Legal news and trends for Canadian in-house counsel and c-suite executives
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COVERSTORY Bennett Jones LLP. He be- lieves the WCI is largely a "political ploy" to force the federal, Alberta, and Sas- katchewan governments into tougher standards. Rick Hyndman, the senior policy adviser for climate change at the Canadian As- sociation of Petroleum Pro- ducers, also doubts the WCI, which will allow companies that exceed their allowances to buy credits from less pol- luting businesses, will come together. "It seems to us that it is extremely ambi- tious to try and do an al- location that applies to the wide range of jurisdictions that have signed up for the WCI," asking why a state or province that exceeds its targets would voluntarily choose to purchase credits elsewhere. He suspects the four provinces involved all believe they'll benefit since they have significant hydro resources or, particularly in the case of Ontario, have plans to shut down coal-fired electric- ity plants. But for the system to work, someone has to pay. "Everybody can't be a seller of permits under this scheme. I don't think it's a done deal yet." In its proposed design recommenda- "Obviously, one of the things we're still trying to figure out is what the federal regulations that will be put in place will be. Although we do have an idea of where the fed- eral government is head- ing, we don't know all the details." At the same time, some companies say while the WCI remains fuzzy on details, it does serve to get businesses to start preparing themselves for prospective greenhouse gas rules. For Adele Malo, ex- Warmer weather is credited for the proliferation of the mountain pine beetle and the devastation it's caused. tions for the cap-and-trade program re- leased in September, the WCI sought to cover an extensive range of businesses, including electricity generators, indus- trial facilities, and oil and gas emissions. The plan so far is to make facilities spew- ing more than 10,000 metric tonnes of carbon dioxide a year track and report their emissions by 2011, something that has Taylor apprehensive, as the WCI could represent an onerous new set of regulations for business. While it's true that Canada's federal government is aim- ing for a 20-per-cent cut in emissions by 2020, the hard caps and low reporting thresholds under the WCI could make it a much more challenging target to meet. "I have heard consultants say that a building the size of First Canadian Place [in downtown Toronto] would be required to report emissions under the WCI's 10,000 metric-tonne-per-year limit. So one of the comments that have been made about the WCI's proposals is that, that's going to put a huge burden on lots of small- and middle-sized busi- nesses." The extent to which the WCI is reach- ing the desks of corporate counsel across Canada varies. At the forestry company Tembec Industries Inc. in Montreal, of- ficials hope its experience with cap-and- trade programs in France, along with its efforts to sell voluntarily earned credits through the Chicago Climate Exchange, will help it adapt to new Canadian regu- lations. For the moment, senior litigation and compliance counsel Marie-Claude Bellemare says the company is more fo- cused on the federal system taking shape. 14 DECEMBER 2008 C ANADIAN Lawyer INHOUSE ecutive vice president and general counsel at energy retailer and producer Di- rect Energy Marketing Ltd., the proposed rules put an onus on in-house lawyers to get up to speed. "I think the message with the WCI that we've been getting is that it is indeed coming to a theatre near you, that people are go- ing to have to get up the curve and un- derstand this fairly arcane universe and understand how it operates because their companies will be buying and selling these credits." And as Bellemare points out, the legal questions can get complicated. At Tem- bec, where the company is currently dealing with the Chicago Exchange to get its emission credits audited before sale, issues range from the long-term va- lidity of carbon sinks to the ownership of the permit itself. "Obviously, the federal government is looking into offset mechanisms. There's a legal question that could come up with respect to forestry sinks [relating to] how they will be dealt with in terms of ownership, considering that a lot of the forestry activities take place on Crown land." Also, the company has to consider how to allocate a credit if a subsidiary has forest photo courtesy of University of Northern British Columbia