Doing Business in Canada: Climate Change

by Bennett Jones LLP

The evolving patchwork of Canadian federal and provincial climate laws and programs has created material risks and opportunities for businesses operating in Canada. Understanding climate change policy and legislation is necessary for those considering carrying on business in Canada.

Canada’s greenhouse gas (ghg) emissions per capita are high relative to most European countries, Japan and most developing countries. However, Canada’s ghg emissions per capita are similar to those of the United States and Australia. Canada’s total reported ghg emissions were 589 megatonnes (measured in carbon dioxide equivalents or CO2e) for 1990, 740 megatonnes CO2e for 2005 and 692 megatonnes CO2e for 2010.

In December 2011, Canada gave notice of its intention to leave the Kyoto Protocol effective December 2012. However, Canada remains a party to the United Nations Framework Convention on Climate Change and has made a commitment under the 2010 Cancun Agreements to reduce its ghg emissions by 2020 to 17 percent below 2005 levels in alignment with the United States.

Domestic GHG Emissions Reporting

The federal government and Alberta require facilities emitting over 50,000 tonnes/yr of ghgs to report their emissions annually. Some provinces (e.g., British Columbia, Ontario and Québec) have lower facility reporting thresholds.

Federal Approach

The current federal government takes a sector-by-sector approach, aligned with the United States where appropriate. This has resulted in a performance standard in the transportation sector for light duty vehicle emissions, which is closely aligned with the U.S. standard, and a proposed emissions standard, again U.S.-aligned, for heavy-duty vehicles. As well, a proposed standard for coal-fired electricity generators has been published although U.S. alignment is uncertain. Upstream oil and gas, oil sands upgraders and refineries appear likely to be the next regulated Canadian sectors. A voluntary plan with a fuel efficiency target for Canada’s aviation sector is now in place.

The federal government has also made significant grants available for carbon capture and storage and clean energy projects.

Provincial Initiatives


In 2003, Alberta enacted the Climate Change and Emissions Management Act (CCEMA) targeting a 50-percent reduction in ghg emissions intensity (emissions per dollar of gross provincial product) from 2000 by 2050. In 2007, the Specified Gas Emitters Regulation (SGER) was implemented under the CCEMA. SGER requires facilities which emitted greater than 100,000 tonnes CO2e/yr in 2000 to reduce their ghg emissions intensity by 12 percent from their 2003 to 2005 baseline. Facilities which were started up after 2000 have their obligation phased-in at two percent per annum after the first three years of operations until the 12-percent intensity reduction target is reached.

SGER uses a market mechanism approach, authorizing emissions trading in both environmental performance credits (generated when a regulated facility reduces beyond its SGER target) and offset credits (reductions produced in accordance with government-approved protocols outside of regulated facilities). As well, the SGER authorizes the use of fund credits obtained by paying $15/tonne to a government fund which is invested to produce ghg emissions reductions.

Alberta has also made up to $2 billion available to support carbon capture and storage projects.

Western Climate Initiative

California led a group of seven U.S. western states in forming the Western Climate Initiative (WCI) – a regional initiative to reduce ghg emissions in those states by 15 percent below 2005 levels by 2020. The provinces of British Columbia, Manitoba, Ontario and Québec all joined the WCI. When six U.S. states left the WCI in 2011, the WCI effectively became a California/Canadian provinces organization. The WCI includes the use of market mechanisms like emissions trading as well as a low carbon fuel standard.


While not a western province, Québec is a member of the WCI and has continued to pursue the WCI program. The province is putting in place the regulation needed to create (as of January 1, 2013) a cap-and-trade system capable of independent operation and/or of linking with California. The regulation will require industrial facilities with ghg emissions exceeding 25,000 tonnes CO2e per year to acquire and tender to the government ghg allowances and/or offsets equal to its ghg emissions.

Allowances will be auctioned (perhaps in tandem with California) although many will be issued gratis to certain industries. The aggregate allowances will be capped to produce an overall provincial emissions reduction. Up to eight percent of a facility’s emissions can be covered by offsets. In 2015, the obligations to tender allowances and offsets will extend to fossil fuel distributors for the CO2 emissions from combustion of the distributed fuel.

Québec also has a modest carbon tax on gasoline, diesel and natural gas.

British Columbia

Prior to joining the WCI, British Columbia set an ambitious target of reducing ghg emissions by 33 percent below 2007 levels by 2020. To accomplish this target, the province introduced:

  • a revenue-neutral carbon tax on combustion of fossil fuels;
  • a low carbon fuel standard regulation;
  • a requirement for the broad government sector to be carbon neutral commencing in 2011; and
  • the potential for a cap-and-trade system.

British Columbia’s carbon tax is $30/tonne from and after July 1, 2012. The “carbon neutral government” requirement resulted in the creation of the Pacific Carbon Trust, a government-owned entity that acquires approved offsets in British Columbia and sells them at $25/tonne to regulated government departments and entities. There are no current plans to implement a cap-and-trade system, with reliance placed on the other measures.

Ontario and Manitoba

Ontario has cap-and-trade authorizing legislation but has not moved to implement such an emissions reductions scheme. Instead, the province is relying on prohibition of the use of coal in the generation of electricity after 2014 and the development of renewable energy under the Green Energy Act feed-in-tariff program.

Manitoba has moved very slowly on the WCI agenda.


Saskatchewan passed the Management and Reduction of Greenhouse Gases Act (MRGGA) in 2010 but the legislation is not yet in force. The MRGGA establishes the authority and framework for provincial emissions reduction goals and investments in low-carbon technologies. The provincial target is to reduce emissions by 20 percent from 2006 levels by 2020.

Maritime Provinces

Nova Scotia has a climate change action plan and a provincial target to reduce GHG emissions by 10 percent below 1990 levels by 2020. It has also introduced a renewable electricity plan which mandates that 25 percent of electricity come from renewable sources by 2015. Given this plan, the federal government has agreed that its coal-fired electricity regulation may not need to be in force in Nova Scotia.

The other Maritime provinces - New Brunswick, Prince Edward Island, Newfoundland & Labrador - have emissions reduction plans but little relevant legislation.


The Canadian federal government’s sector-by-sector approach to achieving ghg emissions reductions, with its limited application to date, has resulted in provincial initiatives to fill the vacuum. While many of the provincial actions incorporate market mechanism approaches, not all do and those that do, employ a wide variety of structures. This creates a significant challenge for business and the need to keep well informed about developments at all levels.

Bennett Jones’ Climate Change Group

The Bennett Jones Climate Change Group has international experience in climate change transactions that is unparalleled in North America, and a detailed knowledge of Canadian climate change issues and policies. Consequently, our climate change lawyers are positioned at the forefront of Canadian climate change developments. We regularly advise our clients on the appropriate policies and activities to deal with the Canadian patchwork of existing and planned regulation as well as on facilitating the financing, contractual structures and projects that enable them to reduce risks from climate change regulation and take advantage of the opportunities such regulation creates.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bennett Jones LLP | Attorney Advertising

Written by:

Bennett Jones LLP

Bennett Jones LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.