Davis LLP - Climate Change Law Practice Group Blog

Alberta's New Energy Minister Confident in Alberta's Energy Resources

Mon, 14 May 2012 18:51:00 PDT

Newly appointed Energy Minister, Ken Hughes, has been tasked with taking on one of Alberta’s most crucial portfolios which requires a juggling act involving the demands of government, the demands of the public and those of industry, all while Alberta’s oil industry is under the microscope. Mr. Hughes is the former chair of the province’s health board, a one-term Progressive Conservative MP and a Harvard-educated insurance entrepreneur. His appointment serves as a signal of Premier Redford’s intention boost the public profile and improve the public image of Alberta’s energy sector. Boosting the public profile of Alberta’s energy sector starts with addressing environmental issues according to Mr. Hughes. He told the Globe and Mail that Alberta must prove to people beyond its borders that “we are conducting ourselves appropriately so that we have a social license to continue to develop our resources.”  Mr. Hughes stated that “there are strategic challenges we face around our ability to develop the natural resources we have, do it in an environmentally appropriate way and tell the rest of the world how we’re doing that in an environmentally appropriate way.” He also said that “...this is a great gift we have received. It’s not of our own creation, but to make the most of it is our obligation. The fact we are so fortunate imposes upon us a higher level of obligation of performing well.” Mr. Hughes, along with Environment Minister Diana McQueen and Premier Redford, will lead the charge in shifting Alberta’s role in Canada. “Ms. Redford has championed a Canadian energy strategy that would knit together the renewable and non-renewable energy sectors of several provinces, and presumably, help push a pipeline through to the West Coast” said Josh Wingrove of The Globe and Mail. The new energy strategy involves ensuring that “going forward, we are developing our resources in as environmentally appropriate way as we possibly can” Mr. Hughes told the Globe and Mail. Travis Davies, a spokesman for the Canadian Association of Petroleum Producers has said that Mr. Hughes’ business experience and ties in both the provincial and federal government should serve him well in his new appointment. This is good news as the energy sector is “obviously an important portfolio for us in Alberta,” Davies said. It’s a positive sign to see that our provinces leaders are really tuning in to the importance of developing Alberta’s resources with the environment and environmental issues at the forefront of discourse and strategy. Co-authored with Lee Axford, Student at Law

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CCEMC Announces $40 Million Call for Proposals

Fri, 04 May 2012 09:29:00 PDT

The Climate Change Emissions Management Corporation (“CCEMC”) has announced that it is offering up to $40 million to fund energy efficiency projects in 2012. Eric Newell, chair of the CCEMC stated that the focus of this, the CCEMC’s sixth round of funding, is on “energy efficiency projects that hold great potential but would not otherwise be feasible without additional support” and that “ [the CCEMC] want to be a catalyst” for energy efficiency in the province. Provincial law requires that companies that emit more than 100,000 tonnes of greenhouse gasses annually are to reduce those emissions by 12 per cent, or pay for emissions offsets. Companies emitting more than 100,000 tonnes may contribute to the Climate Change Emissions Management Fund as a means of paying for offsets. To date, the CCEMC has approved 32 energy efficiency projects worth $167 million. These investments are responsible for $830 million worth of research and development. The CCEMC hopes that some of the energy efficiency projects that it has funded in previous funding rounds will be nearing the commercialization stage this year. Eligible applicants for funding include organizations that emit more than 50,000 tonnes of carbon dioxide annually, as well as municipalities, and utilities and commercial operations that can estimate their emissions reductions based on Alberta’s emissions protocols. The CCEMC will match up to one third of private sector cash contributions to a maximum of $7 million for each successful applicant. The energy efficiency projects must be in Alberta, however development work can be done elsewhere provided that this work leads to an energy efficient installation in Alberta. Information sessions are planned for May of this year. The deadline for energy efficient project proposals is July 5, 2012. Full project proposals for selected projects will be invited in the fall of this year. For more information, visit the CCEMC’s website at <a href="http://www.ccemc.ca">www.ccemc.ca</a>.

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Environmental Review Sparks Debate

Thu, 03 May 2012 09:04:00 PDT

Critical debates have been sparked following the announcement by Natural Resources Minister Joe Oliver of an overhaul of environmental assessment rules. So far it appears that voters have accepted that some change to environmental assessment rules is worthwhile, but the public will be paying close attention to the motives behind any change. The stakes are high for both the Conservatives and the NDP. The question of motive is a risk for the government as well as for the opposition. For the Tory government ministers who talk about the amount of potential interventions will be reinforcing the public confidence that they are exercising good governance. However, it has been suggested that spending millions to audit environmental NGOs may make voters wary that the motive of the Tory government is to smother legitimate debate, or that they are not confident that their ideas will hold up under scrutiny. For the NDP opposition, the risk is that criticizing proposals for change will portray disinterest in the economy, or indifference to legitimate reform. The Conservatives and the NDP have both made calls for the middle ground. Minister Oliver has emphasized the importance of robust regulation (regardless of whether implementation is by federal or provincial officials) in the overhaul of environmental assessment rules. While the NDP environment critic, Megan Leslie, has also acknowledged that there are areas where regulation can be improved. As the debate unfolds, if Conservative motives are trusted, there will still be a need to ensure the policy features appear, and are, sound. Therefore, the details of the environmental reform package will matter and will be of consequence. Both the Conservatives and the NDP will be weakened if their motives appear to be ideologically driven, and they will be strengthened if they concentrate on sensible solutions. The hope is that the outcome of the debate will be constructive, that is, an important piece of legislation properly thought out, and debated on its merits. Co-authored with Lee Axford, Student at Law

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Ups and Downs in the Ever Changing World of Bio-fuels

Thu, 03 May 2012 08:50:00 PDT

In the ever changing world of bio-fuel technology there are always twists to the story line. Soaring energy prices are thinning profit margins in the transport sector and increasing operational costs in many manufacturing industries. The shift in research and development has been to turning organic waste into bio-fuel, helping industry with a cost-effective and environmentally sustainable energy source to complement traditional fuel. Recently the plug has been pulled on at least one major bio-fuel project, while another project employing different, albeit similar, technology has been given the green light. <h2> Shell-Iogen plant cancellation raises doubts about new bio-fuel technology</h2> Ottawa-based Iogen Corp. and Royal Dutch Shell PLC have killed a plan to build a cellulosic ethanol plant in southern Manitoba which would produce motor fuel from corn stalks. This is the second time within a week that Canadian companies have backed away from major investments in GHG emission-reduction technologies. Last week, TransAlta Corp. announced that it will not to proceed with a $1.4-billion project to capture carbon dioxide from an Alberta coal-fired power plant and sequester the gas underground. The <a href="http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/shell-iogen-plant-cancellation-raises-doubts-about-new-biofuel-technology/article2417820/" target="_blank">Globe and Mail</a> reports that Shell-Iogen plant cancellation raises new doubts about a technology that governments have praised as being ready to make a major contribution to North America’s fuel consumption. Cellulosic ethanol has been publicized as the future of bio-fuels, allowing companies to shift from a reliance on food crops like corn and wheat to agricultural, forestry and municipal waste. The current challenge with this technology is the difficulty in efficiently breaking down the cellulose into sugars needed to make ethanol, and to handle the vast amount of feedstock required for a commercial plant. <h2> Innovation Turning Wood Waste into Bio-fuel for Transportation</h2> Montreal-based pulp and paper company Domtar is partnering with Battelle, an independent research and development specialist in Columbus, Ohio, to test a new technology that rapidly converts wood waste into crude bio-oil and gas. This new public-private partnership is set to drive revenue for the forest products industry in Northern Ontario. The technology being employed in this project is known as fast pyrolysis, which applies heat without the use of oxygen to convert the biomass, in this case rejected wood chips, into bio-fuel. While pyrolysis is not an entirely new process, Battelle has changed the playing field significantly by designing smaller reactors that chemically and molecularly modify the oil produced to generate greater market value. The project is aimed at capitalizing on the economic advantages of collocating smaller systems with nearby biomass sources. “Because it is small, it can easily be deployed in combination with other activities, so you don’t have to drag materials great distances for processing” explains Charles Lucius, vice president of Energy, Environment and Material Sciences at Battelle. The advantage of this technology is that it is not an overly capital intensive process and it is more energy efficient than more traditional bio-fuel technologies. This technology could also be distributed across a variety of operations and industries. For the climate-related technologies to be commercial viable, governments have to introduce regulations or levies that put a price on carbon dioxide emissions. Canada has done little to provide such a market incentive, and even major business groups have called for a more robust policy to put a price on carbon dioxide emissions. Despite all of this, industry spokesman <a href="http://business.financialpost.com/2012/04/30/innovation-turning-wood-waste-into-bio-fuel-for-transportation/" target="_blank">Scott Thurlow </a>said that it is too early to write off next-generation bio-fuels as a viable part of Canada’s clean-energy mix. In the face of all these challenges, bio-fuel continues to take strides in contributing to the energy market in a positive way. Co-authored with Lee Axford, Student at Law

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Federal Government to Announce Proposed Measures for Streamlining Project Approvals

Tue, 17 Apr 2012 08:33:00 PDT

One of the highlights of last month's budget speech was the <a href="http://www.davis.ca/en/entry/environmental-energy-and-resources-law/highlights-of-the-2012-federal-budget/">announcement by the federal government</a> that it would overhaul the environmental approval process for major resources projects. The measures are expected to include a time limit on the length of reviews, general streamlining of the process, and most significantly, ensuring that only a single review (either federal provincial but not both) is carried out for each project. The <a href="http://www.theglobeandmail.com/news/politics/ottawa-to-unveil-sweeping-changes-to-environmental-oversight/article2404607/">Globe and Mail is reporting</a> that Natural Resources Minister Joe Oliver will make a major announcement of the details of the proposed streamlining measures later today.  Further details will follow as they become available.

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Highlights of the 2012 Federal Budget

Thu, 29 Mar 2012 21:05:00 PDT

Finance Minister Jim Flaherty delivered the Harper government’s 2012 budget today, mixing together austerity measures, pension reforms, and the end of the penny. For the energy and resources sectors, there are a number of highlights in the budget, most significantly the setting of limits on the time for environmental review of major projects. The budget speech cited a need to cut through a "complex maze" of rules and “long and unpredictable” approval processes, and stated the government’s commitment to ensure that needed pipeline infrastructure is built to access Asian markets. Accordingly, new rules will limit review processes for pipelines to 18 months. Mining projects will be limited to two years, and all other approvals would be limited to a one year review period. In addition, Flaherty reaffirmed the government’s commitment to “one-project, one-review”, likely limiting the scope of federal review of projects already undergoing a provincial review. Other energy and resources highlights include <ul> <li> Improvements to oil tanker safety, including stronger vessel inspection requirements and improved emergency preparedness ($35.7M)</li> <li> Trade measures to support the energy industry, including continuing to advance recently announced free trade negotiations with Japan and exploring freer trade with other Asian nations</li> <li> Expanding the eligibility for the accelerated capital cost allowance for clean energy generation equipment to include a broader range of bioenergy equipment. An expanded Class 43.2, which depreciates at 50% per year, would include such equipment as waste-fuelled space and water heaters, waste-fuelled district energy, and equipment that uses plant residue such as straw to generate electricity and heat</li> <li> $13.5m to the National Energy Board to increase the inspection of oil and gas pipelines</li> <li> Continuing the Aboriginal Skills and Employment Training Strategy, in recognition of the severe labour shortage faced by the energy and resources industries</li> <li> Following concern that some of the opposition to major resources projects is funded by illegitimate charities, the government is dedicating $8m per year to the Canada Revenue Agency to “ensure that charities devote their resources primarily to charitable, rather than political, activities”</li> <li> $47m to the Northern Pipeline Agency, tasked with the development of the Alaska Pipeline</li> <li> Spending $107M to ensure a stable supply of medical isotopes from Atomic Energy of Canada and maintain safe and reliable operations at the Chalk River reactor, and providing $8m per year to fund the licensing function of the Canadian Nuclear Safety Commission</li> <li> $8m to fund the cleanup of low-level radioactive waste in Port Hope and Clarington, Ontario</li> <li> $1m to update mine effluent regulations</li> <li> $50 million over two years to implement the Species at Risk Act.</li> <li> Extending the 15% mineral exploration flow-through tax credit</li> <li> Improving access to offshore seismic resource information</li> <li> Renewal of the Diamond Valuation and Royalty Assessment program</li> <li> Tariff relief, including the elimination of the 5% duty on certain imported oils and electricity</li> <li> The extension of Export Development Canada’s temporary domestic lending powers</li> <li> Phasing out the 10% Atlantic Investment Tax Credit on the oil, gas and mining sectors in Atlantic Canada</li> </ul>   The federal government’s summary of the budget can be found <a href="http://www.budget.gc.ca/2012/rd-dc/brief-bref-2012-eng.pdf">here</a>, and the full budget can be found <a href="http://www.budget.gc.ca/2012/plan/pdf/Plan2012-eng.pdf">here</a>

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Federal Budget - March 29, 2012

Wed, 28 Mar 2012 22:15:00 PDT

Finance Minister Jim Flaherty will deliver the federal government's 2012 budget on Thursday.  The budget is expected to deliver spending cuts in the $4B range and provide for other austerity measures. Following delivery of the budget, we will provide further details of the budget measures affecting energy and resources, the environment, and climate change.

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New Rules Proposed for U.S. Power Plants

Wed, 28 Mar 2012 12:23:00 PDT

The U.S. Environmental Protection Agency proposed on Tuesday a rule to cut carbon dioxide emissions from power plants. The <a href="http://epa.gov/carbonpollutionstandard/actions.html">EPA Proposal</a> will effectively require any new coal-fired plants to incorporate carbon capture and storage (“CCS”) equipment. The proposal does not affect currently operating plants, or plants that already have permits and begin construction within 12 months. A related <a href="http://yosemite.epa.gov/opa/admpress.nsf/79c090e81f0578738525781f0043619b/9b4e8033d7e641d9852579ce005ae957!OpenDocument">EPA News Release</a> states that the proposed rule reflects “the ongoing trend in the power sector to build cleaner plants that take advantage of American-made technologies.”   The EPA also claims that “the power plants that are currently projected to be built going forward” would already be compliant with the standard set by the proposal, and therefore there would be no additional costs of industry compliance. Once the proposal has been published in the Federal Register, the EPA will commence a 60 day public comment period.   Laura Easton, Student-at-Law

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Federal and Nova Scotia Governments Work Towards Equivalency Agreement

Thu, 22 Mar 2012 09:08:00 PDT

As we <a href="http://www.davis.ca/en/entry/climate-change-law-practice-group/federal-government-may-phase-out-coal-fired-generation-impose-cap-and-trade-on-existing-plants/">previously reported</a>, the federal government intends to enact regulations to phase out coal fired generation in Canada. These regulations will require both new coal-fired power plants, and any existing plants reaching their 40-year lifespan, to be fitted with carbon capture and storage equipment. Minister of Environment Peter Kent <a href="http://www.ec.gc.ca/default.asp?lang=En&n=714D9AAE-1&news=C57FE6E9-8B0D-487E-8B31-58B3FE776DBC">has now announced</a> that the federal government and the government of Nova Scotia are working towards an equivalency agreement which would allow the Province to make its own rules to meet national targets. Nova Scotia has already mandated a reduction of 25 per cent in greenhouse gas emissions in the electricity sector by 2020. The agreement with the federal government would require new targets extending to 2030 to match reductions that would be required under the proposed federal regulations. The Nova Scotia equivalency plan is to be finalized this summer, after the release of the federal regulations. The equivalency plan will allow Nova Scotia to meet targets by giving it the flexibility to focus its efforts on renewable energy projects instead of the individual regulation of each coal-fired power plant. The plan is anticipated to save the province hundreds of millions of dollars which would have been associated with permanently closing two peaking coal-fired plants. Laura Easton, Student at Law

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Cap-and-Trade Regulations come into force in Quebec

Thu, 05 Jan 2012 11:17:00 PST

As Canada announced its withdrawal from the Kyoto Protocol in late December, 2011 and amid much discussion about the future of Canadian climate policy, January 1, 2012 marked the coming into force of Quebec's Regulation respecting the cap-and-trade system for greenhouse gas emissions.  British Columbia, Ontario and Manitoba, who along with Quebec are all members of the Western Climate Initiative (WCI), have all announced plans to introduce cap and trade programs (and are currently at different stages of legislative progress on these promises), but Quebec continues to lead on implementation and will almost surely become the first province with an enforced cap-and-trade program.  Designed to integrate with California's implementation of a cap-and-trade program under the WCI, the first year of the program is 'transitional', giving emitters an opportunity to familiarize themselves with the system and buy and sell greenhouse gas emission credits voluntarily, before emission caps come into effect on January 1, 2013.  As of next year, approximately 75 industrial and electrical sector entities who emit at least 25 thousand tonnes of carbon dioxide equivalent greenhouse gases annually will be bound by the new caps on total emissions.  In 2015 additional parties involved in the fuel importation or distribution sector will become subject to the caps. If these parties are unable to reduce their emissions to the prescribed cap, they may purchase the credits necessary to cover their excess. Conversely, companies who reduce emissions below the cap will be able to sell credits through the system. Companies who emit in excess of the cap and fail to procure the required additional credits, or otherwise violate the regulation may face a number of administrative sanctions or a fine of up to $250,000.

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CCEMC Investment Sparks Renewable Projects

Thu, 22 Dec 2011 06:53:00 PST

Enmax Energy has begun installing renewable energy systems for residential consumers across Alberta with funding from the Climate Change and Emissions Management (CCEMC) Corporation. The CCEMC allocated roughly $14.5 million to Enmax to partially fund the installation of 9,000 residential renewable energy systems. The systems include both solar photovoltaic and wind power technologies which will produce electricity for household consumption, while returning excess electricity to the grid. The installations are expected to reduce greenhouse gas emissions by 600,000 tonnes CO2-equivalent. In addition to the GHG reductions, the visibility of the installations could spur further residential renewable energy development. The CCEMC's support will contribute to immediate and direct GHG reductions, while facilitating innovative energy use solutions for Albertans. More information on the Enmax program can be found here: http://www.generatechoice.ca/   Patrick Stratton, Student-at-Law

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A Departure From Kyoto

Fri, 09 Dec 2011 08:58:00 PST

As the annual UN Climate Change Conference winds down in Durban, South Africa, Canada appears poised to withdraw from the Kyoto Protocol. The anticipated withdrawal comes as no surprise to observers of the federal government. In 2002, Canada ratified Kyoto, committing to a reduction in greenhouse gas (GHG) emissions of 6% below 1990 levels by 2012. As of 2009, Canada’s GHG emissions were 17% above 1990 levels. Canada’s current Environment Minister, Peter Kent, previously stated that the government does not intend to agree to a second, post-2012, commitment period under Kyoto. Russia and Japan have also taken similar positions. On the eve of the conference, Minister Kent stated that “Kyoto is the past” and touched off speculation that Canada will withdraw from Kyoto. The federal government properly views Kyoto as an agreement that not only imposes significant costs on Canada, but also one that will have little impact on global warming. Since 2002, neither the Liberal nor Conservative governments took concrete steps to comply with Canada’s Kyoto obligations. However, the election of the Conservative government in 2006 represented a policy shift. Whereas Kyoto excuses the world’s number 1 and number 3 emitters in China and India from reducing emissions, and does not include the United States, the Conservative government seeks an agreement that obliges all major emitters to reduce their emissions. Industry Minister Christian Paradis stated, “We need an effective agreement. Effective means it must include large emitters.” Canada has common ground with the EU, whose Commissioner for Climate Action, Connie Hedegaard, also expressed the need for GHG reduction commitments from emerging countries. While the Canadian government faces much criticism on the climate change file, it realizes that progress on the global problem of climate change requires the participation of all of the world’s major emitters. Canada will face intense international criticism if it withdraws from Kyoto, but such action gives our federal government an opportunity to lead the debate towards a global agreement on climate change. Jennifer Cleall and Patrick Stratton, Student at Law

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Alberta: a Global Energy Leader

Mon, 28 Nov 2011 14:34:00 PST

Alberta’s Premier, Alison Redford, recently completed a tour through Washington, D.C., New York City, Toronto and Ottawa. She punctuated the tour with a speech at the Economic Club of Canada in Toronto where she set out a national vision for energy. In the speech, the Premier stressed the importance of diversifying Canada’s energy exports to Asia, outlined a vision of Canada as a global energy hub and articulated a national interest in the success of the oil sands. In the midst of the delayed decision on Keystone XL, Premier Redford noted the need to have more customers for Canada’s energy products and the potential to “guarantee national prosperity for a long time to come by supplying (Asia) with the energy they need.” Moreover, she noted that stronger links with Asia need to “extend beyond oil and gas to include technology for all forms of energy and its sustainable and efficient usage.” This statement reflected her theme of Canada as a global hub for all forms of energy. Premier Redford noted Canada’s abundance in energy resources, while emphasizing our human resources consisting of a “skilled workforce capable of expanding production in an environmentally, socially conscious and economically sustainable manner.” She set out a vision of Canada as a “preferred international supplier of both energy and innovation” and called for the provinces to start a “dialogue about the outcome we want, not taking any source off the table” and to “put old antagonisms behind us.” Premier Redford noted Canada’s leadership in the development of nuclear power, hydro and renewables, while identifying Ontario’s current expertise in smart grids and renewables. Critically, Premier Redford articulated a vision for the oil sands as a national resource that benefits from all provinces’ contributions and continues to innovate environmentally. The Premier noted a past investment made by the Ontario government in the oil sands during a troubled early period in the oil sands’ development. She then outlined the skills, expertise and materials Ontarians supply to the oil sands, highlighting spin-offs from the oil sands which create jobs across Canada. The Premier cited projections that, over the next twenty-five years, “the oil sands will fuel 450,000 positions country-wide” and “Alberta-based energy companies will buy $55 billion worth of goods and services from Ontario.” She then highlighted innovations occurring in the industry such as reduced greenhouse gas intensity, reduced water use, successful reclamation of tailings ponds and electricity cogeneration. Premier Redford recognized criticism and disagreement over the oil sands and called for a “meaningful dialogue” between stakeholders. Her speech may spark such a dialogue. Premier Redford concluded that Canada can achieve “a truly national vision for energy that we can take to the rest of the world” which contributes our “variety of energy sources, the innovation and technology to supply them sustainably and best practices on how to use them efficiently Jennifer Cleall and Patrick Stratton, Student-at-Law

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Alberta stops hearings into transmission lines UPDATED

Fri, 21 Oct 2011 10:59:00 PDT

<div> The province, apparently making good on premier Alison Redford's promise to send transmission projects "back to the drawing board" has stopped hearings into three transmission projects.</div> <div>  </div> <div> Energy minister Ted Morton, in a letter to the Alberta Utilities Commission, requested that the AUC adjourn the hearings while the government "reviews its approach to certain critical transmission infrastructure projects."  The AUC in turn has suspended all proceedings until further notice.  </div> <div>  </div> <div> The three projects are the Heartland, Western Alberta Transmission Line and Eastern Alberta Transmission Line.</div> <div>  </div> <div> For Heartland, hearings were concluded and a decision was expected on October 24.  WATL hearings were scheduled to commence on November 7.  EATL hearings were expected to commence on January 16, 2012.  All proceedings are suspended.</div> <div>  </div> <div> Update:  late on Friday afternoon, the Premier clarified at a news converence that the Heartland project was not being stopped.  The AUC briefly put the project on hold as a result of Friday's first announcement, has stated that the decision will not be released on October 24 but should be ready within two weeks.</div> <div>  </div> <div>  </div> <div>  </div>

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Australia introduces carbon tax, emissions trading

Wed, 19 Oct 2011 19:35:00 PDT

Australia's minority Labor government passed that country's first nationwide carbon tax this week.  The tax will go to the Australian senate for approval next month. The details of the plan are extremely complicated and represent a compromise among a number of different plans and interests, as well as a compromise between the governing Labor party and the Greens. The initial price for carbon, commencing in 2012, will be $A23 per tonne (equivalent to $C24 per tonne), and increase at 2.5% per year.  The tax will only be applied to 500 of Australia's largest polluters. The proceeds of the program will be used to provide individual income tax relief.  Many commentators have speculated that the subsidies and tax relief were necessary to gain some measure of popular support for the carbon tax bill. Commencing in 2015, an emissions trading (cap-and-trade) scheme will come into force, allowing the price of carbon to float.   Free permits representing 94.5% of industry's carbon costs will be issued to industry.  International trading will be permitted, linking the Australian carbon price to world prices.   Farming and agriculture are exempt, as is motor fuel - except rail and shipping companies which will pay the tax on diesel.   And the tax doesn't apply to the export of coal (which represents approximately 25% of Australia's exports, primarily to China).  In fact, it has been estimated that emissions in other countries from exported Australian coal exceed emissions from all sources within Australia. Australian opposition leaders remain opposed to the plan, and have warned industry not to make long-term investments based on the plan as they plan to repeal it should they form the next government. The Business Council of Australia, which opposes the carbon tax, has noted that the level of the tax is significantly higher than in other jurisdictions (50% higher than in Europe), putting Australia at a competitive disadvantage.

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BC Speech from the Throne and Jobs Plan - "Clean Energy" Matters?

Tue, 04 Oct 2011 15:19:00 PDT

Snuck in the middle somewhere between "Putting Families First" and "Services for BC Families", in her <a href="http://www.leg.bc.ca/39th4th/4-8-39-4.htm" target="_blank">Speech from the Throne on October 3, 2011</a> ("Throne Speech"), Premier Christy Clark offered up a few (very few) general statements on clean/renewable energy and climate change. By comparison, "energy" was mentioned 4 times (with "clean-energy" being 2 of the 4), while "families" was mentioned 23 times, and "family" 14 times. Statements on clean energy/climate change included: <ul> <li> Your government is also committed to sustaining its leadership in the fight against climate change, and maintaining clean air and clean water throughout our province.</li> <li> B.C.'s revenue neutral carbon tax accelerates the transition to cleaner fuels and technologies, and reduces pollution and greenhouse gas emissions.</li> <li> As we look beyond 2012, we will consider next steps in our clean energy and environmental strategies, in partnership with communities, industry, First Nations, non government organizations and, most importantly, citizens.</li> <li> Your government sees the economic benefits of clean technology as part of a diverse economy. We will look at the larger picture and consider how tax policy, energy policy, incentive programs and new technology contribute to a renewed vision for B.C.'s green economy.</li> </ul> Premier Clark also commented in the Throne Speech that "Planned rate hikes by<a href="http://www.bchydro.com/" target="_blank"> BC Hydro</a> have been reviewed and will be reduced by half. Your government has taken a hard look at B.C. Hydro's operations to ensure it meets its critical role as a generator of reliable, renewable and affordable power." This rate hike statement stemmed from a proposal by BC Hydro to a 29% hike in electricity rates over 3 years, in order to counterbalance the costs of the public company to purchase power, and for its operations. This hike correlates to the requirement in BC's Clean Energy Act enacted in 2010 ("Act"), that the public utility be "self-sufficient" by 2016. <a href="http://www.newsroom.gov.bc.ca/2011/08/bc-hydro-to-cut-proposed-rate-increase-in-half.html">Premier Clark (in conjunction with BC Hydro) have now committed to halving this rate hike (8% first year, and 3.9% for following two years), </a>and how exactly this will be accomplished, and reducing large future rate hikes, will likely be a major focus of the upcoming "Integrated Resource Plan" ("IRP"). BC Hydro was to complete the IRP, mandated by the Act, for submission to the Ministry of Energy by November 2011. This has been delayed to December, 2012. The IRP will set BC Hydro's course for conservation, electricity generation acquisition and export market opportunities, as well as an assessment of transmission requirements. IRP objectives include BC Hydro meeting its obligations under the British Columbia Hydro and Power Authority Act and to the Act including the current requirement of ensuring that 93% of the generation in the province comes from clean or renewable resources. What does this mean for the future of "clean energy" in BC? In the years leading up to 2011, led by Premier Gordon Campbell, the province of BC strove towards a leadership position in clean/renewable energy and climate change action, building upon its <a href="http://www.energyplan.gov.bc.ca/">2007 Energy Plan: A Vision for Clean Energy Leadership</a>, and later the Act. Stemming from the Energy Plan and subsequently through the Act, BC Hydro ramped up purchases of power from Independent Power Producers ("IPPs") through a variety of power calls and programs, including the 2006 Power Call, 2008 Clean Power Call, Bioenergy Calls and Standing Offer Program. At the time, the purchase of power from IPPs, though not universally supported, was supported politically from the Premier on down, was reflected in BC Hydro's power purchases and attracted a lot of interest from many project developers and First Nations in the province. Now, however, as stated by Dave Cobb, CEO of BC Hydro, in his address on September 26, 2011 at the <a href="http://www.cleanenergybc.org/conferences/generate_2011/">Clean Energy BC Generate 2011</a> Conference ("Conference"), "now is a good time to stop and take a breath." He also commented though that "there is no question that BC Hydro is going to require more power in the future and no question that our load forecast is going up, its just a matter of how much, and when." He commented further that there is "no question we are going to market .. at some point .. to purchase energy" and "we are very supportive of doing what we can to keep the options open to benefit our customers." In a response to a question regarding the Technical Review Committee from Bob Duncan, CEO of <a href="http://www.hupacasath.ca/">Hupacasath First Nation</a> (Hupacasath) and Upnit Power LP, a limited partnership involving the Hupacasath that operates a 6.5 MW run-of-river project on China Creek on Vancouver Island, Dave Cobb responded to the question of the "self-sufficiency" definition and timing of upcoming power calls by commenting that "there is no question its coming, but the definition (of self-sufficiency) will impact timing." Dave Cobb also made statements to the effect that there is no question BC Hydro's load forecast is going up and that there will be a supply/demand gap, and a need to source power from somewhere. He stated that currently power supply in BC is sourced 72% from heritage assets (i.e. hydroelectric dam facilities such as those on the Peace and Columbia rivers); 8% from outside purchases; and 19% from IPPs. The likely scenario is that BC, through BC Hydro, will source some power from IPPs "at some point" but that this will be less than what the clean/renewable energy industry is hoping for, and a major focus of these power purchases will be the cost at which it can be acquired. This ties into Premier Clark's comment that "Your government has taken a hard look at B.C. Hydro's operations to ensure it meets its critical role as a generator of reliable, renewable and affordable power". This cost-competitiveness was also made clear in Dave Cobb's address, when he made a comment to the effect that this government has a clear objective and competitive rates have "risen up on the list of importance". Ultimately, this indicates that clean/renewable power that costs more to produce, such as solar, will not be supported, but if clean energy sources (such as run-of-river and wind) can compete on a competitive level with other energy supply sources, BC Hydro may "play ball" so to speak, with these types of IPP projects in future power purchases. Paul Kariya, Executive Director of Clean Energy BC, commented during the Conference to the effect that when comparing power sourced from IPPs on an "apples-to-apples" basis", if not lower, "we're competitive, we're in the game." What is very clear is that the focus of Premier Clark's government right now is not on initiating clean energy power purchases, but on issues affecting families, job creation and the economy. This is apparent in <a href="http://www.bcjobsplan.ca/">Premier Clark's Jobs Plan, titled "Canada Starts Here"</a>, announced on September 22, 2011 ("Jobs Plan"). The Jobs Plan focuses primarily on private sector projects such as mining, building up the Prince Rupert Port and Deltaport and advancing three liquefied natural gas (LNG) export terminals planned for Kitimat. This focus on jobs and cutting red tape was also evident throughout the Throne Speech, where the focus was building BC as a "gateway" to emerging economies in Asia and increasing international trade. The major investments in port expansions and LNG terminals were highlighted in the speech as well, as part of this gateway strategy. With respect to LNG, during the Clean Energy Conference there was plenty of discussion regarding the huge increase in demand for power that is coming as a result of shale gas development and mining activities, primarily in the northern portion of the Province. In the Throne Speech Premier Clark stated that "We are committed to enabling the development and operation of three LNG terminals by 2020, with sufficient sources of electricity to make it possible. Where will this electricity be sourced from, and at what cost? This is what is uncertain at the moment, and what permeated the general mood of participants at the Clean Energy Conference, including IPP project proponents, which could be best described as "anxious uncertainty". This is troublesome for the Province's First Nations. In the Throne Speech, Premier Clark made several references to establishing partnerships with First Nations to create jobs, including: <ul> <li> As we look beyond 2012, we will consider next steps in our clean energy and environmental strategies, in partnership with communities, industry, First Nations, non government organizations and, most importantly, citizens.</li> <li> To further improve the investment climate, your government will work with First Nations to create a new business and investment council to foster wealth creating partnerships.</li> </ul> Dave Porter, President of the <a href="http://fnbc.info/fnemc">BC First Nations Energy and Mining Council</a>, stated at the Conference that there are over 125 First Nations in BC now engaged in clean energy in one form or another. There were comments made from many First Nations speakers at the Conference on the theme that - you the Province of BC imposed this clean/renewable energy mandate on us without consultation, which we've now bought into, and now again, without consultation, you are seemingly going to stall or halt this development which has created jobs and benefited First Nations in the Province. Paul Kariya, Executive Director of <a href="http://www.cleanenergybc.org/">Clean Energy BC,</a> commented on the Premier's Job Plan by stating "let's fuel that job strategy, an aggressive job strategy, with clean energy." To highlight First Nations involvement in the clean energy sector and support (generally), the Conference opened with the signing of a landmark MOU between Clean Energy BC, the First Nation Energy and Mining Council, the Sts'ailes, Kwakiutl Indian Band, shíshálh First Nation, Sliammon First Nation, and Squamish Nation. The MOU is designed to facilitate cooperation and collaboration on future clean energy projects in BC, and Paul Kariya stated that the intent was to have all First Nations inovlved in clean energy sign onto it. 75 individual First Nations participated in the Conference as speakers, exhibitors and delegates, and BC First Nations are involved in the clean energy sector in a wide variety of ways including partnerships, equity investments and direct ownership. It's fair to say that there is real concern by First Nations, as well as other clean energy sector participants over what direction the Province of BC is taking with respect to clean/renewable energy. Until there is more certainty in this sector, most IPPs and other industry players (especially those with large projects advancing without electricity purchase agreements (EPAs)) must watch, listen and patiently wait. As mentioned, the IRP is due to be released in December, 2012, and it is thought that this will likely provide some clarity and answer many questions about the future of clean/renewable energy in the Province. Otherwise, prior to the provincial election in 2013, it does not appear that the Premier, faced with a generally moody and restless electorate, one which recently voted down the Province's HST, is in a hurry to solve BC's energy supply issues. Thinking back to the Throne Speech, its easy to see this when reading between the lines on the comment that "as we look beyond 2012, we will consider next steps in our clean energy and environmental strategies."

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Two New Adaptation Reports - NRTEE and the CBC

Tue, 04 Oct 2011 15:09:00 PDT

The National Round Table on Environment and the Economy (NRTEE) has just published its latest <a href="http://nrtee-trnee.ca/climate/climate-prosperity/the-economic-impacts-of-climate-change-for-canada/paying-the-price" target="_blank">climate change report</a>, "Climate Prosperity: Paying the Price - the Economic Impacts of Climate Change for Canada".  The Report estimates that climate change costs for Canada "could escalate from roughly $5 billion per year in 2020 - less than 10 years away - to between $21 billion and $43 billion per year by the 2050s".  The Report reviews four separate scenarios combining both global emissions growth and Canadian economic and population grown to understand the potential costs of climate change "under different futures".   The Report examines how we get costs down and indicates that "[g]lobal mitigation leading to a low climate change future reduces costs to Canada in the long term".  The Report also argues in favour of a post-2012 international climate arrangement that "systematically reduced emissions from all emitters - including Canada - over time". A Focus on Adaptation Far from being centred on mitigation, the Report focuses on how adapting to climate change is both possible and cost-effective.  To that end, the Report examined five different adaptation strategies in detail to assess their costs and benefits: <ul> <li> enhancing forest fire prevention;</li> <li> controlling pests;</li> <li> planting climate resistant tree-species;</li> <li> prohibiting new construction in areas at risk of flooding in coastal areas; and </li> <li> undertaking strategic retreat by gradually abandoning dwellings once flooded</li> </ul> Recommendations The Report provides four recommendations: 1. The Government of Canada invest in growing our country's expertise in the economics of climate change impacts and adaptation so we have our own Canadian-focused, relevant data and analysis for public and private-sector decision makers. 2. The Government of Canada cost out and model climate impacts to inform internal decisions about adapating policies and operations to climate change and allocating scarce resources to programs that help Canadians adapt. 3. Governments at all levels continue investing in generating and disseminating research to inform adaptation decision making at the sectoral, regional and community level.  This research should, as a matter of routine, incorporate economic analysis of the costs and benefits of options to adapt to climate impacts because the current data is insufficient for decision makers and is not readily or consistently available. 4. The Government of Canada forge a new data-and analysis-sharing partnership with universities, the private sector, governments and other expert bodies to leverage unique and available non-governmental resources for climate change adaptation. Adaptation Is Hot Interestingly, adaptation seems to be a hotter climate change topic in Canada than ever before.  The Conference Board of Canada has just released "Beyond Sandbagging: Building Community Resilience to the Impacts of Climate Change".  The CBC Report looks at the impacts of climate change in Canada in an attempt to clarify what it means for public safety and national security.  The Report concludes: <ul> <li> Climate change is real.  Its impacts are being felt here and they are being felt now.</li> <li> While climate change will continue to be characterized by incomplete information and uncertainty, effectively managing and responding to its impacts will require consistent and concerted action, with an emphasis on fostering resilience from the "bottom up".</li> <li> Engagement from the private and public sectors is a key element of community, and ultimately societal resilience.</li> <li> a "whole of society" approach rooted at the local will help build a more resilient Canada.</li> </ul> So What Are We Doing Canada doesn't have a national climate change strategy, let alone an adaptation strategy.  Individual provinces, however, may address adaptation on their own (for example, Alberta's Climate Change and Emissions Management Act provides that the Climate Change and Emissions Management Fund can be used to fund programs and measures related to adaptation).   Out of time for today to address Canada's various adaptation strategies, but stay tuned for Davis LLP's Cross Country Climate Change Check-Up next week.

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Canada and Mexico Sign MOU on Greenhouse Gases

Wed, 21 Sep 2011 14:55:00 PDT

Canadian Environment Minister, Peter Kent, recently traveled to Mexico to enter into a Memorandum of Understanding (MOU) with Mexico's Secretary for Environment and Natural Resources, Juan Elvira Quesada. The MOU, signed September 12, 2011, is "to increase cooperation to reduce greenhouse gas emissions from Mexico's waste management sector" according to the Environment Canada news release. Minister Kent remarked that "Canada and its continental neighbour has a strong bilateral relationship on environmental issues, and this agreement strengthens our commitment to work together to reduce our emissions. Environment Canada also indicates that "[t]he purpose of this MOU is to provide solutions to help reduce Mexico's methane emissions by diverting organic matter from landfills, capturing methane gas, and using it as a new source of energy". We'll keep track of this initiative as it develops and will keep you posted.

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Ontario Ministry of Finance to clarify property tax treatment of renewable projects

Wed, 03 Aug 2011 09:45:00 PDT

The Ministry of Finance has issued a proposal to amend Ontario Regulation 282/98, which provide rules governing the property tax treatment of energy generation facilities. According to the Ministry, the goals of the amendments are to: <ul> <li> provide greater clarity and certainty to the property tax treatment of renewable energy installations for property owners, municipalities and the Municipal Property Assessment Corporation; and</li> <li> ensure that property tax does not act as a disincentive to energy generation, particularly small-scale generation by persons who are not ordinarily in the business of generation.</li> </ul> Details of the proposal are available on the<a href="http://www.ontariocanada.com/registry/view.do?postingId=7322&language=en"> Regulatory Registry</a>. The changes would result in different property tax treatment depending on the location and size of the project and on the nature of the person generating electricity: <ul> <li> for rooftop installations, there will not be any change to the property classification or assessment of the property, regardless of the size of the project;</li> <li> for ground mount installations up to 10 kW, there also would not be any change to the property classification or assessment of the property;</li> <li> for ground mount projects where generation is conducted by entities whose primary business is the generation, transmission or distribution of electricity ("corporate power producers), the applicable land, buildings and structures will be taxed at the industrial tax rate;</li> <li> for ground mount projects between 10-500 kW where generation is conducted by entities other than corporate power producers, the applicable land, buildings and structures will be taxed at the rate applicable to the surrounding land use;</li> <li> for ground mount projects over 500kW where generation is conducted by entities other than corporate power producers, the applicable land, buildings and structures will be taxed at the the rate applicable to the surrounding land use for the first 500kW and at the industrial tax rate for the remaining capacity.</li> </ul> Wind turbine towers would continue to be assessed at the rate of $40,000 per MW of installed capacity, except where they are rooftop mounted or ground mounted by under 10kW. Although the proposed regulation is not perfectly clear, it seems that machinery and equipment used for the generation of electricity (e.g. solar panels, wind turbines and blades) will continue to be exempt from property taxation. The proposal is one of several measures<a href="http://www.news.ontario.ca/mei/en/2011/08/moving-clean-energy-projects-forward.html"> announced on Monday</a> to improve certainty in Ontario's renewable power project market (see our previous posts regarding <a href="http://www.davis.ca/en/blog/Environmental-Energy-and-Resources-Law/2011/08/02/Ministry-of-Energy-directs-OPA-to-offer-waiver-of-pre-NTP-termination-rights-under-FIT-Contracts">the waiver of the OPA's pre-NTP termination rights</a> and <a href="http://www.davis.ca/en/blog/Environmental-Energy-and-Resources-Law/2011/08/03/Ontario-government-improves-REA-process-with-technical-and-aboriginal-consultation-guidance-and-other-measures">improvements to the REA process</a>).

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CCEMC Seeks Big Ideas from Small Business

Tue, 26 Jul 2011 11:54:00 PDT

The Climate Change and Emissions Management (CCEMC) Corporation ("CCEMC") continues to target GHG reductions with its July 15, 2011 call for Expressions of Interest (EOI) from small and medium enterprises. The CCEMC has up to $10 million in funding for start-ups and any private organization with less than 250 full-time staff. Contributions will cover up to 50% of a project's cost to a maximum amount of $500,000 per project. CCEMC Chair, Eric Newell, noted that "small and medium sized businesses are historically strong innovators." This call for EOIs looks to tap into Alberta's spirit of innovation and open the door to significant breakthroughs in GHG reduction. The EOIs can target any of the CCEMC's strategic investment areas: energy conservation and efficiency, CCS, biological management, renewable energy and cleaner energy production. EOIs are due October 19, 2011 and final decisions will be made May 22, 2012. The CCEMC's call for EOIs demonstrates a continued commitment to achieving actual and sustainable reductions in Alberta's GHG emissions, while fostering an emerging green energy sector. By Patrick Stratton, Student-at-Law

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