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Minister Prentice Concludes International Climate Change Trip

Environment Minister, Jim Prentice, concluded a series of important international climate change discussions today in London. The Minister participated in the World Business Summit on Climate Change in Copenhagen, the Major Economies Forum in Paris, and a carbon capture and storage conference in Bergen. The Minister ended his trip in London, where he had extensive discussions his UK counterpart, the Rt Hon David Miliband.

All roads continue to lead to Copenhagen, as we've been saying for a number of months (see here, here and in particular here. In a May 24 speech at the World Business Summit, to which he was invited by the Danish Minister, Minister Prentice remarked:

"I think the fundamental question for business leaders here today is how do we build confidence and momentum towards Copenhagen, and in particular for the business leaders and the companies [those business leaders] represent, what responsibility do you have and what role do you play in that process".

The Minister also indicated to that he is optimistic about the prospect of achieving international agreement on climate change strategy in Copenhagen and cautioned leaders about "green protectionism".

The Minister confirmed to media this morning that Canada's climate change policy would be unveiled in advance of Copenhagen and reiterated Canada's commitment to 20% by 2020 relative to 2006 levels. He advised that the specific domestic approach would be tabled first in Canada and then at the international level.

One of the most important points to come out of the discussion this morning, is the continental approach to climate change, which Minister Prentice has previously indicated is so vital.

Canada's trading relationship with the United States is the biggest trading relationship in the world. Clearly any federal climate change strategy must work in concert with the U.S. approach to climate change. Any policies which Canada develops to address climate change must also reflect Canada's national interest. We have blogged many times about meaningfulness of co-operation on both a North American and global basis. In his remarks to the media today, Minister Prentice further reiterated these important points.

However, the Minister also stressed that while Canada's climate policy must be concordant with that of its neighbour to the south, it does not mean that the policies will be exactly the same all the time. Minister Prentice gave fuel economy standards as an example of where it is in Canada's best interest to mirror that of the United States - the auto industry is truly cross border and having identical fuel standards makes sense. But there are other areas, electricity generation, for example he said, where they are not the same. The Minister asserted that while Canada's policies would work on an equivalent basis with those of the U.S., they need not be identical. For the time being, the United States has not yet arrived at a domestic policy or target. As a result, it is difficult for "Canada to define continental solutions".

What Canada's policy will ultimately be is important. But what is truly and fundamentally important is making progress - how will we find real solutions for climate change? The answer: Technology. Transformative change will only be able to occur through investments in technology. In his Copenhagen speech, Minister Prentice emphasized this point:

"[T]he challenge before us is all about technology. That just cannot be overemphasized, because we're talking fundamentally about a transformation of the capital stock, the technological investments in our society. This will take time. It will take massive investments...".

"Massive" investments in technology and transformative change have already started. Canada, and Alberta in particular, has already demonstrated it is serious. The Canadian government has pledged $1 billion to carbon capture and storage technologies. The Alberta government another $2 billion.

Perhaps the most unique sources of funding is the Climate Change and Emissions Management Fund.. The $122.4 million from 2007 and 2008 compliance years will be specifically allocated for purposes related to the reduction of emissions or improving the ability to adapt to climate change. With all these investments in transformative technology, we are leading the way.

Ontario introduces cap-and-trade bill

Ontario's Ministry of the Environment tabled the Environmental Protection Amendment Act (Greenhouse Gas Emissions Trading), 2009 (the "Bill") today. The Bill amends the Environmental Protection Act (Ontario) ("EPA") to lay the groundwork for implementing a cap-and-trade system in the province.

The Bill proposes to revive s. 176.1(1) of the EPA to read as follows:

"The Lieutenant Governor in Council may make regulations establishing programs and other measures for the use of economic and financial instruments and market-based approaches, including without being limited to emissions trading, for the purposes of maintaining or improving existing environmental standards, protecting the environment and achieving environmental quality goals in a cost effective manner."

The Bill then specifies a non-exhaustive list of types of regulations that may be made to create the cap-and-trade system. The Bill appears to leave open the question of whether allowances will be auctioned or given away free of charge. It also contemplates trades with jurisdictions outside of Ontario. This is consistent with Ontario's membership in the Western Climate Initiative.

The Bill also provides for regulations that designate "a person or body to administer programs and other measures" established under the proposed act. For example, Ontario could choose to establish an arm's length corporation to administer allowance auctions and to distribute the revenues received thereunder.

Huge amounts of regulatory detail must still be drafted. The full details of Ontario's plan are therefore still unknown. Some indication of Ontario's plans may be found in a discussion paper included with the Bill (but originally released in December).

Both the proposed legislation and the discussion paper have been posted on the Environmental Registry for a 60-day comment period until July 26, 2009.

Stay tuned for more details.

Canada Continues to Co-operate on Climate Change

We have blogged many times about Canada's commitment to address climate change both continentally and internationally. Today we explore how the co-operation continues.

May 24, 2009 represented the official commencement of the international energy efficiency framework. Energy leaders from around the world met in Rome for the G-8 Energy Ministers Meeting to launch the International Partnership for Energy Efficiency Cooperation (IPEEC), a high-level forum for facilitating improvements in global energy efficiency and encouraging market implementation of key energy efficiency technologies. The signatories included the entire Group of 8 (G8), which consists of Canada, France, Germany, Italy, Japan, the Russian Federation, the United Kingdom, and the United States, as well as key emerging economies, including Brazil, China, India, Mexico, and the Republic of Korea.

Discussions about IPEEC began in June 2008, when the G8 countries, China, India, South Korea and the European Community decided to establish the International Partnership for Energy Efficiency Cooperation, at the Energy Ministerial meeting hosted by Japan. The signing of the IPEEC terms of reference on May 24, 2009 put the discussions into action.

The purpose of the partnership is to facilitate those actions that yield high energy efficiency gains in recognition that improving energy saving and energy efficiency is one of the quickest, greenest, and most cost-effective ways to address energy security and climate change and ensure economic growth.

IPEEC will provide a forum for discussion, among developing, transitional and industrial nations to engage in consultation and exchange of information on a voluntary basis. It will not develop or adopt standards or efficiency goals for the partners.

It was decided at the May 24, 2009 meeting that the first order of business for IPEEC would be to establish a Sustainable Buildings Network, a compilation and summary of national energy efficiency action plans, an inventory and review of international energy efficiency initiatives and improved methods for measuring and verifying progress towards domestic energy efficiency goals.

The launch of IPEEC comes in response to conclusions at G8 Environment Minister's Meeting that countries begin processes with the ultimate goal of a global platform on low CO2 impact technology.

Canada's participation at the IPEEC meetings is further evidence of its commitment to co-operation on a global level to address climate change. Copenhagen is 6 months away - wonder what impact this co-operation will have by then? We'll keep you posted.

Jennifer Cleall and Corie Flett, Summer Student

Edmonton to open North America's first waste-to-biofuel plant

Posted by Sarah Robicheau, Summer Student

By the end of 2009 the City of Edmonton will be home to a one-of-a-kind in North America commercial facility which uses microorganisms to convert waste into valuable synthetic gases including ethanol, methanol and diesel, as well biochemicals such as acetic acid or acetate.

This pioneering project is the result of a joint effort between Enerkem, a Canadian biofuel and biochemical producer, GreenField Ethanol of Toronto and the City of Edmonton, where the facility is to be located. GreenField, Canada's leading ethanol producer, has contributed $70 million to the venture, while Edmonton has contributed $20 million. Enerkem and the City entered into a 25 year agreement in 2008 which will see the city supplying 100, 000 tonnes of municipal waste, which Enerkem expects to convert into 36 million litres of ethanol a year. Over the lifespan of the agreement, the facility is expected to reduce Alberta's carbon dioxide footprint by more than six million tons.

"This unprecedented project is set to change the dynamics of the waste and fuel industries by making waste that would otherwise be landfilled a resource for transportation fuels," said Vincent Chornet, chief executive of Enerkem. Adopting such an entrepreneurial attitude, not only is the technology involved innovative, but so is the business scheme; it represents the first such partnership "between a large urban centre and a biofuel producer to turn municipal waste into ethanol", according to Enerkem.

While this project is being funded by the City of Edmonton and other investors, Enerkem has received funding for other biofuel facilities through Sustainable Development Technology Canada. SDTC administers a $500 million dollar "NextGen Biofuel Fund", established by the federal government to support projects related to the development of next generation biofuels. Through the fund, the government "will support up to 40%, of eligible project costs for the establishment of first-of-kind large demonstration-scale facilities for the production of next-generation renewable fuels." Those interested in applying for funding may contact Davis LLP for assistance or visit the SDTC's site directly.

PwC (UK) publishes model climate change disclosure report

PricewaterhouseCoopers ("PwC") hasreleased a model climate change disclosure best practice guide. While designed to demonstrate compliance with the UK's new Carbon Reduction Commitment legislation, the guide will be instructive to companies in Canada that are struggling to figure out how to address climate change in their ongoing reporting.

The best practice guide takes the form of a sample report prepared by a fictional company called Typico plc. In addition to reporting on its greenhouse gas emissions, Typico provides an analysis of the strategic implications and corporate response to the risks and opportunities associated with climate change.

Alan McGill, partner in the Sustainability and Climate Change Reporting division at PwC, predicts that companies will increasingly be expected to provide more than just emissions data. "Rather than compliance and data reporting alone, forward-looking analysis and statements of the risks and opportunities affecting a business will become an established part of the reporting cycle. This model will support companies' preparations for that by helping them identify the right questions to ask, the right data to measure and report on, resulting in them taking the right actions for their business."

PwC's guide is just one example of proposed approaches to climate change disclosure. See also here and here. Canadian companies stay apprised of developments at the Ontario Securities Commission and the other provincial securities regulators.

Bad news from MIT: climate change likely to be worse than expected

A new study from MIT concludes that the earth's temperature is likely to rise 5.2 degrees Celsius by 2100, much higher than the 2.4 degree increase commonly cited from a 2003 study. "There is significantly more risk than we previously estimated," said Ronald Prinn, the study's co-author and the co-director of the Joint Program and director of MIT's Center for Global Change Science, adding that "there's no way the world can or should take these risks."

The model used by MIT in the new study considers a much more comprehensive range of factors. In particular, it is the only climate change model that includes "detailed treatment of possible changes in human activities as well - such as the degree of economic growth, with its associated energy use, in different countries."

MIT rans its statistical model 400 times to arrive at the median probability surface temperature increase of 5.2 degrees, which has a 90% probability range of the predicted increase is 3.5 to 7.4 degrees. The Telegraph quotes Friends of the Earth climate campaigner Tom Picken as saying that "The consequences of such changes would be off the known scale. They are unthinkable. A 7.4C rise would mean severe ecosystem collapse worldwide, with total economic collapse in many parts of the world. The planet would face resource wars between people, and you can safely say many, many hundred of millions of people would die."

The 3.5 to 7.4 degree range assumes that the world does not initiate a significant policy response to the issue of climate change. Somewhat more encouragingly, the research team ran a second version of the model based on an aggressive policy response. That version predicted increases similar to the 2003 model.

Taking a cue from the marketing world, the team illustrated the differences between the two possible outcomes using two roulette wheels.

OEB issues notice to amend Distribution System Code

On May 14, the Ontario Energy Board ("OEB") gave notice that it intends to amend the Distribution System Code ("DSC") (see also a subsequent clarification letter). The proposed amendments will change the rules for generators who wish to apply to connect to distribution systems. While under development before the passing of the Green Energy Act, the proposed amendments appears most squarely aimed at the type of renewable generation projects that will be built pursuant to Ontario's new Feed-in Tariff system.

The OEB identified two related objectives to the proposed amendments:

• "To ensure that viable generation projects, and in particular renewable generation projects, are connected to the distribution system in a timely manner";
• "To ensure that generation projects that are not likely to proceed do not impede the allocation of capacity to more viable projects."

Six major types of changes are proposed:

• The distribution connection queue will be abolished and replaced with a concept of a capacity allocation. Projects that successfully complete a connection impact assessment ("CIA") will receive a capacity allocation instead of a spot in a queue;
• CIA applications will only be accepted for feeders or substations that have available capacity to connect;
• Proponents will have to meet certain CIA application prerequisites, including confirming available capacity, showing that projects will be ready to connect within 3 years, demonstrating site control, and providing certain technical information;
• Proponents will have to pay a Connection Cost Deposit equal to 100% of the estimated connection costs and a Capacity Allocation Deposit equal to $20,000 per MW of nameplate capacity upon execution of a Connection Cost Agreement (although these deposits may be waived for applicants who have tendered security as part of the FIT application process);
• Proponents will have to meet new technical requirements, in particular by submitting engineering designs and detailed electrical drawings to the distributor at least 6 months before the planned in-service date;
• Certain transition mechanisms will be added to accommodate applicants who have already commenced applications or who hold RESOP contracts.

As evident from the notice, the proposed amendments will have to feather together with the requirements of the FIT application process, which addresses issues like capacity availability, security deposits, approval timing, and legacy projects. However, as currently worded, the proposed amendments may not fit neatly together with the Ontario Power Authority's proposed FIT process. For example, the proposed DSC amendments provide that a CIA will not be performed if the project exceeds the technical capacity limits of a distributor's system. Presumably, this refers to the existing limits of the system. In contrast, the FIT application process contemplates situations in which a FIT contract would be awarded where capacity was planned but not actually built.

The proposed DSC amendments are one of several OEB initiatives that have or will be pushed to the front burner as a result of the passing of the Green Energy Act. Other examples include the OEB's decision regarding queue exempt facilities and letter from the Board's chair suggesting that the regulatory process for reviewing capital spending by transmitters and distributors may be reviewed
Other electricity market stakeholders are also adjusting their processes as a result of the passing of the Act. For example, Hydro One Distribution is in the middle of a consultation process regarding proposed distributed generation connection requirements.

The OEB has invited comments on the proposed amendments to the DSC until June 10, 2009.

Canada announces details of $1 billion clean energy fund

The government of Canada announced the details of the $1 billion clean energy fund it announced in February. A statement issued by the Minister of Natural Resources Lisa Raitt revealed that the fund will be allocated as follows:

• $650 million to support large scale carbon capture and storage ("CCS") demonstration projects;
• $200 million to support smaller-scale demonstration projects of renewable and alternative energy technologies; and
• $150 million to support research and pre-demonstration pilot projects "ranging from next generation renewable and cleaner energy systems to new technologies to address environmental challenges in the oil sands such as water use and tailings"

Additional details are available on the Ministry of Natural Resources website. The government has already issued a request for proposals for smaller-scale demonstration projects.

That the majority of the money is allocated to CCS is not surprising given the quantity of emissions from coal-fired generation and oil sands projects, particularly in the province of Alberta. The US has recently hinted that it may ban or impose large tariffs on oil imports from carbon-intensive sources like the oil sands. CCS could effectively clean up the emissions profile of upgraded and refined bitumen and preserve the export market.

The fund is also consistent with Canada's Clean Energy Dialogue with the US (discussed here, here, and here).

Obama Sets a Shorter Timeline for Tailpipe Emissions

We have blogged a couple of times about proposed new standards for tailpipe emissions in Canada and the United States. Yesterday, President Obama's administration announced plans to put those standards into practice in 2016, four years earlier than originally expected. The program covers the 2012 model year through to the 2016 model year and, according to the White House website, "ultimately requires an average fuel economy standard of 35.5 mpg in 2016".

In his speech, the President asserted that the new standards would have a projected reduction in oil consumption of 1.8 billion barrels over the life of the program, "more oil than [the United States] imported last year from Saudi Arabia, Venezuela, Libya, and Nigeria combined". How much oil is this? In 2008 the U.S. imported 3,570,848 thousand barrels of crude oil. Of those barrels, the U.S. imported from a total of 42 different countries. The top 5 importing countries were: Canada (19.8%), Saudi Arabia (15.4%), Mexico (11.8%), Venezuela (10.6%), and Nigeria (9.4%) for a total of 67% of its imports. Of the countries mentioned by the President above, the United States imported about 0.7% of its oil from Libya in 2008. "[M]ore oil than the [United States] imported last year from Saudi Arabia, Venezuela, Libya and Nigeria combined" is equal to about 36.1% of U.S. yearly imports.

What does this mean for Canada? Environment Canada previously announced new emissions standards for Canada. Minister Prentice has said"what we're striving for is a North American standard because we know there's only one North American automobile industry". Today, the Minister confirmed that the Canadian government will match the new standards. According to the Globe and Mail, "Michael Martin, Canada's lead negotiator on international climate change talks, said the new auto standards will be one part of a 'suite of policies' that Canada will be adopting before" Copenhagen in December. This is further evidence of Canada's commitment to address climate change in North America.

We will be carefully monitoring what other policies are in that suite...

Quebec tables cap-and-trade bill

The government of the Province of Quebec has tabled Bill 42 to introduce a cap-and-trade system in the province. The Globe and Mail reports that the bill may be passed as early as June, with reporting obligations beginning next fall. The first caps will be implemented for the period of 2012 to 2015.

The Globe quotes Quebec Environment Minister Line Beauchamp as saying, "we hope Quebec's participation in this common market with Ontario, Manitoba, British Columbia will incite the federal government to co-operate with the provinces to develop a Canadian carbon market compatible with what is taking place elsewhere in the world."

Ontario is apparently set to follow suit in the coming weeks. Ontario Premier Dalton McGuinty recently said, "we [the leaders of Ontario and Quebec] both agree that we have an opportunity, even a responsibility here in Canada, to put in place a carbon-exchange register that will, one way or another, serve as kind of a pilot project that the federal government and maybe even the government in Washington can use as a base for a national program."

Ontario and Quebec signed an accord last year to implement a joint cap and trade scheme. Along with Manitoba and British Columbia, they are also members of the Western Climate Initiative ("WCI"), which is committed to implementing a regional scheme by 2012.

The announcements follow on a report by the federal Environmental Commissioner (discussed here) that is critical of the federal government's existing emissions reduction plans. Ottawa has been signalling recently that it may update its plan to achieve its goals of protecting Canada's interests while harmonizing to the greatest extent possible with developments south of the border.

Ontario launches time-of-day electricity pricing initiative

Ontario has begun implementing time-of-use electricity pricing. Beginning in June, 10,000 homes in Toronto will pay different prices for electricty depending on the time of day when the power is consumed. The province expects to roll out time-of-day pricing to a million homes by next summer.

Under the new pricing scheme, consumers will pay the following:
- On-peak: 9.1 cents
- Mid-peak: 7.6 cents
- Off-peak: 4.2 cents

As detailed here, on-peak, mid-peak and off-peak periods between weekdays and weekends and between winter and summer.

Time-of-day pricing is made possible by new smart meters, which Ontario's electricity distributors have been installing over the past few years.

However some have criticized Ontario's smart meters for not being smart enough. Currently, the meters do not provide real-time consumption feedback to customers. Many feel that time-of-day pricing will not have a significant impact on consumption unless consumers can, to us an anachronism, watch their meters spin.

Ontario passes Green Energy Act

The Ontario legislature passed Bill 150, the Green Energy and Green Economy Act, 2009, today. The Green Energy Act is intended to pave the way for the widespread deployment of renewable power while creating up to 50,000 "green collar" jobs in the province.

In the words of Deputy Premier and Minister of Energy and Infrastructure George Smitherman, "the Green Energy Act will truly set us on the path to a 21st century green economy for Ontario, one that is sustainable, easy on the environment, and focused on the jobs of the future. We'll be working hard to ensure Ontario gets every benefit possible from renewable energy and from the efficiency and savings that come from developing a culture of conservation."

The bill passed third reading by a vote of 59 to 13, with opposition from the Progressive Conservatives, who were concerned that the Green Energy Act would burden consumers with increased electricity prices.

The enthisasm of environmentalists was qualified by a concern that the province still relies too heavily on nuclear power.

Renewable power investors and developers, however, are very excited about the new legislation. The combination of compelling feed-in tariff pricing and a streamlined approvals process sends a strong signal that Ontario is open for business in the renewable energy sector. Developers and investors from around the world have their eyes on Ontario.

As explored in our recent client seminar, translating the promises of the Green Energy Act into successful projects will require an in-depth understanding of the regulatory framework under the Act. Davis continues to track the evolving regulations and will provide updates through this blog.

Environment Commissioner Strikes Again

The Office of the Auditor General today released "Chapter 2 - Kyoto Protocol Implementation Act - 2009 Spring Report of the Commissioner of the Environment and Sustainable Development" today. We blogged back in February>back in February after the annual report was released, that the Environment Commissioner entirely missed the point - that he could have used the report to recommend that the Canadian Government establish sensible measurement tools and accords on Climate Change which can be used in all jurisdictions in Canada.

Did he miss it again?

There are four findings and recommendations in the Report:

• The 2007 and 2008 climate change plans do not include all of the information required under subsection 5. (1) of the Kyoto Protocol Implementation Act. The Report recommends that the upcoming climate change plans include the information required.
• That for all of the three plans examined by the Commissioner, the plans are not fully transparent. For example, they do not disclose how expected reductions in greenhouse gas emissions might be affected by such uncertain factors as future economic conditions. The Report recommends that Environment Canada describe in the annual climate change plans the quantitative or qualitative uncertainties related to the expected GHG emission reductions of each measure.
• While Environment Canada has a system in place to report on Canada's total greenhouse gas emissions, it has no system for reporting the actual emission reductions achieved from each measure in the annual climate change plans. The Report questions why emissions reductions can be forecasted in advance, but not measured after the fact. The Report recommends that Environment Canada clearly indicate how it will measure actual emission reductions for each of the GHG emission reduction measures in the plans. Where no such measurement takes place, the rationale should be provided for why expected emission reductions can be estimated in advance but corresponding actual reductions cannot be measured after the fact.
• That Environment Canada could not demonstrate that the emission reductions expected under the Regulatory Framework for Industrial Greenhouse Gas Emissions are based on an adequate rationale and that the climate change plans overstate the reductions that can be reasonably expected from the Regulatory Framework during the Kyoto period (2008 to 2012). The Report recommends that projected greenhouse gas emission levels in Canada for each year from 2008 to 2012 should be reported for each measure in the annual climate change plan.

Environment Canada was given the opportunity to respond to the Report and accepted the first three of the recommendations outlined above. It did not accept the fourth recommendation, that climate change plans overstate the reductions and asserted that the monitoring of actual GHG emission reductions could be technically unfeasible and that reductions could be impossible to attribute to a specific measure.

We will be monitoring further developments on this topic.

Introducing the Climate Change and Emissions Management (CCEMC) Corporation

Alberta Environment announced today that the Climate Change and Emissions Management (CCEMC) Corporation ("CCEMC") will manage and administer the Climate Change and Emissions Management Fund. The CCEMC is a not-for-profit corporation which is arm's length and independent from government.

Alberta is one of the few jurisdictions in North America with a functional climate change regulatory system. In enacting the Climate Change and Emissions Management Act (the "Act"), Alberta was first in North American to pass climate change legislation requiring industry to reduce emissions below a set threshold.

Large emitters have three compliance options under the Act:

1. Make facility improvements to reduce emissions below the required threshold

2. Purchase Alberta-based carbon offset credits; or

3. Pay $15 for every tonne over target into the Fund.

The Climate Change and Emissions Management Fund (the "Fund"), which is established under the Act, is a critical element of Alberta's long term Climate Change Strategy to achieve provincial and national greenhouse gas reductions targets. Its unique characteristic as a compliance mechanism under targeted climate change legislation makes it singular in the world. Monies flowing into the Fund are segregated and targeted specifically to addressing climate change.

Under the Alberta model, the Ministry of Environment collects monies paid into the Fund from specified emitters. These monies do not form part of the General Revenue of the Province of Alberta and cannot be diverted for other objects. Rather, these may only be used to satisfy the purposes of the Fund set out in the Act.

The Act provides that the Fund may only be used for purposes related to reducing emissions of specified gases or contributing to Alberta's ability to adapt to climate change. The CCEMC is aligned with the purposes of the Fund set forth in the Act. The Minister of Environment will maintain responsibility for receiving payments from industry and transferring the dollars to the CCEMC. The CCEMC will invest money collected from industry into initiatives and projects that support technologies to reduce greenhouse gas emissions and improve the ability to adapt to climate change.

It is expected that the CCEMC will begin accepting funding proposals in the second half of fiscal 2009/2010. Eric Newell has been named as the Chair of the CCEMC - Mr. Newell is the recipient of the Order of Canada and has extensive experience in industry.

Robert A. Seidel, Q.C., who is the National Managing Partner of Davis LLP and Jennifer Cleall are legal advisors to the Climate Change and Emissions Management (CCEMC) Corporation.

New Legislation Under Alberta's Climate Change Regulatory Framework

Further to yesterday's blog announcing that the Climate Change and Emissions Management (CCEMC) Corporation would be administering the Climate Change and Emissions Management Fund, the Alberta Government has also passed the Climate Change and Emissions Management Fund Administration Regulation, AR 120/2009.

The Regulation is passed pursuant to the Climate Change and Emissions Management Act , which permits the Lieutenant Governor in Council to make regulations "respecting the establishment or designation of delegated authorities (s. 60(1)(u) and "respecting the delegation to one or more delegated authorities of the performance of any of the Minister's duties or functions, or the exercise of any of the Minister's powers, under this Act or the regulations, other than a power to make regulations and a power to delegate" (s. 60(1)(v)(ii)).

Section 1 of the Regulation designates the CCEMC as a delegated authority. Section 3 of the Regulation delegates the "performance of the Minister's duties and functions and the exercise of the Minister's powers in respect of holding, administering and making payments of the money paid to the Corporation from the Fund under section 4(1) to the CCEMC. The Regulation also permits the Minister to pay all or some of the Fund to the CCEMC and states that the money paid to the CCEMC from the Fund "belongs to the Corporation" (s. 4(2)).

Other provisions of the Regulation address reporting requirements, compliance with FOIPP and the inspection and audit abilities of the crown.

Robert A. Seidel, Q.C., who is National Managing Partner of Davis LLP and Jennifer Cleall are legal advisors to the CCEMC.

Federal government may phase out coal-fired generation; impose cap-and-trade on existing plants

The federal government intends to enact regulations to phase out coal-fired generation in Canada. In an interview with the Globe and Mail, federal Environment Minister Jim Prentice indicated that government's "concept is that, as these facilities are fully amortized and their useful life fully expended, they would not be replaced with coal."

Any new coal-fired plants will have to include carbon capture and storage ("CCS") technology to make them emissions free. However, CCS technology is unproven and expected to be prohibitively expensive. The CCS requirement may therefore render coal uneconomical.

Mr. Prenctice also said that the federal government plans to impose absolute greenhouse gas emission limits on existing coal-fired power plants. Utilities would be able to purchase additional credits to cover emissions that exceeded the prescribed caps. It is unclear whether this cap-and-trade system will apply only to coal-fired generation, to electricity generation more generally, or to industry as a whole as part of a revised Turning the Corner plan.

As with many proposed climate change policies, the impacts of the above would not fall evenly on the provinces. Quebec and British Columbia are powered predominantly by hydro. Ontario relies on hydro and nuclear for its baseload and has already legislated the phase-out of its coal plants. Alberta and Saskatchewan are likely to be hit hardest, both because of their higher dependence on coal-fired power and because they sit atop huge coal deposits.

Nevertheless, the Globe and Mail quoted Brian Vaasjo, VP of Alberta-based Epcor Power LP as saying that they "are absolutely supportive" of the proposal. Epcor has already invested millions in new combustion technology and has applied with Enbridge Inc. for government funding of two proposed CCS projects (see our posting).

Mr. Prenctice did not specify exactly how the regulations would be implemented. However, the federal government has previously indicated that it would implement climate change regulations as amendments to the Canadian Environmental Protection Act ("CEPA"). If any of the provinces take a dim view of the regulations, they may seek to challenge the constitutionality of the federal government's plan. The Supreme Court ruled in R. v. Hydro-Québec that the federal government can regulate environmental matters under its criminal law power. Noted constitutional scholar Peter Hogg has opined that Hydro Quebec would apply to cap-and-trade regulations enacted under CEPA. However, the economic regulation of emissions (i.e., in part through market-based mechanisms) may not fit as neatly into the criminal law power as did the prohibition enforced by a penal sanction that was considered in Hydro Quebec.

BC tops ranking of climate change policies by Sustainable Prosperity

BC's carbon tax scored highest on a ranking of 5 climate change policies by Ottawa-based think tank Sustainable Prosperity. Policies were ranked based on eight principles that Sustainable Propserity believes are necessary for an effective climate change policy. Not even BC achieved a perfect score, suggesting that all Canadian jurisdictions have room for improvement.

The complete ranking, with scores based on the above, is as follows:

• BC: 87% compatible with the Sustainable Prosperity principles;
• Quebec: 65%;
• Western Climate Initiative: 48%;
• Federal Turning the Corner: 48%; and
• Alberta: 30%.

Many Canadian provinces have yet to implement or even propose any meaningful climate change plan and were thus not ranked.

Policies were ranked based on eight principles that Sustainable Prosperity believes are necessary for an effective climate change policy:
1. Comprehensive: across all sources and sizes of emissions with no exemptions;
2. Nation-wide: a federal framework is needed to establish a minimum carbon price across the country;
3. Simple and readily implemented: avoiding complex rules and exemptions, and with a short lead time to come into effect;
4. Transparent and accountable: to ensure its integrity, any new policy must be accompanied by a clear analysis of its expected economic and environmental effects, including a clear accounting of amount and use of any revenues raised;
5. Complemented by other measures such as improving the efficiency of vehicles, homes and appliances, and promoting technology research and development where a price signal alone is insufficient;
6. Environmentally effective in meeting the jurisdiction's medium and long-term emissions reduction targets;
7. Ultimately comparable to carbon prices in other countries; and
8. Predictable but adaptable to provide investment certainty but respond to changing scientific knowledge, international agreements, or unanticipated emissions reduction responses.

There were some common themes in the analysis of the 5 climate change policies:

• Systems with widely-scoped offset programs, like those included in Alberta's plan, Turning the Corner, and the WCI, were penalized. Sustainable Prosperity believes that offsets are prone to manipulation and may thus undermine the environmental effectiveness of a policy;
• Intensity-based targets, such as those that are (or were) part of Turning the Corner and Alberta's system, were viewed as a dubious approach to achieving absolute emissions reductions;
• Carbon taxes had an edge over cap-and-trade and baseline-and-credit systems in that they can be implemented through existing administrative bodies; and
• Sustainable Prosperity prefers a coordinated national approach to the issue of climate change, a preference that benefited only the Turning the Corner plan.

Additional reporting is available from the Globe and Mail.

Green Energy Act goes to 3rd reading, amendments proposed

Ontario Bill 150, the Green Energy and Economy Act, 2009, was ordered for third reading on May 30, 2009. The bill therefore currently appears to be on track to pass in June of this year.

Bill 150 has been intensely debated in the legislature (and in the press) over the past two months and has been the subject of extensive testimony by witnesses before the Standing Committee on General Government.

As a result of these consultations, Minister Smitherman announced a series of amendments to Bill 150 earlier this week:

• Home energy audits will now be required at the buyer's option and related enforcement provisions will be deleted;
• Community consultation and municipal assistance will be assured through specific amendments to the bill;
• Community and aboriginal assistance will be advanced through a parallel policy initiative;
• Health concerns will be addressed by amending grounds for appeal under the Environmental Protection Act;
• Setbacks will be the subject of ongoing consultations by the Ministry of the Environment;
• Domestic content requirements will be explicitly strengthened;
• The Minister's directive powers under the bill will be limited only to renewable energy, energy efficiency and conservation - i.e., not nuclear;
• Energy procurement policy will be reviewed to address energy technologies including geothermal, solar thermal, combined heat and power and small scale wind;
• Stray voltage concerns will be addressed by the Ontario Energy Board; and
• The Environmental Commissioner of Ontario's ability to carry out its role will be ensured through certain amendments.

The full text of the amendments does not yet appear to have been posted on the website of the Legislative Assembly.