Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

Davis LLP releases Climate Change Law Bulletin on the Waxman-Markey Bill

As reported earlier this week, the U.S. House of Representatives passed the American Clean Energy and Security Act of 2009 (more commonly known as the "Waxman-Markey Bill") on June 26. The Bill, which must still be passed by the U.S. Senate, marks a very significant development in climate change law and will have a significant impact on Canadian businesses. Davis LLP's latest Climate Change Law Bulletin provides an overview of the Waxman-Markey Bill. It also offers a perspective on the impact the bill will have in Canada. Given that Canada is considering implementing a cap-and-trade system based on that proposed in the US, particular attention is given to the key features of the Bill's cap-and-trade provisions.

Davis LLP releases Climate Change Law Bulletin on the proposed Canadian Offset System

As discussed previously, Canada's Environment Minister Jim Prentice announced on June 10 that the Federal Government will be moving forward with its Offset System for Greenhouse Gases. On June 12, the government released two draft guides for the proposed system: Program Rules and Guidance Project Proponents and Program Rules and Verification and Guidance for Verification Bodies. The new documents provide details for those looking to enter the carbon market and describe the government's plan for the certification and issuance of offset credits for greenhouse gas reductions. Issue 8 of the Davis LLP Climate Change Law Bulletin summarizes these new guidance documents and discusses what they mean for Canadian businesses.

The two new guidance documents complement the draft Guide for Protocol Developers for Canada's Offset System for Greenhouse Gases, released last August (and discussed here), which proposed requirements for developing offset protocols under the federal system. All three Offset System guides are expected to be finalized by fall of 2009.

US Congress Passes Climate Change Bill

The U.S. House of Representatives passed what is being called "historic" climate change legislation on Friday. The Waxman-Markey bill passed through Congress by a vote of 219-212. Eight Republicans voted in favour of the bill; forty-four Democrats voted against it.

The Waxman-Markey bill went through countless revisions before it was passed on Friday. In its final form in Congress, the Bill contained over 1300 pages and according to the New York Times, "the bill's sponsors were making deals on the House floor right up until the time of the vote".

Proponents of the bill are hearlding its passage as "a staggering achievement" and one which will pave the way for "an international deal in Copenhagen this December - as well as a bilateral deal with China, hopefully sooner". Detractors on the other hand, called the bill "a national energy tax and predicted that those who voted for the measure would pay a heavy price at the polls next year".

At the heart of the bill is a cap and trade system which sets an overall limit on greenhouse gas emissions, but allows industry to trade emissions permits among themselves. The cap would grow tighter over the years, pushing up the price of emissions and ideally, driving industry to renewable and other clean sources of energy.

The legislation is "a patchwork of compromises" and certainly not what was originally envisaged by its sponsors. In its final form, the bill has a goal of 17% reductions in emissions relative to 2005 levels by 2020 and 83% by 2050. These numbers were loosened in order to woo fence-sitting Representatives in the weeks and days before the vote. In comparison, Canada has set a goal of 20 by 2020 relative to 2006 levels and 60 - 70 by 2050. If the US targets remain the same and the bill becomes law, Canada's targets may eventually align with the US levels.

Interestingly, but perhaps not surprisingly, it appears that the Democrats who voted against the bill were motivated by policy and economics and not by ideology. These representatives are primarily from areas dependent on coal for electricity and heavy industry for jobs and economy. You can see an interative map of the Congressional vote here. In contrast, the Republican supporters of the bill came from California, Delaware, New Jersey and New York.

It looks like the closeness of the vote, with 44 people from the majority Democrats voting AGAINST the bill, means the hard work is really yet to come for the President and the bill's sponsors. It is not certain what the legislation may look like in its final form - if we had a crystal ball, we'd love to be able to tell you. However, what is clear is that the discussion is not over. The bill goes to the Senate next before it lands in its final form on the President's desk.

Watch for our bulletin on the Waxman-Markey bill and our analysis of what the bill may mean for us in Canada in the next day or so.

Support for a Global Climate Change Fund?

A global climate fund proposed by Mexico over a year ago is beginning to gain support at UN climate talks in Bonn. One of the major issues anticipated to be addressed in Copenhagen in December is whether developing nations should pay for their contributions to climate change. Most developing nations believe that industrialized nations should pay for their efforts to cope with and adapt to climate change. The latter are wary of this, believing that developing nations should be somewhat accountable.

The Mexican solution attempts to bridge the gap by suggesting that ALL countries pay an amount into a Fund based on their economic output, population and fossil-fuel output. The monies in the Fund would be used for financing programmes to adapt to and combat climate change. The basis of the mechanism is that everyone contributes, not just "rich, developed countries". Poorer countries would be eligible for a greater share of the monies in the Fund. Contributions to the Fund could reach as high as $10 billion say the authors of the plan.

A governance framework, which is important to the U.S., is also proposed. Bloomberg reports that "the fund would be supervised by member-states of the United Nations Framework Convention on Climate Change, avoiding bodies like the World Bank, which developing countries say doesn't favor them".

How does this compare to the Climate Change and Emissions Management Fund we have in Alberta? Who are the detractors of this global climate fund? What else is being proposed?

Stay tuned.

Deutsche Bank puts huge carbon counter in Times Square

Like proverbial frogs plunked into water that is being slowly brought to a boil, many people have difficulty appreciating that climate change is happening now and is creating "unmanageable risks" for global society. To help drive home the immediacy of the problem, Deutsche Bank has set up a huge carbon counter in Times Square. Based on models developed by MIT, the counter tracks the total quantity of greenhouse gases (measured in tonnes of carbon dioxide-equivalent) in the atmosphere in real time.

At the launch of the carbon counter, Kevin Parker, CEO of Deutsche Asset Management, said the purpose of the clock is to "foster a sense of urgency about the problem, raise public awareness, create a need for education, intended and spur a call for action" (no doubt it is also to drive business to DB Climate Change Advisors).

Know-the-number.com, the website for the Carbon COunter, elaborates as follows:

"Our climate is changing. The scientific evidence is clear: our planet is getting warmer. Greenhouse gases (GHGs) - including carbon dioxide, methane, nitrous oxide, ozone, and chlorofluorocarbons - are increasing rapidly in our atmosphere. Human activity such as burning fossil fuels and deforestation is a major source of these gases. But since we can't see them, it's easy to forget they are there. Out of sight, out of mind. And if we aren't aware of these 'carbon' gases, it's easy to ignore the urgent need to reduce their emission. The Carbon Counter displays the running total amount of long-lived greenhouse gasses in the earth's atmosphere, measured in metric tons."

You can bring the counter to your desktop using a widget available from Deutsche Bank.

OEB launches new portal for its Green Energy Act initiatives

The Ontario Energy Board ("OEB") recently launched a web portal for its green energy initiatives. The OEB is being called upon to help Ontario transition to a green economy powered by renewable energy. Following the enactment of the Green Energy and Green Economy, 2009, the Board has three new objectives:
1) The promotion of renewable energy, including the timely connection of renewable energy projects to transmission and distribution systems;
2) The promotion of conservation and demand management; and
3) The facilitation of the implementation of a smart grid.

The new portal provides current information about the OEB's initiatives to help it meet its new objectives.

Canada's pulp and paper industry receives $1 billion in new funding targeted at green energy initiatives

The federal Natural Resources Minister recently announced a $1 billion Pulp and Paper Green Transformation Program. The program will provide funding tied to the amount of black liquor produced by pulp mills. Black liquor, a by-product of the pulping process, can be used to generate renewable heat and power. Companies will receive $0.16 per litre of liquor on the condition that the money be invested over the next three years in improvements to energy efficiency and other measures of environmental performance.

The program is designed in the hopes of creating a more sustainable, and commercially viable, industry. Natural Resources Minister Lisa Raitt claimed that "[b]y making a smart investment today, we are laying the ground work for a greener, more secure future for the pulp and paper sector and the people who work in it".

Part of the federal government's current efforts to pull Canada out of the recession, this new funding is just one of several programs available to members of the forestry industry, as well as those operating in other economic sectors. Canada's Economic Action Plan makes cash available to support the development of innovative technologies which can enhance the competitiveness of Canadian companies internationally. Further, the Community Adjustment Fund and Community Development Trust, both created under the Economic Action Plan, contain $1 billion each to help "mitigate the short-term impacts of restructuring in communities." The federal government has also made cash available to extend work sharing agreements, which are aimed at helping employers avoid temporary layoffs, while waiting for an economic turnaround.

Posted by Sarah Robicheau, Summer Student (Toronto)

Québec Takes a Bold Step on Cap-and-Trade

On May 12, 2009, Bill 42 entitled An Act to amend the Environment Quality Act and other legislative provisions in relation to climate change was tabled by Line Beauchamp, Québec's Minister of Sustainable Development, Environment and Parks (the "Minister"). If adopted into law, Bill 42 will bring a mandatory Cap-and-Trade System to Québec, making it the first Canadian province to implement such a system.

The aim of Bill-42 is to reduce greenhouse gas ("GHG") emissions. It would allow Québec to fulfil its commitments under the Western Climate Change Initiative of which Québec is a member.

Bill 42 would allow the Minister to:

• require every GHG emitter to report its GHG emissions (nature and quantity) to the Minister who will publish said information in a public register of GHG emissions. An "emitter" is defined as a person or municipality "who carries on or operates a business, facility or establishment" that emits GHG, or "that distributes a product whose production or use entails" the emission of GHG;
• set an overall GHG reduction target (for specific periods), based on 1990 emissions. This target may be broken down into specific reduction/limitation targets for different sectors of activity (as determined by regulation); and
• require GHG emitters to cover their GHG emissions with an equivalent number of "emission allowances". Emission allowances will include: emission units, offset credits, early reduction credits and any other emission allowances determined by regulation.

The Minister may grant (subject to conditions determined by regulation):

(a) available emission units by allocating them (without charge) to GHG emitters required to cover their GHG emissions, or by selling them by auction or agreement to persons or municipalities as determined by regulation;

(b) offset credits to GHG emitters who have reduced their GHG emissions or to persons or municipalities who avoid GHG emissions or who capture, store or eliminate GHG; and

(c) early reduction credits to GHG emitters who have voluntarily reduced their GHG emissions prior to the date by which they were required to cover them.

Section 46.8 of Bill 42 allows emission allowances to be traded between GHG emitters. At the end of a prescribed period, any emission allowances not used to cover GHG emissions may be banked for use or trade during a later period.

Emission allowances will be tracked and accounted for in a public register containing the names of emission allowances holders and the number and type of emission allowances credited to their accounts.

Sums collected under the provisions of Bill 42 that are put into the Green Fund (a fund intended to support sustainable development) will finance, inter alia, GHG reduction.

Bill 42 is expected to be adopted this fall and implemented by 2012.

Contributors:
Josie Morello
Sylvie Lang

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OPA posts draft FIT contract

The Ontario Power Authority ("OPA") has released a draft of the standard contract to be used under the Feed-in Tariff ("FIT") program (the "FIT Contract"). The draft contract reflects much of the feedback received during the extensive consultations held by the OPA. Specifically, it includes the revisions to the FIT Program announced by the OPA on May 12.

The draft FIT Contract and associated documents are available online.

The OPA invites comments and feedback on the contract and associated documents until Friday, June 26, 2009. Comments must be provided through OPA FIT website.

Sale of wheat straw biofuel in Ottawa marks a "World First"

One of the most common criticisms of biofuels has been that they generate a "food versus fuel" conflict unacceptable in a world where so many go hungry. In the past few years, biofuel generation has been blamed by many for the rising cost of food. Thus, there is much incentive to generate a form of biofuel that does not use pure food products, such as corn and soy. Enter, wheat straw biofuel. Made from portions of wheat that are usable for food, this cellulosic ethanol is being touted as a far more sustainable version of the "first generation' biofuels which required the use of edible portions of plants.

This week, an Ottawa Shell station will be the first in Canada to sell a 10% cellulosic ethanol-gas blend. Costing the same as unblended gas, and offering equal mileage, the fuel is being produced by Iogen Energy Corporation at a local facility. Royal Dutch Shell is a partner in this project, as they continue to build their involvement in the development of sustainable fuels. While they are a significant investor in the Alberta oil sands and a natural gas producer, they are also the world's largest distributer of biofuels and seek to expand their involvement in the development and distribution of cleaner fuel sources.

At the opening on June 10th, Dr. Graeme Sweeney, Shell's Executive Vice President for Future Fuels and CO2, stated: "while it will be some time before general customers can buy this product at local service stations, we are working with governments to make large-scale production economic." His enthusiasm is echoed by Iogen CEO, Brian Foody, who noted that this station is a "world-first". Federal Transport and Infrastructure Minister John Baird, called is "a great day for Canadian technology and proof that Canada's commitment to developing low CO2 fuels is starting to pay dividends for the environment, farmers, and consumers".

In the hopes of expanding the sale of this particular type of biofuel, Shell has plans to open a second facility in Saskatchewan.

Posted by Sarah Robicheau, Summer Student

OEB releases discussion paper exploring more innovative approaches to cost recovery for electricity infrastructure projects

Further to the Ontario Energy Board ("OEB") Chair's announcement on April 3 and his letter of June 1, the OEB released a Staff Discussion Paper on The Regulatory Treatment of Infrastructure Investment for Ontario's Electricity Transmitters and Distributors on June 10.

The discussion paper was prompted by the passing of the Green Energy and Green Economy Act, 2009 (the "Act") last month. The OEB describes the purpose of the paper as follows:

"This Discussion Paper is intended to solicit input from all interested stakeholders on a range of alternative mechanisms within an integrated framework for the regulatory treatment of infrastructure investment. The focus of this Discussion Paper is specifically on infrastructure investment by electricity transmitters and distributors. The [Act] establishes a legislative framework that imposes responsibilities on electricity utilities in relation to smart grid development and renewable generation connection activities, and that requires the Board to be guided by the objective of promoting or facilitating such activities. Nonetheless, staff notes that this need not preclude the Board from considering use of such a framework for other rate-regulated entities."

Written comments must be filed with the OEB by July 7, 2009. As explained in the cover letter to the discussion paper, cost awards will be available to eligible persons under section 30 of the Ontario Energy Board Act, 1998 for their participation in this consultation

Offset System for Greenhouse Gases Announced

If you've been following our blogs, you'll have read about our thoughts with respect to the federal government's implementation of national climate change initiatives (read up on it here) . With the provinces scrambling to enact their own legislation, delayed federal regulation could prove difficult to align with existing provincial systems and become problematic to implement.

Have the winds of change begun to blow? Canada's Environment Minister, Jim Prentice, announced today that the Federal Government will be moving forward with its Offset System for Greenhouse Gases. The system represents a significant advance towards finalizing Canada's domestic regulatory framework for greenhouse gas emissions and establishing a Canadian carbon market. In its current form, the Offset System will establish tradable carbon credits and a forum in which businesses and individuals can buy and sell credits for use in voluntary or regulated greenhouse gas systems. For instance, those companies subject to greenhouse gas emissions regulations will be able to purchase offset credits for compliance purposes. Small businesses, individuals and even travellers who wish to voluntarily offset the greenhouse gas emissions from their activities, will also be able to acquire and utilize carbon offset credits under the proposed regime.

Apart from encouraging cost-effective domestic greenhouse gas reductions in areas that will not be covered by planned federal greenhouse gas regulations, such as the forestry and agricultural sectors, potential offset projects could vary considerably, ranging from new forest creation to methane capture.

Although plans to move forward with the development of the Offset System seem to have cemented, the scheme's logistics have yet to be finalized. In August, 2008 a draft guide proposing the rules and guidance to quantify greenhouse gas reductions for projects in Canada's Offset System was published in the Canada Gazette. This will be followed by the June 12 release of two more draft guides containing proposed rules and guidance on the requirements and processes used to generate offset credits and to verify the eligible greenhouse gas reductions achieved from a registered project. Interested parties will have 60 days to comment on these guidance documents and all three Offset System guides are expected to be finalized by fall of 2009.

With so much still brewing in the Canada's climate change kitchen, we've only begun to shed light on this new development. Stay tuned for more on the Davis blog as things begin to heat up!

Eileen Rhein, Summer Student and Jennifer Cleall

The Harmonization of Climate Change

Since you've been waiting with bated breath to find out what we had to say next about the federal and provincial climate change policies, we didn't want to keep you in suspense. We blogged on Monday that the provinces are throwing together climate change legislation faster than you can say "greenhouse gases".

In related news, yesterday the Globe and Mail reported that the Alberta Conservatives are taking their federal counterparts to task over energy and environment, treatment of the oil sands and other federal government policies. The controversy arises after speaking notes prepared for Conservative MLAs to raise with federal MPs in their home ridings found their way into media hands.

A significant bone of contention for Alberta's governing party appears to be with respect to the federal government's climate change policies as they relate to coal-fired electricity. In a meeting with media on April 29, Minister Prentice was asked about what types of regulations Canada would be rolling out with respect to climate change, and specifically what its policy around thermal-coal would be. The Minister replied that any new coal-fired plants will have to be neutral in terms of emissions, (which means they must have the ability to inject the carbon dioxide at the source underground). He also indicated that once coal-fired electricity plants that have come to the end of their useful lives, and have been fully depreciated, they will be decommissioned and replaced with more environmentally friendly options.

Unfortunately, the announcement appears to have been the first time the information was relayed to Alberta. Why is this so significant for Alberta in particular? Alberta relies on coal for electricity. Virtually all of the country's 27 coal plants are here. We do not have hydro in Alberta and we rely only minimally on renewables, so thermal coal is rather important for keeping the lights on. A policy such as the one outlined by the Minister means that Alberta may "shoulder the biggest burden in complying with these regulations - and depending on how they are formulated, they could have a significant impact on the health of the provincial economy". Premier Stelmach may agree. He was quoted in the Globe article as saying "You cannot ask Albertans to carry the burden of equalization, and then also penalize them for producing the wealth that allows us to make such a massive contribution to the programs that Canadians enjoy".

While the Globe story points to the issue as being one of a frayed relationship between Alberta and Ottawa, really the problem is one of harmony of regulation, not relationship.

As Canadians, we are seeking solutions to climate change at the provincial level - this is good. But it's also challenging. Each province's emissions profile is different from the next and given its industry, Alberta's situation is particularly hard to address. Intraprovincial carbon trading, for example, is a desirable mechanism, but regulations in BC are so vastly different from those in Alberta or Ontario that they will be difficult to align. You could be trading apples for oranges. The longer the provinces have to grow and develop their own programs, the harder it's going to be to allow the various systems to operate in concert.

What will drive harmonization? Probably not climate change, but rather industry (national corporations are the same whether they are operating in PEI or Saskatchewan after all) and intra-provincial trade. Degrees of harmony have to be created.

We're just beginning to explore this topic here on the blog. Stay tuned to see our thoughts on how harmony will be achieved and how the constitutional issue will be addressed.

MOE and MNR release draft requirements for approvals under Ontario's new Green Energy Act

Two major pieces of the Green Energy Act regulatory puzzle were released for comment today. The Ministry of the Environment ("MOE") posted proposed regulatory changes pursuant to the Green Energy and Green Economy, 2009 Act ("MOE Regulatory Changes"), including a document describing the requirements of the new Renewable Energy Approval ("REA Approval Requirements"), on the EBR Registry. Simultaneously, the Ministry of Natural Resources ("MNR") posted its draft approval and permitting requirements for renewable energy projects("MNR Approval Requirements").

In announcing the proposed MOE Regulatory Changes, REA Approval Requirements, and MNR Approval Requirements, the Government of Ontario highlighted that the proposals are consistent with the one-window approvals process and standardized requirements for renewable energy projects promised under the Green Energy Act. The MNR emphasized that proponents will be expected to submit a "complete application" that addresses the requirements of the MNR, the MOE, and any other Ministry that has jurisdiction over aspects of renewable project development. Based on our preliminary review of the requirements released today, preparing a complete application for most types of renewable projects will be a very significant undertaking.

MOE Regulatory Changes

MOE proposes to amend five regulations to implement the Green Energy Act:

• Environmental Assessment Act, Ontario Regulation 116/01 (Electricity Projects) will be amended to exempt most renewable energy generation facilities (except large scale hydro) from the requirements of the Environmental Assessment Act ("EAA"). This change, which addresses the last great historical environmental hurdle for developers, will be very significant for those who wondered why the EAA was not addressed in the Green Energy and Green Economy Act, 2009.
• Environmental Assessment Act, Revised Regulations of Ontario 1990, Regulation 334 (General) will be amended to state that renewable energy generation facilities and renewable energy testing facilities that are carried out by the Crown, municipalities or public bodies are exempt from the EAA.
• Environmental Assessment Act, Ontario Regulation 101/07 (Waste Management Projects) will be amended to create an exemption for renewable energy generation facilities, meaning that the regulation and the EAA will not apply to a renewable energy generation facility that is also a waste disposal site.
• Environmental Bill of Rights, 1993, Ontario Regulation 681/94 (Classification of Proposals for Instruments) will be amended to classify the Renewable Energy Approval as a Class II instrument under the Environmental Bill of Rights, 1993, meaning that the MOE would have to give notice of proposals for a Renewable Energy Approval in accordance with the Environmental Bill of Rights Act, 1993.
• Environmental Bill of Rights, 1993, Ontario Regulation 73/94 (General) will be amended to provide that the provisions of the Environmental Bill of Rights, 1993 relating to leave to appeal do not apply to a proposal to issue, amend or revoke a Renewable Energy Approval. Note however that an appeal as of right for third parties exists under the amended Environmental Protection Act.

The MOE is also considering amending Environmental Protection Act, Revised Regulations of Ontario 1990, Regulation 347 (General - Waste Management) to facilitate the intermediate processing of biomass waste and the use of agricultural by-products for biomass projects. Details of these amendments have not yet been released.

REA Approval Requirements

Proponents applying to the MOE for a Renewable Energy Approval will have to provide the following:

• Description of Project, including information about the generation technology, nameplate capacity and expected output, location and land tenure, etc.;
• Construction Plan, including details regarding the mitigation of any impacts of construction;
• Site Plan, including pans showing existing natural features, existing and proposed infrastructure, surrounding land use, points of reception, etc.;
• A Stormwater Management Plan, as applicable;
• A Response Plan for addressing emergencies arising from the operation of the facility;
• A Consultation Summary, including a details of public, municipal, and Aboriginal consultation, what concerns were raised and how they will be addressed;
• Evidence that any Cultural Heritage resource considerations are assessed and mitigated, if applicable;
• Natural Heritage submissions showing that the facility is sited outside setbacks for significant natural heritage features, or documentation of a mitigation approach (approved by MNR);
• Water Bodies submissions showing that the facility site is outside setbacks for sensitive hydrologic features, or documentation of a mitigation approach ;
• A discussion of the extent to which Provincial Policy Plansapply to the renewable energy generation facility, and documentation that development is permitted, if siting on the Niagara Escarpment;
• Technology-Specific Requirements.

Each of these items is discussed in much greater detail in the documentation released today.

One of the most highly anticipated Technology Specific Requirement is the setback requirement for on-shore wind turbines. MOE has proposed a universal minimum setback of 550 m, with larger setbacks required based on a matrix of sound power levels from various numbers of turbines. In applying the setback requirements, all turbines within 3 km of the receptor must be considered, even if they are not part of the same project.

The REA Approval Requirements do not apply to some types of projects. For example, solar photovoltaic facilities with a nameplate capacity less than 10 kW (the smallest class under the OPA's Feed-in Tariff proposal) would not require a Renewable Energy Approval (or any Certificate of Approval).

MNR Approval Requirements

Pursuant to the newly added s. 13.2 of the Ministry of Natural Resources Act, MNR can request documentation in connection with renewable energy projects for the statutes it administers, including the following:

• Ministry of Natural Resources Act;
• Public Lands Act;
• Lakes and Rivers Improvement Act;
• Fish and Wildlife Conservation Act;
• Endangered Species Act, 2007;
• Crown Forest Sustainability Act;
• Forest Fires Prevention Act;
• Aggregate Resources Act;
• Oil, Gas and Salt Resources Act;
• Provincial Parks and Conservation Reserves Act;
• Conservation Authorities Act; and
• Niagara Escarpment Planning and Development Act.

For projects that will be constructed on Crown land, a complete submission to the MNR will include:

• Documentation of public consultation;
• Documentation of Aboriginal consultation;
• Project description;
• Site plan;
• Documentation of natural resource assessment and actions taken;
• Documentation that other interests on Crown land have been addressed;
• Construction plan;
• Post-construction monitoring plan;
• Public safety plan; and
• Decommissioning plan.

The MNR will require additional information for specific generating technologies. For example, developers of on-shore wind farms will have to address bird and bat issues.

The MNR may require even more information if the project will require the removal of aggregate materials, the harvesting of Crown forest resources, or the prevention of wildfires, or if the project is located in a Provincial Park or Conservation Area, near a natural hazard or in an area subject to a Forest Resource or Sustainable Forest License.

It is immediately apparent that some of the MNR's requirements are also required as part of an application to the MOE for a Renewable Energy Approval. We hope but cannot confirm that MNR and MOE will work together to harmonize any overlapping requirements. Ideally, such harmonization will occur with the input of the new Renewable Energy Facilitation Office.

For projects that will be constructed on private land, the MNR will require documentation in respect of the following:

• any impact of the project on species or habitat protected under the Endangered Species Act, 2007;
• any applicable Fish and Wildlife Conservation Act authorizations;
• setbacks from petroleum resources operations; and
• construction plan for any water crossings, bridges, culverts and causeways.

The MNR Approval Requirements include exemptions for specific types of small-scale waterpower, windpower, solar, and biomass, biogas and biofuel facilities.

The MNR Approval Requirements also address the construction of testing facilties, amendments to plans prior to construction, and expansions and modifications of facilities, as well as certain specific types of appeals.

Public consultation

MOE Regulatory Changes, REA Approval Requirements, and MNR Approval Requirements are all open for public comment until July 24, 2009. Comments can be submitted through the EBR Registry or to the individuals identified on the EBR Postings. See posting 010-6516 for the MOE Regulatory Changes and REA Approval Requirements and posting 010-6708 for the MNR Approval Requirements.

In addition, the MOE will be holding 6 information meetings between June 15 and July 25. See the MOE's Renewable Energy Approval page for details.

Dandelions are Springing Up Everywhere

We blogged the other day that Canada is pushing back its target start date for the regulation of emissions at the federal level to align more closely with the American schedule. In a discussion with media from London on May 28, Minister Prentice indicated that the GHG reduction targets would be in effect as late as 2012 in order to ensure they were aligned with the system south of the border. The Turning the Corner Plan called for targets to be developed in 2008 and come into force in 2010.

In a speech to the CD Howe Institute on June 4, the Minister remarked "[w]e will outline the full suite of policies that relate to all major sources of emissions this year, in 2009. I have said this, this will happen time and time again and it will happen by the time we reach the international table at Copenhagen. The process then of drafting the detailed regulations under CEPA will consume much of 2010, the following year. In some cases - the tailpipe emission standards being the obvious illustration - we have already started that process, but 2010 will be the year in which the regulations are drawn together. The regulations will be drafted with a view to an application date of January 1, 2011 and they will be brought into force thereafter on a sector by sector basis. We will make individual decisions on a sector by sector basis in terms of the application date for those".

The critics used to complain that Canada was moving forward without a plan and now they critics bitterly declare that Canada is lagging behind. Isn't that ironic given a year ago we were busily lambasting the U.S. for their lack of climate change initiatives. Canada lagging behind? I don't think so - we're moving forward, just not cohesively.

What is the consequence of Canada pulling back at the federal level (and what, exactly, is the meaning of the blog title), you ask? While the federal government waits for its biggest trading partner to define its domestic targets, regulatory frameworks addressing climate change are springing up all over the place like dandelions on a prairie field.

Alberta's emissions reduction targets were introduced in 2007. BC brought in a carbon tax last year. Ontario passed the Green Energy Act this year and has recently introduced a cap and trade bill (although the implementation date has been pushed back to 2012). So has Quebec. Saskatchewan introduced comprehensive climate change legislation in May. We're expecting that the Maritime provinces and Manitoba, which have established action plans already, will follow suit with regulatory frameworks soon.

All of these provincial frameworks have an opportunity to emerge because the federal framework is being delayed. But are the provinces going to bump into one another? What if you're a corporation operating in B.C., Quebec, Alberta and Ontario - what do you do? Are the provinces on a collision course with the federal government? Where's it all going?

We have some thoughts about that. Stay tuned the next couple of days and we'll explore it.

OEB Chair formally announces initiatives regarding electricity infrastructure investment

Howard Weston, Chair of the Ontario Energy Board ("OEB"), issued a letter on June 1 to all electricity market stakeholders announcing new OEB initiatives to implement an "integrated Regulatory framework" for electricity infrastructure investment. The announcement was foreshadowed by a statement from the Chair in April. The initiatives are all in response to the changes to be implemented by the Green Energy and Green Economy Act, 2009.

The OEB will undertake planning and consultations to address the following 3 related issues:

• Distribution infrastructure planning and funding related to renewable generation connection and smart grid development activities: The Board hopes to implement accounting and funding mechanisms to allow utilities to invest in enhancements to the smart grid upgrades and upgrades to connect new renewable generation;
• Cost recovery for infrastructure investment associated with those activities: The Board will explore more "innovative" approaches to cost recovery for renewable generation and smart grid upgrades. Several possible approaches were discussed in the Chair's earlier announcement.
• Cost responsibility associated with the connection of renewable generation facilities to distribution systems: This issue will be addressed through proposed amendments to the Distribution System Code. The amendments are intended to ensure that "costs are fairly allocated in a

manner that protects ratepayers, promotes the connection of renewable resources and maintains appropriate locational signals as a means of ensuring that site selection for generation is economically efficient."

The OEB will release materials on all three initiatives in the coming weeks. Stay tuned for updates.

The Chair also noted that the OEB is working on further initiatives to "give effect
to the new target-based and global adjustment-funded regime for electricity conservation and demand management."

Canada, Ontario push out start of climate change regulations

Both the federal and Ontario provincial governments have decided to delay regulations that would mandate reductions in greenhouse gas emissions. The modified schedules more closely align with the expected legislative timetable south of the border.

Federal announcement

Federal Minister of the Environment Jim Prentice announced on May 28 that hard emissions targets will now come into effect beginning in 2012 and will be phased in through 2016. The shift to a 2012 start date is consistent with the federal government's strategy of aligning Canadian environmental, energy and economic policy with that of the Obama administration in the U.S. "In terms of our industrial competitiveness, protecting jobs, investments, we will need to ensure that the application dates for Canadian climate change policies are harmonized with the United States," the Globe and Mail reports Mr. Prentice as saying, "or at least that we give close consideration to how and when individual sectors of the American economy will be regulated."

However, the new timeline is a significant departure from that set out in the federal Turning the Corner plan, which called for regulations to take effect on January 1, 2010. The 2012 start date means that Canada will have no regulations in place before the end of the first commitment period under the Kyoto Protocol, Canada's targets for which Prime Minister Harper has described as unachievable since his campaign for office in 2006. Critics note that the change is out of step with the fierce urgency of now recently highlighted by a group of Nobel laureates.

Some suggest that the announcement will hurt Canada's credibility during the negotiations in Copenhagen later this year (see e.g., Climate Action Network Canada and the Pembina Institute). However, Mr. Prentice made it clear that the government will make public "a full suite of policies that relate to all sources of greenhouse gas emissions" before Copenhagen.

Ontario's acknowledgement

Also on May 28, Ontario's Minister of the Environment John Gerretsen acknowledged that the provincial Liberals had pushed back their cap-and-trade implementation date to 2012. The acknowledgement followed the tabling of framework legislation for the proposed cap-and-trade system.

2012 coincides with the expected start of the first phase of a cap-and-trade regime under the Western Climate Initiative, of which Ontario is a member. However, the new start date is two years later than the 2010 date in the Ontario-Quebec cap-and-trade MOU signed almost exactly a year ago.

The need for the delay is attributed to the change in administration in the US and to delays in Ottawa. However, Ontario Premier Dalton McGuinty had previously declared that Ontario should move faster than Ottawa and Washington, saying, "we want to ensure that we have in place a framework at least, before we can even talk about putting a price on carbon ... that allows Ontario businesses to know where the future's going to be and so that we can influence the debate which I think will unfold."

20 Nobel laureates implore leaders to act to prevent temperatures from rising more than 2C by 2050

A group of 20 Nobel prize winning scientists, economists and writers recently released a call to action in advance of the climate treaty negotiations in Copenhagen later this year. The St. James Palace Memorandum points to compelling evidence that the increase in average temperatures must be held below 2 degrees Celcius to avoid "unmanageable climate risks." The memo calls on leaders to recognize the "fierce urgency of now", stating that the scientific evidence gives leaders a "clear mandate to accelerate the actions that need to be taken." The memo leaves no room for debate as to whether climate change is an issue that needs to be addressed: "Political leaders cannot possibly ask for a more robust, evidence-based call for action."

To avert unmanageable climate risks, the memo asks leaders to deliver three things:

• An effective and just global agreement on climate change that will ensure that emissions peak no later than 2015, decline by 24-40% relative to 1990 levels by 2020 and by at least 50% by 2050. Such an agreement should put a price on carbon while recognizing the need for developing countries to overcome poverty but develop sustainably.
• A low carbon energy infrastructure that is based on energy convservation and efficiency, as well as the widespread deployment of green generation technology and smart grids. Appropriate financial and regulatory systems must be created to spur green growth and to ensure that developing countries leapfrog to a low carbon economy.
• Tropical forest protection, conservation and restoration, through the accelerated negotiations of a long-term UNFCCC agreement on halting deforestation and on forest restoration. This initaitive is critical given that deforestation and forest degradation by humans is the source of over 20% of global emissions.

Kofi Annan's Global Humanitarian Forum releases report on human impact of climate change

The Global Humanitarian Forum, a think tank chaired by Kofi Annan, former secretary general of the UN, released a report on the human impact of climate change. The report presents a bleak picture of the current and projected impacts of climate change on the world's population. However, it holds out hope that climate change policy can be developed quickly enough to avert the worst of the impacts.

The report estimates that 325 million people are seriously affected by climate change each year. Of these, 300,000 are killed - a death toll similar to that of the Indian Ocean Tsunami. Increasingly severe storms, floods, droughts, shifting rainfall patterns, heat waves, and rising sea levels not only kill and dislocate people in the short term, but also compromise food and water supplies over the long term. These effects are felt disproportionately (and arguably unjustly) by people in developing countries, particularly in the semi-arid dry land belt countries from the Sahara to the Middle East and Central Asia, sub-Saharan Africa, South and South East Asia, and small island developing states.

The total current economic cost of climate change is pegged at $125 billion per year, which is greater that all of the foreign aid that flows to developing countries each year.

The numbers are expected to get much worse by 2030, with deaths rising to 500,000 per year and the cost ballooning to $340 billion annually.

While the report acknowledges that the estimates are subject to significant uncertainty, it expresses confidence about the order of magnitude. It was reviewed by leading international experts, including Rajendra Pachauri of the IPCC, Jeffrey Sachs of Columbia University, and Barbara Stocking of Oxfam.

The release of the report was timed to help put a human face on the issue of climate change in the run up to negotiations in Copenhagen later this year. Mr. Annan intends the report to be a call to action: "Just six months before the Copenhagen summit, the world finds itself at a crossroads. We can no longer afford to ignore the human impact of climate change. Put simply, the report is a clarion call for negotiators at Copenhagen to come to the most ambitious international agreement ever negotiated, or continue to accept mass starvation, mass sickness and mass migration on an ever growing scale."