On July 16, 2020, Environment and Climate Change Canada (ECCC) released its Strategic Assessment of Climate Change (SACC). The SACC provides detailed guidance to those project proponents required to assess climate change impacts within a federal impact assessment under the Impact Assessment Act, SC 2019, c 28, s 1 (IAA). On October 6, 2020, ECCC released a revised version of the SACC to add clarity on how net-zero plans and offset credits will be considered in the impact assessment process.
We provided an in-depth analysis on the SACC in Federal Government Releases Strategic Assessment of Climate Change. Here we provide an update summarizing the relevant revisions to the SACC released on October 6, 2020.
Avoided GHG Emissions
In the revised SACC, ECCC provided more detail on what constitutes avoided domestic GHG emissions in the quantification of a project's net GHG emissions. Specifically, avoided domestic GHG emissions can include GHG emissions removed as a result of mitigation measures separate from the project and not reflected in a project's direct GHG emissions. This could include action taken at the corporate level in Canada such as the use of direct air capture technology and afforestation; provided that the corporation action is not required by law, is not counted as offset credits and can be assigned to a project.
ECCC added that any offset credits utilized under the SACC should have been issued no more than five years before the year the emissions occurred. This change forces proponents to use recent offset credits, rather than offset credits that are issued well before the time of the emissions. Project proponents in Alberta should be mindful that this expiry period is much shorter than the eight-year expiry period (starting from the year following the year of issuance) governing performance credits under the Technology Innovation and Emissions Reduction Regulation, Alta Reg 133/2019 (TIER Regulation).
Plan to Achieve Net-Zero Emissions by 2050
The bulk of the revisions to the SACC, were added to explain the net-zero emissions plan (the Net-Zero Plan), which we summarized in Federal Government Releases Strategic Assessment of Climate Change. ECCC specified that the Net-Zero Plan need not describe every technology or practice that a project will implement to achieve net-zero emissions. However, a Net-Zero Plan should include emissions reductions at specified intervals up to 2050 and should seek to maximize absolute emissions reductions in the earlier years of a project's lifespan.
The new revisions included a qualifier that if a Net-Zero Plan does not specify how a project will achieve net-zero emissions by 2050, this will not disqualify the project from proceeding through the impact assessment process. Where it is not feasible to specify how later-year reductions will be achieved when a project is approved, the Minister of Environment and Climate Change may require a proponent to update their plans throughout the project to specify how additional emissions reductions will be achieved.
Lastly, upstream GHG emissions of a project are now subject to the requirement of a Net-Zero Plan and are no longer excluded from this requirement.
Project proponents should be mindful of the revisions to the SACC as they:
- acknowledge that avoided domestic GHG emissions can include GHG emissions removed from measures separate from the project, including action taken at the corporate-level;
- include a five-year expiry period for offset credits, which differs from the eight-year expiry period (measured from the year following the year of issuance) governing usage of performance credits under the TIER Regulation;
- provide added clarity to the contents of a Net-Zero Plan, a requirement that now applies to upstream GHG emissions of a project; and
- specify that a project will not be disqualified under the impact assessment process if a project proponent does not specify how the project will achieve net-zero emissions, which is helpful given the difficulties of projecting emissions reductions over a 30-year period.
Project proponents should be aware of these revisions when preparing for assessments under the IAA. ECCC plans to publish a technical guide to provide further guidance and details on developing a credible plan to achieve net-zero emissions in the near future, which will provide further guidance on the preparation of a Net-Zero Plan.