The Minister elaborated that "the reduction target will show flexibility from one economic activity sector to another in accordance with the reduction potential of each, international competitiveness, available technology and required transition measures."

In order to achieve the announced reduction target, the Minister suggested that Québec will make major investments in mass transit and will establish means to encourage the increased use of intermodal transportation of goods. This initiative is in addition to the previously announced introduction of a GHG emission standard for light-duty vehicles, equivalent to the California standard, and investments to encourage the use and development of Québec's expertise in the electric vehicles sector. Lastly, the Québec government has stated that in order to achieve its reduction target, a GHG cap and trade system will need to be implemented in 2012 and, to this end, Québec expects to participate in establishing the largest GHG cap and trade system in North America in conjunction with its partners in the Western Climate Initiative.

OSC to focus on environmental disclosure by reporting issuers

Ruth Elnekave and Cora Zeeman

In an earlier Securities Law Update we reported that against the backdrop of investors' concerns regarding climate change considerations and increasing regulation to combat greenhouse gas (GHG) emissions, the Ontario Securities Commission (OSC) released Staff Notice 51-716 - Environmental Reporting in February 2008, outlining the results of a targeted review to determine the degree to which reporting issuers were adequately disclosing "environmental matters". Similarly, in our September 2009 Emissions Trading & Climate Change Update we reviewed the escalating significance of such considerations in light of numerous mandatory GHG reporting regimes that have recently been announced across North America.

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Ontario announces greenhouse gas reporting regulation

Cora Zeeman

On December 1, 2009, the government of Ontario introduced a key regulation in support of the implementation of a cap-and-trade program in the province. The Greenhouse Gas Emissions Reporting Regulation (O.Reg. 452/09) will assist the development of this program by providing for the collection of accurate greenhouse gas (GHG) emission data. It is also aimed at aligning Ontario's cap-and-trade program with those being developed across North America. To this end, where viable, the province intends to work with other provinces and the federal government to harmonize GHG reporting requirements, as well as with its Western Climate Initiative partners, to harmonize with U.S. EPA reporting requirements. The regulation follows the introduction of Bill 185 on May 27, 2009, an act designed to implement Ontario's cap-and-trade program through amendments to the Environmental Protection Act, which bill passed its third reading on December 3, 2009.

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B.C. announces greenhouse gas reporting regulation

Phil G. Griffin

On November 25, 2009, the Minister of Environment announced the approval of the Reporting Regulation under British Columbia's Greenhouse Gas Reduction (Cap and Trade) Act. The new regulation, which becomes effective on January 1, 2010, requires the operators of facilities that emit more than 10,000 metric tonnes of carbon dioxide equivalent (C02e) annually to report those emissions to the Ministry of Environment. The regulation requires the reporting of all six main types of greenhouse gases (GHG) and prescribes the types of facilities for which reports are required. Commencing with the report for 2010, annual emission reports are required to be filed by March 31 of the following year. In the case of facilities that emitted more than 20,000 tonnes of C02e in any year between 2006 and 2009, the report submitted for 2010 must also include the emissions in any year in the 2006-to-2009 period in which the 20,000-tonne threshold was exceeded. The quantification methods established by the Western Climate Initiative (WCI) are required to be used by facility operators for reporting purposes. Where WCI quantification methods do not exist, the methods to be used will be those specified by the Ministry of Environment. For the purposes of the reporting requirements, emissions from wood biomass or wood-biomass components of mixed fuels are excluded in determining the reporting thresholds.

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North America bets on carbon capture and storage

Bradley B. Grant and Matthew Synnott

As we move towards the United Nations conference on climate change in Copenhagen, Denmark from December 7 to 18, 2009, Canada is still without a definitive climate-change strategy. The Government of Canada has stated that the solution in Canada will ultimately depend on the approach taken in the U.S. Similarly, the approach adopted in Canada will impact those currently being implemented in Canadian provinces.

While no definitive federal policies are in place in the U.S. or in Canada, both governments appear to be looking to carbon capture and storage (CCS)-a process that captures carbon dioxide (CO2) emissions before they are released into the atmosphere and stores them in geological formations kilometres deep inside the earth-as an important part of the solution to the problem of reducing greenhouse gas (GHG) emissions. Canadian provinces (in particular, Alberta and Saskatchewan) are also investing heavily in CCS.

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Canadian Implications of U.S. Climate Change Regulation - Part II

Kerry-Boxer Bill Introduced in the Senate

Jason Kroft, Ruth Elnekave and Michael Lees

On September 30, 2009, Senators John Kerry (D-MA), Chairman of the Committee on Foreign Relations, and Barbara Boxer (D-CA), Chairman of the Committee on Environment and Public Works, introduced the Clean Energy Jobs and American Power Act ("Kerry-Boxer", or the "Bill"). The stated purpose of the Bill is to "create clean energy jobs, promote energy independence, reduce global warming pollution, and transition to a clean energy economy." The Bill, the main feature of which is an economy-wide cap-and-trade regime to reduce greenhouse gas (GHG) creation, is closely modelled on its House of Representatives predecessor, the American Clean Energy and Security Act (ACES), which was passed on June 26, 2009.1

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The impact of legislation requiring GHG-emissions reporting

Jason Streicher

Focus continues to intensify on this December's climate change talks in Copenhagen. Regardless of what may transpire by year's end, climate-change considerations will remain a hot-button issue and will garner long-term political, legal and media attention. Towards Copenhagen and beyond, it seems safe to say that Canadian companies will continue to be faced with new legislative requirements enacted to address climate change issues. As an example, many Canadian companies are, or soon will be, required to report greenhouse-gas (GHG) emissions.

Against this backdrop, Canadian companies should consider whether they are adequately preparing themselves to report GHG emissions and/or to comply with other foreseeable climate change obligations. Additionally, Canadian reporting issuers should address whether they are giving adequate disclosure to investors about environmental matters that may have a material impact on them.

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Canadian implications of U.S. climate change regulation

U.S. House passes American Clean Energy and Security Act

Jason Kroft, Ruth Elnekave and Michael Lees

While Canadian market participants are understandably focused on our own emerging climate-change regulatory framework, it is important to keep up to date on U.S. developments and their potential implications for our markets and industries. This short article provides a high-level overview of key features of current U.S. federal legislative initiatives and their possible effects north of the border.

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British Columbia's Carbon Trust delivers first offsets

Ruth Elnekave

The Pacific Carbon Trust has delivered its first 34,370 tonnes of emissions offsets to the provincial government through investments in new energy technologies.
The Trust, a Crown corporation established in 2008 as part of the province's Climate Action Plan, purchases carbon offsets on behalf of public-sector organizations and other clients, including businesses and individuals. Under the Plan, all public-sector organizations are required to achieve carbon neutrality by 2010.

Offsets purchased by the Trust must be generated through B.C.-based activities that demonstrate real GHG emission reductions or removals that would not have occurred without the revenue from the purchases, and reductions must be verified by an objective third party.

The Trust has a goal of acquiring over 700,000 tonnes of offsets annually by 2011. To date, it has agreed to acquire offsets from fifteen facilities, including greenhouses, a cement plant and a developer of hybrid heating systems.

Ottawa unveils carbon-offset system

Ruth Elnekave

On June 10, 2009, the Government of Canada announced the release of two draft "Program Guides" for the creation of Canada's Offset System for Greenhouse Gases (Offset System). The Offset System is an important step in the creation of a carbon market in Canada, establishing tradable credits for greenhouse gas (GHG) reductions that will work in conjunction with the planned federal GHG regulatory regime. Under that regime, the Government will place a cap on GHG emissions and allow firms that do not meet set targets to buy credits from those with a surplus as an alternative to reducing their emissions. The creation of a carbon market is part of the Government's commitment to reducing total GHG emissions by 20% below 2006 levels by 2020.

The Program Rules and Guidance for Project Proponents provides the rules, requirements and processes for offset credit creation, addressing registration of eligible projects right through to the issuance of credits and requirements after issuance. The Program Rules for Verification and Guidance for Verification Bodiessets out the rules for processes to verify the eligible GHG reductions or removals achieved from a registered project. The two Program Guides, together with the Guide for Protocol Developers (released August 2008), form the basis of Canada's Offset System.

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Ontario's energy renaissance continued: Green Energy Act passed

Jeffrey Elliott and Andy Gibbons

On May 14, 2009, Ontario's Bill 150, the Green Energy and Green Economy Act, 2009 (GEA) was passed by the Ontario Legislature. Modeled, in part, after successful programs in Europe, the GEA is intended to provide the catalyst for the development of the green economy in Ontario, improve the environment, implement Ontario's commitment to climate change initiatives and create a culture of energy conservation. To accomplish this, the GEA amends 15 other statutes - including the Planning Act, Electricity Act, 1998 and Ontario Energy Board Act, 1998.

To re-cap our February update when we first reported on Bill 150, some of the key components of the GEA include the following.

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Ontario introduces cap-and-trade legislation

Ruth Elnekave

On May 27, 2009, the Government of Ontario introduced legislation to enable the creation of a "cap-and-trade" system in the province. If passed, Bill 185 - the full name of which is the Environmental Protection Amendment Act (Greenhouse Gas Emissions Trading), 2009 - would amend existing legislation to establish a system with hard caps on the absolute level of permitted emissions. This is expected to help the province meet its commitment to reduce greenhouse gas (GHG) emissions to 6% below 1990 levels by 2015 and 15% by 2020.

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Canada's Budget 2009 - A shade of green

Jeffrey Elliott

The increasingly anemic Canadian economy was administered a boost in the form of an unprecedented stimulus package announced in the federal government's Budget 2009 released on January 27, 2009. The budget contains a number of programmes and incentives to promote "green" projects and the development of clean technologies and renewable energy.  While the exact details are still to be provided, the "green" budget highlights are as follows.

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Carbon capture and storage: A key carbon abatement option in Canada?

Ruth Elnekave

As countries worldwide search for ways to make deep cuts in carbon dioxide (CO2) and other greenhouse gas (GHG) emissions, carbon capture and storage (CCS) technology is being recognized by governments, research institutions and industry as a potentially key tool for such emissions reduction.

The world's leading body of experts on climate change, the Intergovernmental Panel on Climate Change,1 believes that CCS is among the most promising tools to control GHG emissions. In Canada, with the recent re-election of Prime Minister Stephen Harper, the development of CCS is expected to proceed as planned as a cornerstone of the government's green plan.

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CCS a cornerstone of Alberta's climate strategy

Harold Andersen

The Alberta government recently announced an updated climate change strategy in its January 2008 policy document, entitled "Alberta's 2008 Climate Strategy: Responsibility/Leadership/Action". The strategy calls for province-wide emissions reduction targets from current levels. Alberta is proposing cutting 20 million tonnes of greenhouse gas emissions by 2010, 50 million tonnes by 2020 and 200 million tonnes by 2050, relative to anticipated economic growth.  The strategy calls for the fostering and leveraging of carbon capture and storage technology to account for approximately 70% of the ultimate reductions, with conservation and efficiency efforts and the adoption of greener practices accounting for the remainder. Other points of interest in the strategy include the development of an Energy Efficiency Act, the development of protocols for facilities that emit over 50,000 tonnes of greenhouse gases to report their emissions, and the continued development of a carbon offset market in the Province.

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Proposed launch date for trading of CO2e futures in Canada

Alix d'Anglejan-Chatillon and Jason Streicher

The Montreal Climate Exchange (MCeX) recently announced that, subject to regulatory approval, on May 30, 2008 it plans to launch trading of its first environmental product, namely futures contracts on Canada carbon dioxide equivalent (CO2e) units. The MCeX set the launch date after the federal government's March 10, 2008 release of further details of its greenhouse gas emissions regulations.

It is expected that the emissions reductions credits and offset credits under the federal government's proposed greenhouse gas regulatory scheme will be the two sources for futures contracts on Canada CO2e units. Units of each of these two types of domestic credits (which will represent an equivalent emission of one metric tonne of CO2e) will be the underlying interest of the CO2e futures contracts traded on the MCeX.

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B.C.'s green plan combines carbon trading and carbon tax

Phil Griffin

In November 2007, the British Columbia (B.C.) Legislature enacted initial legislation respecting the reduction of greenhouse gas (GHG) emissions. The Greenhouse Gas Reduction Targets Act, which came into force on January 1, 2008, establishes targets of a 33% reduction below 2007 GHG emission levels by 2020, and an 80% reduction below 2007 emission levels by 2050. It also requires that realistic, economically viable interim targets for 2012 and 2016 be established by the Minister of Environment by the end of 2008, and that the provincial government itself become carbon neutral by 2010.

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Interest in emissions trading soars as Canada prepares to confront climate change

Harold Andersen and Kirsten Iler

There is an emerging Canadian consensus that carbon regulation is inevitable, and with it, a growing sense that future policies for addressing climate change will include market-based mechanisms such as emissions trading. In early October, the Canadian Council of Chief Executives released a declaration calling climate change the "most pressing" issue today and calling for "aggressive" action and "absolute" emissions reductions. The CEOs also acknowledged that government regulation - including emissions trading, technology investment and environmental taxation - would be required in order to reduce greenhouse gas (GHG) emissions.

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Canada's Clean Air Act Introduced in Parliament

Patrick Duffy

On October 19, 2006, the federal government introduced Bill C-30, Canada's Clean Air Act, for first reading in Parliament. The proposed legislation sets the legislative framework for implementing what the government refers to as "an integrated, nationally consistent approach to reducing emissions of air pollutants and greenhouse gases."

In the Notice of Intent that accompanies Bill C-30, the federal government has stated that it will adopt fixed caps for air pollutants and is committed to achieving an absolute reduction in greenhouse gases emissions of between 45% and 65% from 2003 levels by 2050. The federal government will ask the National Round Table on the Environment and the Economy (NRTEE) for advice on the specific emission-reduction targets to be selected and scenarios for how the target could be achieved.

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