Ontario's Cap and Trade System under the Climate Change
Mitigation and Low-Carbon Economy Act, 2016, could
mean additional financial challenges for institutions arising from
new compliance costs. In its Climate Change Action Plan (announced
on June 8, 2016) Ontario commits to a fund to assist hospitals,
universities and colleges to retrofit their facilities with energy
efficient and renewable energy technologies. The details of the
fund are still to be developed.
In the meantime, energy services companies and institutions
could partner in order to get a head start on costly retrofits.
Willms & Shier recently assisted an institutional client to
implement comprehensive energy and water conservation measures at
two of its campuses through such a partnership.
Energy Conservation under a Cap and Trade System
Many institutions will be mandatory participants under the Cap
and Trade System and others, based on the nature of their industry,
may choose to be voluntary participants.
In an environment where energy costs will continue to escalate
and compliance requirements under the Cap and Trade System will
become more stringent over time, institutions will need to look at
ways to reduce their energy costs and carbon footprint.
The lack of funding constitutes one of the greatest hurdles to
implementing comprehensive energy conservation measures for many
Energy Performance Contracting
Energy performance contracting offers an innovative way to
finance energy and water conservation measures.
What is an energy performance contract? In the simplest terms an
energy performance contract is a form of contracting where an
energy services company ("ESCO")
provides an institution with a package of energy and water saving
measures that will pay for themselves over a specified period of
The institution uses the energy saving achieved to finance the
project costs including identification, design, construction,
implementation and long-term financing of the energy conservation
The ESCO guarantees that the savings arising from implementation
of these measures will pay for the project costs over time and
where there is a deficiency the ESCO pays the amount of that
deficiency to the institution. The institution can obtain security
for the ESCO guarantee through several means including parent
guarantees, letter of credits, performance bonds etc.
Opportunities under Cap and Trade System
The increased cost of energy and the compliance costs of the Cap
and Trade System will increase the value of energy savings arising
from implementing energy conservation measures.
Institutions that are able to unlock the significant energy
savings at their facilities will be well positioned to comply with
any obligations their industry may be subject to under the Cap and
Trade System and to take advantage of any future offsets that may
Effectively drafted energy performance contracts provide
significant potential for both energy and financial savings.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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).