the climate change regulatory patchwork: impacts on energy contracts
DESCRIPTION
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. - PowerPoint PPT PresentationTRANSCRIPT
The Climate Change Regulatory Patchwork:Impacts on Energy Contracts
RON EZEKIEL
Fasken Martineau
604 631 4708
Outline
Regulatory Patchwork
Regulatory Convergence?
Impact on Energy Contracts
Canada’s Emissions
Source: Environment Canada, 2005 Inventory
Regulatory Patchwork
Federal Regulatory LandscapeClean Air Act / Notice of Intent
Turning the Corner PlanReduce 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 LandscapeClean 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 LandscapeKyoto Protocol Implementation Act
Plan in ResponseCERs 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 LandscapeBritish Columbia
2007 Throne Speech CommitmentsReduce by 33% relative to current levels by 2020
Western Regional Climate Action InitiativeAZ, CA, NM, OR, WA, UT, MB
Regional Goal (15% below 2005)
Regional market based mechanism
Regional registry
Regulatory Patchwork
Provincial Regulatory LandscapeAlberta
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 LandscapeSaskatchewan
Energy and Climate Change PlanStabilizing 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 LandscapeOntario
Being DevelopedReduce 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
QuebecQuebec 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 LandscapeNova Scotia
Environmental Goals and Sustainable Prosperity Act
Reduce emissions by 10% relative to 1990 by 2020
New BrunswickClimate 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
CONSULTANTACCREDITEDVERIFICATION
BODY
VERIFICATIONSERVICES
PROJECTSERVICES
Qualifications?
Conflicts?
Typical - Internal Reductions
OWNER
CONSULTANTACCREDITEDVERIFICATION
BODY
VERIFICATIONSERVICES
PROJECTSERVICES
PROCUREMENT / CONSTRUCTION
Quit Claim?
Typical – Inter-firm
OWNER
Credit streams?Credit risk?Production risk?
OWNER
Typical – Project Development
PROPONENT
BUYER COMPETINGCLAIMANTS
CONSULTANTACCREDITEDVERIFICATION
BODY
PROPONENTPARTNERS
OFFSETPURCHASE
AGREEMENT
VERIFICATIONSERVICES
PROJECTSERVICES
OWNERSHIPAGREEMENT
QUIT CLAIM
Typical – Project Development
PROPONENT
BUYER COMPETINGCLAIMANTS
CONSULTANTACCREDITEDVERIFICATION
BODY
PROPONENTPARTNERS
OFFSETPURCHASE
AGREEMENT
VERIFICATIONSERVICES
PROJECTSERVICES
OWNERSHIPAGREEMENT
QUIT CLAIM
FINANCING
LEGAL
PROCUREMENT /CONSTRUCTION
O&M
Typical – Project Purchases
PROPONENT
Credit streams?Credit risk?Production risk?
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