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LEGAL REPORT: ENERGY AND THE ENVIRONMENT forcing industry to reduce greenhouse gas emissions. With valuable carbon-offset credits for those companies that fi nd innovative ways to reduce greenhouse gas, a multibillion-dollar market dedicated to the trading of those credits is expected to develop within the next de- cade, resulting in new op- portunities for business. Ottawa has indicated it C will follow through with a mandatory plan for con- trolling GHG emissions, which it outlined in 2007 in a document called "Turning the Corner" (read it online at: www.ec.gc.ca/default.asp? lang=En&n=75038EBC-1). This is not an absolute cap on GHG, but an "intensity cap." Under it, the rate of GHG emissions per unit of product is to fall by 18 per cent, from 2006 levels, by 2010 and then continue dropping by two per cent per year. Companies that don't reduce will either have to pay $15 per tonne over their prescribed limit to a national clean technology fund, or pay for their extra GHG by purchasing carbon-offset credits, a form of investment certifi - cate in approved projects that reduce GHG. Canada currently has a small voluntary carbon-credit mar- arbon could become the new gold, as gov- ernments bring in rules So far, only Alberta, where, with the expan- sion of the tar sands, total emissions are forecast to continue growing for de- cades, boasts a "compli- ance" model that forces big carbon emitters to either cut down, invest in a clean- technology fund, or pur- chase offset credits. Like the coming federal scheme, it is based on intensity of emis- sions per unit of product, rather than a hard cap. Other provinces have The new gold Carbon may not be good for the environment but carbon trading can be lucrative for companies that find innovative ways to reduce greenhouse gases. BY MIKE SADAVA ket, where big corporations invest usually in green power proj- ects to atone for their carbon emissions and show they are good corporate citizens. Several major fi nancial institutions, including TD Bank Financial Group, ING Direct, and HSBC have either become, or pledged to become, "carbon neutral" by purchasing offset credits plans in the works. British Columbia, Manitoba, and Quebec have joined seven U.S. states in the Western Climate Initiative, which is considering hard caps, while Quebec and Ontario have been discussing a cap- and-trade scheme. There could be a change of government in Ottawa in the next year, but who- ever takes power, the com- bination of federal and provincial legislation will result in a rapidly expand- ing carbon-offset market and billions of dollars in new opportunities for in- vestors and for "clean" in- dustry, says Jean Piette, a veteran environmental lawyer and senior partner with Ogilvy Renault LLP in Montreal. "The feds have announced their intentions clearly, and now they have to deliver a real regulatory systems with the force of law," he says. The supply side of the carbon-offset market will come from "green" industries, such as wind farms, that will be able to sell credits. The demand side will come from companies that contin- ue to emit more than the prescribed limits and will be obliged to purchase carbon credits. That side will likely grow rapidly once the market switches from a voluntary to compliance system. www. C ANADIAN Law ye rmag.com SEPTEMBER 2008 59 ILLUSTRATION: NICK CRAINE