Canada: Recent Developments


Offset verification body adjusts rules for Canadian projects

On July 23, 2009, the Voluntary Carbon Standard Association (VCSA) announced that it will now allow voluntary offset projects in Canada to issue its internationally recognized Voluntary Carbon Units (VCUs) without evidence from the Canadian government that the corresponding number of Kyoto compliance units (called "Assigned Amount Units," or AAUs) have been cancelled. This evidentiary precondition was unattainable for developers because the Canadian government would not issue a letter confirming cancellation of the AAUs, in effect rendering all offset projects in Canada ineligible for VCU issuance. The letter had been "required" by the VCSA to mitigate the risk that the emission reductions underlying VCUs would also be counted as reductions in Canada's aggregate emissions (hence "double-counting" the benefit of the reductions). The VCSA Board concluded that the requirement should no longer be applicable in Canada because without any reasonable prospect of a Kyoto-compliant regulatory framework or Kyoto-compliant emissions reductions in the country, there would be no risk of double-counting.

Until this development, many projects that were rendered ineligible in Canada for the reason stated above would have been eligible if located in the United States because the latter did not ratify the Kyoto Protocol. The VCSA announcement can therefore be expected to create a significant incentive for the development of offset projects in Canada.

For further details, please see,%20Canadian%20VCUs,%20FINAL.PDF.

Environment Canada releases GHG reporting requirements

On July 11, 2009, Environment Canada issued a notice requiring any person who operates a facility that emits 50 kilotonnes or more of carbon dioxide equivalent (CO2e) in the 2009 calendar year to submit information about those emissions to the federal government no later than June 1, 2010. Environment Canada has required reporting since the 2004 calendar year, but previously had only required reporting by facilities that emitted 100 kilotonnes or more of CO2e in a calendar year.

For further details, please see, at 2025.

Canada publishes climate change plan

Environment Canada recently published, as required by the Kyoto Protocol Implementation Act (the Implementation Act), an annual plan highlighting Canada's compliance with various requirements under the Kyoto Protocol, such as submitting national reports to the UNFCCC. The plan continues to emphasize the government's view that achieving the country's broader Kyoto emissions-reduction commitment is not economically feasible, and advocates instead for long-term targets achieved in concert with other major economies, particularly the United States. The Implementation Act came into force on June 22, 2007, requiring the federal government to take actions designed to ensure that Canada meets its obligations under the Kyoto Protocol; specifically, it requires the Minister of the Environment to prepare and report on the implementation of a climate change plan that describes how the government will ensure that Canada reduces its emissions by 6% below 1990 levels between 2008 and 2012.

For further details, please see

Enactment passed to allow for regulation of renewable fuels

The Canadian Environmental Protection Act, 1999 (CEPA) was recently amended to authorize federal regulations that would set low carbon fuel standards for gasoline produced in or imported into Canada. The amendments also recommend that Parliament review, every other year, the environmental and economic aspects of biofuel production in Canada. The government is currently developing regulations under CEPA that would require all gasoline produced in or imported into Canada to contain an annual average of at least 5% renewable content, beginning in 2010. The amendments will come into force on September 28, 2009.

For further details, please see


Securities commission to review environmental disclosure requirements

The Ontario Securities Commission (OSC) will begin consultations in September 2009 in response to a resolution in the Ontario Legislature regarding, among other things, environmental disclosure. The April 2009 resolution directed the OSC to "undertake a review of Ontario's current corporate disclosure reporting requirements, standards and compliance therewith, with a particular emphasis on additional financial and non-financial information to ensure that Ontario investors have access to all information material to them in making investor decisions." More specifically, the resolution requires that the OSC seek to develop and adopt an enhanced standardized reporting framework for both quantitative and qualitative environmental information. The OSC must provide the Minister of Finance, by January 1, 2010, with its findings and recommendations for next steps to enhance disclosure.

North America

Western Climate Initiative solicits comments on offset criteria

On July 24, 2009, the Western Climate Initiative (WCI) released a discussion paper titled Offset Definition and Eligibility Criteria, which will be available for public comment until August 21, 2009. In the paper, the WCI asks how it should determine whether GHG emissions reductions are eligible for offset credits and thus compatible with the cap-and-trade system the WCI plans to implement by January 1, 2012. Among the eligibility criteria discussed, the requirement for additionality features prominently; the paper solicits feedback on how the WCI should assess whether emission reductions are additional to any GHG emission reductions that would otherwise occur as a result of business-as-usual activities or regulatory requirements. The paper proposes the following: a project-specific test, which would scrutinize the circumstances of an individual project to ensure that it would not have occurred in the absence of the offset market; a performance-standard approach, which would determine, through an initial study of a sector or project type, what level of performance is necessary to ensure that projects meeting or exceeding the standard are additional; a protocol-specific approach, in which the additionality assessment may vary by offset project type; or a hybrid of these options.

The outcome of these consultations will influence Ontario, Quebec, British Columbia, Manitoba and several U.S. states, all WCI partners that are currently working to implement the WCI's cap-and-trade and offset systems in their respective jurisdictions. The consultations will also interest the Canadian federal government, which recently released guidance on its developing offset system.

For further information, please see

United States

GHG emissions to be considered in New York environmental assessments

According to a recent announcement by the New York State Department of Environmental Conservation (DEC), a new policy that becomes effective on August 15, 2009 will require GHG emissions to be included in New York's environmental review of large-scale projects. The policy also provides guidance for DEC staff who consider GHG emissions and energy efficiency when conducting these reviews. Generally, the environmental reviews are conducted under the State Environmental Quality Review Act, which requires that a "lead agency" identify and assess actions for their potential adverse environmental impacts and, in certain cases, develop an environmental impact statement and propose mitigation strategies.

For further information, please see


Major economies fail to reach climate change agreement

At the July 2009 Group of 8 summit meeting in Italy, the world's major economies failed to agree on long-term targets to mitigate GHG emissions. Those at the summit had hoped to reach agreement on this issue before the United Nations Climate Change Conference this December in Copenhagen, where a successor to the Kyoto Protocol will be negotiated. The G-8, along with China, India and seven other developing countries, which together account for 80% of the world's GHG emissions, did agree to an "aspirational" goal of preventing global temperatures from rising more than 2 degrees Celsius. The countries did not, however, agree to specific emission-reduction targets. Before the summit, a draft communiqué was circulated, calling for a 50% reduction in global GHG emissions by 2050, with industrial countries cutting their own emissions by 80%. The developing nations refused to endorse the 50% cut.

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.

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