Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

Global carbon market to soften according to Point Carbon

As reported by Carbon Finance, Point Carbon, a leading provider of news and analysis about the carbon market, predicts that the value of the global market will shrink by a third in 2009. They expect the aggregate value of carbon credits to drop to EUR62.6 billion, compared with EUR92 billion in 2008. This is despite a 20% increase in the volume of transactions, an increase which is not nearly as pronounced as the 80% and 200% growth levels seen in the two previous years.

Point Carbon summarizes their findings as follows: "2009 will see a levelling off from the massive growth seen in the carbon market so far. How long this 'breather' will last is, for the most part, a question of how long, and how deep, the recession will play out."

The EU ETS will continue to be the dominant market, with an expected 3.8 billion tonnes to be traded.

2009 will be a leaner year for CDM and JI projects. Primary market transactions are expected to plummet 45% to 300 million tonnes. Combined with a weak CER price, uncertainty about the post-Kyoto framework, and the dry credit markets, this decline may put many projects at risk. Secondary market CER trades are, however, expected to climb 12% to 1.4 billion tonnes.

The Regional Greenhouse Gas Initiative in the northeastern United States will expand to occupy just under 6% of the global market, with an expected trading volume of 339 million tonnes in 2009.

Two new bulletins available: Clean Energy Dialogue and the Ontario Green Energy Act

The Climate Change Law group has published two new bulletins:

1) A Clean Energy Dialogue - Prime Minister Harper and President Obama Pledge to Work Together

At their first official meeting in Ottawa on February 19 U.S. President Barack Obama and Canadian Prime Minster Steven Harper announced a new "Clean Energy Dialogue". While falling short of the continental accord the Canadian government has suggested, the Clean Energy Dialogue is a first step towards developing a more coordinated approach to clean energy development and climate change policy in North America. Senior officials from both sides of the border are expected to meet in coming weeks to launch the Clean Energy Dialogue.

This bulletin explains describes the Clean Energy Dialogue and its implications in more detail.

2) Ontario Tables New Green Energy Act

On February 23, 2009, the Honorable George Smitherman, Ontario's Deputy Premier and Minister of Energy and Infrastructure, table the long-anticipated Bill
150, the Green Energy and Green Economy Act, 2009. As Minister Smitherman put it at a preview breakfast the previous Friday, Bill 150 is intended to "supercharge" Ontario's green economy by promoting the development of renewable energy and fostering a culture of conservation in the province. It also expands the mandate of the Ministry of Energy and Infrastructure and provides mechanisms to fund and report on the progress of provincial green energy initiatives. Once implemented, the reforms of Bill 150 will have a material impact on almost everyone in Ontario. The changes could substantially reshape the province's energy infrastructure, create new opportunities for businesses and individuals, impose new requirements on certain transactions, and impose new costs on rate payers.

This bulletin describes the highlights of Bill 150 and the implications the proposed changes will have.

The US Green Power Play

The writer "attended" a live web-cast the other day organized by John Podesta, who is one of two members of President Obama's transition team. The forum, "Building the New Economy: National Clean Energy Project" included an impressive list of speakers, including former President Bill Clinton, former Vice-President Al Gore, Nobel prize winner and Energy Secretary, Steven Chu, House Speaker Nancy Pelosi, John Podesta, Republican and Democrat senators and many others. In addition to political types, the forum involved representatives of consumer groups, including Wal-Mart, representatives from the oil and gas industry, environmental organizations, labour entities and academics.

The forum focused on the environment and climate change as the means to building the new economy. Despite that such different interests were represented, a few common themes emerged:

1. Reduce dependence on foreign oil and "dirty" coal fired plants. What constitutes foreign oil seems to exclude Canadian resources for the most part;

2. Invest in renewable energy projects;

3. "Connect America" - there was a great deal of discussion and emphasis on developing a national system for the electricity grid, which includes standardizing the approvals process at the federal level.

4. Embrace a global climate change accord, which includes China and India. China has recently surpassed the US in terms of emissions. India is not far behind. To effectively deal with climate change, these countries will have to be involved.

So what?

Behind all of this, is the one main driving force - power. All of the above proposals will require the U.S. federal government's heavy involvement. Private industry cannot do it alone nor can these initiatives be undertaken solely at the state level. The amount of money that it's going to take to implement these ideas means federal government leadership and funding is compulsory. President Obama and his team will be the impetus, the funding body and the reaper of praise and credit when it works.

Once they've tackled climate change in the name of the economic stimulus and national security, will other legacy programs, such as universal health care, be far behind?

Green Energy Act tabled in Ontario legislature

Posted by Zoë Thoms and Andrew Lord

Bill 150, Green Energy and Green Economy Act, 2009 (the "Act") passed first reading Monday, February 23, 2009 in the Legislature of Ontario. As expected, the proposed Act is broad in scope and ambitious in the extent of legislative change it will implement. The Act has the potential to affect virtually everyone on the province, whether you are a homeowner, a renewable project developer, a local distribution company, a municipal planner, or a member of an First Nations community.

The full text of the proposed Act is available online. This posting provides an overview of the proposed Act. References in brackets refer to the bill as posted online.

In introducing the Act, Minister of Energy and Infrastructure, George Smitherman, stated that the purpose of the Act is to enhance Ontario's "green economy" and reduce the province's impact on the climate. The Act has two equally important thrusts:
1) making it easier to bring renewable energy projects to life, and
2) fostering a culture of conservation by assisting homeowners, government, schools and industrial employers to transition to lower and more efficient energy use.

The Act repeals the Energy Conservation Leadership Act, 2006 and the Energy Efficiency Act. Many of the provisions of those two repealed statutes are re-enacted in the Act. The Act further proposes amendments to 15 other statutes, such as the Electricity Act, the Environmental Protection Act and the Planning Act.

The "Green Economy"

Minister Smitherman predicts that the Act would create an estimated 50,000 jobs in its first three years in the areas of construction, trucking, and engineering. Architects, contractors and installers will see more opportunities as they're asked to retrofit buildings for energy efficiency. The proposed legislation would also enable the government to set domestic content requirements for renewable energy projects, aimed at creating those job opportunities in Ontario (Schedule B, s. 7). As well, if passed, the legislation would provide for First Nations and Métis communities to build, own and operate their own renewable energy projects (Schedule B, s. 2).

Expanding Renewable Energy

Some key measures aimed at expanding renewable energy in the province, include:

• creating a feed-in tariff regime - a pricing system for renewable energy - that will guarantee rates and help spark new investment in renewable energy generation, help increase investor confidence and access to financing for renewable energy projects (Schedule B, s. 7);
• establishing a streamlined approvals process, and provide service guarantees for renewable energy projects (Schedule G, s. 4);
• establishing a right to connect to the electricity grid for renewable energy projects (Schedule B, s. 8);
• appointing a Renewable Energy Facilitator to offer one-window assistance and support to project developers in order to facilitate project approvals (s. 10);
• establishing, for the first time, province-wide standards for renewable energy projects - like standardized setback requirements for wind farms (Schedule K, ss. 1-3);
• helping local communities to build and operate their own renewable energy generating facilities, including support for community projects (Schedule I, ss. 1-2);
• implementing a smart power grid in Ontario, making it easier to connect renewable energy generation to the system (Schedule B ss. 1, 4, 5; Schedule D, s. 8); and
• offering incentives for small scale renewables, such as zero or low interest loans to assist homeowners in financing the capital cost of residential renewables (Schedule C, s. 6).

Supporting a Culture of Conservation

If passed, the Act (and related policy initiatives) would support a culture of conservation among consumers, public institutions and industry through a series of initiatives, including:

• making energy efficiency a key purpose of Ontario's Building Code, establish a fixed review period of every five years to identify further opportunities to increase energy conservation and establish an advisory council to provide energy efficiency advice to the Minister of Municipal Affairs and Housing (Schedule J, ss. 1-2);
• Greening Ontario government and broader public sector buildings/facilities, and establish Leadership in Energy and Environmental Design (LEED) Silver as the standard (s. 9);
• requiring the development of energy conservation plans throughout the broader public sector, including municipalities, universities, colleges, schools and hospitals (ss. 5-7);
• establishing North American leading energy efficiency standards for household appliances, including efficient use of water. Energy STAR would be standard so household appliances sold in Ontario achieve continued reductions in energy use (ss.13-14);
• mandating home energy audits prior to sale of homes (s. 2);
• making more energy-efficient products more available to more consumers (s. 3);
• establishing mandatory electricity conservation targets for local distribution companies and empowering them to better deliver conservation programs to consumers (Schedule D, s. 7);
• increasing productivity in the Ontario industrial sector through energy efficiency programs and demand management plans (s. 5); and
• requiring targeted conservation measures to protect low-income Ontarians (Schedule B, s. 6).

Further Consultation

As the proposed legislation and its implementation move forward, the government plans to hold consultations with First Nations and Métis communities and stakeholders including business, environmentalists and municipalities.

The Next Step - Minister Prentice Goes to Washington

In the wake of the meeting between Prime Minister Harper and President Obama last week, Minister Prentice is playing his green card and going to Washington. The Environment Minister is one of five cabinet Ministers who are headed to the U.S. capital following the historic meeting. His goal will be to pursue the Clean Energy Dialogue the two leaders announced on Thursday.

The writer blogged last week about the importance of technology and innovation in the Clean Energy Dialogue and about the fact that both countries would be working toward global leadership, which would manifest itself in Copenhagen in 2009.

Minister Prentice confirmed on Thursday that both Canada and the United States will need technology and innovation to transform their industries. He stated that the Clean Energy Dialogue is a step to broadening talks on a joint approach to emissions regulation, fuel standards and energy strategy.

"It's a pivitol year", he said and maintained that Canada, like its neighbour, needs to set up its own framework for regulation and climate change strategies before making its way to Denmark.

He confirmed that Canada will be watching to see how the U.S. designs its approach to climate change, because the economies of the two countries are so closely linked.

What might the U.S. climate change strategy involve?

The American President has already issued a memo to require the EPA to open up the California tail pipe waiver question, issued fuel efficiency guidelines and required appliance manufacturers to green their product. The newly passed U.S. Stimulus Bill allocates billions of dollars to greening the federal vehicle fleet, research for carbon capture and storage, retrofitting homes, developing high speed rail projects, funding wind and solar power initiatives and providing loan guarantees for renewable energy and transmission projects.

In addition to considering the implementation of a cap and trade system, the U.S. climate change strategy might also:

• Use government purchasing power to increase efficiency and renewable energy
• Require the federal government to consider global warming when it conducts environmental assessments on its projects
• Launch a green White House initiative
• Create an energy innovation council to coordinate public and private sector efforts to research, develop, and deploy clean energy technologies at the commercial level
• Provide funding to help technologies designed to lower emissions from coal fired power plants

Minister Prentice says Canada will be watching. We will.

Minister Smitherman promises to "supercharge" Ontario's green economy

Minister of Energy and Infrastructure George Smitherman addressed a crowd of 750 people this morning about the Green Energy Act (the "Act") that will be tabled on this coming Monday. He did not discuss the entire Act, but did provide some more specific hints at what we should expect.

He identified the two main thrusts of the Act as being facilitating new renewable energy projects and fostering a culture of conservation. His expects that the Act will "supercharge" the green economy in Ontario and could lead to the creation of up to 50,000 new jobs in the province.

With respect to renewables, he emphasized that the Act would provide an attractive price for power and improved certainty for project developers. The attractive pricing will be in the form of a feed-in tariff regime "inspired by Europe but engineered for Ontario." The regime would apply to on- and off-shore wind, solar, geothermal and biomass projects.

Improved certainty will result from changes to the approval process for projects. The Act will replace the need for multiple approvals with a "one window, one permit" approach. The man who tackled health care wait times also announced that the Act will include service time guarantees. Specifically, complete project applications will be processed within 6 months.

As part of streamlining project development, the Act will replace the patchwork of set-back rules made by municipalities with a province-wide set-back requirement based on the Ministry's review of a wide variety of peer reviewed studies of the health risks associated with living close to wind farms and other renewable projects. This part of the Act, which Minister Smitherman characterized as an "uploading" of responsibility from the municipalities to the province, is likely to raise the ire of the NIMBYs that Premier McGuinty criticized in recent weeks.

The Act also contemplates transmission and distribution system upgrades and investment in smart grid technology, presumably at the distribution level. More accommodation will be made for distributed generation, both by facilitating interconnection and by providing grants and low-interest loans to community and cooperative power initiatives.

The Minister also hinted at an enhanced role for first nations.

As mentioned above, Minister Smitherman did not reveal every detail of the Act (he joked that doing so would take not only breakfast but all the way through lunch). However, he did indicate that the Act proposed to amend 15 existing statutes. He confirmed that the Act will be introduced in the legislature Monday morning. Stay tuned for more details.

President Obama in Canada: What Just Happened and What Does it Mean

Wow! What is must have been like to have been in Ottawa today when Prime Minister Stephen Harper and President Obama had their much anticipated meeting. How lucky those people happened to be in the Market when the President stopped by for a Beavertail or who cheered on as the he waved to the crowds gathered on Parliament Hill and Wellington Street. What a cool day to be in the capital.

Although the leaders' agenda touched many matters, economy, climate change & the environment and national security (I see a theme here...) were at the centre of comments made by both the President and the Prime Minister after their meeting.

Prime Minister Harper said that the two countries have begun a "Clean-Energy Dialogue", which will see senior officials from both sides of the border working together on the development of clean energy, science and technologies. If you've been paying attention to the comments from our Environment Minister, this will come as no surprise. Although the President confirmed that the U.S. must firm up its own environmental policies before entering into binding agreements with Canada, he said that the "dialogue will move us in the right direction".

Why? Because Economy = Environment/Climate Change = National Security and both the U.S. and Canada recognize that. The goal of the Clean-Energy Dialogue will be to position the U.S. and Canada at the forefront of global leadership on "clean energy" and climate change.

How? By focusing on:

1. Technology
2. Innovation
3. Energy research
4. Carbon capture and storage
5. Renewable Energy

The governments of both countries will have to collaborate to pursue technology and innovation to fight climate change, stimulate the economy and preserve national security. The Clean-Energy Dialogue will bring private enterprise and science together with government funds to develop new technologies to combat global warming and lead the world from economic crisis.

Seems to me that huge dollars will be involved and government intervention on both sides of the border will be required in order to put the Clean-Energy Dialogue partners on the road to the Green Economy. Right now, that road is leading to Copenhagen.

OEB to allow small-scale renewable projects to jump the distribution connection queue

Effective February 12, 2009, the Ontario Energy Board ("OEB") amended its Distribution System Code ("DSC") to make it easier for small-scale generation projects to connect to the grid. By default, projects that wish to be connected to a distribution system are considered on a "first come first served" basis. The amendments to the DSC exempt certain projects from the default process, allowing them to jump the queue.

Under the previous version of the DSC, "micro-embedded generation projects", defined as embedded generation facilities with a name-plate rated capacity of 10 kW or less, were exempt fron the queuing process. The amendments preserve the exemption for micro-embedded generation projects and extend it to apply also to "queue exempt small embedded generation facilities", which include the following: any embedded generation facility which is not a micro-embedded generation facility and which has a name-plate rated capacity of 250 kW or less in the case of a facility connected to a less than 15 kV line and 500 kW or less in the case of a facility connected to a 15 kV or greater line.

The expanded exemption applies retroactively to projects already in the connection queue. However, distributors retain the discretion to reject applications where the proposed project may adversely impact a larger generation project already in the queue. Such rejections must be put to the OEB for consideration. A detailed discussion of the amendments, and the discussions leading up to them, is available from the OEB.

In its press release, the OEB justified the amendments as follows: "These changes will support the development of smaller, local generation by allowing pending projects to move forward immediately, and by simplifying the process to connect new smaller generation projects."

The Green Energy Act, to be unveiling next week, may further simplify the process by requiring distributors to connect renewable power projects. The Green Energy Act Alliance (see our related posting ) has been advocating for a "right to connect." We should know by Monday whether such a right is part of Minister Smitherman's bill.

Ontario Green Energy Act imminent

There has been a lot of buzz about Ontario's Green Energy Act in recent months. This week the buzz may become reality.

The "Green Energy Act" that most people have been talking about has been the Green Energy Act Alliance's draft recommendation (see also their executive summary). Despite some apparent confusion, this proposal is not law, but merely an effective PR campaign by the Alliance, an NGO. However, Premier McGuinty announced on February 5 that his government will table a Green Energy Act bill in the legislature later this month. Minister of Energy and Infrastructure George Smitherman is scheduled to address the Toronto Board of Trade about the Green Energy Act this Friday. It therefore appears that the Alliance may soon get its wish.

But will the wish be granted in full? The contents of the bill are still unknown. If it mirrors the Alliance's proposal, it will include provisions addressing the following:

• Setting of renewable power targets for the province;
• Prioritizing conservation and renewable power over the procurement of new traditional generation;
• Recognizing additional economic benefits associated with renewable and distributed power;
• Creating renewable feed-in tariffs to encourage the development of renewable power;
• Providing priority (and in some cases guaranteed) access to the grid for renewable and distributed power projects;
• Financing green power through a public debt fund;
• Recognizing the value of community-based power projects;
• Protecting the interests of First Nations and Metis;
• Upgrading transmission infrastructure to create a smart grid;
• Encouraging conservation;
• Protecting the environment, including by expediting project approvals (perhaps by curtailing recourse to the Ontario Municipal Board (the "OMB")); and
• Protecting vulnerable consumers.

We will post again once the bill is released. In the meantime, Premier McGuinty has already said that the bill will include a major investment in a smart grid for Ontario. Of the remaining measures proposed by the Alliance, the suggestion that the province should be able to fast track project approvals despite local objections has already generated significant controversy. Premier McGuinty has spoken out against unjustifiable local opposition to projects, saying "NIMBYism will no longer prevail" (where a NIMBY is one who cries "not in my backyard"). Citizens have retorted that the Premier is unfairly painting all local objections with the same brush and that the proposed measures will undermine local democracy. We expect the controversy to intensify if the bill contains such approval fast-tracking provisions.

(Interestingly, there is already a section 62.0.1 of the Planning Act (Ontario) would already appear to give the province the option of avoiding Planning Act requirements, including recourse to the OMB, for certain energy projects. However, we are unaware of any time that this power has been used.)

Stay tuned for updates once the bill is released.

New tax credit for carbon credits?

Liberal Senator Grant Mitchell wants to encourage Canadians to invest in carbon offset credits. On January 27, 2009, he introduced Senate Bill s-213, which would provide a 15% tax credit to individuals and businesses who purchase qualifying carbon offset credits.

In introducing the bill, Senator Mitchell drew parallels between the proposed tax credt and existing incentives for recreation and home renovation. He expects the change would not only help improve the environment, but also stimulate investment in Canadian businesses (including in farming in his native Alberta).

Offsets are currently regulated in Alberta as part of that province's emissions management legislation. Their use is also contemplated in the federal Turning the Corner program. Presumably offsets under either of these systems would qualify. Whether or not other types of offsets would qualify is not yet clear.

North American Climate Accord a Real Possibility

Last week the writer blogged about the inefficiency of our bottom-up approach to the U.S. developments in energy, climate change and the economy. Looks like things are starting to improve somewhat in that regard.

The Canadian Environment Minister, Jim Prentice, confirmed yesterday that among other topics, a Canada-U.S. energy and climate change accord is on the agenda when the Prime Minister meets with the new President next week. Minister Prentice's remarks outlined five key points:

1. Canada and the US already have similiar targets for reducing greenhouse gas emissions;

2. Both countries would likely at some point establish cap and trade systems for meeting their respective emissions reduction goals;

3. The cap and trade systems would, ideally, be linked through a cross-border carbon trading market in which Canadian and American companies which exceed emissions caps could buy carbon credits from one another;

4. The retention of Intensity-based caps, which the Minister reiterated are not mutually exclusive of "hard" caps, would be open to discussion;

5. The costs of carbon cutting would appear on both sides of the border so that neither Canada nor the U.S. would suffer a competitive disadvantage.

The Minister also confirmed that he was unaware of a discussion related to giving special treatment to the oilsands and asserted a much bigger challenge is in the United States, where coal-fired electricity-generating plants spew out 70 times the carbon emissions of Canada's oilsands.

The Minister remarked "one of the challenges that we faced in the past was we had an American administration that was not taking any action on climate change. [I]n that context anything you did as a Canadian government was imposing a competitive burden on Canadian industry and Canadian jobs. That now has all dissipated and we're in an enviable circumstance where we can move together".

Minister Prentice understands the math - to President Obama and his new administration plans to make to use Energy and the Environment to result in economic recovery. The formula for Canada's approach to the issue of Climate Change appears to be going in a similar (although not parallel) direction, particularly with the confirmation that a north american climate accord is so doable. That's good news for Canada and for climate change.

By the way, the U.S. House of Representatives passed the Economic Stimulus Bill on Friday. More about the climate change related contents of that later, but for now, I thought that it was interesting to mention that of the $787 billion in spending, $2 billion was earmarked for carbon capture and storage. The same sum that Alberta alone has set aside for the same thing. Actually, there are a number of similiarities between the spending in that bill and the commitments Canada and its provinces have made. More on that at a later date.

Alberta Charges Ahead

You'll recall the writer's update after the federal budget where I mentioned I would be closely watching the provinces' environmental and climate change initiatives. The new session of the Alberta Legislature kicked off today with the Speech from the Throne. As expected, climate change and the environment were addressed and once again, Alberta is leading the way in Canada to help advance new technologies to combat climate change.

Today's Speech from the Throne revealed the provincial government's intention to implement the Carbon Capture and Storage Implementation Act to solidify the government's $2 billion commitment (which is twice the federal commitment) to carbon capture and storage. Funding for between three and five CCS projects are expected to be announced in 2009 which could result in greenhouse gas emission reductions of up to five million tonnes annually in Alberta, the equivalent of taking a third of Alberta's vehicles off the road.

The CCS initiative is not just good for Alberta - the CCS technologies "will set the stage for technological developments that will make carbon capture and storage - real reductions in greenhouse gas emissions - possible in other jurisdictions, including those whose emissions are substantially larger than Alberta's".

Also announced was the government's intention to "develop an energy efficiency policy framework to help Albertans be wise energy consumers". The government will be introducing a consumer rebate program to encourage energy wise decisions.

Taking a cue from Minister Prentice's remarks in Toronto in January where he indicated that the provinces and the federal government will have to work together to address climate change, the Throne Speech stated that Alberta will "continue to work with the federal government to support a cohesive national framework to limit greenhouse gas emissions and do our part as a responsible, sustainable North American energy leader".

There will, of course, be critics who think that the Alberta government hasn't done enough. I remind them: Alberta pioneered North America's first regulatory system to reduce industrial greenhouse gas emissions. It is still the only jurisdiction in Canada regulating emissions. Alberta has set aside $2 billion for carbon caputre and storage - even the federal government hasn't put away that kind of money. And Alberta has the Climate Change and Emissions Management Fund, where regulated emitters can pay $15 per tonne of CO2 emissions over a permitted baseline. The money in the fund, expected to be up to $200 million per year, will be used for purposes related to reducing emissions of specified gases and improving Alberta's ability to adapt to climate change. Who is doing more in this country than Alberta?

The Green House?

A couple of days ago I blogged about the influence Todd Stern is having on American energy policies. I proposed that one of the next things President Obama may tackle would be the greening of building codes and federal buildings. No Presidential Memo has been issued yet (aren't those memos efficient?), but the President confirmed in a speech on February 5 that the government will be retrofitting 75% of the federal buildings in the U.S. and improving efficiency of 2 million American homes.

I bet they start with the White House. If they expect the average American to jump on the green-bandwagon in their day to day lives, the President and his family are going to have to drive it. Plus, wouldn't it be handy to use one of the most prominent buildings in the world to educate the American public about the cost savings, lower energy demand and reduced greenhouse emissions from a retrofit to make the First Family's home truly a Green House?

Environment Commissioner Misses the Point

The writer sits in awe of the speed of the top down policy on Climate Change developing in the U.S.. Meanwhile, back in Canada…

Britain was once described as a "nation of shop keepers"; Canada continues to earn its proud reputation as a "nation of accountants". In our slow moving, bottom-up world, the Office of the Auditor General tabled the Report of the Commissioner of the Environment and Sustainable Development in the House of Commons on Thursday (February 5, 2009).

Chapter 1 of the Report, "Managing Air Emissions" examined the federal government's toolbox of approaches to managing and controlling air emissions and whether the government has achieved "real, measurable and verifiable results". The remaining 42 pages of the chapter (yes, I read them all... I wonder how many trees died to produce that treatise) lambaste the government for a variety of what some think are insightful and stunning findings on Canada's failure to measure results from funding.

Rubbish. It has been said "an accountant is someone who knows the cost of everything and the value of nothing". Clearly not concerned with bringing value, the Environment Commissioner has reviewed documents, crunched some numbers and then questioned "where did the money go"?.

His boss, the Auditor General, released a number of reports concurrent with the Environment Commissioner's Report, including "A Study of Federal Transfers to Provinces and Territories". The Study explains that one way funds are transferred to provincial coffers is through the use of trusts. Funds are allocated to provinces for a targeted area of provincial responsibility. In order to become eligible to draw on these trust funds, provinces must confirm in writing their understanding of the purposes of the trust and name an authorized agent. From then on, it's up to each province how they want to spend the money. For the Environment Commissioner and the Auditor General, therein lies the problem.

We don't have a trust blog at Davis, but if we did, I'm sure that my colleagues who work in the area of trusts would agree - that's the point of a trust! As the person establishing the trust, you set up some rules in a trust agreement and then give away the money to beneficiaries.

More importantly, our Auditor General looked the wrong way. Instead of looking up, she should be looking down. The Study complains "…once the provinces and territories have established their eligibility to draw funds from the trust, they become accountable in principle to their own citizens, not to the federal government, for how they use the funds" [emphasis mine].

Oh no! Not accountable to their own citizens, surely! Please. Scott Vaughan and Ms. Fraser want to know where the money went. Well, the Provinces know where the money went. Ask them. Danny and Dalton weren't out shopping together. The Provinces spent the money in their own best interests and in accordance with the trust agreements under which the money was allocated.

What's this all got to do with climate change? Either of the two reports could have arrived at a real value proposition: the Canadian Government needs to establish sensible measurement tools and accords on Climate Change which can be used in all jurisdictions in Canada (provincial and federal), and which will also be a model internationally. Guess what? Jim Prentice already knows this... he's indicated that Canada and its southern neighbour are going to have to co-operate to bring about climate change. He wants to "engage the United States of America in pursuing a coordinated approach to the energy and environmental challenges that we both face" and to to help achieve an effective multilateral climate change agreement for the years ahead. At least someone is looking in the right direction.

The U.S. is playing the "Green Card"

Last week I blogged about two major announcements in the U.S.related to Climate Change. I suggested that Todd Stern, the powerful U.S.Special Envoy for Climate Change holds all the cards on Climate Change and that we should "stay tuned". Well, Mr. Stern is playing his hand even faster than we thought!

Today President Obama signed a Presidential Memorandum directing the U.S. Energy Department set new energy efficiency standards for a broad range of common household appliances. These new energy-saving standards are expected to save the American economy "hundreds of billions of dollars in electrical costs and reduce power plant emissions". This Presidential memorandum brings the climate change game from the theoretical to the bureaucratic to industry to the ordinary retail American in one hand.

Why? Because the standards, which must be implemented by August and affect everything from microwaves to dishwashers to lamps and ranges, are going to impact the ordinary retail American"s shopping experience at Costco, Target and Wal Mart. This summer when Mr. and Mrs. America goes to buy a new air-conditioner, their new energy efficient model will be representative of the impact climate change is having at all levels of the economy.

Why does this announcement point to Mr. Stern? Mr. Stern has been expounding on the importance of efficiency and conservation for years. Energy efficiency and energy conservation are two related, though slightly different, concepts affecting climate change. (Energy efficiency refers to doing more with the same amount of energy. Energy conservation means reducing the amount of energy you use). Stern has talked about it in the context of reducing vehicle emissions (Obama Presidential Memo issued? - check); he has talked about it in the context of making appliances more efficient (Obama Presidential Memo issued?- check); and Stern has talked about making buildings more efficient. Obviously Mr. Stern's influence is at work here. What card will Mr. Stern play next? Is the next green card a major tweaking of building code standards?.

U.S. industry is going to have to scramble to make their products meet the new standard and have them on the shelf for Mr. and Mrs. America's purchase very quickly. Can international competitors mobilize as quickly? Is there a modicum of U.S. protectionism here?

What about we Canadians? Do we have a green card or do we need a Green Card?

More tomorrow.

Davis Closes Deal to bring Green Energy to the Regent Park Redevelopment Project, Canada's Largest and Oldest Social-Housing Community in Toronto

Davis LLP is pleased to announce the establishment of Regent Park Energy Inc., a joint venture between our client, Corix Utilities Inc., and Toronto Community Housing Corporation.

Regent Park Energy Inc. will provide clean and affordable heating, cooling and hot water throughout Regent Park, Canada's largest social-housing neighbourhood, while significantly reducing greenhouse gas emissions. The joint venture's long-term sustainable program will promote the incorporation of 'greener' fuels and technologies.

Davis LLP lawyers Don Bell, Howard Kellough, Celia Johnson, Lisa Davies, Lisa Robinson and Kevin Wright were advisors to Corix Utilities.

Corix Utilities helps communities build and manage infrastructure for water, wastewater and sustainable energy, with services ranging from providing products for water and wastewater distribution systems to turnkey multi-utility systems management.

Budget 2009 - Transformation to a Green Energy Economy

The Conservative Government's 2009 Budget promises billiions of dollars in government spending to help the country ride out the global economic downturn. With the recent U.S. announcements about climate change, did Canada give due consideration to climate change and the environment in the Budget?

The Budget allocates $1 billion dollars to support clean energy technologies. Spread over five years, this includes $150 for research and $850 million for the development and demonstration of promising technologies, including large scale carbon capture and storage (CCS) projects. According to the budget, this support is expected to generate a total investment in clean technologies of at least $2.5 billion over the next five years.

Federal allocations of money to carbon capture and storage are in addition to the Alberta government's $2 billion fund to kick start carbon capture and storage technologies. Between Federal and Alberta monies, funding for CCS could be nearly $3 billion.

In light of the potential of CCS as a means of reducing emissions, the Government has also announced plans to consult with stakeholders to identify specific assets used in CCS which may be eligble for accelerated capital cost allowance. This tax incentive will be used to actively promote investments in certain clean-energy generation techologies.

Another $1 billion dollars will go to the Green Infrastructure Fund over the next five years. This fund will be allocated based on merit to support green infrastructure projects on a cost-shared basis. The Budget states:

"Targeted investments in green infrastructure can improve the quality of the environment and will lead to a more sustainable economy over the longer term. Green infrastructure includes infrastructure that supports a focus on the creation of sustainable energy. Sustainable energy infrastructure, such as modern energy transmission lines, will contribute to improved air quality and lower carbon emissions."

Monies for CCS and the Green Infrastructure Fund are in addition to other funds in the Budget allocated in the area of climate change and Canada's environment, including:

• $1.3 billion over two years to support renovations and energy retrofits that will make Canada's social housing stock more energy efficient, to be split on a 50/50 cost-shared basis with the provinces;
• $300 million over two years to go to the ecoENERGY Retrofit program to support an additional 200,000 energy-saving home retrofits;
• $85 million over two years for key Arctic research stations, and $2 million over two years for a feasibility study for a world-class Arctic research station;
• $80.5 million over the next two years to manage and assess federal contaminated sites, which will facilitate remediation work totaling an estimated $165 million over the next two years and contribute to an improved environment as well as employment opportunities;
• $75 million for national parks; and
• $10 million in 2009-2010 to improve the government's annual reporting on key environmental indicators such as clean air, clean water and greenhouse gas emissions.

All of these initiatives demonstrate the Government's commitment to the environment - and these are Federal initiatives. Provincial budgets, including Alberta's, are coming soon and will include their own environmental and climate change initiatives. We will be keeping a close eye on them.