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March 2022

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Environment and Climate Change Canada (ECCC) today released the 2030 Emissions Reduction Plan (the Plan) under the Canadian Net-Zero Emissions Accountability Act (the Act; read our earlier bulletin on the Act here). The Plan sets out current actions, additional funding of $9.1B, and several new initiatives to meet Canada’s emissions reduction target of 40-45% below 2005 levels by 2030, as provided last year in an update to Canada’s Nationally Determined Contribution (NDC) under the Paris Agreement (read our earlier bulletin on Canada’s updated NDC targets here).   The Plan also sets a new interim objective of reducing GHGs by 20% below 2005 levels by 2026, noting that this interim objective is not an official target akin to Canada’s 2030 NDC, but that progress towards achieving the objective will be a cornerstone of progress reports associated with the Plan in 2023, 2025, and 2027.   This bulletin highlights key parts of the Plan and summarizes the newly announced funding and initiatives, across the following categories: Carbon pricing Clean fuels Clean growth funding Methane Buildings Electricity Heavy industry Oil and gas Transportation Agriculture Waste Nature-based solutions Clean technology and climate innovation Sustainable finance Jobs, skills, and communities Prime Minister Justin Trudeau launched the Plan in an address at the GLOBE Forum in Vancouver earlier today.  Carbon pricing. The Plan notes the measures undertaken to address economy-wide emissions including the federal fuel charge and the Output-Based Pricing System for industrial emitters under the Greenhouse Gas Pollution Pricing Act. Escalating the federal benchmark price to $170 by 2030 is meant to further support the 2030 targets of the federal government along with continued consultations on a possible border carbon adjustment (read our earlier bulletin here). Very significantly, the Plan puts forward the concept of investment approaches, like carbon contracts for differences, which enshrine future price levels in contracts between the federal government and low-carbon…

The Securities and Exchange Commission (SEC) yesterday proposed rule changes that would require climate-related disclosures in registration statements and periodic reports (the Proposed Rule). The Proposed Rule is similar to other disclosure frameworks including the recommendations of the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol. This bulletin summarizes key, high-level details of the Proposed Rule, which is over 500 pages in length:   Required climate-related disclosure. The Proposed Rule would require registrants to disclose: the oversight and governance of climate-related risks by the board and management; how any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short-, medium-, or long-term; how any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook; the registrant’s processes for identifying, assessing, and managing climate-related risks and whether any such processes are integrated into the registrant’s overall risk and management system or processes; the impact of climate-related events and transition activities on the line items of a registrant’s consolidated financial statements, and disclosure of financial estimates and assumptions impacted by such climate-related events and transition activities; Scope 1 and 2 emissions and Scope 3 emissions in specific circumstances;  carbon offsets and renewable energy credits or certificates (RECs); any  internal carbon price; and any climate-related targets, goals, and transition plans. Scope 1, 2, and 3 emissions. The Proposed Rule would require the disclosure of a registrant’s Scope 1 and 2 emissions in disaggregated constituent GHGs and in the aggregate, as well as in absolute and intensity terms. Scope 3 emissions and intensity would be disclosable only if material or where a registrant has set a GHG emissions target or goal that includes Scope 3 emissions. The SEC notes that the…

1PointFive yesterday announced the sale of 400,000 tonnes of carbon removal credits from its planned first direct air capture (DAC) facility to aerospace leader Airbus. The facility uses using Carbon Engineering’s industrial-scale DAC solution and will extract atmospheric carbon dioxide (CO2) and permanently store it deep underground in geologic formations, delivering permanent and verifiable carbon dioxide removal. Airbus has pre-purchased the capture and permanent sequestration of 100,000 tonnes of CO2 from the atmosphere each year for four years, with an option to secure more volume in the future. The purchase marks a key milestone for the decarbonization of the aviation industry.  1PointFive is a carbon capture, utilization and sequestration (CCUS) platform that is working to help curb global temperature rise to 1.5°C by 2050 through the deployment of decarbonization solutions. It is a subsidiary of Occidental Petroleum’s Oxy Low Carbon Ventures business. Carbon Engineering is a climate solutions company working to deploy large-scale, commercial DAC facilities in multiple markets around the globe. Resilient LLP was pleased to assist 1PointFive on this groundbreaking transaction. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

Environment and Climate Change Canada (ECCC) today released a discussion paper, “A Clean Electricity Standard in support of a net-zero electricity sector” (the Discussion Paper), as part of its first steps in developing and consulting on a Clean Electricity Standard (CES) under the Canadian Environmental Protection Act, 1999. This bulletin summarizes key details of the Discussion Paper and provides important information on ECCC’s consultation on developing a CES.   Purpose. The Discussion Paper indicates that its purpose is to support the government’s intention to introduce regulations to achieve a net-zero electricity system by 2035 and invite comments regarding the scope and design of the CES. The Discussion Paper notes that Canada’s electricity system is currently 82% non-emitting but remains Canada’s 4th largest source of emissions, accounting for 8.4% of total greenhouse gas (GHG) emissions in 2019.   Proposed CES Regulations. The Discussion Paper notes that carbon pricing will be insufficient to ensure that the electricity sector achieves net-zero emissions by 2035 or likely even by 2050. Therefore, a nation-wide CES regulation will complement carbon pricing by requiring the phase-out of all conventional fossil fuel electricity generation and incentivizing fuel switching in other sectors. The scope and design of the CES regulations will also need to provide enough compliance flexibility to allow for the use of natural gas for emergency events, back-up power to complement renewables, and supplying power during seasonal peaks of demand. The proposed CES regulations may, among other things: apply to all sources of emitting electricity generation that sell to the grid; transition the electricity sector to net-zero by 2035 while providing increased supply of electricity to support electrification and the role of available technologies in the provision of clean power to Canadians; be stringent enough to achieve its objectives while including compliance flexibility, such as robust GHG offsets, and allow for the…

The Ontario Ministry of Northern Development, Mines, Natural Resources and Forestry (the Ministry) is seeking stakeholder feedback on proposed legislative changes to improve regulatory clarity and remove prohibitions on granting authorizations to use Crown land for carbon capture and storage (CCS) activities. The Ministry has also released a discussion paper on carbon storage, providing background on CCS and potential suitable sites in Ontario. This bulletin briefly summarizes the key changes:   Amendments to the Oil, Gas and Salt Resources Act   Proposed Amendments to the Oil, Gas and Salt Resources Act include: narrowing the prohibitions on the injection of carbon dioxide so that, going forward, the prohibition would no longer apply to potential carbon storage projects related to activities in wells regulated under the act other than for the purpose of carbon sequestration, when used in association with a project to enhance the recovery of oil or gas; adding the ability for the Ministry to enter into agreements with companies that want to use wells to explore, test, pilot or demonstrate new technologies (such as CCS) in relation to wells used for oil, gas, solution-mined salt as well as underground storage resources subject to Indigenous consultation requirements; and enhancing provisions for corporate accountability and allowing for the issuance of orders to prevent risks to the public or environment. Amendments to the Mining Act   Proposed changes to the Mining Act would allow the Ministry to grant authorizations to use Crown land for carbon storage activities.   Purpose   The Ministry notes that the proposed legislative amendments seek to provide greater regulatory clarity and support new energy concepts and technologies including CCS, as CCS is not currently subject to the provisions of the Oil, Gas and Salt Resources Act framework. The Ministry indicated that entering into agreements with CCS project proponents at the pilot and demonstration stage will provide valuable knowledge, learning,…