Environmental Science & Engineering - www.esemag.com - September 2005
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Canada’s climate change strategy

By Paul Manning,Willms & Shier Environmental Lawyers LLP

Ottawa has fleshed out its strategy to force large emitters of greenhouse gases (GHG) to meet their individual reduction targets by 2012. As expected, the feds intend to add GHGs to Schedule 1 of the Canadian Environmental Protection Act, enabling the promulgation of enforceable back-up regulations under the Act.

While working to guarantee compliance with the forthcoming compulsory limits, the feds have also offered to soften the economic blow of cutting GHGs by capping reduction costs. The measures, which should be in place by 2008, would affect about 700 companies in the oil and gas, mining and manufacturing, and thermal electricity sectors.

Emitters will have several compliance options. They could invest in inhouse emission reductions, purchase domestic or international emission reduction credits, or contribute to a new Technology Investment Fund (TIF), which will help promote technological innovation and reductions beyond the Kyoto period. Access to the TIF will be capped at 9 megatonnes. If a company cannot meet its target, Ottawa has pledged not to seek a penalty "greater than $200 per excess tonne of emissions unless circumstances dictate otherwise."

The plan includes a potentially costly pledge. To promote compliance, Ottawa would implement, "if required, a price assurance mechanism to ensure that companies would be able to meet their regulatory obligations at a cost of no more than $15/tonne for the period 2008-2012." Special credits, rebates, or a new investment fund are among the funding supports suggested.

Companies that have surplus emission reductions may sell them to other companies or to the Climate Fund. Ottawa will establish the basic rules for trading domestic offset credits and an electronic system for tracking transactions. However, the private sector is expected to set up and run brokerages, carbon exchanges and other components of the trading infrastructure.

Details on setting emission reduction targets, compliance mechanisms, and the preferred regulatory options were published in the Canada Gazette Part I on July 16, 2005. In addition, the scientific rationale for regulating GHGs under CEPA s.64 has been posted on the CEPA Environmental Registry.

The Canadian plan mirrors renewed international support for the Kyoto Protocol. Despite the distraction of the London bombings during the G8 summit meetings of early July, the leaders (including the Americans!) found time to issue an extensive communiqué reaffirming their commitment to reduce GHG gas emissions, enhance energy security, support clean power and energy efficiency, and cut air pollution.

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