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because of a shortage of qualified staff to consistently apply the complex rules. Ezekiel says one of the big challenges will be equating supply with demand. A strict approval process could reduce the number of offsets, but overly lax regu- lation could mean some get approved without having a real effect on carbon emissions. "There is a wide range of views about what a happy medium is. Some say, 'Don't over-regulate the mar- ket,' while others think there has to be a strict regulatory regime to make real re- ductions [in carbon emissions]," he says. Lisa DeMarco, a climate change law- yer with Macleod Dixon LLP in Toronto, says demand for offset credits should ex- ceed supply in the early stages in order "to change behaviour." A tough market is more likely to spur big emitters to inno- vate to reduce their emissions, she says. One of the big issues will lie around the principle of "additionality." Under that principle, an emission-reducing upgrade to a power or manufacturing plant that would have been done anyway wouldn't be eligible for offset credits. McCullough says validation and verifi- cation of carbon-offset projects will be key to their success, and there will be pressure from companies that buy offset credits to ensure the projects stand up to scrutiny. "Every industry realizes it has that risk," he says. "Industry does not want to be seen as buying bogus credits." Validation and verification will become an industry of its own and create a lot of opportuni- ties for engineering consultants. Initially, at least, there could also be different rules in each province. Respon- sibility for environment is shared be- tween Ottawa and the provinces, and the co-operation usually means federal rules form the "floor" of what the provinces can do, says Ezekiel. That means prov- inces that, like B.C., are headed towards a hard cap on emissions can have a stricter regime than the federal government's. But if the Liberals form the next govern- ment and bring in a stricter regime with a hard caps, it is difficult to say what would happen to Alberta's legislation, he says. Law Specialistson Your Team! We help you help your clients. Call us. Get Our Environmental Environmental Specialists*on Your Team! Our team of environmental lawyers includes 5 Environmental Law Specialists* Another growing pain with regional carbon markets could be price spikes for offset credits, which isn't good either for investors or industry. The smaller the market, the more likely activity by one industry sector could have a significant effect on the price of credits. Ezekiel thinks the offset market could eventually evolve to a wider, even global, system to get more price stability, especially if the U.S. creates a mandatory system. As the offset system evolves, it will generate a large need for legal expertise. Piette, who has practised environmental law since 1972, says these big changes mean it is a great time to specialize in this area. "Our job is to understand the law, how policy works, and help clients adjust and survive in this new regulatory environment. . . . We help industry make the right decisions as far as investment, new projects, new technologies. They have to make costly investments and de- cisions, and they need sound advice about what's going to happen in the next five, 10, or 20 years." www.willmsshier.com * Certified by the Law Society of Upper Canada Juli Abouchar 416 862 4836 Doug Petrie 416 862 4835 John Willms 416 862 4821 Donna Shier 416 862 4822 Marc McAree 416 862 4820 ENVIRONMENT, ENERGY & RESOURCES LAW www. C ANADIAN Law ye rmag.com SEPTEMBER 2008 61 Canadian Lawyer #MS07-25 – 7" x 4-7/8"