Canada: Torys on Climate Change - Recent Developments

North America

Western Climate Initiative releases program design document

The Western Climate Initiative recently released its program design document (the Program Design), setting out how the WCI will implement its plans to establish a regional cap-and-trade system by January 1, 2012. A partnership of seven U.S. states and four Canadian provinces, the WCI seeks to reduce regional greenhouse gas (GHG) emissions to 15% below 2005 levels by 2020. The system will cap emissions from major industrial emitters in 2012, and be expanded to cover providers of transportation, residential and commercial fuels in 2015.

Under the Program Design, each WCI partner will have significant discretion over how to reduce GHG emissions within its jurisdiction. In general, each partner will issue a number of allowances – called an "allowance budget" – equal to its share of the regional cap, but can decide to whom those allowances will be allocated. Some standardization will take place across jurisdictions. The Program Design recommends that in 2012, the first year of the program, each partner issues allowances equivalent to the actual emissions of its covered firms, so that these sources will not be required to reduce their emissions until 2013. When the fuel providers are covered in 2015, the Program Design similarly recommends that in that year they be issued allowances equal to their actual emissions. After these phase-in years, the WCI recommends a linear decline in the size of each partner's allowance budget until 2020.

The Program Design will allow covered firms to trade allowances to meet their compliance obligations. And the following flexibility mechanisms will be in place:

  • WCI partners may award covered firms Early Reduction Allowances for voluntary emission reductions that occurred on or after January 1, 2008 and before January 1, 2012, and that were in addition to any business-as-usual emission reductions.
  • Covered firms may bank allowances for use in future compliance periods. However, the WCI will generally not allow these firms to borrow allowances from future compliance periods to meet present compliance obligations unless the partners create specific exceptions to this rule.
  • Firms covered by the WCI, collectively, may use certain offsets and emissions credits from outside the covered sectors to meet their caps, but for no more than 49% of the aggregate required emissions reductions (as opposed to the total allowable emissions) across all WCI jurisdictions. In practice, this may mean that a firm could only cover approximately 5% of its total allowable emissions by the purchase of offsets or non-WCI credits. It is therefore expected that demand will initially be low for offsets inside the WCI.

In the Program Design, each WCI partner can choose how it will allocate allowances to covered firms within its jurisdiction. One allocation method will be quarterly auctions, such as those that take place under the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade system of northeastern U.S. states. Allowances sold through WCI auctions will have a floor price to ensure that low-cost allowances do not flood the market. Any person with an account in the WCI's allowance tracking system, including covered firms and other market participants, may participate in the auctions; however, to prevent market manipulation, the WCI will limit the number of allowances a single person can purchase.

Other than auctions, WCI partners may also distribute allowances for free, especially to energy-intensive, trade-exposed industries, which otherwise may face significant incentives to relocate to jurisdictions outside the WCI that do not regulate GHG emissions. According to the Program Design, the WCI partners may consider using "benchmarking" to allocate the free allowances – essentially, issuing more allowances to covered firms whose efficiency exceeds the industry standard.

To contain the cost of allowances, the WCI will consider allowing partner jurisdictions to establish an allowance reserve from which additional allowances could be released into the system if allowance prices exceed a certain level. This method of increasing allowance supply has been a cost-containment feature of recent U.S. Congressional cap-and-trade proposals. Furthermore, according to the Program Design, the WCI may eventually be linked to other North American cap-and-trade systems – such as the RGGI or the proposed Midwestern Greenhouse Gas Reduction Accord – by recognizing emission reduction credits generated under those systems. Such linkage can add liquidity to the WCI market and reduce the marginal cost of abatement for firms covered by the WCI.

For further information, please see the WCI's website.


Canada requires GHG reporting for 2010

On August 14, 2010, the federal government published a notice requiring all persons who operate a facility that annually emits 50,000 tonnes of carbon dioxide equivalent or more to report their 2010 emissions to Environment Canada no later than June 1, 2011. These reports are now collected through Environment Canada's Single Window Reporting system, which was launched in March 2010. This system has been used to collect information for Alberta's emissions intensity trading system, and other provinces are considering it for their own GHG reporting requirements.

Regional coordination of GHG emissions reporting guidelines is likely to continue. Recently, the U.S. WCI partners agreed to harmonize their reporting requirements with the U.S. Environmental Protection Agency (EPA) Mandatory Reporting Rule for GHG emissions. The Canadian, U.S. and Mexican governments have also expressed their interest in harmonized North American reporting requirements.

For further information, please see the Canada Gazette.

Saskatchewan to release draft offset plan

The government of Saskatchewan is continuing to develop its proposed GHG cap-and-trade system, and expects to release draft offset program methodologies in September. These methodologies will set out the technical implementation, monitoring and reporting guidelines for projects seeking to obtain offset credits that can be sold into a future Saskatchewan cap-and-trade system. As discussed in Torys' April Climate Change Bulletin, Saskatchewan has begun consultations on the scope of proposed regulations that would establish such a system: targeting a 20% reduction in Saskatchewan's 2006 emissions by 2020; requiring firms emitting over 50,000 tonnes of CO2e per year to reduce their baseline 2010 emissions by 2% per year until 2019; allowing firms to obtain credits for certain emission reductions achieved before 2006 and for certain investments in pre-certified technologies, including carbon capture and storage; and offering offset credits for activities that reduced or sequestered GHGs in Saskatchewan on or after January 1, 2006. The regulations are expected to obtain final approval in fall 2010.

For further information, please see the government of Saskatchewan's website.

United States

Environmental Protection Agency proposes GHG permitting requirements

On August 12, 2010, the U.S. EPA published two proposals to implement its final GHG Tailoring Rule. The EPA will begin to phase in this rule on January 2, 2011, requiring certain new major stationary sources of GHG emissions, and major modifications to existing sources, to obtain a permit addressing those emissions under Title V of the Clean Air Act. The permits, which must be obtained before construction, will require the new or modified source to adopt best available emission-control technology, which is determined on a case-by-case basis taking into account, among other factors, the cost and effectiveness of the control.

Under the first proposal, the EPA would require 13 states to update their Clean Air Act implementation plans by January 2, 2011, so that their Prevention of Significant Deterioration (PSD) permitting requirements cover GHG emissions. Additionally, all other states that implement their own PSD permitting programs must inform the EPA if these programs do not apply to GHGs sources. Under the second proposal, the EPA would adopt a federal implementation plan so that EPA could issue the PSD permits for the new and modified GHG sources in states that have not yet revised their own permitting procedures.

The EPA is currently undertaking public consultation on the proposed rules, which are expected to take effect before January 2, 2011, the earliest date that the new permitting requirements would come into force. For further information, please see the EPA's website.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions