Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

Canada and U.S. Invest in Leading Carbon Capture and Storage Project

This week, the Honourable Christian Paradis, Canada's Minister of Natural Resources, and Steven Chu, Secretary of the U.S. Department of Energy, announced a total of $5.2 million in new funding for the International Energy Agency (IEA) Greenhouse Gas Weyburn-Midale CO2 Monitoring and Storage Project.

The Government of Canada's portion of the investment is $2.2 million, which brings its total contribution to $15.2 million in the project to date. The investment, announced during the Clean Energy Ministerial meeting in Washington, will support additional CO2 storage research in the final phase of the project. The research being carried out will improve the knowledge of measurement, monitoring and verification of CO2 storage in depleted oil reservoirs and also aims to demonstrate that CO2 can be stored safely, minimizing the possibility of leakage.

The IEA's Greenhouse Gas Weyburn-Midale CO2 Monitoring and Storage Project is taking place in conjunction with one of the largest, fully integrated carbon capture and storage operations in the world. The CO2 is provided by the Dakota Gasification Company's coal gasification facility in Beulah, North Dakota, and is pipelined 320 km to Cenovus Energy's Weyburn and Apache Canada's Midale oil fields in southeastern Saskatchewan.

Created by the Government of Canada, the Government of Saskatchewan, Cenovus (formerly Pan Canadian Petroleum and later EnCana) and the Petroleum Technology Research Centre (PTRC) in Regina, the project is the world's first and largest monitoring site for geological storage of CO2. To date, a record 18 million tonnes of CO2 have been stored in the Weyburn and Midale oil fields in Saskatchewan.

The final phase of the project is expected to be completed in 2011 and will conclude the creation of a best practices manual to guide all aspects of CO2 geological storage projects in depleted oil fields worldwide.

This carbon capture and storage investment at Weyburn-Midale is a practical application of the Canada-U.S. Clean Energy Dialogue announced in February 2009 by President Obama and Prime Minister Harper, which aims to enhance joint collaboration on the development of clean energy technologies and the reduction of greenhouse gas emissions.

Of the project and the latest investments, Minister Paradis declared: "These investments by our government and the U.S. demonstrate our leadership and expertise in carbon capture and storage technology [...] this collaborative, world-renowned carbon capture and storage project is reducing greenhouse gas emissions while demonstrating clean energy innovation."

Of the cooperation between Canada and the U.S. on the project, Energy Secretary Steven Chu commented "This project is an example of what we can accomplish when we leverage the technical expertise in both countries to deploy clean energy technologies [...] working together, we have not only reduced carbon pollution, we have demonstrated that carbon capture and storage technology can play an important role in a clean energy future."

Canadian Chamber of Commerce Comments on Climate Change

The Edmonton Journal reported this morning that the Canadian Chamber of Commerce has called on its members to sign and send a template letter charging that Bill C-311, the Climate Change Accountability Act is a threat to Canadian competitiveness. According to the article, the Chamber message advises its members that "Bill C-311 must die in the Senate...this will require significant lobbying by Canadian business".

Bill C-311 was introduced to Commons by NDP MP Bruce Hyer and requires the Canadian government to regularly make public reports that measure and review the effectiveness of its policies to reduce GHG emissions. The bill requires the Minister of Environment to implement measures to ensure that Canada reduces its absolute GHG emissions by 25 percent below 1990 levels by 2020 and 80% below 1990 levels by 2050. It also mandates that the National Roundtable on Environment and the Economy review the public reports and advise on the feasibility of the government's plan for reductions.

Minister Prentice has on many occasions indicated that Canada's target will be consistent with the targets established by the United States in respect of GHG reductions. He has confirmed that Canada's target is 17% below 2005 levels, by 2020, which is loosely aligned with the U.S.' 16% below 2006 levels. The Journal article asserts that "[c]limate scientists have estimated that developed countries need to collectively reduce emissions by 25 to 40 percent below 1990 levels by 2020 to ensure that average global temperatures do not rise beyond a tipping point of more than two degrees Celsius above pre-industrial levels".

While the Chamber of Commerce letter acknowledged that there is a need for action on climate change, it criticized Bill C-311 as potentially imposing "great costs on the Canadian economy", since the targets proposed by the bill do not align with those in the United States. And therein lies the problem. If Canada's targets are lower than those proposed by the U.S. and legislation is passed there which requires border tariffs on goods produced in Canada, Canadian exports will suffer as a result. If our targets are greater than those of the United States, which is, by the way, our largest trading partner, our goods could potentially become so expensive that the result would be crippling to our economy. The letter states:

"Globally, responding to climate change will take the biggest single investment in the history of humankind...It will be of monumental scale here in Canada as well. We cannot simply tweak our way to success. And we cannot deal with climate change by eliminating consumption. That is simply not practical. It would cripple the economy, make it impossible to pay for the changes that are needed and destroy public support for strong, environmental policies".

Predictably, NGOs like the Climate Action Network are "shocked" by the letter. They want GHG reductions no matter what the cost. Wonder who they think will fund them if our economy is crippled and companies and governments alike are out of money.

Alberta Leads the Way on Climate Change Technology

We blogged last week that the CCEMC had announced that it had selected projects in which it would be investing a total of $71 million.

Davis LLP attended the press conference yesterday morning in which CCEMC Chair, Eric Newell, announced some of the projects which would be receiving funding.

1. ECB Enviro North America Inc. was awarded $8.2 Million for a biogas co-generation project in Lethbridge, Alberta. Thane Hurlbert, the company's president, indicated that the project will employ approximately 15 people in green jobs and that the plant will be ready to go in 2011.

2. Plasco Alberta and its partner, Red Deer County, were awarded $8 million to builld a plant to convert solid waste into clean fuel gas that can be burned in a combustible engine. A pilot project is already under way in Ottawa, and the first commercial scale project will be built and operated in Red Deer. Plasco Executive Vice-President, Corporate Development, Lynde Coit thanked Red Deer County for their decision to implement this new technology over the establishment of a new landfill.

3. Enmax Corporation was awarded $14.5 million to instal solar or wind power home generation kits to 9,000 homes across Alberta over the next five years. ENMAX Executive Vice President for Smart Grid Technologies, Helen Bremner, indicated that the project will extend benefits of greenhouse gas reductions to the consumer level. The first installation is expected in the spring of 2011 and then will move across Alberta region by region. Green jobs will be created by the ENMAX program.

4. City of Medicine Hat was awarded $3 million for the Medicine Hat Concentrating Solar Thermal Power Project. Concentrating solar thermal technology can produce heat, power, and chemicals, using energy from the sun while avoiding burning fossil fuel and its cost and air emissions. This hybrid energy system will be installed and will evaluate the technology's potential Alberta-wide.

5. Enerkem Inc. was awarded $1.8 million to develop a pilot plant to produce biofuel and utilize CO2. Enerkem's technology converts residual materials, such as non-recyclable municipal solid waste, into transportation fuels and advanced chemicals. Through this project, Enerkem and its partners will use waste, such wood and straw, to produce clean biofuels, and will also incorporate carbon dioxide directly in the process, demonstrating the potential for greenhouse gas reductions in biofuels production.

The projects announced yesterday represent a total of $37 of the $71 million in funding announced by the CCEMC. Chairman Newell indicated that another 11 projects in the energy-efficiency and the carbon capture and storage sectors will be announced in the next two weeks.

These announcements mark a significant step in Alberta's fight against climate change. Both the Alberta provincial government and federal government have indicated that technology and innovation are the pathway to significant emissions reductions.

Since 2007 the Canadian Government has invested in a range of ecoAction programs, many of which promote the use of new technologies. In 2009, Canada's Economic Action Plan included billions of dollars in spending on initiatives like the Clean Energy Fund and the Green Infrastructure Fund. They provide close to $2 billion for the development of promising clean energy technologies and green infrastructure projects.

Alberta's 2010 Speech from the Throne makes direct reference to innovation and technology and the federal dollars are in addition to the clean energy technology initiatives that Alberta has undertaken provincially - the $2 billion Alberta CCS spend is one example. The funding outlined in the CCEMC's announcements are another.

With the 5 annoucements yesterday and more to come, it's clear that Alberta is leading the way on climate change technology.

Environment Minister Says US Laws Could Backfire

Alberta's Environment Minister, Rob Renner, is in the United States this week to talk about climate change and Alberta's commitment to clean energy. But the Minister is also warning that "new low-carbon fuel standards proposed in the North-eastern U.S. could actually slow the greening of the oilsands", the Edmonton Journalreports. Amid typical and predictable remarks from environmentalists that the Minister's comments are "outrageous", Minister Renner said that "[w]e need to make sure that whatever we do doesn't have the unintended consequence of disinsenting further investment into technology that will reduce greenhouse gas emissions".

Why would they? Because the low carbon fuel standards being proposed penalize more carbon intensive fuel sources like shale gas or oilsands, Alberta's climate change policy. These laws would force refiners to reduce the amount of oilsands fuel in the oil they refine or purchase offsets or credits, ultimately making oil produced from the oilsands more costly.

The Minister wants to ensure that critics of the oilsands understand what they are talking about, given that the anti-oilsands campaigns launched by various environmental organizations never really provide the full picture about the oilsands. The Minister remarked "[i]t's not up to us to tell other jurisdictions what they should and shouldn't do. It's up to us to ensure that as tehy make policy decisions, they do so in the context of thorough information and balanced information".

Despite what the Minister calls a perception that Alberta isn't doing anything about greenhouse gas emissions or climate change, Alberta's climate change policy, which includes spending the millions of dollars in the Climate Change and Emissions Management Fund has reduced Alberta's emissions per barrel of oil produced.

As we reported last week, the CCEMC has announced spending of $71 million on clean and green projects. Tomorrow the specific projects will be revealed. Stay tuned and we will be present for the announcement. Stay tuned.

The CCEMC Awards $71 Million to Clean and Green Projects

The Climate Change and Emissions Management (CCEMC) Corporation, which administers Alberta's Climate Change and Emissions Management Fund, has announced it will invest approximately $71 million dollars in sixteen projects in the areas of greening energy production, carbon capture and storage and energy conservation and energy efficiency.

The Fund, which currently sits at about $185 million dollars, is one compliance option for the 100 or so specified emitters in Alberta to comply with the province's emissions reduction legislation, the Climate Change and Emissions Management Act and its associated regulations. Monies from the Fund, which may only be used for the purposes described in the Act, are granted to the CCEMC, which is an arm's length organization, independent from government. The CCEMC is leveraging the dollars from the Fund with the proponent organization's own and other sources of funding to fund new technologies which reduce emissions of specified gases or improve the ability to adapt to climate change.

Alberta is currently the only jurisdiction in North America which requires emitters to reduce their carbon emissions below a specified threshold and the Fund is an important component of Alberta's overall climate change strategy. The projects will be announced by CCEMC Chair Eric Newell on June 16 in Edmonton. The announcements are the next step in the process begun in 2009 with the CCEMC's 2009 Call for Proposals: Initial Expression of Interest Stage. Project proponents will be required to enter into agreements with the CCEMC and, as Chair Eric Newell asserts, those projects will "have project milestones; we want to see results".

The announcement of funding is significant for the CCEMC and for Alberta. It is the first time that the monies from the Fund are being allocated. If successful, the projects will create a direct link between the Fund as a compliance option and the reduction of emissions in Alberta.

We will be present for the public annoucement of projects on June 16th. Stay tuned.

Ontario ratchets coal plant emissions cap down to 11.5 Mt beginning in 2011

The province of Ontario has lowered its voluntary cap on CO2 emissions from coal-fired generation to 11.5 megatonnes (Mt) for each of 2011 through 2014. While this cap is significantly lower than the cap of the past two years, it is not low enough for many environmentalists, particularly given the level of actual emissions last year.

The government of Ontario, through its Ministry of Energy and Infrastructure, is the sole shareholder of Ontario Power Generation ("OPG"). In that capacity, the government issued a shareholder directive to OPG on May 20 limiting the CO2 emissions from OPG's four coal-fired generating stations to 11.5 Mt per year. A previous directive in April 2008 set the limit for 2009 at 19.6 Mt and for this year at 15.6 Mt. The new limit established by the May 20th directive is therefore 41% lower than the 2009 limit and 26% lower than this year's limit.

However, the new limit is higher than actual emissions in 2009. According to OPG's 2009 Sustainable Development Report, 2009 emissions from coal-fired generation were about 10.1 Mt. The new cap of 11.5 Mt for 2011 and beyond is therefore 14% higher than actual emissions in 2009 (the Ontario Clean Air Alliance pegs the difference at 17% based on 2009 emissions of 9.8 Mt, although we have been unable to determine where they obtained the 9.8 Mt figure).

Several stakeholder groups are crying foul at a limit that exceeds recent historical emissions. The Ontario Clean Air Alliance characterized the decision in particularly harsh terms, saying, "Premier McGuinty's decision to permit Ontario Power Generation to increase the output of its dirty coal-fired power plants by 17% is a cynical betrayal of the public trust. To save lives, reduce asthma attacks and to help prevent dangerous climate change, Premier McGuinty should direct Ontario Power Generation to put its coal-fired power plants on standby reserve and only operate them if they are absolutely necessary to keep the lights on."

Neither the Premier's office nor the Ministry of Energy and Infrastructure have commented on the directive to OPG. However, we suspect that the decision to set the limit above 2009 emissions was informed by the economic downturn of the past year and a half. By setting the limit above 2009 emissions, the government may have intended to leave some generation capacity headroom to accommodate a bump in demand as the economy recovers.

However, it is curious that the limit flatlines at 11.5 Mt through 2014, when coal-fired emissions are to be phased out. We would have expected to see the cap continue to be reduced in the last 4 years of coal-fired generation in the province, particularly in the last couple of years when more and more Feed-in Tariff projects should be coming online.

In any event, OPG may continue its recent track record of keeping emissions significantly below its mandated limit.

BC's Clean Energy Act becomes law

BC's Clean Energy Act received royal assent on June 3, 2010. As previously reported, the Clean Energy Act revamps the province's energy laws to achieve a long list of objectives, including developing renewables, achieving energy self-sufficiency, promoting energy exports, encouraging conservation, and facilitating the participation of First Nations in energy projects.

Significant work remains to be done in writing the regulations required under the Act (for example, to define the promised feed-in tariff program). If Ontario's roll-out of the Green Energy Act serves as a reasonable guide, these regulations could be ready by early fall.

More information about British Columbia's clean energy future can be found at the new Powe of BC website.

Renault-Nissan Alliance Signs Zero-Emission Vehicle Partnership in Québec

On June 1, 2010, the Renault-Nissan Alliance announced that Nissan Canada had entered into a memorandum of understanding (MOU) with the Government of Québec, the City of Montréal, Québec City, Hydro-Québec and the Agence de l'efficacité énergétique du Québec which aims to advance zero-emission mobility in Québec.

Under the MOU, the parties are to work together to plan the necessary charging infrastructure and to promote the use of zero-emission vehicles in Québec. The MOU agreement adds Québec to a growing network of zero-emission vehicle initiatives across the world.

Of the agreement, the participants were quoted as follows:

Québec Minister of Natural Resources Nathalie Normandeau was quoted as saying "This agreement brings us a step closer to a governmental action plan on electric vehicles, which will be launched within the next few months [...] we are planning a series of concrete actions that will pave the way for the arrival of electric vehicles in Québec. Since 97% of our electricity comes from clean, renewable resources, Québec presents a number of advantages for the introduction of electric vehicles."

"The Renault-Nissan Alliance has committed to being a global leader in zero-emission mobility, which is one of the best solutions for reducing CO2 emissions," said Mark Grimm, President Nissan Canada Inc. "We look forward to bringing the Nissan LEAF, the only mass-market zero-emission car at an affordable price, to Québec. Our partners have already demonstrated their commitment to combating greenhouse gas emissions and we anticipate a productive collaboration."

Thierry Vandal, Hydro-Québec's President and CEO, added that "[this] announcement falls perfectly in line with our Strategic Plan 2009-2013 and other initiatives currently underway at Hydro-Québec. This memorandum of understanding will allow us to work closely with these important partners to carefully plan for the arrival of electric vehicles in Québec."

"Montréal is a true leader with respect to the reduction of greenhouse gas emissions," said Alan DeSousa, Vice-President of the Executive Committee and responsible for finance, sustainable development, environment and parks. "The memorandum of understanding signed with our partners meets the objectives of Montréal's Strategic Plan for Sustainable Development. It will raise our city's profile in North America with regard to electric vehicles and will help us reach our goal of reducing greenhouse gas emissions by 30% by the year 2020."

Québec City's Mayor, Régis Labeaume stated: "This partnership is in line with Québec City's ongoing efforts to develop sustainable transportation. The implementation of the Écolobus service, a fleet of non-polluting, ultra-quiet electric minibuses that travel the streets of Vieux-Québec, is a great success that contributes to maintaining the quality of the capital's environment."

Nissan, along with its alliance partner Renault, is committed to making affordable, all-electric vehicles available to the mass-market globally. The Nissan LEAF, a five-passenger all-electric vehicle, will first be available in select Canadian markets, such as Québec, before the end of 2011.

Ontario's Chief Medical Officer concludes that wind farms do not cause adverse health effects

"According to the scientific evidence, there isn't any direct causal link between wind turbine noise and adverse health effects," concludes Dr. Arlene King, Ontario's Chief Medical Officer of Health, in a new report.

The report was based on a literature review of existing scientific evidence on the potential health impact of wind turbines. Its main conclusions are the following:

• While some people living near wind turbines report symptoms such as dizziness, headaches, and sleep disturbance, the scientific evidence available to date does not demonstrate a direct causal link between wind turbine noise and adverse health effects.
• The sound level from wind turbines at common residential setbacks is not sufficient to cause hearing impairment or other direct adverse health effects. However, some people might find it annoying. It has been suggested that annoyance may be a reaction to the characteristic "swishing" or fluctuating nature of wind turbine sound rather than to the intensity of sound.
• Low frequency sound and infrasound from current generation upwind model turbines are well below the pressure sound levels at which known health effects occur. Further, there is no scientific evidence to date that vibration from low frequency wind turbine noise causes adverse health effects.
• Community engagement at the outset of planning for wind turbines is important and may alleviate health concerns about wind farms.
• Concerns about fairness and equity may also influence attitudes towards wind farms and allegations about effects on health. These factors deserve greater attention in future developments.

Similar conclusions drawn in an earlier study prepared for the American Wind Energy Association and Canadian Wind Energy Association. The authors of that study were somewhat more pithy than Dr. King, concluding that "annoyance is not a disease."

While helpful, the Chief Medical Officer's new report will likely not placate wind farm opponents in the province. We anticipate that the alleged health effects of wind turbines will remain at issue as developers seeking renewable energy approvals ("REAs") and may be asserted as grounds for appealing REAs before the Environmental Review Tribunal.

Record-setting decline in U.S. Carbon Dioxide Emissions: U.S. Energy Information Adminstration Report

At 7 percent or 405 million metric tons, the energy-related carbon dioxide emissions in the United States saw their largest percentage and absolute decline since the U.S. Energy Information Adminstration (EIA) began keeping a comprehensive record of annual energy data in 1949.

On May 5, the EIA, which is the independent statistical and analytical agency within the U.S. Department of Energy, released an analysis of the factors affecting this decline. EIA Administrator Richard Newell summarized as follows: "The large decline in emissions was driven by the economic downturn, combined with an ongoing trend toward a less energy-intensive economy and a decrease in the carbon-intensity of the energy supply,"

In addition to a decline in gross domestic product (GDP) in 2009 of 2.4 percent, the energy intensity of the economy (energy consumed per dollar of GDP) declined 2.4 percent and the carbon intensity of the energy supply (carbon dioxide per unit of energy consumed) declined by 2.3 percent. The latter two factors led to a decline in the overall carbon intensity of the economy (carbon dioxide per dollar of GDP) of over 4.5 percent between 2008 and 2009.

The EIA's complete analysis can be found here.