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Davis LLP Web Logs or "Blogs" are intended to provide general comments on developments in the law. They are not intended to be a comprehensive review nor are they intended to provide legal advice. Readers should not act on information in the blogs without seeking specific advice on the particular matter. Please contact a lawyer listed on the blog pages for additional details, or to discuss how blog information is relevant to a specific situation.

Climate Change Law Practice Group Blog

» December, 2009

Pacific Carbon Trust Issues RFQ for Business Advisory Services

Submitted by Grant Boyle

A Request For Qualifications ( #ON-001874 / PCT- 2378 ) was issued December 21 by the Pacific Carbon Trust (PCT) with the intent of establishing a series of qualified bidders for Business Advisory Services PCT will be requiring over the next few years.

The solicitation covers a number of broad areas including:

-Carbon & energy consulting;

-Finance and investment;

-Sales & marketing;

-Management consulting

It is anticipated that the PCT will establish a list of Qualified Suppliers that will be used to select potential candidates for a variety services during the planning, procurement and post financial close implementation phases of projects contemplated by PCT and/or PCT clients.

The Closing Date for bids is January 21, 2010

Copenhagen Accord: Where do we stand on finance?

Submitted by Grant Boyle

The Copenhagen Accord coming out of COP 15 says funding will be provided to developing countries for emissions mitigation, reduction of deforestation, and adaptation. There is a collective commitment from developed countries "approaching" $30 billion for the period 2010-2012, "balanced between adaptation and mitigation," with adaptation funding being prioritized for the most vulnerable developing countries. The developed countries also committed to a goal of jointly mobilizing $100 billion annually by 2020.

The Accord does not set out how this financing will be raised, despite the range of proposals ( albeit contentious proposals) on the table going into the summit. See previous posting.

Concerning the first $30 billion by 2012, it looks like the plan is for developed country governments to make cash pledges. There was talk during the conference that the US would come up with $3.6 billion, the EU $10.6 billion and Japan, $11 billion.

Concerning the $100 billion by 2020, the Accord says that this funding will come from a "wide variety of sources, public and private, bilateral and multilateral, including alterative sources of finance". The Accord says that this funding should flow through the "Copenhagen Green Climate Fund" and that a "High Level Panel will be established under the guidance of and accountable to the Conference of the Parties to study the contribution of the potential sources of revenue, including alternative sources of finance, toward meeting this goal."

It will be interesting to see how this "Green Climate Fund" shapes up in 2010 and the findings of this "High Level Panel". Clearly, there is a tension between whether to promote private or public funding approaches. Given the scale of funding promised by 2020, most of this money will likely come from private sources, which will probably result in renewed interest in 2010 in reforming and scaling upthe Clean Development Mechanism (the CDM). The CDM and/or similar crediting schemes may act as an international offset system for emerging national and regional emissions trading regimes.

COP 15 ends with Obama-brokered Copenhagen Accord and UN decisions to extend negotiating mandate.

Submitted by Grant Boyle

COP 15 ended Saturday afternoon. The Parties decided to extend the mandate of the working groups under the Kyoto Protocol and Long Term Cooperative Action and requested those groups to deliver the results of their work for adoption by COP 16 in Mexico next year.

COP 15 also adopted a decision "taking note" of the Copenhagen Accord. As widely reported, the Copenhagen Accord is considered politically important, but does not constitute a legally binding agreement, even though no such agreement was anticipated going into the summit. In any event, the Copenhagen Accord represents a novel outcome for UN negotiations and has created some uncertainty over the procedure and forum for international climate talks going forward. Jacob Werksman posted a helpful brief analysis of the international legal status of the Accord.

Also, the Pew Center has published a good Summary of the conference.

Joint Announcement of an Investment of up to $20 million to develop a Pilot Biorefinery in Thunder Bay

Today, the Honourable Tony Clement, Federal Minister of Industry, on behalf of the Honourable Lisa Raitt, Canada's Minister of Natural Resources, along with the Honourable Michael Gravelle, Ontario Minister of Northern Development, Mines, and Forestry, announced funding of up to $20 million to develop a forest biorefinery. The pilot project will test forest biomass for use in energy and next-generation forest products. The initial phase of the pilot project involves a feasibility study that will provide a complete analysis of the biorefinery's functions, including a pre-commercial process to extract wood fibres; identify market opportunities; assess output capacity of the demonstration plant; and determine full project costs.

An agreement was also reached by all partners to increase the research capacity and knowledge in the region, which will help Thunder Bay's reputation as a leading centre for bioeconomy research and innovation.

Of the project and agreement, Minister Gravelle was quoted as saying "The diversification of the forest industry in Ontario, including emerging innovative biofuel, is key to strengthening Ontario's forest sector now and into the future [...] we created the Centre for Research and Innovation in the Bio-Economy to bring business, government and communities together to develop new economic opportunities and help ensure a bright future for Northern Ontarians."

Located in Thunder Bay, the Centre for Research and Innovation in the Bio-Economy, or CRIBE, is a not-for-profit organization developed by the Ontario Ministry of Research and Innovation, which focuses on commercializing new forest products and technologies by working with leading researchers and industry. The province is currently investing $25 million in the CRIBE, which intends to attract world-class researchers and industry leaders to develop the next generation of renewable forestry bio-products.

Forest bio-products contribute an estimated $1 billion to Canada's economy and could one day be as important as the conventional forest economy.

GDF SUEZ Completes New Brunswick's Largest Wind Facility

GDF SUEZ has completed construction and achieved commercial operation at Caribou Wind Park, located 70 kilometers northwest of Bathurst, New Brunswick. The largest wind operation in the province, the 99 MW facility will provide all of its power to New Brunswick Power to fulfill a 20-year power purchase agreement with the utility.

Upon completion of the project, David Hay, NB Power's President & CEO was quoted as saying "NB Power is focused on minimizing its environmental footprint through a number of initiatives such as diversifying our renewable portfolio."

Achieving commercial operation of Caribou Wind Park, which is GDF SUEZ's first generation facility in New Brunswick, brings the company's North American renewable energy portfolio to 509 MW, more than 40 percent of which is wind powered generation. The company also owns and operates two wind farms, which hug the west and north capes of Prince Edward Island: West Cape Wind Farm, with a generation capacity of 99 MW, and Norway Wind Farm, which generates 9 MW. GDF SUEZ claims that over one third of its power operations in North America are carbon-free or carbon-neutral facilities.

Producing enough electricity to supply as many as 30,000 homes, Caribou Wind Park, via New Brunswick Power, will provide power to about 2 percent of the electricity needs in the province.

You've Gotta Riot About Something

If you're a professional protestor (as lots of these people are), and you've got to riot over something - it may as well be over climate change.

There were more protests today - this time downtown and not at the Bella Centre, where, if you weren't part of an official government delegation, you weren't getting within a kilometre of the building, pass or no pass.

We have been taking the train everywhere and wanted to again yesterday, but someone (a protestor, out to save the world, perhaps?) helpfully (or not) left a suspicious bag in the train station, resulting in a bomb scare and the train network being shut down. Wonderful. Very helpful, protestor types. Thanks very much. Didn't that little stunt in the name of climate change just entirely backfire on you? A nation of commuters just had to hire taxis (= emissions) to get home.

It's still all about money, but it remains unclear what kind of agreement will emerge from the summit. Some nations want a legally binding agreement that commits the developed world to binding emissions cuts in and to spend hundreds of billions of dollars in aid to help poor countries meet climate change challenges - both mitigation challenges and adaptation challenges.

The United States continues to take a firm line that the developing world, and particularly China, must agree to control their own emissions and make those actions verifiable. It's unclear to me what's going to happen.

Heading home tomorrow. Will reflect over what's happened in Copenhagen this past week in the days ahead.

Tales from Copenhagen - Part 4 - Star Sightings...

I blogged earlier today about the scene in the Bella Centre and what was going on in there. Turns out I was lucky to get in when I did. As I said, there was a heavy police presence and a sit in at the front door. What I didn't know was that a few minutes after I was able to get in the door, the Centre was shut down to NGOs entirely. I am guessing on the timing based on information from some of the people I know who tried to get in about 15 minutes after I did and were turned away.

Why?

Protesters. Boo. They were getting aggressive and were there for most of the day. How I managed to slip into the building during the window when they were contained or not there yet, I will never know.

Meanwhile in the Bella Center, I went to see Senator John Kerry speak, which was neat - not every day you see a famous American Senator. Speaking of famous, remember the movie Splash? Daryl Hannah was at the Bella Center today - apparently she was on a panel - she's churned up her backyard and grows vegetables and lives off the grid. I didn't see her speaking, but I did spend a few minutes standing two people in front of her in a line-up.

Who ever guessed what I was going to see in Copenhagen?

OPA to offer 700 microFIT contracts

The Onatio Power Authority ("OPA") announced today that it will offer 700 microFIT contracts to homeowners, schools, farmers and small businesses. This is the first round of offers to be made under the new Feed-in Tariff program. Many more offers are expected in the New Year.

The contracts are all for renewable generating facilities smaller than 10 kW. Their combined capacity is about 8.6 megawatts (MW), enough to power about 1,000 average homes.

The OPA received about 1,200 applicants for the microFIT program, including the 700 successful proponents. It is unclear whether the remaining 500 are still being evaluated or have been rejected.

Still pending are the approximately 1,000 applications under the FIT program for projects over 10 kW. The OPA indicated that it intends to award about 2,500 MW of large scale projects. However, the OPA did not say when it would announce the next round of FIT winners.

Oil sands a "trade exposed" industry that may warrant special treatment under cap-and-trade

The federal government may be contemplating special treatment for the oil sands under its yet-to-be-unveiled greenhouse gas regime (see e.g., here, here, and here). Cabinet documents obtained by the CBC suggest that the goals of the Conservative's Turning the Corner plan may be abandonned and that the oil sands will be subject to much less demanding reduction targets.

Environment Minister Jim Prentice responded that any such documents do not represent the government's current position. However, he acknowledged the need give careful thought to "trade exposed" industries, noting that such thought is being given in the U.S. "A key feature of the Waxman-Markey legislation is the treatment accorded to what are referred to in the United States as trade-exposed industries," he said. "And this is something that we will need to consider on the Canadian side of the border."

There is speculation that the special treatment could take the form of tax incentives outside of the planned cap-and-trade regime.

However, in a letter to the Toronto Star, Minister Prentice emphasized that the "government has not yet made any decisions with regard to trade-exposed sectors."

The notion of protecting "trade exposed" industries under cap-and-trade schemes is hardly a new one. Much of the debate about whether emissions allowances should be distributed for free or auctioned is informed by similar considerations. "Trade exposed" industries consistently argue that they need free allowances to avoid losing their international competitive advantage.

Certainly, any global or continental deal will have to strive to keep the playing field within specific industries as level as possible. If not, trade wars will no doubt ensue.

For Canada's federal government, an equally contentious issue will be keeping domestic competition fair between industries (and provinces). Alberta still smarts from the wealth transfer brought about by the old National Energy Program. Albertans will fiercely resist any cap-and-trade scheme that is seen to generate revenue in Alberta (either by way of credit auctions or alternative compliance payments) and distribute it to other provinces. In contrast, those outside of Alberta and Saskatchewan are very wary of any special treatment given to the tar sands. They would prefer to see all industries be subjected pay an equal price on carbon.

As discussed previously, provincial battle lines are already being drawn. Lurking in the background is an unanswered question as to whether the federal government can stretch its constitutional authority over criminal matters to enact market-based regulation of carbon emissions. If Prime Minister Harper and Minister Prentice find striking a deal in Copenhagen hard, just wait until they come home to a country that loves its constitutional battles.

"Annoyance is not a disease", concludes new study of health effects of wind farms

A study prepared for the American Wind Energy Association and Canadian Wind Energy Association concludes that wind turbines do not pose a health risk to those who live near them. The study dispels the notion of a "wind turbine syndrome" caused by the noise and vibrations of wind turbines. Following on the heals of a U.S. DOE report that concluded that wind farms do not depress property values, the study should help remove another potential barrier to renewable energy development.

While funded by wind industry proponents, the study was the product of independent analysis by a multidisciplinary panel comprised of medical doctors, audiologists, and acoustical professionals from the United States, Canada, Denmark, and the United Kingdom. The team is confident in its results, and is reportedly submitting the study for publication in a number of peer reviewed journals.

The following are the main conclusions of the report:

  • There is no evidence that the audible or sub-audible sounds emitted by wind turbines

have any direct adverse physiological effects.

  • The ground-borne vibrations from wind turbines are too weak to be detected by, or to affect, humans.
  • The sounds emitted by wind turbines are not unique. There is no reason to believe, based on the levels and frequencies of the sounds and the panel's experience with sound exposures in occupational settings, that the sounds from wind turbines could plausibly have direct adverse health consequences.

While the team acknowledged that some people may be annoyed and stressed out by the fact that a wind farm has been erected in their vicinity, they noted that "annoyance is not a disease."

No doubt, annoyance is exactly what many wind farm opponents will feel upon reading the report. It will be interesting to see if such opponents challenge any Renewable Energy Approvals ("REA") issued under Ontario's newly streamlined approval process for wind farms. Under Section 142.1(3) of the Environmental Protection Act (Ontario), the only grounds for appealing an REA are that engaging in the renewable energy project will cause "(a) serious harm to human health; or (b) serious and irreversible harm to plant life, animal life or the natural environment." If the conclusions of the study were to be accepted by the Environmental Review Tribunal, it would be very difficult to establish either of these grounds.

Two Year's Preparations for a Post-Kyoto Agreement Culminate in a "Series of Thematic Decisions"

Submitted by Grant Boyle

On December 15, the working group for Long Term Cooperative Action under the UNFCCC presented its work to date at Copenhagen, which it initiated in Bali in 2007, as a series of "thematic decisions"

The Chair of the Group reportedly proposed, and Parties agreed, to adopt the package as "unfinished business". The summary decision says that the package of decisions does not "prejudice" the possible legal nature of the agreed outcome of the Group's work to be ultimately adopted by the UNFCCC.

The fact that there is no grand treaty to sign makes it difficult, it appears, for delegates to know whether or not their efforts have been successful going into the final, high level segment of the conference. But when one considers the scope of the task at hand: getting everyone to agree on a plan to essentially de-carbonize the global economy over the next 40-50 years after only having begun to realize in the last 15 that climate change is a problem at all - this looks like a good start. There will likely be a legally binding agreement made in 2010 perhaps in Bonn or Mexico and there will likely be a new, greater proliferation of regional approaches and agreements (G-20 in Torontoin June?) to supplement whatever base agreement is established under the UNFCCC.

The current list of thematic decisions to be reviewed by the COP Plenary are as follows:

-Enhanced action on adaptation

-Enhanced action on the provision of financial resources and investment

-Enhanced action on technology development and transfer

-Enhanced action on capacity-building

-Nationally appropriate mitigation actions by developing country Parties: mechanism to record nationally appropriate mitigation actions and facilitate provision and recording of support

-Policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries

-Enhanced national/international action on mitigation of climate change: economic and social consequences of response measures

-Various approaches, including opportunities for using markets, to enhance the cost/effectiveness of, and to promote, mitigation action

-Cooperative sectoral approaches and sector-specific actions in agriculture

Tales from Copenhagen - Part 3 - Police All Over the Place

It's snowing again today - lovely December day in very pretty Copenhagen. The snow and the Christmas decorations make it look like something from a fairy tale. Fairy tale is not, however, what I would use to describe the atmosphere inside the Bella Centre today.

There is MUCH more security here for one. They shut down the Metro Station that stops at the Bella Centre entirely and, unless you're accredited, registered and have a secondary card, you're not getting within 200 metres of this place today. I walked from the Metro station beyond the Centre. There are police all over the place. You had to produce your badge to get past about three sets of them even before you set foot on Bella Centre premises.

One of the officers told me it's because they were expecting a large scale demonstration today, but my guess is that there are some big dogs here and that's why. Senator John Kerry is speaking today - I'll probably listen to what he has to say, but I'm not sure that he's the reason for the major police presence. Security was heightened everywhere - we even saw police standing on hills about a km from the Bella Centre keeping an eye on things. I wondered where they're all coming from. There are regular police, swat teams (multiple), army and independent security firms. Can Denmark possibly have this many police? They're either coming from every place around the country or else they've imported them from the rest of Scandanavia. I also wonder how many people wandering around in here are undercover?

If it's this tight now, I can't imagine what it's going to be like when the President arrives. I'm not going to be able to see it first hand either - they are only letting 90 NGO representatives into the Bella Center when he's here on Friday. That's 90 people, not 90 NGOs. By comparison, there are 7000 of us today and that's a 40% reduction from Monday when there were close to 10,000.

In other news, Canada continues to be in the Climate Change Doghouse, but as the Globe and Mail reported , this morning we can spend our way out. Why people are forgetting that Canada's target is nearly identical to the U.S. target and the U.S. seems considerably better received - it's helped by the fact that their Nobel Peace Prize winning President, who is very popular internationally, is arriving shortly, I think. What I also don't understand is why China isn't more of a target? Their emissions are the highest in the world and they are steadfastly refusing to be bound by any sort of emissions reduction framework. I checked out the Fossil of they Day Award chart this morning and China's not even ON it. We're in first place.

Anyhow, I will explore these thoughts further later. For now, I'm going to wander around, check out some pavillions and keep my ear to the ground.

Over and out.

Copenhagen - December 15 - China Still Not on Board

When we were in the line-up for registration this morning, someone remarked to us "if climate change isn't real, why are all these people here".

Good question.

That climate change exists is certainly not in not in dispute at COP 15. What is in dispute is how the world is going to manage it. A couple of big names spoke today - Secretary-General of the UN, Bai Ki-moon and the Governor of California, Arnold Schwarzenegger both gave speeches.

Today marked the formal opening of the final high-level stage of the conference. All the world leaders who are attending the conference will be arriving in the next day or two.

Secretary General Bai Ki-moon said "[w]e know what we must do. We know what the world expects. Our job here and now is to seal the deal, a deal in our common interest," adding that the world's leaders face "a defining moment in history". The Secretary-General also said that "three years of effort have come down to three days of action. Let us not falter in the home stretch. No one will get everything they want in this negotiation". He labelled these negotiations as the "most complex and ambitious ever to be undertaken by the world community". If the attendance alone is any indicator, he's probably right.

What's interesting is that there is an expectation on the world leaders and national governments to solve the issue by themselves - legislate emissions reduction requirements, come to some sort of agreement by which each nation will have to abide. What about on a smaller scale? This was the focus of the speech Governor Schwarenegger gave today.

"The world's governments alone cannot make the kind of progress needed on global climate change, they need everyone working. They need the cities, the states, the provinces and the regions. They need the corporations, the scientists, the individuals to create the determination and action for movement".

"I believe technology and economic focus will overtake the politics and regulatory efforts of national governments," he said. "We are beginning on a historic great transformation, a new economic foundation for the 21st Century and beyond". He also commented that the conference was in danger of "talking grandly" but failing - but even if national governments fail to agree, he said the rest of the world must take action at a "sub-national level".

The foundation of these comments is that it's not just world governments which have resonsibility for addressing climate change - it's everyone. What are we doing at the provincial level in Canada for example? What are you doing in your own home?

So what are the negotiations really going to accomplish? We have three days left - the American President and the Canadian Prime Minister both arrive on Thursday for the last two days of the conference. Canada's positoin here continues to be a tough one and Canada was awarded another "Fossil of the Day" awards this evening for something or other. Canada is definitely not the belle of the climate change ball here.

In any event, is Bai Ki-moon's request going to be granted? Will the world leaders be able to "seal the deal". The Wall Street Journal doesn't seem to think that the chances of a new climate accord are "particularly good". It reported today:

"That's brought home by the latest draft agreement, which leaves for later pretty much everything that's controversial: How much to cut greenhouse-gas emissions globally and in each country; who will pay for all that and how much; how to verify what other countries are doing on emissions; how to square the climate deal with international trade agreements, and more. At the same time, the sniping among countries has gotten more intense. Developing countries such as China and India have long taken shots at the U.S. position on climate change. But instead of finding common ground, U.S. and Chinese negotiators have been trading barbs".

It still looks like China is not on board with the idea of being accountable for its emissions. I am going to start sounding like a broken record, but in order for any international agreement to be meaningful, China, India and the other developing nations must be accountable. Todd Stern, the U.S. Climate Change Envoy took aim at China's reluctance: "If we are going to have an international agreement, as opposed to a bunch of individual countries doing their own domestic thing, but an international agreement where countries come together to work together, then they [China] have got to be prepared to put what they are doing into that international agreement." That doesn't sound like the words of someone who's optimistic about finding a solution in the last three days of Copenhagen.

There's still a question of whether the Kyoto Accord will be ditched entirely or extended, there's still a question of what the international emissions target should be and there's still a quesiton of who is going to be held accountable. Is all that going to get sorted out in the next 72 hours?

Hmmm.

So, it's going to be an interesting next three days. Lots going on tomorrow. Keep checking in.

And by the way, no, I did not meet The Terminator.

Tales from Copenhagen - Part 2

Chilly, snowy day in Copenhagen today. The Bella Centre was packed with people waiting to get in again today, although the queues were better organized and the protester/activist types were actually fenced away from those lined up.

Today, I thought I'd describe a litte bit about what goes on in the Bella Centre.

The Centre itself is a massive convention centre. It is divided into a few different parts. As you walk in there is a security screening area - picture airport security (although considerably more efficient) times 20 or so. Once through security and registation (which, by the way took us about seven hours) you enter into the first hall, which houses the most massive coat check I have ever seen and a climate change trade show. There were probably about 50 or 60 exhibitors from all over the world promoting various businesses and NGOs. From the trade show it's a short walk past the conference room booking table (which was lined up yesterday about 40 deep) to a huge atrium filled with tables, chairs and people on computers.

Beyond that there is another large hall divided into a few different sections, with small meeting rooms off each side. In the middle of the hall, there are two work areas where the UN has set up hundreds of laptops for anyone's use. In the same hall beyond this area is a room filled with long tables. Each seat is reserved for the climate change negotiator or other representative of each nation at the conference. There is a chair behind each seat for assistants. If you've ever seen a picture of a UN meeting, this is very similar. I took pictures. This room is where the government statements take place and is not open to the public for viewing during meetings. Although the room was not filled with people when we wandered in, we did see Michael Martin, Canada's chief negotiator, stride by us as we were exiting. He looked rather focused and busy, to say the least.

Behind the hall described above are the delegate offices. The United States and the EU have trade rooms set up in this area and have rooms set aside for meetings which anyone can attend. We attended a few of these meetings put on the by the US Department of Transportation, the DOE and the European Union, which I will touch on in the second blog of the day.

You can obtain daily schedules near the conference room booking tables each day. The schedule is quite thick as there are literally meetings and plenary sessions from 9 am to 6:30 every day put on by various nations. I would estimate the book had a list of about 40 or 50 meetings taking place today alone.

As I mentioned yesterday, there are two types of side events which take place "off campus". There are cultural events happening all over the city - movies on climate change, an exhibit at the national Danish museum on climate change, an exhibition called "100 Places to Remember Before They Disappear", readings, talks (today Al Gore is speaking again) - there are about 100 different cultural events listed in the guide.

The second type of side events are just called "Side Events", but consist of other sessions, talks and meetings on climate change. We will likely go to the some of the Emissions Trading events tomorrow, so stay tuned for a description on those.

So far the days have been fascinating and this conference is, all in all, a massive undertaking, the planning for which must have been underway for years. More tomorrow!

Canada under pressure to turn GHG policy talk into action

A key theme of the federal government's climate change strategy in the past few months has been to align Canada closely with the U.S. In so doing, the government's goal is to ensure that our vital trade relationship with the U.S. is maintained. Harmonization with the U.S. is seen as a key competitive advantage for Canada. However, a new report from PowerUP Canada concludes that "Canada is not matching U.S. efforts, that our delay in doing so already has serious implications, and that every moment we fall further behind increases the cost and missed opportunity for Canadians."

The following are the reports key observations:

  • Canada's global warming emissions are growing significantly while U.S. emissions are declining.
  • Every moment of delay means that Canada is starting from further and further behind although nominally aiming for the same finish line.
  • The U.S. government is providing unprecedented levels of support to clean energy and efficiency while Canada's primary programs are expiring
  • The U.S. is outspending Canada as much as 14-1 per capita on renewable energy.
  • Moving forward, the U.S. is aiming for deeper carbon cuts than Canada's "target" by orders of magnitude. Although Canadian and U.S. targets proposed at Copenhagen are superficially similar, the U.S. "target" does not include many of the programs before the legislative branch and none of its executive branch programs. Canada has no program to meet its proposed cuts and past policy proposals were deemed inadequate by independent government and academic auditors.
  • The U.S. federal government has accelerated to unprecedented levels of action on carbon restrictions, efficiency and clean energy in the past year while the Canadian federal government is "not even trying" to match U.S. efforts.

If Canada's only goal in harmonizing with the U.S. is to avoid punitive border adjustments (i.e., carbon tariffs), the above conclusions suggest that setting similar reduction targets for the purposes of the Copenhagen negotiation may not get the job done. Even if Canada matches the US's Copenhagen target, the US may make even deeper emissions cuts and may nevertheless be inclined to protect its industry from its (relatively) dirty neighbour to the north. If Canada's goals also include ensuring that Canada competes in a clean energy, carbon constrained world, the above conclusions also suggest that Canada is being seriously outpaced by the US.

In a related note, Green Cross International's Climate Change Task Force and PowerUP Canada (again) delivered a letter to Prime Minister Stephen Harper calling on him to "dispel perceptions of defeatism" about the climate change file and to "rally the Canadian people" to build an economy powered by clean energy.

The letter, which was jointly signed by Mikhail Gorbachev, The Rt. Hon. Kim Campbell and prominent Canadian business leaders, scientists and artists, again focuses on the growing "clean energy" competitiveness gap: "Currently Canada does not have a consistent price signal or sustained national incentives for the deployment of clean energy. Recent studies by the UN and HSBC show that Canada lags the G20 in deploying green stimulus. Canada is missing the economic opportunity of the twenty-first century."

Regardless of what Canada commits to internationally, it appears that the federal government has much work to do domestically on the climate change and green energy file.

Copenhagen - What Happened Today

It's really nothing new.

The talks in Copenhagen seem to be confirming the status quo. Developing countries are still looking for someone to pay for climate change so they can continue growth. They are looking to the developed world to do this. Today some African nations walked out of the talks in protest over discussions to let the Kyoto Protocol expire and begin with a new treaty, one to which all countries are bound.

What does it really mean? It has to do with money.

Under Kyoto developing nations have no emissions reduction requirements. Countries to the Kyoto Protocol are to reduce their emissions or purchase international offsets if they don't (clearly it's not entirely this simple, but those are the basics). The purchase of these offsets (which for most industrialized nations are necessary in order to get their emissions below the cap) essentially amount to financial assistance by the developed to the developing world.

The developing nations are not accountable for emissions under Kyoto, nor is the United States, which neither signed nor ratified the treaty. If a new treaty is made, then most developed nations argue that in order to be effective and to involve the U.S., it must also bind the developing world. The developing world isn't particularly keen on this (see our previous blogs commenting on India and China). It would also mean that the financial assistance would stop.

The United States is very clear - for them to buy in, all nations must participate. Canada agrees. However, despite that Canada contributes only about 2% of global emissions, it appears to becoming an international climate change target. Today Canada received two fossil awards (the presentation was shown on the big screen outside the Bella Centre to the amassed crowd of registants) and was the subject of a climate change "hoax" where Canada's emissions reduction goals were falsely identified in a phony news release.

It's not productive. Minister Prentice's Communications director pointed out as much to the press when asked to comment on the incident today. And Canada's reduction target continues to align with that of the United States. The Minister has been saying this for months.

Needless to say, it's still not clear what will come from these negotiations at this point. The Americans know that a binding international treaty will require them to walk a fine line between committing resources to finance the low carbon economy - both domestically and internationally - and what Congress has an appetite for.

Whether the negotiations result in an extension of Kyoto, the favoured option of developing nations, or an entirely new agreement, the favoured option of Canada remains to be seen. We'll know more in the next few days of "Hopenhagen", as they're calling it around here.

"REDD" - How will tropical forest carbon projects be brought to market post Kyoto?

Submitted by Grant Boyle

The forestry sector, mainly through deforestation in developing countries, accounts for about 17.5% of global greenhouse emissions. 80% of these emissions are caused by only ten countries. 33% of the emissions come from Indonesia and 18% from Brazil alone.

Theoretically reducing emissions from tropical deforestation offers a cost effective climate change mitigation measure. According to the UK-commissioned Eliasch-review, the cost of reaching the 2 degrees target can be reduced by as much as 50% if forests are included in the climate regime currently under discussion at Copenhagen.

At the end of last week's negotiations in Copenhagen, the Chair of the Working Group on Long-Term Cooperative Action highlighted progress in negotiations over "REDD" ( Reducing Emissions from Deforestation and Degradation).

Section 26 of the draft text says developing countries may, as part of their agreed "nationally appropriate mitigation actions" undertake mitigation in the forest sector by reducing emissions from deforestation, reducing emissions from forest degradation, conservation of forest carbon stocks, sustainable management of forest and enhancement of forest carbon stocks.

As discussed in an earlier posting the draft text shows developed countries may agree to help finance these activities, either though public or private mechanisms.

Norway has started developing a fundof this sort. Current US cap and trade bills include provisions that would allow US emitters to comply with domestic targets using international forestry credits - possibly of the type under discussion in current REDD negotiations.

The United Nations Environment Program announced a report: Bringing Forest Carbon Projects to the Market over the weekend that looks helpful in figuring out how this may work....Certainly REDD activities, if they are to be successful, will require more than financing. Measuring, monitoring, land tenure, co-benefits, and institution-building are other concerns under discussion.

Scenes from Copenhagen - Part 1

I thought I'd divide the blogs into two sections. One section devoted to the "experience" of being in Copenhagen, and one about what the Conference is doing. For those of you not interested in hearing about the former, skip to the next blog. For those of you who want a little bit of what it's like to be on the ground, read on.

Today is our first full day in Copenhagen. We arrived last night to a crowded airport and a city fully ready for Christmas - hardly a storefront is not done up with garland (the real stuff), fairy lights and tasteful ornaments. Climate change is a big deal here, but clearly so is Christmas. It's very pretty.

The Conference is being held at Copenhagen's Bella Conference Centre. In order to gain access to to the Centre, you have to be (a) accredited by the UNFCCC and (b) registered. Accreditation happened before the Conference began. Registration for accredited individuals this morning was an absolute zoo. Thousands (and I truly mean thousands, see attached picture) of people queued (which would seem to suggest it was relatively orderly - it was only for a while) to gain access to the registration tables. Most people in the queue are not part of official government delegations, but are rather here as conference observers through various NGOs.

There were activists hanging climate change banners, others handing out flyers and a few wandering through the crowd speaking to anyone who would listen to them about a multitude of different sins humankind has committed against Mother Earth. The "livestock is causing climate change - become a vegan" signage was particularly....interesting. Some had erected "art" devoted to climate change. A couple of enterprising individuals were serving americano coffees at points along the line up. One activist group was giving it away for free, provided you took the proffered flyer.

It was freezing out; not quite the same as it has been in Edmonton the last few days (where apparently the International Airport was the coldest place on the PLANET on Sunday night), but still mighty cold if you're lined-up waiting for access to the Conference. Did I mention that it's a "wet" cold? I saw one girl take off her leather boots and wrap newspapers around her calves and feet and then slip her boots back on. It was not warm. The poor girl from Equador standing in front of us (who had left her hostel with wet hair of all things), could hardly believe her bad luck.

It was pretty calm, cool and collected at the Bella Centre. Not so in a downtown Copenhagen Street later in the day. There are meetings within the Bella Centre and a number of other activities going on in other locations. We were downtown and happened upon a street which was being blocked by police to traffic. The cross street was a pedestrian only thoroughfare and people were being held back and prevented from crossing. I thought something really interesting was going to happen - like someone's motorcade was going to pass by (the helicopter hoving above the street was curious) until I heard beating drums coming from around the corner and a full scale protest/demonstation materialized.

The protesters were all 20-somethings who were protesting capitalism. They were linked arm and arm chanting something I couldn't understand, beating drums, dancing around and generally making it difficult to cross the street! The press were everywhere and there were a huge number people in the demonstration, but what they are really accomplishing, I do not know.

Back to the Bella Centre tomorrow and more from there.

Latest Copenhagen Draft Text: Update on Climate Finance

Submitted by Grant Boyle

The Chair of the Working Group on Longterm Cooperative Action released a draft text on the outcome of deliberations so far at Copenhagen.

So where do we stand on the question of developing country climate finance? As discussed in an earlier postingthis is an important question since it has implications for what opportunities Canadian ( and US) emitters will have to buy international credits for compliance under a future Canadian cap and trade scheme, not to mention any obligation that arises for the country as a whole to contribute to international public climate finance.

A few notable points:

Section 36 says: funding will support "enhanced action on mitigation, including REDD-plus, adaptation, technology transfer and capacity building for enhanced implementation of the Convention after 2012. So the general aim is to develop some type of fund with "specialized funding windows" for different needs.

The text leaves open the question of how funds will be raised but suggests a mix of public and market-based approaches with more emphasis on public funding. Section 38 of the text says "Private-sector financing and other innovative sources of funding shall complement the provision of financial resources". This is interesting since under Kyoto the big emphasis has been on carbon markets. Note, the CDM is a child of the Kyoto Protocol and not under discussion under this working group, but it is under discussion at Copenhagen under the Kyoto Protocol working group, which has its own new draft text . Also, for example, much of the discussion to date on financing REDD (mainly avoided tropical deforestation) includes both markets and public funds.

Section 39 says: "[Developed country Parties] [All Parties, except least developing countries,] shall beginning in 2013, provide resources based on a...scale of contributions to be adopted by the Conference of the Parties." Note the significantly different result depending on what bracketed text is agreed upon. The latter approach means developing countries like China, India, and Brazil would make contributions from 2013. It will be interesting to see where this one goes over the next days...

And the Fossil of the Day goes to...

Canada, Canada, and Canada, which has managed a hat trick in the first three days of COP 15 in Copenhagen.

The Climate Action Network, a coalition of over 450 NGOs worldwide dedicated to limiting climate change to sustainable levels, regularly judges and presents three 'Fossil of The Day' awards to the countries who perform the worst during the past day's negotiations at UN climate change conferences.

While Canada has shared the podium with other countries, it has also climbed the rankings from third place to first:

  • Day 1: Third Place, for federal Environment Minister Jim Prentice proclaiming that his nation "won't be swayed" by Copenhagen "hype." Minister Prentice's statement is if nothing else consistent, as he had previously said "if the price of having strong, capable, tough negotiators at the table is being singled out and given 'fossil of the year' awards, then so be it. Bring it on."
  • Day 2: Second Place, as part of the "Umbrella Group" (which also includes Iceland, Japan, Kazakhstan, New Zealand, Norway, Russian Federation, Ukraine, United States and Australia), for advocating that carbon capture and sequestration projects should be eligible under the Clean Development Mechanism, which environmentalists feel could actually promote emissions-intensive and fossil-fuel dependent industries (like coal-fired power) in developing countries. Canada has a clear interest in developing the CCS market, as CCS is intended to play a pivotal role in managing major emissions sources in Canada.
  • Day 3: First Place, tied with Croatia, for pushing in a Kyoto Protocol contact group against the 1990 base year. The US is rumoured to have taken the same position, which makes sense if the magnitude of each country's obligations is to be proportionate to the magnitude of its emissions in the base year, particularly given the emissions ascendency of China since 1990. However, the position becomes more dubious when Canada's proposed target of 20% below 2006 levels by 2020 results in higher emissions that Canada's Kyoto Target of 6% below 1990 levels by 2020 (see Environment Canada emissions data).

Canada has long been a favourite target for Fossil of the Day awards. Hopefully we will be able to break our "winning" streak before the end of the Copenhagen negotiations.

Ontario emissions reduction targets unachievable with current policies

Ontario is not on track to meet its own emissions reduction targets. That is the conclusion of the Annual Greenhouse Gas Progress Report 2008/2009 released by the Environmental Commissioner of Ontario this week. The Commissioner's conclusion is a one-two punch for Premier McGuinty's government. It undermines Ontario's position in Copenhagen and makes Ontario's criticism of the federal government's climate change strategy ring hollow.

Ontario's Action Plan on Climate Change call for a step-wise reduction in greenhouse gas emissions. The government's targets are:

  • 6% below 1990 levels of GHG emissions by 2014 (which accords with Canada's commitment under the Kyoto Protocol);
  • 15% 1990 levels by 2020; and
  • 80% below 1990 levels by 2050.

The government reports on its progress in a Climate Change Action
Plan Annual Report ("CAAP"). Having reviewed 2008/2009 CAAP, the Commissioner concluded that "the government will not meet either its 2014 or its 2020 reduction targets." Specifically, current policies will result in Ontario:

  • falling 15 Mt short of the 2014 reduction target of 165 Mt;
  • possibly experiencing an increase in emissions between 2014 and 2020, leaving the province nearly 10 Mt above the 1990 baseline and 35 Mt short of the 2020 reduction target of 149 Mt.

The Commission was particularly critical of the government's undue reliance on the phase out of coal stations to achieve timely reductions, of its "blind spot" for the contribution of natural gas fired generation to the province's emissions profile, and its lack of effort to address emissions from transportation. The Commissioner also cautioned the province against placing significant emphasis on the role of a future cap-and-trade system, noting that "the ECO remains concerned about the risks inherent in a process where key decisions about a future trading regime are largely in the hands of other jurisdictions."

As reported previously, Ontario has been trumpeting its aggressive reduction targets, both in the run up to Copenhagen, and in the context of its criticism of the federal government's more modest targets and inaction on the climate file. Ontario's position on both fronts does not ring as true in light of the Commissioner's report.

Hopefully, the government will take the Commissioner's criticism to heart. The opportunity to enact more effective climate change policies is certainly ripe. Hopefully the province will build on the momentum of the Green Energy Act to undertake innovative policies in other emissions intensive sectors.

Climate talks at Copenhagen: How are we going to pay for this?

Submitted by Grant Boyle

Developing country climate finance is a key issue for negotiation this week in Copenhagen. Developing country demands are high and developed country willingness is mixed.

Certainly the market is a potentially promising one for investors. In 2008 the primary Clean Development Mechanism market reached $6.5 billion. According to the International Energy Agency's 2009 World Energy Outlook around $200 billion is required in developing countries for clean energy and energy efficiency investments by 2020. Copenhagen will likely establish some "prompt-start" financing of around $10 billion over the next couple of years.

But how will this be paid for?

One of the issues at Copenhagen is how to improve and scale-up the existing Clean Development Mechanism (the CDM) of the Kyoto Protocol, although industry groups involved in the CDM are impatient with the pace of CDM reform going into the summit.

There is also discussion on how to add more mechanisms - both public and private. Not surprisingly, this looks tricky. The draft textof the Ad Hoc Working Group on Long Term Cooperative Action (AWG-LCA) on finance (about 30 pages) is replete with bracketed text and includes a wide range of options. As it stands, some of the proposals include:

"International Public Finance"

-An assessed contribution from developed country Parties based on "climate debt" amounting to at least 0.5-2% of GNP

-An assessed contribution from developed country Parties over an above current Overseas Development Assistance

-Assessed contributions by developed country Parties and other developed Parties based on a contribution formula developed by the COP, updated on a regular basis reflecting per capita capacity to pay and responsibility for emissions and cumulative per-capita responsibility for emissions since 1850

"Innovative Sources"

-A mechanism for financing climate change action whereby a certain number or percentage of allowances (for developed country Parties) is set aside and monetized through international auctioning. The COP shall determine the quantity of allowances to be set aside and auctioned to support adaptation, REDD, capacity-building and other climate change actions

-A uniform global levy on CO2 emissions above a threshold of 1.5-2.0 tonnes per capita.

-Levies on international aviation and maritime transport

-An international adaptation levy on airfares, except on journeys originating from or destined for Least Developed Countries

-A share of proceeds on Clean Development Mechanism or Joint Implementation emissions trading

-A levy of 2% on "capital transfers" between developing and developed country Parties

-Carbon market finance and private investment leveraged as appropriate by domestic policy frameworks and targeted public funds

-Agreed penalties or fines on non compliance of developed country Parties

By December 15, the AWG-LCA is expected to produce text in the form of draft decisions that could be adopted by the Parties (presumably to be put into a legally binding treaty or other instrument after Copenhagen). How far they will get on the finance question remains to be seen...Times are tight and the world has changed since 1992 - the simple "developing and developed country division" is now less tenable.

Alberta Environment Minister willing to consider raising price of emissions

According to the Montreal Gazette, Alberta's Environment Minister Rob Renner is willing to raise the $15 price of carbon emissions in Alberta in the wake of the negotiations in Copenhagen. But such an increase would be conditional on competing jurisdictions imposing a similar price on emissions.

Under Alberta's Specified Gas Emitters Regulation, regulated emitters can achieve emissions reduction targets in four ways: by reducing emissions, by purchasing Alberta offsets, by purchasing emissions performance credits (i.e., credits from those who reduce below their targets), or by paying $15 per tonne to the Climate Change and Emissions Management Fund ("CCEMF").

In 2008, the CCEMF received $82.3 million in compliance payments, which corresponds to about 5.5 million tonnes. By comparison, Alberta achieved real reductions in the same period of 6.5 million tonnes (figures from the CBC's story on an Alberta press release that is no longer available online). This suggests that in about 45% of cases, achieving real reductions would have cost more than $15 (on a risk-adjusted basis). The $15 price ceiling may therefore already be hindering Alberta from driving real immediate emissions reductions.

Minister Renner reportedly said, "we're not tied to $15, we believe it has to go up much beyond as long as our competition, Venezuela, California, Russia and the Middle East, faces the same. If there is a cost, all countries have to be in. The writing is on the wall and industry knows that." He mentioned that the $15 payment could double or treble after Copenhagen.

Many environmentalists will welcome the Minister's open-mindedness, but may doubt that he will be willing to increase the price high enough. In a report that was roundly attacked by both the Albertan and federal governments, M.K. Jaccard and Associates, on behalf of the Pembina Institute and the David Suzuki Foundation, concluded that the price on carbon must move to $50 in 2010 and continue rising to between $100-200 by 2020.

Whatever the number should be, Minister Renner's qualification about Alberta's competitors is likely critical. Consistent with the federal government's message in Copenhagen, it is clear that Alberta will do nothing to undermine the competitiveness of its oil and gas sector in the global energy markets.

However, the Minister acknowledges that the CCEMF is a key component of Alberta's strategy to remain competitive in the carbon-constrained future. The CCEMF is being used to fund innovative climate change adapation and mitigation projects. In setting a higher price on carbon, Minister Renner will likely try to balance the potential to raise more money to kick-start such innovation for the benefit of tomorrow with the risk of harming Alberta's most profitable industry today.

US EPA finalizes finding that GHGs threaten the public health and welfare

The United States Environmental Protection Agency ("EPA") released its long-awaited finding that greenhouse gases endanger public health and welfare. Specifically, the EPA found that "current and projected concentrations of the six key well-mixed greenhouse gases - carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) - in the atmosphere threaten the public health and welfare of current and future generations." The decision does not impose immediate obligations on industry. However, it sets the stage for future EPA regulations and puts the pressure on Congress to finalize its climate change bill. It is also well-timed for the kick off of negotiations in Copenhagen.

The endangerment finding has been in the works for years. The EPA's finding was prompted by the US Supreme Court's 2007 decision in Massachusetts v. EPA in which the court held that the EPA had the authority to regulated GHGs under the Clean Air Act and that its decision not to regulate GHGs was, at the time, "arbitrary, capricious, or otherwise not in accordance with law." The EPA subsequently released a draft finding in April of 2009, which was open to public comment.

The endangerment finding cements the EPA's jurisdiction to regulate greenhouse gases. It was accompanied by a specific finding that "greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas pollution which threatens public health and welfare." This "cause or contribute" finding will allow the EPA to move forward with its proposed light duty vehicle emissions standards. Canadians can likely look forward to similar standard being enacted in Canada.

Perhaps most importantly, the endangerment finding gives new context to the efforts in Washington to enact climate change legislation. If Congress is unable to pass a cap-and-trade bill, the EPA may step in and regulate emissions more generally. Most stakeholders would prefer emissions regulation to come from Congress, which is able to balance competing interests, rather than from the EPA, which may take a less compromising approach.

Ontario increases solar thermal incentive by a factor of 5

Ontario's Ministry of Energy and Infrastructure announced this week that it has quintupled the incentive available to organizations that install solar thermal hot water systems. The maximum provincial grant is now $400,000 (up from $80,000), and can be matched by up to an additional $400,000 under the federal ecoENERGY program.

The Ontario Solar Thermal Heating Initiative is open to industries, businesses and public institutions including schools, hospitals, municipalities, municipally owned utilities, industrial associations, non-profit organizations and energy service companies.

The change is retroactive to March 1, 2009.

Visit the Ministry's Ontario Solar Thermal Heating Incentive Program site and its FAQ for more details.

Copenhagen kicks off

Submitted by Grant Boyle
Recently some of the largest GHG emitting countries announced greenhouse gas reduction targets, breathing some life into the 15th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC COP 15), starting this week in Copenhagen. The US pledged a 17% cut in emissions under 2005 levels by 2020 and China announced a plan to reduce carbon-intensity 40-45% by 2020 against 2005 levels ( although what this amounts to in terms of actual reductions remains unclear). There are now a number of commitments on the table. According to the Climate Action Tracker, the US, EU, Japan, Canada, Russia, Australia, New Zealand, Switzerland, Norway, China, Brazil, South Korea, Indonesia and India have all announced some type of target.

Unfortunately, these announcements may be the highlight of the summit. While there will be unprecedented attendance by heads of state at COP 15 and hopefully a promising political outcome, the actual negotiations at this much anticipated summit appear to be primed mainly for setting the agenda for negotiating a binding legal agreement over the next year. Very basic questions remain going into Copenhagen, including whether or not the UNFCCC's two tracks of negotiation will continue - one under the Kyoto Protocol(supported by most developing countries) and one under a larger group that includes developing countries and the US. The summit is likely to produce a series of decisions under the UNFCCC, but no new binding treaty that builds upon or subsumes Kyoto.

Still, the Copenhagen summit will set the ball rolling for a process of negotiation that will quite likely lead to legally binding outcomes that will influence regulatory developments in North America in 2010. For example, emerging rules and frameworks for "prompt-start" finance, REDD ( Reduced Emissions From Deforestation and Forest Degradation, adaptation finance and Clean Development Mechanism reform will become increasingly important for Canadian emitters that eventually look to international carbon markets to meet emerging compliance obligations under a Canadian or North American cap and trade regime. Both cap and trade proposals in the US House and Senate allow for fairly extensive international offsets and the rules for what qualifies as an international offset or credit will at least party be decided by the Parties to the UNFCCC and those decisions will be determined by the trajectory set over the next couple of weeks in Copenhagen.

We'll see what happens over the next couple of weeks...

First Power Solar Project: Clean Energy for First Nations Communities

Today at the 2009 Solar Conference, the Government of Canada announced an investment of up to $1 million in the First Power solar project through its ecoENERGY for Renewable Heat program. In addition to the federal government's commitment, First Power is also being supported by Solar BC and several financial institutions, including the All Nations Trust Company.

The First Power project will support the installation of domestic solar water heating systems in up to 900 homes, with a focus on remote First Nations communities.

First Power, which will leverage millions of dollars in additional funding to complete its projects, is a partnership between Taylor Munro Energy Systems and the Centre for Integral Economics. This unique hybrid business is designed to support First Nations communities to gain access to and ownership of renewable energy and clean technologies. The project intends to replace diesel power generation by energy systems that deliver all the heat, light and power a community requires through renewables.

Making the announcement on behalf of Minister Lisa Raitt was Senator Linda Frum, who declared: "This investment will generate new economic activity in First Nations communities, while reducing energy costs and greenhouse gas emissions [...] Investing in projects like this will stimulate the growth of a domestic clean energy industry, create high-quality jobs for Canadians and help protect our environment."

Donna Morton, President of the Centre for Integral Economics added: "We believe that First Nations can take ownership of renewable energy and clean technology systems through orally taught training [...] Autonomous energy can give First Nations in Canada both a leading role in building green collar jobs and economic development that respects ancestors, elders and the future."

New York raids RGGI coffers to pay down deficit

On Wednesday, New York lawmakers approved the transfer of $90 million of Regional Greenhouse Gas Initiative ("RGGI") auction proceeds to help fill the state's $3.16 billion budget deficit. The move sets a very unfortunate precedent in the U.S. Fortunately, Canadian lawmakers appear intent on guarding against similar temptation in provincial climate change regimes.

Covering the power sector in 10 Northeastern and Mid-Atlantic states, RGGI is the United States' first cap-and-trade system. The emission cap, which will decrease by 10% by 2018, is administered by distributing emissions allowances to regulated facilities. Nearly all allowances are auctioned, with the intention that proceeds will be reinvested by the participating states in efficiency, renewable energy, and other clean energy technologies. To date, New York has raked in almost $180.7 million from the sale of allowances under RGGI.

The legislature's decision this week to "re-purpose" these proceeds is unfortunate for at least three related reasons. First, the decision compromises part of the environmental and economic effectiveness of RGGI by halving the amount of RGGI dollars currently available for investment in clean energy and green jobs in the state. As a result, the decision also undermines a key justification for auctioning permits, instead of giving them away for free. Finally, by moving the proceeds into general revenue, the decision lends credence to the criticism that cap-and-trade systems are really cap-and-tax schemes.

New York may therefore have set a precedent that will not only undermine the effectiveness of RGGI, but could also be used to undermine efforts to pass similar cap-and-trade legislation in Washington.

Fortunately, Canadian lawmakers have been more savvy in anticipating the temptation of politicians to dip into funds generated by emission reduction regimes. Under Alberta's Specified Gas Emitters Regulation, regulated entities can comply with emissions targets by paying $15 per tonne into the Climate Change and Emissions Management Fund ("CCEMF"). However, the CCEMF is legally segregated from general revenue, is managed by an arm's length entity (the CCEMC), and may only be used to support climate change mitigation and adaptation projects in the province. The province therefore cannot reallocate that money without rewriting its emissions management laws.

Ontario's cap-and-trade regulation, which was passed this week, contains similar protections. The proceeds of any allowance auctions in Ontario will be designed as "money received for a special purpose" under the Financial Administration Act (Ontario) and will be segregated in a "Greenhouse Gas Reduction Account." Funds from the account will only be available for "costs incurred by the Crown in administering the regulations [...] that relate to greenhouse gases and in carrying out or supporting greenhouse gas reduction initiatives."

Countdown to Copenhagen: Feds bid adieu to intensity-based targets

Finally.

The federal government has announced that its much anticipated climate change program will not be based on emissions intensity targets. Responding to a question from question from Bloc Quebecois MP Bernard Bigras, Environment Minister Jim Prentice said, "we are talking about a cap-and-trade system, a continental cap-and-trade system that involves absolute emission reductions, not intensity targets." The change is a welcome one for both the environmental and business communities. It is also well timed, given Canada's declared strategy for the negotiations in Copenhagen.

Ever since tabling its Turning the Corner plan, the Conservative party has been under fire for proposing to limit emissions per unit of production instead of absolute emissions. Environmentalists feared that even if the targets were met, Canada's total emissions could rise as productive output grew. In contrast, a cap based on absolute targets provides direct control over total emissions, regardless of economic growth, and is thus a more certain way to address climate change.

The business community will also be relieved by the change. The costs of complying with a cap-and-trade system depend significantly on the size of the market in which carbon credits can be traded. Bigger and more diverse markets tend to result in lower compliance costs. A critical feature of Canada's plan is therefore to ensure that our cap-and-trade market is integrated with that of the U.S. However, there was significant doubt that intensity-based carbon credits would have been recognized in the U.S. The move to a regime based on absolute targets should help ensure that homegrown carbon credits are fungible and tradable with those used south of the border.

It is the need to integrate with the U.S. that most likely drove the Conservatives to change their tune. The timing of the announcement, just a few days before the opening of COP 15 in Copenhagen, is certainly intended to reinforce our solidarity with the U.S., whose lead Canada has consistently said it would follow in the negotiations.

Ontario passes cap-and-trade bill

The Ontario Legislature passed the Environmental Protection Amendment Act (Greenhouse Gas Emissions Trading), 2009 today. As discussed when the bill was introduced in May, the new legislation provides the legal foundation for a cap-and-trade system in Ontario.

While reams of regulations will have to follow before such a system "goes live", the passing of this bill and of the related emissions reporting regulations this week suggests that Ontario is moving forward with its plans to regulate greenhouse gas emissions at the provincial level. As discussed earlier, the announcement may be seen as part of a trend by several provinces (also including Alberta, BC and Quebec) to take bolder action than has been proposed by the federal government. The timing of the announcement suggests that Ontario wants to have a fresh achievement to talk about in Copenhagen next week.

The proposed scheme will cover carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride, and "any other contaminant prescribed as a greenhouse gas by the regulation." It provides the government with the power to create tradable instruments (i.e., emissions allowances), which may be distributed for free or auctioned.

As highlighted in the accompanying press release, "the act allows Ontario's program to link to other systems in North America and abroad. Aligned systems would maximize trading opportunities for industry, helping them to make GHG reductions at lowest cost." Fungibility of credits across the border is key to making such a system affordable, a reality that continues to escape some federal policy makers who still advocate for a national system based on emissions intensity, instead of absolute emissions.

The most significant revision since the bill was introduced was the addition of provisions relating to the collection and use of proceeds received by the government from the distribution of allowances. Taking a cue from Alberta's Climate Change and Emissions Management Fund, the bill attempts to segregate such proceeds for use in climate change initiatives. The bill requires that such funds be designated under the Financial Administration Act (Ontario) as "money received for a special purpose and placed in a "Greenhouse Gas Reduction Account." Funds from the account may only be used for "costs incurred by the Crown in administering the regulations [...] that relate to greenhouse gases and in carrying out or supporting greenhouse gas reduction initiatives." Unlike Alberta's approach (and the federal Turning the Corner plan), the new legislation does not appear to contemplate that regulated emitters will be able to pay into the Greenhouse Gas Reduction Account in lieu of reducing emissions or acquiring allowances or offsets.

DOE-funded study concludes wind farms have no effect on home prices

As reported today in the Star, Lawrence Berkeley National Laboratory recently released a study that concludes that industrial scale wind turbines do not have an adverse effect on the value of properties that surround them. The conclusion will be a disappointment to many wind turbine opponents, who have argued for years that the projects depress the value of neighbouring homes.

The study, which was funded by the U.S. Department of Energy, analyzed about 7,500 residential real estate transactions from 1996 to 2007 for single family homes near 24 existing wind farms. The homes were located between 244 meters (much closer than Ontario's new 550 m minimum setback) and 16 kilometers from the turbines. While the study's authors acknowledge that some individual properties may have sold for less than expected, there was no statistically significant adverse effect on home prices.

"Neither the view of wind energy facilities nor the distance of the home to those facilities was found to have any consistent, measurable, and significant effect on the selling prices of nearby homes," said report author Ben Hoen, a consultant to Berkeley Lab. "No matter how we looked at the data, the same result kept coming back - no evidence of widespread impacts."

The study's authors note that further analysis may be warranted as wind farms become more prevalent.

For the meantime, however, wind farm critics may have to look for other reasons to oppose new projects. We expect that the next battleground will be the allegedly adverse health impacts of low frequency noise and vibration.

Canadian Solar Inc. to open solar module factory in Ontario

Canadian Solar Inc. plans to build a $24 million solar module manufacturing facility in Ontario, according to a press release issued this week. The facility is expected to create 500 jobs and will have an annual production capacity of about 200 MW, enough to equip 60,000 homes.

The company's decision to invest in Ontario was driven by the province's commitment to transition to clean energy. "When considering Ontario for our next investment in manufacturing, we looked at the strength of R&D and the governments' commitment to investing in a low carbon economy. We are looking forward to working with government representatives in creating jobs and a viable solar market in Ontario and across Canada," said Milfred Hammerbacher, President of the subsidiary, Canadian Solar Solutions Inc.

Canadian Solar Inc. is rumoured to be playing both sides of the Feed-in Tariff ("FIT") game. As a manufacturer, it hopes to capitalize on the domestic content requirements for solar systems under the FIT, which start at 40% for residential systems and 50% for larger systems in 2010 and rise to 60% across the board in 2011. As a project developer, Canadian Solar may become one of its own best customers. It reportedly submit several applications during the launch phase of the FIT, which closed Monday.

It is expected that more clean energy manufacturing investment will follow. While it remains to be seen how much renewable capacity (including solar) the OPA will procure under the FIT in the near term, the OPA had indicated that the Ontario grid could accommodate about 4,500 MW. While the government is no doubt pleased with the job projections for the Canadian Solar facility, the 500 jobs represent only 1% of the 50,000 green collar jobs former Minister Smitherman promised when he launched the Green Energy Act.

World's first concept tires made of renewable biomass arrive in Copenhagen in time for United Nations Climate Change Conference

The world's first concept demonstration tires made with BioIsoprene technology, a breakthrough alternative which aims to replace a petrochemically produced ingredient in the manufacture of synthetic rubber with renewable biomass, made their debut in Copenhagen, Denmark, this week. One tire will make appearances at several special events during the United Nations Climate Change Conference in Copenhagen (COP 15), while the other tire will be on display at a lounge in the common departure area at the Copenhagen International Airport throughout December 21.

The tires made with BioIsoprene are the result of a collaboration between Genencor, a world leader in industrial biotechnology and a pioneer in enzyme innovation and division of Danisco A/S, and Goodyear, one of the world's largest and well known tire companies.

Beyond tires, BioIsoprene offers a huge potential in all kinds of other applications where petroleum-based rubber products and adhesives. The market for isoprene could reach up to 11 billion pounds per year by 2012. Genencor plans to bring the technology to pilot stage within two years, followed by commercial production.

Philippe Lavielle, Executive VP of Business Development for Genencor declared: "We're building advanced biorefineries of the future through strategic collaborations, such as our work with Goodyear and our joint venture DuPont Danisco Cellulosic Ethanol, as well as public-private partnerships. By joining forces with other industry leaders and leveraging our cutting edge biotech capabilities, we're able to accelerate development and deployment of breakthrough technologies like BioIsoprene."

The development by Goodyear of its first concept tire manufactured using a bio-based alternative to the petroleum-derived raw material isoprene is a good example of how traditional industry has taken notice of the consumer's pursuit for more environmentally friendly products and of the growing importance of corporate social responsibility, a part of which results from lessening one's impact on the environment.

BC issues reporting regulation under Cap and Trade Act

Submitted by Grant Boyle
On November 25 BC introduced a reporting regulation under the GHG Reduction Cap and Trade Act that will come into force on January 1, 2010. The regulation will require facilities in British Columbia that emit over 10,000 tonnes of greenhouse gases annually to report their emissions. It is expected that approximately 200 facilities will be required to report annually under this regulation.

Specifics include:

All six main greenhouse gases included;

10,000 tonne CO2e reporting threshold;

25,000 tonne CO2e verification threshold;

(i) upstream oil and gas; (ii) natural gas transmission and distribution; (iii) electricity transmission and distribution; and, (iv) oil pipeline transportation emissions are aggregated into "linear facilities" to determine whether the 10,000 tonne reporting and 25,000 verification thresholds are exceeded;

Carbon dioxide from wood biomass, or the wood biomass component of mixed fuels, is not included in the determination of thresholds;

First requirements (data collection and management) for reporting operations start on January 1, 2010;

Not applicable to Public Sector Organizations except for BC Hydro and BC Transmission Corporation electricity generation or electricity transmission;

Not applicable to emissions of landfill gas as defined under the Landfill Gas Management Regulation;

Registration to occur by April 1, 2010;

Annual emissions reports, beginning with the 2010 calendar year, required by March 31 of the following year;

Facilities with emissions greater than 20,000 tonnes of CO2e in any year between 2006 and 2009 must report these emissions along with the 2010 emissions report submitted in 2011;

A facility may calculate emissions using alternative methodologies for the lower of 3% of the facilities total emissions, or 20,000 tonnes;

For the 2010 calendar year, a facility may measure a specific parameter using alternative methods inconsistent with those prescribed in the regulation. Approval is required for this after March 31, 2010;

The Ministry may publish emissions data from major source categories;

A facility may request that certain data remain confidential;

Western Climate Initiative quantification methods required to be used. Where these do not exist, required methods are specified by the Ministry of Environment; and
Offense provisions in the Act apply.

Ontario passes greenhouse gas reporting regulation

On December 1, Ontario passed O. Reg. 452/09 (the "Regulation") which requires large emitters to report their greenhouse gas emissions to the Ministry of the Environment ("MOE"). The Regulation, which will force companies to focus on their emissions while giving the MOE better data about the province's emissions profile, is seen as an important step towards the creation of a cap-and-trade system in the province.

The Regulation, which applies to 26 types of facility, requires the following:

  • reporting of specified GHG data by all facilities that are emitting 25,000 tonnes of carbon dioxide equivalent (CO2e) or more per year;
  • annual reporting of GHG emissions, starting with 2010 emissions;
  • mandatory use of identified standard quantification methods to quantify emissions starting with 2011 emissions;
  • flexibility to use the best alternative quantification methods for 2010 emissions;
  • annual third-party verification of emissions, beginning with 2011 emissions;
  • emission reports to be submitted on June 1 starting with 2010 emissions in 2011; and
  • verification to be completed by September 1 starting with 2011 emissions in 2012.

The delay of third party verification until the 2011 reporting year is intended to allow the required professional services capacity to grow in the province. The flexibility to use best alternative verification methods in 2010 is similarly intended to smooth the transition to standardized reporting requirements in 2011.

In an interesting compromise, the Regulation allows regulated emitters to deduct up to 15,000 tonnes of carbon dioxide generated from a facility through the combustion of biomass, the theory being that the combustion of biomass, which draws CO2 from the atmosphere as it grows, is carbon neutral. In contrast, BC's regulation provides that all carbon dioxide from wood biomass, or the wood biomass component of mixed fuels, is not to be included in the determination of thresholds. The EU ETS takes a similar approach, where emissions from biomass must be reported but are "zero-rated" for the purposes of determining if a facility has stayed under its emissions limit. It is unclear why Ontario adopted a "halfway house" approach to the combustion of biomass.

The MOE has also issued a companion Guideline for Greenhouse Gas Emissions Reporting that details exactly how facilities are to report their emissions.

In crafting the Regulations, Ontario sought to ensure that Ontario's regulatory system for greenhouse gases will be harmonized with whatever system will ultimately be adopted south of the border (note the absence of any concept of "emissions intensity", as found in federal and Albertan approaches). The Regulations have therefore been modelled significantly on the approach proposed by the Western Climate Initiative as well as the September 22, 2009 EPA ruling on GHG reporting.

Tonight's Munk Debates tackles one of the great public policy questions of our time: how should the world respond to climate change?

Days before the United Nation's historic Copenhagen summit, the esteemed Munk Debates will tackle one of the great public policy questions of our time: how should the world respond to climate change? Tonight's debate is set as follows: C02 levels in the atmosphere are climbing steadily higher. Some believe this is having a devastating effect on humans and nature, while others argue that the threat has been overstated. Is this the moment for a bold international treaty to curb carbon emissions? Or, are the social and economic costs of reducing C02 emissions too high in world where a billion people live on a dollar or less a day?

The event begins at 6:45 p.m. eastern time with a vote by the audience on the resolution being debated, tonight's being: Be it resolved Climate change is Mankind's defining crisis, and commands a commensurate response. The debaters then provide opening arguments and cross-examine each other. A question and answer period with the audience follows. A well-known moderator keeps the proceedings orderly. The debate wraps up with a summation by each debater and a second vote by the audience on the resolution. The final vote is tallied and the winning side announced at 9:00 p.m. eastern time.

Of the view that Climate Change is indeed mankind's defining crisis and therefore debating the PRO side are Elizabeth May, leader of the Green Party of Canada, environmentalist, writer, activist and lawyer active in the environmental movement since 1970, as well as George Monbiot, author of the best selling books Heat: how to stop the planet burning; The Age of Consent: a manifesto for a new world order and Captive State: the corporate takeover of Britain; as well as the investigative travel books Poisoned Arrows, Amazon Watershed and No Man's Land. George also writes a weekly column for the Guardian newspaper.

On the CON side and of the opinion that the Climate Change threat has been overstated is Bjørn Lomborg, who Time magazine named one of the world's 100 most influential people in 2004, the UK Guardian "one of the 50 people who could save the planet" in 2008 and Esquire, "one of the world's 75 most influential people of the 21st century". Lomborg is currently adjunct professor at the Copenhagen Business School and is the organizer of the Copenhagen Consensus Center, which brings together some of the world's top economists to set priorities for the world. Lomborg is also author of the best-selling The Skeptical Environmentalist and Cool It' in which he challenged mainstream concerns about the environment and argued that we need to focus attention on the most important problems first. Joining him will be Lord Nigel Lawson, Baron Lawson of Blaby, who was Chancellor of the Exchequer between June 1983 and October 1989. Lord Lawson is currently Chairman of Oxford Investment Partners and also of Central Europe Trust. He is the immediate past President of the British Institute of Energy Economics. Most recently his major interest has been the economics and politics of global warming, about which he has written a best-selling book, An Appeal to Reason: A Cool Look at Global Warming, which has made him a prominent and high profile climate change sceptic.

The Munk Debates are open to the public. CBC Radio's Ideas, The Globe and Mail and CPAC take each event's discussion to the larger public and tonight's debate can also be viewed via live webstream.

Québec announces its GHG reduction target: 20% below 1990 levels by 2020

Last week, Québec Premier Jean Charest and Minister of Sustainable Development, Environment and Parks, Line Beauchamp, unveiled the province's target to reduce greenhouse gas emissions (GHG) by 20% below 1990 levels by the year 2020. Seeking to be recognized as a Canadian leader against climate change, Québec has decided to set an objective similar to that established by the European Union.

In making the announcement, Premier Charest acknowledged that the province's target is very ambitious, especially given that 48% of its total energy requirements are currently satisfied by renewable energy sources. At approximately 11 tons per capita, or half the Canadian average, Québec already currently holds the best GHG emissions record in Canada. If it can achieve its 20% reduction target by 2020, the province would have the lowest level of emissions per capita in North America.

In announcing its target, the government stated that the proposed measures to be taken would show flexibility from one economic activity sector to another, notably by taking into account each one's overall reduction potential, international competitiveness, available technology and required transition measures. As an illustration of one particular sector's progress to date and to demonstrate that climate change does not necessarily have to come at the expense of economic growth, the Premier noted that the province's industrial sector had already achieved emissions reductions of over 7% in 2006, as compared to 1990 levels, despite the fact that Québec's GDP had increased by 41% over that same period.

As transportation accounts for 40% of Québec's GHG emissions, the government stated that it would be paying particular attention to that sector. In order to achieve the 2020 target, the government expects to make major investments in mass transit options and will take measures to encourage the increased use of intermodal transportation of goods. It also plans to introduce a GHG emission standard for light-duty vehicles equivalent to that in California. Also, as Québec-based corporations have demonstrated expertise in electric vehicle technologies, the government will encourage the development of that industry, as well as the use of such vehicles.

Lastly, through its participation in the Western Climate Initiative, the province will contribute to implementing the largest GHG cap and trade system in North America in 2012. The government expects that these actions will set the stage for a flourishing green economy by the year 2020 and will gradually reduce Québec's economic dependence on foreign oil. It will also lessen the economic impact of the anticipated oil crisis in the decades to come and improve Québec's trade balance.

With less than a week to go before the December 2009 climate conference in Copenhagen, the province of Québec has now clearly announced where it stands on climate change. In a statement aimed at her federal counterpart, Minster Beauchamp declared that "Through this ambitious target, Québec is showing its partners and the international community that it is fully committed to assuming its share of responsibility. By continuing to demonstrate strong leadership, we hope to change the position of the federal government leading up to the Copenhagen Conference."

Countdown to Copenhagen: Canada's reputation called into question

Canada's reputation is taking a bit of a pounding in the final weeks before the climate change negotiations in Copenhagen. While that reputation may not prove to be particularly material in the coming weeks, it may again be relevant in future negotiations.

In its analysis of countries to watch at the negotiating table, the UK's Guardian newspaper said yesterday, "in stark contrast to its cuddly international image, Canada is the dirty old man of the climate world." George Monbiot, an outspoken climate change activist and columnist for the Guardian, followed up by saying that Canada "is now to climate what Japan is to whaling."

Similarly, a coalition of scientists and environmentalists from developing countries petitioned to have Canada suspended from the Commonwealth, on the basis that "countries that fail to help [tackle global warming] should be suspended from membership, as are those that breach human rights" (Pakistan, Zimbabwe, Nigeria and South Africa have all been suspended in the past for electoral or human rights reasons). However, there have been no reports of the petition having been accepted at the meeting of the Commonwealth last weekend.

Even the Edmonton Journal conceded that, "the Guardian's article might be a simplified view of Canada's record on the climate change portfolio but it is also a measure of how far Canada's reputation has fallen in the eyes of the world, especially to those who look to us for leadership."

Overcoming this new reputation may a high hurdle for Canada in Copenhagen. However, if the Canadian government is able to execute its strategy of following the lead of the U.S., Canada's reputation in the next couple of weeks may be of relatively minor importance compared to that of President Obama. Nevertheless, it would be in Canada's interest to take every opportunity in Copenhagen to restore its once sterling reputation, as it may be relevant in future international negotiations where Canada has to "go it alone."