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L EGAL REPOR T: ENERGY AND ENVIRONMENT Under a cloud of competing rules and plans for possible rules, Canadian companies face great uncertainty over greenhouse gas regulations. BY GL ENN KAUTH C limate change may be a new frontier in Canadian law, but for Canadian businesses the lingering uncertainty about what governments will do about greenhouse gas regulations is starting to get old. "The problem that we have here is that we're in a regulatory Wild West," says Adam Chamberlain, the head of Borden Ladner Gervais LLP's national climate change group in Toronto. The federal government has out- lined plans to regulate carbon emissions based on reductions by intensity. That much-criticized plan has potentially put Canada on a collision course with the new administration in the United States, which has called for a cap-and-trade sys- tem based on hard limits on emissions. At the same time, a number of regional and provincial initiatives have sprouted up. In Canada, the most prom- inent is the Western Climate Initiative, which brings together British Columbia, Manitoba, Ontario, Quebec, and seven U.S. states in a bid to cut emissions by 15 per cent below 2005 levels by 2020 under a cap-and-trade system. The result is a plethora of potentially competing regulations. And while cor- porate Canada has, in some cases, resisted aggressive action on climate change, the ongoing questions about what they'll have to do to reduce their emissions has many companies changing their tune on the need for regulation. "Nature abhors a vacuum, and companies abhor a vac- uum," says Paul Manning of Willms & Shier Environmental Lawyers LLP. "They see this stuff coming, they hear the pol- iticians talk, and the next question is, 'What do we do about all of this?'" Chamberlain notes. "Even when Kyoto was first signed, we got questions: 'What does this mean?' The answers then were that it's in the future. The difference now www. is that we think there will be answers to those questions in the coming years." The consequences can be a disincen- tive to investment. Among the chief questions in the electrical sector, for example, is who owns the "green attrib- utes" in a carbon market in which busi- nesses buy and sell credits for either exceeding or beating their emissions targets. "Our [economic] system is one where you can be certain [that] when you buy things, you actually own it," says Chamberlain. But with only voluntary carbon markets in use now in much of the country, the ownership ques- tion can be tricky, something businesses mag.com APRIL 2009 51 VICTOR GAD