Climate Change Law Update: Recent North American Developments - June 2008

Climate change regulations and responses are changing rapidly

across Canada and North America.

To keep you up to date on this quickly-evolving situation, we

have compiled a brief overview of the most significant recent

developments. This update should be read in conjunction with the

Bennett Jones LLP brochure entitled "Key Federal &

Provincial Actions to Address Greenhouse Gas Emissions".

Ontario/Quebec MOU Re:Provincial and Territorial Greenhouse Gas

Cap and Trade Initiative

On June 2, 2008, the Premiers of Ontario and Quebec signed a

Memorandum of Understanding (the "MOU")

in which they agreed on behalf of their governments to collaborate

on a Provincial and Territorial Greenhouse Gas Cap and Trade

Initiative (the "Initiative").

In the MOU, Ontario and Quebec reject intensity-based greenhouse

gas emission reduction schemes in favour of hard caps in order to

provide "sufficient certainty of real reductions". They

would put in place a regional cap and trade system through

extensive co-operation with other provinces, territories and US and

Mexican states. The signatories promise to work co-operatively with

other jurisdictions on the design and implementation of a

greenhouse gas cap and trade system, to facilitate linkages with

other trading regimes, to provide a collaborative forum for

intergovernmental initiatives and to harmonize greenhouse gas

reporting requirements to avoid redundancy. Other provinces and

territories are explicitly invited to sign on to the MOU.

Although the MOU sets out key elements of the Initiative only in

general terms, the proposals look starkly different from the

climate change plan of Canada's federal government released in

April, 2007 and updated in March, 2008 (the "Federal

Climate Change Plan"). The Initiative's promise

of hard caps on emission volumes and reference to the base year of

1990 (the year used as a base for emissions reductions targets

under the Kyoto Protocol) contrast with the Federal Climate Change

Plan's intensity-based reductions without near or middle term

hard caps and use of a 2006 base year for target setting.

As indicated above, the Initiative places great emphasis on

inter-jurisdictional co-operation and collaboration between

provinces, states and territories and in that respect also differs

from the Federal Climate Change Plan. Indeed several of the

commitments in the MOU relate to intergovernmental ties, work and

harmonization. While the Federal Climate Change Plan states that

the federal government "still intends to work to reach

equivalency agreements with any interested provinces that set

enforceable emission standards that are at least as stringent as

the federal standards," and contemplates links to emissions

trading systems in the U.S. and Mexico, it is not clear that

equivalency agreements are achievable and there is little evidence

of progress to date on U.S. or Mexican links. An equivalency

agreement is contemplated in the Canadian Environmental

Protection Act, 1999 ("CEPA") as

the pre-requisite to an order which makes otherwise relevant

federal regulations not applicable in a province with equivalent

provisions in its laws. The proposed Initiative, if translated into

provincial law, could be 'equivalent' to the Federal

Climate Change Plan regulations as the provincial requirements

likely will exceed the federal targets (although this is not

certain). However, the fundamental differences between hard caps

and intensity-based systems as well as the vehemency with which the

competing views are held and expressed indicate that it will be a


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