31 Oct Climate Change Blog Series: Update on Recent Developments in Climate Change Law & Policy
This is the twelfth post in the Environmental Law Centre’s blog series exploring climate change law in Canada. This blog series provides updates on climate change law developments and includes insights from our related law reform research. This blog series is generously funded by the Alberta Law Foundation.
Climate change law and policy has been rapidly evolving on a provincial, federal and international scale. Throughout the year, this blog series has looked at a variety of climate change topics ranging from local opportunities for mitigation and adaptation (cities and climate change) to significant international developments (the Paris Agreement). This particular blog post provides an update on developments relevant to energy efficiency, pipeline safety, and a national approach to climate change.
Energy Efficiency in Alberta
Effective 1 November 2016, the National Energy Code for Buildings, 2011 and Section 9.36 of the 2014 Alberta Building Code will begin to apply in Alberta (see the Building Code Regulation). These codes set new energy efficiency requirements with respect to building envelopes, HVAC (heating, ventilation and air conditioning) systems, service water heating, and lighting.
Given that increased energy efficiency and conservation is an effective means to reduce greenhouse gas emissions, this is one important step toward meeting Canada’s climate change obligations. However, we would like to see additional changes to further facilitate implementation of low emission solutions by municipalities. It is our recommendation that either the Municipal Government Act or Safety Codes Act be amended to allow municipalities to impose minimum energy requirements and minimum renewable energy standards above and beyond those imposed by the building codes. This would enable municipalities to set high standards for buildings within their borders and could include retrofitting of existing, inefficient buildings.
The Pipeline Safety Act (the PSA) came into effect on 19 June 2016. As discussed in our previous blog post, the PSA makes several amendments to the National Energy Board Act (the NEB Act) and the Canada Oil and Gas Operations Act designed to strengthen the polluter pays principle as it relates to federally regulated pipelines.
With the PSA amendments, the NEB Act imposes absolute liability on companies for uncontrolled releases from their pipelines (s.48.12). In other words, a company is liable for uncontrolled releases with no need for proof of fault or negligence. The liability limit for a company that transports 250,000 barrels of oil per day is $1 billion (although this can be raised by regulation).
For all other companies, the liability limit is to be set by regulation. Although not yet law, proposed Pipeline Financial Requirements Regulations were released earlier this month (see here). These proposed regulations set the absolute liability limitations and the financial resource requirements for companies operating federally regulated pipelines for oil, gas, and other commodities. The regulations divide operations into a variety of classes based on the highest risk value of their respective pipeline systems. Liability limitations range from $5 million to $1 billion based upon the type of operation.
As an alternative to or substitute for pipelines, Canada’s railway system is often used to transport crude oil. The possibility of derailments brings similar concerns with human health and environmental impacts as do pipeline failures. In response to these concerns, the Safe and Accountable Rail Act made changes to the Canada Transportation Act designed to strengthen the liability and compensation regime for federally regulated railways. Many of these changes came into force earlier this year (on 18June 2016) with more to come next year. Like pipeline companies, railway companies with accidents involving crude oil will be subject to absolute liability (that is, liability with no requirement to prove fault or negligence). Minimum insurance levels have been imposed ranging from $25 million to $1 billion (some of the mid-range insurance requirements are being phased-in and will increase effective 18 June 2017). Furthermore, a supplementary compensation fund—the Fund for Railway Accidents Involving Designated Goods— has been established and is financed by shippers of crude oil by rail. This fund will cover any damages above the railways’ mandatory insurance level for accidents involving crude oil.
Both large-scale interprovincial pipelines (Northern Gateway, Trans Mountain and Energy East pipeline projects) and catastrophic derailments (Lac-Megantic) have been squarely within the public’s attention in the last few years. As we have previously indicated, we are encouraged to see more stringent financial responsibility placed onto companies transporting oil and gas products and stronger adherence to the polluter pays principle.
The Paris Agreement & a Pan-Canadian Price on Carbon
As with many international agreements, conventions or protocols on environmental issues, the Paris Agreement had to pass a certain threshold to enter into force. The Paris Agreement provides that it enters into force on the thirtieth day after the date on which at least 55 Parties to the Convention accounting in total for at least an estimated 55 % of the total global greenhouse gas emissions have deposited their instruments of ratification, acceptance, approval or accession with the Depository. On 5 October 2016, the threshold for entry into force of the Paris Agreement was achieved (see here) meaning it enters into force on 4 November 2016.
Canada is among the 86 countries that have already ratified the Paris Agreement. In early October (around the time of its ratification), the Canadian Government announced its intention to place a Pan-Canadian price on carbon in order to meet its climate change mitigation commitments (see here). The Pan-Canadian approach is meant to ensure that all Canadian jurisdictions adopt carbon pricing by 2018 while allowing each jurisdiction flexibility in its approach. The Canadian Government has established some benchmarks for the Pan-Canadian approach including (see here):
- All jurisdictions will have carbon pricing by 2018. It should be noted that B.C., Alberta, Quebec and Ontario already have carbon pricing regimes in place.
- Carbon pricing must be based on GHG emissions and applied to a common and broad set of sources to ensure effectiveness and to minimize interprovincial competitiveness impacts. At a minimum, carbon pricing should apply to substantively the same sources as B.C.’s carbon tax.
- Jurisdictions must implement either (i) an explicit price-based system (could be a carbon tax or carbon levy with performance-based emissions) or (ii) a cap-and-trade system.
- If a jurisdiction adopts an explicit price-based system, the carbon price should start at a minimum of $10 per tonne in 2018, and rise by $10 per year to $50 per tonne in 2022.
- If a jurisdiction adopts a cap-and-trade system, there must be a (i) 2030 emissions reduction target equal to or greater than Canada’s 30% reduction target (ii) declining annual caps to at least 2022 that correspond to the projected emissions reductions resulting from the carbon price that year in price-based systems (at a minimum).
- The federal government will introduce an explicit price-based carbon pricing systems to apply in jurisdictions that do not meet the benchmarks.
- Each jurisdiction is required to provide regular, transparent and verifiable reports on the outcomes and impacts of carbon pricing policies.
The federal government has indicated that it will review the overall approach by early 2022 to confirm the path forward including increases in stringency. The review will consider progress and the actions of other countries in response to carbon pricing, as well as recognition of permits or credits imported from other countries.
The ELC Climate Change Legal Roadmap
The ELC will continue to monitor and participate in the development of climate law and policy in Alberta and federally over the coming year. Our series of reports – the Climate Change Legal Roadmap – will look at coal phase-out, oil-sands emissions limits, and methane emissions reductions (already published reports can be found here and here). These reports outline climate change actions taken in other jurisdictions and make recommendations for Alberta. As well, we will continue to provide updates on interesting developments in climate law and policy on our Climate Change Blog Series.