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Download AN UPDATE ON: GREENHOUSE GAS REGULATION
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The Climate Change Regulatory Patchwork: Impacts on Energy Contracts RON EZEKIEL Fasken Martineau 604 631 4708 [email protected] Outline Regulatory Patchwork Regulatory Convergence? Impact on Energy Contracts Canada’s Emissions Source: Environment Canada, 2005 Inventory Regulatory Patchwork Federal Regulatory Landscape Clean Air Act / Notice of Intent Turning the Corner Plan Reduce by 20% relative to 2006 by 2020 Reduce by 60-70% relative to 2006 by 2050 Reduce emissions intensity of major sources by 18% relative to 2006 by 2010, and then 2%/year New facilities have 3 year grace period, clean fuel standard, and then 2%/year Regulatory Patchwork Federal Regulatory Landscape Clean Air Act / Notice of Intent Compliance options: internal reductions Tech Fund ($15/tonne, $20/tonne, linked to GDP) Emissions trading (both inter-firm and project-based) CDM (capped at 10% of target) Finalize regulatory framework this fall Publish draft regs in 2008 Finalize regs by 2010 Regulatory Patchwork Federal Regulatory Landscape Kyoto Protocol Implementation Act Plan in Response CERs and ERUs less than 1/3 Canada’s gap AAUs cannot be adequately “greened” 85% of Canada’s GHG emissions emitted in areas under sole or partial provincial/territorial jurisdiction Regulatory Patchwork Provincial Regulatory Landscape British Columbia 2007 Throne Speech Commitments Reduce by 33% relative to current levels by 2020 Western Regional Climate Action Initiative AZ, CA, NM, OR, WA, UT, MB Regional Goal (15% below 2005) Regional market based mechanism Regional registry Regulatory Patchwork Provincial Regulatory Landscape Alberta Climate Change and Emissions Management Amendment Act / SGER Reduce intensity by 12% from baseline on 07/01/07 Reduce intensity by 50% relative to 1990 by 2020 Compliance options: internal reductions Tech Fund ($15/tonne, investments in Alberta only) Emissions trading (both inter-firm – performance credits; and project-based in Alberta) Regulatory Patchwork Provincial Regulatory Landscape Saskatchewan Energy and Climate Change Plan Stabilizing GHG emissions by 2010 Reduce emissions to 32% below current by 2020 Reduce emissions by 80% below current by 2050 Manitoba Kyoto and Beyond Plan Reduce emissions by 18% relative to 1990 by 2010 Reduce emissions by 23% relative to 1990 by 2012 Regulatory Patchwork Provincial Regulatory Landscape Ontario Being Developed Reduce emissions by 6% relative to 1990 by 2014 Reduce emissions by 15% relative to 1990 by 2020 Reduce emissions by 80% relative to 1990 by 2050 Quebec Quebec and Climate Change Plan Reduce emissions by 6% relative to 1990 by 2012 Green Fund funded by new carbon fee on energy Regulatory Patchwork Provincial Regulatory Landscape Nova Scotia Environmental Goals and Sustainable Prosperity Act Reduce emissions by 10% relative to 1990 by 2020 New Brunswick Climate Change Action Plan Reduce emissions by 10% relative to 1990 by 2020 Regulatory Convergence? Lots of targets, few details Federal plan may be default, but jurisdictional issues exist Federal government will also rely on equivalency agreements, permitting suspension of federal plan in Provinces with equivalent regulatory regime Regulatory Convergence? There will be pressure to converge Early movers (Alberta / Feds) may set standard, but linkages to US may also determine path if Canada departs from Kyoto, or a different regime emerges after 2012 Regulatory Convergence? Some time before regulatory regime resolves, and still some variances But there are indications that common elements will exist: Internal reductions Inter-firm trading, beating caps or intensity Project-based offsets, from emissions outside regulatory sphere and possibly international (CDM) Impacts on Energy Contracts Internal reductions Inter-firm trading Project-based development Project-based purchases Typical - Internal Reductions OWNER Qualifications? Conflicts? VERIFICATION SERVICES ACCREDITED VERIFICATION BODY PROJECT SERVICES CONSULTANT Typical - Internal Reductions OWNER VERIFICATION SERVICES ACCREDITED VERIFICATION BODY Quit Claim? PROCUREMENT / CONSTRUCTION PROJECT SERVICES CONSULTANT Typical – Inter-firm Credit streams? Credit risk? Production risk? OWNER OWNER Typical – Project Development BUYER COMPETING CLAIMANTS OFFSET PURCHASE AGREEMENT QUIT CLAIM PROPONENT VERIFICATION SERVICES ACCREDITED VERIFICATION BODY OWNERSHIP AGREEMENT PROPONENT PARTNERS PROJECT SERVICES CONSULTANT Typical – Project Development BUYER OFFSET PURCHASE AGREEMENT FINANCING LEGAL PROCUREMENT / CONSTRUCTION COMPETING CLAIMANTS QUIT CLAIM PROPONENT VERIFICATION SERVICES ACCREDITED VERIFICATION BODY OWNERSHIP AGREEMENT PROPONENT PARTNERS PROJECT SERVICES O&M CONSULTANT Typical – Project Purchases Credit streams? Credit risk? Production risk? PROPONENT OWNER Conclusion Lots of targets, few details Keep an eye on early movers, they may set standard Keep an eye on Kyoto and post-2012 for US role Prepare for emissions trading Questions? Ron Ezekiel