Canadian Energy Law : Lawyers & Attorneys for Environmental Energy Law

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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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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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.
 

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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.
 

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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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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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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.

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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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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.

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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.

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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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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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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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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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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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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.

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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.

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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.

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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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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.

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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
 

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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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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.

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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.

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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.

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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.

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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.

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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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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 = http://www.theglobeandmail.com/report-on-business/economy/prospects-for-cap-and-trade-system-waning/article1783998/), 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.
 

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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

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The Alberta government has recently drafted legislation, Bill 24, Carbon Capture and Storage Statutes Amendment Act, 2010, 3^rd Sess., 27^th 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.

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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.

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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.

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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.

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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 http://carbonoffsetsolutions.climatechangecentral.com/

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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.

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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.

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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.

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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.

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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”

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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.

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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.

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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.

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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.

 

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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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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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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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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.

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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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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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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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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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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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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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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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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.

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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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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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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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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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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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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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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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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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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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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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