Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

Dole's carbon neutral banana

Long able to attract eco-tourists, Costa Rica is now positioning itself as a destination for environmentally conscious businesses.

On June 7, Costa Rican President Oscar Arias pledged that Costa Rica will be a carbon neutral country by 2021. To help achieve that goal, the country is developing a voluntary “C-Neutral” certification. To be certified, businesses will be able to pay a voluntary “tax” of about US$10 per metric tonne of carbon dioxide emissions. Funds generated from the scheme will help fund conservation, reforestation, and research. The government is also working directly with businesses to help them reduce their net emissions, as evidenced by a major corporate announcement just 2 months after President Arias’ pledge.

Dole Food Company Inc., the world’s largest producer of fresh fruits and vegetables, announced August 9 that it will go carbon neutral in Costa Rica. Dole’s local subsidiary, Standard Fruit de Costa Rica, currently produces and ships about 44 million boxes of bananas and pineapples annually from Costa Rica to markets in North America and Europe. Working with the Ministry of Environment and Energy of Costa Rica and the Fondo Nacional de Financiamento Forestal, Dole has committed to make its entire Costa Rican supply chain carbon neutral.

The magnitude and timing of the initiative is not yet clear. The company has yet to calculate the total emissions from the supply chain and has not finalized the details of the program. However, the undertaking will likely require Standard Fruit both to reduce emissions in transportation and agricultural practices as well as to offset emissions by partnering with local preservation and reforestation programs.

-Post by Andrew Lord, Student-at-Law

Mitsubishi and KenGen sign contract for geothermal plant in Kenya

This past weekend KenGen signed a contract with Mistubisihi Corporation and Mitsubishi Heavy Industries to construct a 35MW geothermal plant in the Kenyan Rift Valley. This project has qualified under the UN's Clean Development Mechanism and will generate Certified Emission Redution credits. Although a small project on the scheme of world energy consumption, this plant will generate about 3% of the power that Kenya required at its peak last year (1082MW). Even more impressive is the fact that the Kenyan Rift Valley has the potential to produce 2,000MW of geothermal energy per year, almost double Kenya's current demand. Not only does this provide Kenya an opportunity to create a surplus of green energy, but it also provides a lot of potential for other CDM projects in the area.

Hydro and Alcan sign a new deal

It would appear that a deal between BC Hydro and Alcan is back on.
This deal, which was originally rejected by the BCTC last year because it provided power that was more expensive than power generated by thermal stations, has been modified to provide for power through to 2034 and a lower price per kilowatt. In addition, the compliance cost of thermal plants with the B.C. Energy Plan's zero net greenhouse gas policy has likely increased the cost of thermal to make other sources cheaper. The big question is, is large hydro really greenhouse gas neutral? Many of the dams in B.C. were created without first clearing the valley's of biomass, leading to methane off-gassing from the rotting biomass in the reservoirs. Regardless of whether or not the hydro is greenhouse gas neutral, the energy policy does not state that hydro projects will have to purchase offsets. This deal would potentially bring another 2000 GWh/yr on to the grid in B.C., enough to power 200,000 homes.

Environmental Lawyer Douglas V. Tingey joins Davis LLP

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Davis acts for Harrison Hydro Finance Inc. in $518 Million Bond Issue

Click here for more details on this run-of-river project.

Offsets for New Power Plants in BC

In February of 2007, the BC Government released its newest energy plan. Policy items 18, 19 and 20 discussed carbon offsets for power projects in BC. In particular:

18. All new electricity generation projects will have zero net greenhouse gas emissions.
19. Zero net greenhouse gas emissions from existing thermal generation power plants by 2016.
20. Require zero greenhouse gas emissions from any coal thermal electricity facilities.

Policy item number 20 has essentially prevented new coal plants in BC until there are some large technical advances in carbon sequestration. Policy item 19 is an issue for the future, although it should be on the minds of every owner of a power plant in BC as it will require planning, and possibly new projects or upgrades to offset the carbon from existing thermal plants. As for Policy item number 18, guidance is still lacking.

BC Hydro recently announced the Standing Offer for projects under 10MW. However no mention is made in the terms of offsets. In theory, all projects tendered will be required to have offsets. This suggests that guidance will not be coming from BC Hydro, but rather from either the provincial government or the federal government. Although both levels of government have suggested legislation is being drafted, very little has been offered with regards to what that legislation will entail. At the federal level, any offset program will probably fall under the Canadian Environmental Protection Act and will be accompanied by a trading program.

A recent example of the uncertainty surrounding offsets in BC was highlighted by WestPac’s recent announcement of plans for a 1200MW Liquid Natural Gas plant for Texada Island. This project will require a substantial amount of offsets, and yet WestPac acknowledges that it has been told that offset guidelines will likely not be ready until the Fall of 2008. It is worth noting that WestPac has suggested that it would like to offset the LNG project with run-of-the-river projects.

This raises an interesting question. Do run-of-the-river projects (or any other zero emission projects) in BC meet the concept of ‘additionality’, a concept which is the cornerstone of any true offset program? Since all power projects in BC will have to be net zero it is hard to see how any low emissions power project in BC will create credits to be used to offset other emissions. Furthermore, since BC Hydro is currently requiring that ‘environmental attributes’ be sold along with the power for energy sold under the Standing Offer program, and encouraging that transfer with a green premium in other calls for power, it is unclear that any credits will be owned by the project developers to be used to offset other emissions. This all suggests either direct emissions reductions at the plant, reductions in other industries, or reductions in other provinces or countries.