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Legal Guide

As is the case with other environmental legislation in Canada, both the federal government and the provincial governments claim jurisdiction over matters relating to greenhouse gas (GHG) emissions.

The Government of Canada has recently made a series of policy announcements setting out limited details of a proposed scheme to reduce GHGs under its existing environmental statute, the Canadian Environmental Protection Act, 1999 (CEPA), but has yet to enact the regulations necessary to turn policy into law. The policy indicates that companies operating in certain sectors (i.e. oil and gas, electricity production from combustion, chemical production, smelting), will be required to reduce their “emissions intensity” (GHG emissions per unit of production or output), from 2006 levels by 18 percent by 2010, with two percent annual reductions thereafter until 2020. Compliance mechanisms will be available to companies to help them meet their targets. Credits issued or received under these mechanisms may be banked or traded and used for compliance purposes.

The only province to enact mandatory GHG emissions reductions to date is Alberta. Regulations passed under the Climate Change and Emissions Management Act came into effect in July, 2007 and require “large final emitters” (facilities that emit more than 100,000 tonnes of “carbon dioxide equivalent” per annum) to reduce their emissions intensity by 12 percent below their respective baselines. To achieve compliance, emissions must be reduced or credits must be acquired to offset emissions in excess of the intensity target reductions.

Another form of climate change legislation introduced at the provincial level is the carbon tax. Both the provinces of Quebec and British Columbia have enacted such taxes, albeit in slightly different formats. The Quebec tax is paid by energy producers, distributors and refiners, and took effect on October 1, 2007. The BC carbon tax is applied to the purchase and use of fossil fuels and commenced July 1, 2008.

The provinces of British Columbia, Manitoba, Ontario and Quebec, together with seven western American states, are members of the Western Climate Initiative (WCI), an organization created to identify, evaluate and implement collective and cooperative ways to reduce GHG emissions in the region, focusing on a market-based cap-and-trade system. In September 2008, the WCI announced the proposed design of a regional cap-and-trade program commencing in 2012, and intended to reduce GHG emissions to 15 percent below 2005 levels by 2020. Member governments have committed to introduce legislation in their respective jurisdictions to implement the program.

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