Climate Change @ Gowlings - May 10, 2010

Edited by Douglas W. Clarke

Contents

• Cross-border Climate Policy Harmonization
• OSC Notice 51-717 - Corporate Governance and Environmental Disclosure
• Supreme Court Won't Hear Kyoto Challenge
• British Columbia Budget 2010: International Financial Activity ("IFA") Program To Render B.C. Greener and Cleaner
• Carbon Market Watch
• Renewable Fuels Regulations Include Market Mechanism for Compliance

Cross-border Climate Policy Harmonization
By: Peter Burn

The basic principle underpinning Canada's climate change policy is to pursue comparable efforts with the United States, through identical greenhouse gas reduction targets, harmonized performance, product and technical standards, compatible regulatory regimes, a common carbon price and complementary border adjustment measures vis-à-vis imports from third countries.

To date, comparable efforts have been realized in the form of a shared 2020 reduction target of "17 % less than 2005 levels", a harmonized vehicle fuel efficiency standard for cars and light trucks (with heavy truck standards soon to follow), compatible Renewable Fuels Standards and a collaborative approach to the development of smart grid and carbon capture and storage technical standards.

It appears that American climate change policy will take one of two forms: either (i) a patchwork of EPA regulations and regional "cap and trade" regimes of varying stringency and coverage; or (ii) a national scheme implemented pursuant to the American Power Act being sponsored by Senators Kerry (Dem-Mass) and Lieberman (Ind-Ct) – ("KL") - following the decision of Senator Graham (Rep-SC) to withdraw his co-sponsorship due to political differences with the Democratic leadership in the Senate.

In December of 2009, the US Environmental Protection Agency ("EPA") issued a determination that rising greenhouse gas levels endangered the health of humans and the natural environment, and hence should be subject to EPA regulation (the equivalent of being listed in the schedule of "toxic" pollutants under the Canadian Environmental Protection Act). This endangerment finding forms the legal basis for EPA regulation of mobile emissions sources (i.e. tailpipe emissions standards calibrated not to miles per gallon, but CO2 volumes per mile). It also creates an obligation for EPA regulation of stationary emissions sources.

In a public letter to American lawmakers dated February 22, EPA Administrator Linda Jackson confirmed that, commencing in the first half of 2011 (i.e. at the same time that the new vehicle efficiency regulations take effect), the EPA will require large stationary emitters to install "Best Available Controls Technology" in their new or modified facilities. The universe of regulated emitters will be expanded over the next five years, with the smallest emitters not facing regulation before 2016. In addition, only facilities emitting over 75,000 tons of annual greenhouse gas emissions will initially be considered large.

The EPA timetable leaves open the possibility that the proposed regulations will be superseded by the passage of KL's American Power Act in 2010.

It is expected that the American Power Act will be unveiled on May 12. While still officially under wraps, it has been widely reported that the legislation will contemplate different treatment for different sectors on different timetables. For thermal power plants, it is believed that KL will propose a hybrid cap and trade system (with a price collar limiting the carbon price to $30/t), a clean power standard that is likely to broaden the definition of "qualified renewables" to include "clean coal" and nuclear base-load power (but not electricity generated from new, big hydrodams), plus substantial financial assistance for both clean coal development and the installation of new nuclear power plants.

In the liquid fossil fuels sector, it would appear that KL will be going to great lengths to disguise a regime that is favoured by many in the oil industry – effectively, a wholesale carbon tax at the refiners' level geared to the carbon intensity of the fuel pool, with the tax rate to be geared to the "collared" carbon price set in the thermal power emissions market. Heavy trucks will be incented to move from diesel to natural gas; the electrification of the vehicle fleet will be encouraged; plus the bill may contain provisions to encourage more off-shore oil drilling (that may prove problematic in light of recent events in the Gulf of Mexico).

Finally, it is expected that KL will delay regulating (until 2016) the so-called "energy-intensive, trade-exposed" industries such as steel, chemicals. metals and cement. In the meantime, the legislation would provide adjustment assistance to these industries, while raising the threat that new border adjustment measures will be erected against imports from third countries that lack commensurate GHG regulations.

While polls show that climate change is a low priority for Americans in the current economic environment, the apparent preference of many industries (including the oil/gas and power sectors) for the KL scheme compared to the looming EPA regulations and various state-level measures, plus the apparent support of some influential unions (for example, the Steelworkers), as well as environmental groups, combine to suggest there is a good chance that the KL legislation will become law in 2010.

This would increase the likelihood that the Harper Government would introduce comparable measures on a comparable timeline in Canada's House of Commons this fall, perhaps hoping to create a sharp contrast between a Conservative Government that is willing to "match the Americans" and opposition parties that wish to "go further", even if it means putting the "energy-intensive trade-exposed" industries of Ontario and Quebec at a disadvantage relative to their American (let alone Asian) counterparts.

OSC Notice 51-717 - Corporate Governance and Environmental Disclosure
By: Patricia Leeson

On December 18, 2009, the Ontario Securities Commission ("OSC") issued OSC Notice 51-717 Corporate Governance and Environmental Disclosure ("Notice"). The stated purpose of the Notice is to communicate the OSC's plans respecting the disclosure of corporate governance and environmental matters by reporting issuers. This summary focuses on the planned disclosure about environmental matters.

The OSC intends to issue a staff notice providing guidance on compliance with existing environmental disclosure requirements under National Instrument 51-102 Continuous Disclosure Obligations. The staff notice will be published by December 2010 ("2010 Notice"), after a period of consultation, and will provide guidance to reporting issuers preparing annual continuous disclosure filings for 2010. The OSC commenced this initiative in response to a resolution of the Ontario Legislature in 2009 directing the OSC to undertake a broad consultation to establish best practice corporate social responsibility and environmental, social and governance reporting standards.

The OSC initiative will build on existing OSC Staff Notice 51-716 Environmental Reporting (51-716) published in February of 2008 after completing a targeted review of 35 Canadian public issuers. A staff spokesperson for the OSC stated that the 2010 Notice will not include a targeted review like 51-716 but rather, will provide public issuers with further guidance to comply with existing requirements. Potential areas of environment-related continuous disclosure requirements highlighted in 51-716 were:

• Form 51-102F1 (MD&A)
• • Environmental liabilities that involve critical accounting estimates;
  • Material asset retirement obligations.
• Form 51-102F2 (AIF)
• • Financial and operational effects of environmental protection requirements;
  • Environmental policies implemented by an issuer that are fundamental to its operations;
  • Risk factors relating to the issuer including environmental risks.

The OSC commented that environment-related disclosure in the MD&A and AIF of targeted issuers in most cases required better quantification or more substantive qualitative description (avoiding boilerplate).

Similar guidance has been published in the United States by the Securities Exchange Commission with the recent addition of climate change disclosure guidance (SEC Guidance). This agency has recently been examining the climate change disclosure obligations of public companies at the behest of advocates of increased climate risk disclosure (mostly large institutional investors). Like Canadian securities laws, SEC regulations require material disclosures by public companies for the benefit of investors. Like the Canadian Securities Administrators, the SEC provides guidance on how to interpret the disclosure rules. The SEC Guidance issued on January 27, 2010 sets out interpretative guidance respecting certain existing disclosure rules that may require a company to disclose the impacts that business or legal developments related to climate change may have on its business. The SEC Guidance does not modify any SEC rule, and it does not alter the definition of what constitutes material information. Possible sources related to climate change that may trigger the disclosure requirements are:

• Impact of legislation, regulation and litigation (including pending legislation, regulation and litigation);
• Impact of international accords and treaties related to climate change;
• Indirect consequences of climate change regulation and resulting business trends;
• Physical impacts of climate change on business and operations.

The OSC has not indicated whether the 2010 Notice will specifically focus on climate change guidance as part of the overall environmental guidance. However, there are a number of reasons the 2010 Notice is likely to include climate change disclosure guidance:

• SEC rules and guidance are often a signal to the CSA to re-examine its own policies and rules in a related area;
• The Canadian federal government is following the US lead in climate change policy and legislation;
• Ontario is part of the Western Climate Initiative created to evaluate and implement a cooperative regional market-based cap-and-trade system to commence in 2012;
• The Ontario government introduced Bill 185 on May 27, 2009 enabling the passage of regulations to establish and regulate a greenhouse gas cap-and-trade program;
• Public issuers are already disclosing climate change related impacts on their businesses and operations voluntarily or pursuant to mandatory requirements. Disclosure in the AIF and MD&A can be the subject of a continuous disclosure review by securities regulators.

The OSC has invited securities regulators and staff in other CSA jurisdictions to participate. With the backdrop of the national securities regulator initiative and current provincial constitutional references, it will be interesting to see who, if anyone, will join the OSC in preparing this guidance. If the 2010 Notice is issued by the OSC only, it will nevertheless exert considerable influence since the guidance applies to public issuers who are reporting issuers in Ontario irrespective of the location of their head office.

Supreme Court Won't Hear Kyoto Challenge
By: Ian Richler

On March 25, 2010, the Supreme Court of Canada denied leave to appeal the decision of the Federal Court of Appeal in Friends of the Earth v. Canada. This brings to an end the effort by Friends of the Earth ("FOTE") to force the government of Canada to comply with the Kyoto Protocol. As usual, the Supreme Court declined to give any reasons for refusing to hear the case.

FOTE's lawsuit was founded on the Kyoto Protocol Implementation Act, a private member's bill that was introduced by the opposition and passed over the objections of the government. The Act requires the government to prepare a Climate Change Plan describing the measures to be taken "to ensure that Canada meets its obligations" under the protocol (i.e. a 6% reduction of greenhouse gas emissions from 1990 levels). The government duly published a Climate Change Plan, but the plan did not purport to be directed to achieving Kyoto compliance. In fact, the plan plainly stated that Kyoto compliance would be impossible without triggering "the most severe recession in the post-World War II period". FOTE alleged essentially that the Climate Change Plan was a sham, and failed to satisfy the government's obligations under the Act. FOTE also alleged that the government was required under the Act to implement regulatory measures to achieve Kyoto compliance, but had failed to do so.

In October 2008, Justice Barnes of the Federal Court ruled against FOTE, holding that the case raised a political question, not a legal one: "the Court has no role to play reviewing the reasonableness of the government's response to Canada's Kyoto commitments". In short, Justice Barnes found that the government was accountable to Parliament, not to individual litigants, in respect of its climate change strategy. FOTE appealed to the Federal Court of Appeal, which issued a three-sentence decision in October 2009 upholding Justice Barnes's ruling.

The effect of the decision is that, despite the Kyoto Protocol Implementation Act, it is open to the government to ignore Canada's Kyoto target; or, more precisely, that it is not for the courts to intervene if the government chooses to do so. The decision can be contrasted with some recent US cases where the courts have been prepared to tackle climate change.

In September 2009, a US federal appeals court allowed a nuisance claim alleging harms related to climate change to proceed against several operators of coal-fired power plants: Connecticut v. American Electric Power Co. The following month another appeals court allowed a class action asserting that GHG emissions had exacerbated Hurricane Katrina to proceed against a number of large emitters: Comer v. Murphy Oil Co. In both these US cases, the appeals courts expressly overturned lower court decisions holding that the cases raised political questions that were beyond the purview of the judiciary. Although these two cases suggest an increasing willingness of US courts to deal with climate change, some reticence remains. Just last month the Fifth Circuit of the US Court of Appeal agreed to rehear the Comer case en banc (i.e. the case will be reheard by all the judges of the court, not just a panel of judges). And another recent US decision departs from the reasoning in Comer and Connecticut. In September 2009 a federal district court threw out a claim by a Native Alaskan community against several large GHG emitters alleging that climate change was responsible for changes to sea ice that were threatening the community: Kivalina v. ExxonMobil Corporation. The court determined that the case raised non-justiciable questions – in particular, allocating the costs of addressing climate change is a matter to be determined by the legislative and executive branches, not the courts. The community has filed an appeal.

In the coming months the courts in the US will continue to wrestle with the question of their proper role in the climate change debate. Ultimately it may fall to the US Supreme Court to determine whether climate change is a matter best left to the politicians. In the meantime, the Friends of the Earth decision should not be seen as foreclosing all climate change litigation in Canada. It was really based on a narrow issue – the proper interpretation of the Kyoto Protocol Implementation Act – and did not raise the same concerns that have troubled some US courts about imposing costs on a few emitters through civil liability in the absence of a comprehensive regulatory regime. There have to date not been any tort claims filed in Canada for climate change related damages, along the lines of the Comer, Connecticut and Kivalina cases. Such a claim would face many procedural and substantive legal obstacles – but the Friends of the Earth decision probably is not one of them. That decision does not stand for the broad proposition that courts must keep their distance from climate change.

British Columbia Budget 2010: International Financial Activity ("IFA") Program To Render B.C. Greener and Cleaner
By: Helena Plecko

British Columbia's 2010 Budget (the "2010 Budget") proposes several important changes to the Province's International Financial Activity ("IFA") program, expanding the list of activities for which businesses registered under the IFA program can claim a tax refund and changing the qualifications of specialists working for those businesses who can personally claim provincial tax refunds.

Generally, the IFA program provides an income tax refund to registered businesses carrying on certain activities in British Columbia, as well as to eligible specialists who work for those corporations. By establishing a registered International Financial Business ("IFB") in British Columbia, a company can receive a full refund of the provincial tax paid on the net income of the IFB. Alternatively, an IFB can receive a 75% refund, to a maximum of $8 million, of the income related to the licensing and commercialization of life science patents, patents related to power generation using forces of nature, and patents for fuel cell technology and wastewater treatment.

To become an IFB, a corporation must meet various criteria including being incorporated in Canada and having a permanent establishment in British Columbia. In addition, an eligible corporation must register as an IFB with the Ministry of Finance. Within 90 days of registration, the corporation must establish and carry on an eligible IFB activity and it must become and maintain a membership in the International Financial Centre British Columbia, which is a non-profit organization that has as its purpose to promote international financial activity in British Columbia

The 2010 Budget broadens the IFA program to include IFBs engaged in digital media publishing and distribution, certification and trading of carbon credits, and clean technology. These new qualifying activities are intended to encourage growth in the distribution end of the film and digital media industries, to increase the incentives for international businesses to develop clean technologies in British Columbia, and to position the province as a world leader in the global cap-and-trade system and low-carbon economy, respectively.

With respect to clean technology and carbon trading, the measures proposed to be introduced in the IFA are in line with other steps already taken by the British Columbia government in an effort to make the Province greener and cleaner while creating jobs and increasing prosperity, such as legislated targets for emission reductions or development of the Province's clean energy resources. Details on effective dates, qualifying businesses and technologies, or qualifying international transactions have not been provided by the Ministry of Finance as of yet.

Carbon Market Watch
By: Douglas W. Clarke

MCX Activity

Our comments regarding the MCX are unchanged since our last report. Activity remains depressed on this market due to the uncertainty that the underlying element of the forward contracts (Canadian federal GHG emission reduction units) will be available for delivery on the contract expiration dates.

The updated table above shows the trading volume from January 1, 2009 to April 30, 2010, for the four (4) contracts that are currently traded. Until such time as the federal government begins to create more certainty with respect to the timing of the coming into force of federal GHG regulation in Canada, there is little reason to expect any significant pick-up in the transaction volumes handled by the MCX.

OTC Market

Carbon market information source Carbon Positive described increase demand in the Voluntary Markets early in the first quarter of 2010. This corresponds to what we have seen. The online information provider also reports prices for units of various voluntary emission reduction units.¹ We would caution our readers against taking the reported quotes from any single broker as representing the market for a particular unit. Our experience is that that there can be significant price variation depending on the nature of the project, its geographical location and other factors.

We have seen steady transaction flow in the Canadian voluntary market with strong interest in projects that have a high corporate social responsibility value. Requests for Canadian VCS registered projects are frequent; however, due to the lack of VCS projects available in Canada, trading remains principally in ISO verified projects with buyers seeking to deal with trusted sources and understand closely the nature of the projects they are buying.

Renewable Fuels Regulations Include Market Mechanism for Compliance
By: Douglas W. Clarke

On April 10, 2010 the federal government published its proposed Renewable Fuels Regulations² ("Regulations") in Part I of the Canada Gazette. These Regulations are now open for public comment for a period of 60 days ending on June 9, 2010. The objective of the proposed Regulations is to achieve an incremental reduction of approximately 1 MT of greenhouse gases ("GHG") per year nationally and a cumulative reduction of 23.8 MT GHG over a 25 year period.

The proposed Regulations require that gasoline fuel producers and importers (called Primary Suppliers) have at least 5% of the average annual volume of gasoline that they produce or import be composed of renewable fuel, beginning on September 1, 2010. The proposed Regulations also include a requirement for an average annual renewable fuel content in diesel and heating distillate oil by 2011. It is intended that that the relevant provisions for diesel and heating distillate oil will come into force upon successful demonstration of renewable diesel fuel use under what are referred to as "the range of Canadian conditions"³. As the coming into force of the rules for diesel and heating distillate has not been determined, our discussion below will focus on the obligations of Primary Suppliers of gasoline.

The renewable fuel content requirement will be based on the Primary Supplier's total annual volume. The compliance period is based on the calendar year but the first period will be 16 months (from September 1, 2010 to December 31, 2011). The threshold for regulation is the production or importation of 400 m³ of gasoline. Primary Suppliers must register by sending a report to the Minister of the Environment "at least one day before they produce or import (or in combination) their 400^th m³" during any compliance period.

Although the program is national, the regulation will not apply to:

"(a) gasoline, diesel fuel or heating distillate oil, as the case may be, sold for or delivered for use in aircraft;

(b) gasoline, diesel fuel or heating distillate oil, as the case may be, sold for or delivered for use in competition vehicles;

(c) gasoline, diesel fuel or heating distillate oil, as the case may be, sold for or delivered for use in scientific research;

(d) gasoline, diesel fuel or heating distillate oil, as the case may be, sold for or delivered for use as feedstock in the production of chemicals, other than fuels, in a chemical manufacturing facility;

(e) diesel fuel or heating distillate oil, as the case may be, sold for or delivered for use in military combat equipment;

(f) gasoline sold for or delivered for use in Newfoundland and Labrador, the Northwest Territories, Yukon, Nunavut and that part of Quebec that is north of latitude 60°N;

(g) diesel fuel or heating distillate oil, as the case may be, sold for or delivered for use in the Northwest Territories, Yukon, Nunavut and that part of Quebec that is north of latitude 60°N;

(h) gasoline, diesel fuel or heating distillate oil, as the case may be, for export; and

(i) gasoline, diesel fuel or heating distillate oil, as the case may be, in transit through Canada, from a place outside Canada to another place outside Canada."⁴

The proposed regulation also includes a system of tradable compliance units to allow gasoline fuel producers and importers to achieve compliance if they cannot incorporate the required level of renewable fuel content into their overall pool. The trading system will include Primary Suppliers and Elective Participants. Elective Participants (as the name suggests) must elect to participate. They do so by registering with the Minister of the Environment at least one day before they first create a compliance credit. An eligible person is one that :

"(i) blends, in Canada, renewable fuel with liquid petroleum fuel,

(ii) produces, in Canada, a liquid petroleum fuel — other than gasoline, diesel fuel and heating distillate oil — by using biocrude as a feedstock,

(iii) imports into Canada a liquid petroleum fuel — other than gasoline, diesel fuel and heating distillate oil — that has renewable fuel content,

(iv) sells, in Canada, neat renewable fuel to a neat renewable fuel consumer for use as fuel in a combustion device, and

(v) uses, as fuel in a combustion device in Canada, neat renewable fuel that they produced or imported;"⁵

Compliance units are created by the aforementioned activities and can be carried forward of backward into other compliance periods under certain conditions. The creation of compliance units must be confirmed by the recording of certain information relating to the creation process in a compliance unit account book held for that purpose. Without the recording, the compliance unit will not exist.

The proposed regulation imposes limits on the number of compliance units that a Primary Suppliers may hold. The true-up date for purposes of the unit limit is every month and the amount of compliance units held cannot exceed the greater of 6 times the number of litres in the Primary Supplier's gasoline pool at the end of the month, and, 0.01 times the number of litres in the Primary Supplier's gasoline pool for the preceding compliance period.

Aside from the position limits for Primary Suppliers, there are two other significant conditions on trading in the proposed Regulations. First, a compliance unit can only be transferred in a trade to a Primary Supplier. This provision would seem to be an attempt to eliminate market intermediaries who pool together small lots of credits to on-sell them with a spread to buyers looking for supply. To the extent that the pool of credit producers remains small and disparate and the buyers large and comparatively few in number, market aggregators might have been useful in order to render the market more liquid. However, if the market is generally long or if large Primary Suppliers decide to trade amongst themselves, then there may not be a need for aggregation. Second, a compliance unit that is created during a compliance period can only be traded during that same compliance period. It can however be carried forward or backward into the next or preceding compliance period under certain conditions. If so carried, it must be traded in the compliance period into which it is transported. These provisions, make the purchase and sale of different "vintages" of credits more difficult than is the case in the voluntary carbon market.

Carbon Round Up

Canada

As mentioned above, the Canadian federal government published in Part I of the Canada Gazette, its Renewable Fuels Regulations under the Canadian Environmental Protection Act, 1999 on April 1, 2010

In addition, on April 17, 2010 the federal government published in Part I of the Canada Gazette, its Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations under the Canadian Environmental Protection Act, 1999.

The proposed automobile and light truck regulations establish mandatory greenhouse gas emissions standards for 2011 and later vehicle model years that are aligned with U.S. federal standards. This alignment has been a primary concern of the federal government, which was critical of the province of Québec's provincial tailpipe emissions regulation initiative (see below), claiming that it would drive auto sales into other jurisdictions.

Under the proposed automobile and light truck regulations, vehicle manufacturers and exporters must meet a fleet average greenhouse gas emissions standard. As is the case with the proposed Renewable Fuels Regulations, the proposed automobile and light truck regulations include an emissions credit creation and trading system to create more flexibility in terms of compliance options. As appears from the Regulatory Impact Analysis Statement posted on the Canada gazette website at http://www.gazette.gc.ca/rp-pr/p1/2010/2010-04-17/html/reg1-eng.html , the goal of the exercise is to align Canadian tailgate emissions standards with those of the United States.

On May 5, 2010, the Climate Change Accountability Act (Bill C-311) introduced by the New Democratic Party passed final reading in the House of Commons and now heads to the Senate. The bill seeks to force the government to adopt measures to cut greenhouse gas emissions to the long term levels recommended by the United Nations Framework Convention on Climate Change and to establish mid-range targets to ensure that the end result is achieved.

British Columbia

On April 6, 2010, the federal government and the provincial government of British Columbia signed an Agreement in Principle on efforts to address Climate Change. The federal government describes this agreement as the first step toward a formal equivalency agreement under the Canadian Environmental Protection Act, 1999, which the federal government believes will "avoid the need for duplication of regulatory measures and ensure that the environmental needs of the province are met."

Readers would be advised to consult our partner Patricia Leeson's article entitled "Will Canadian equivalency agreements avoid a patchwork of regulation?" which appeared in Point Carbon's Carbon Market North America News weekly on December 12, 2008⁶ with regard to the possible pitfalls that may await the federal government and the provinces when they attempt to negotiate equivalency agreements in this area.

On April 28, 2010, the BC government introduced a Clean Energy Act. The government press release is available at http://www2.news.gov.bc.ca/news_releases_2009-2013/2010PREM0090-000483.htm# .

Saskatchewan

On March 22, 2010 the Saskatchewan government released proposed its draft Management and Reduction of Greenhouse Gases Regulation. The regulation provides for the definition of what is a greenhouse gas and identifies the industries that will be subject to an emissions reduction obligation in Saskatchewan. The threshold for the application of the regulation is 50,000 tonnes of CO2e emissions annually. Entities with emissions over the above-mentioned threshold will be required to reduce their emissions by 2% per year between 2010 and 2019 in order for the province to achieve a 20% net reduction by 2020 over 2006 levels. The government of Saskatchewan is currently holding stakeholder meeting in regard to the proposed regulation. More information is available at http://www.environment.gov.sk.ca/Default.aspx?DN=9192fbe8-23fe-4077-ac7d-30b7b269bdbf .

Quebec

On January 14, 2010 The Regulation respecting greenhouse gas emissions from motor vehicles came into force in Québec. The regulation aims to reduce new automobile and light truck emissions for model years 2010 through 2016 that are sold, leased or otherwise marketed in Québec. Automobile manufacturers must ensure that their average fleet GHG emissions do not exceed the standards set by the regulation.

The government claims that these standards will encourage the use of more efficient technology in the transportation industry and that applying them will allow a 25% to 35% reduction in new motor vehicle emissions for the target model years.

The regulation is available online at http://www2.publicationsduquebec.gouv.qc.ca/dynamicSearch/telecharge.php?type=3&file=/Q_2/Q2R6_001_A.htm .

USA

In the United States, the draft climate change bill being worked on in the United States Senate by Senators Kerry (Dem-Mass), Graham (Rep-SC) and Lieberman (Ind-Ct) was to be released publicly on Monday, April 26, 2010, which did not occur. According to Senator Graham, his refusal to cooperate in the public release of the bill is a protest over efforts by the Democratic leadership to prioritise immigration reform. In our view, the fact that the draft bill was sent to the EPA for modelling by Senators Kerry and Lieberman with Senator Lindsey's consent means that the non-release is more political manoeuvre than anything else and that the bill will come to the floor of the Senate for debate once it has passed through the EPA modelling process, estimated to take about six weeks.

The WCI continued to move forward with the Markets Committee releasing the following documents: Market Oversight White Paper Presentation, Market Oversight Draft Recommendations, Auction Design White Paper, Market Oversight Draft Recommendations Presentation and the Auction Design Presentation. The Offsets Committee meanwhile released the following documents: WCI Offsets System Essential Elements Draft Recommendations and Review of Existing Offset Protocols.⁷

On January 29, President Obama announced that the U.S. Federal Government will reduce its greenhouse gas emissions by 28% by 2020. According to the White House, achieving the Federal GHG emission reduction targets will lead to the reduction of $8 to $11 billion in avoided energy costs through 2020. This action is significant as the federal government is the largest energy consumer in the United States.

This announcement was further to Executive Order 13514 issued in October 2009 by President Obama directing US federal agencies to "establish an integrated strategy towards sustainability in the Federal Government and to make reduction of greenhouse gas (GHG) emissions a priority for Federal agencies." The Executive Order required Federal agencies to set reduction targets within 90 days for scope 1 and 2 GHG emissions by fiscal year 2020, relative to a 2008 baseline.

The required reductions will be achieved by measuring current energy and fuel use, increasing energy efficiency and transitioning from traditional fuel sources to clean energy sources such as solar, wind, and geothermal.

In an era where the Canadian federal government's self declared policy is to align itself with the United States, this is one initiative it has conveniently overlooked.

Footnotes

^{1. "VER Market Picks up in January" available online at http://www.carbonpositive.net/viewarticle.aspx?articleID=1864}

^{2. « Renewable Fuels Regulations » available in the Canada Gazette online at http://canadagazette.gc.ca/rp-pr/p1/2010/2010-04-10/html/reg1-eng.html}

^{3. Ibid.}

^{4. Ibid.}

^{5. Ibid.}

^{6. Available online at http://www.pointcarbon.com/news/cmna/ .}

^{7. Available online at http://www.westernclimateinitiative.org/documents .}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.