October 2023

A majority of the Supreme Court of Canada (SCC), in a 5-2 opinion released earlier this month, found the federal Impact Assessment Act (the Act) to be unconstitutional in part and inconsistent with shared federal and provincial jurisdiction over the environment. The SCC’s conclusions in Reference re Impact Assessment Act (the Decision) are expected to have significant implications for major projects across Canada, including mines, pipelines, and other interprovincial infrastructure and activities. This bulletin briefly summarizes the key findings of the SCC and our anticipated next steps for Canada’s impact assessment and approval regime. Impact Assessment Act The Act, which received Royal Assent in 2019, seeks to provide an information gathering and regulatory scheme for certain projects and activities carried out in Canada or on federal lands so as to prevent significant environmental, health, social, or economic effects. The Act also regulates certain federal “aspects” of projects, including in respect of: Indigenous Peoples; federal lands; fish and fish habitat; aquatic species; migratory birds; changes in a province other than the one in which the activity or project is occurring; and changes in the environment outside of Canada. The Act contains two assessment components for gathering information as part of the regulatory scheme. The first portion, provided in sections 81 to 91 of the Act, deals with projects carried out or financed by federal authorities on federal lands or outside Canada and requires determining whether projects are likely to cause significant adverse environmental impacts. The second portion, which is provided in much of the rest of the Act and regulations, deals with “designated projects”, defined as physical activities carried out in Canada or on federal lands and are designated by regulations. This portion is aimed at mitigating or preventing potential adverse environmental, health, social and economic impacts arising from the activities. Overview of Opinion The opinion of…

On October 1, 2023, the European Union’s Carbon Border Adjustment Mechanism (CBAM) became effective in its transitional phase until December 31, 2025. The European Commission (EC) noted that the transitional phase will serve as a pilot and learning period for stakeholders and will be used to collect information on embedded emissions to further refine and improve the CBAM’s methodology. We expect other countries to consider and adopt their own border carbon adjustments to avoid carbon leakage and to ensure the competitiveness of domestic emission intensive and trade exposed sectors of the economy (see our earlier bulletins on the development of BCAs in Canada and USA). This bulletin briefly highlights key information related to the transitional phase of the CBAM. CBAM Overview. The CBAM applies to importers of CBAM-covered goods. Importers of covered goods must register with national authorities, through which they will also able to buy CBAM certificates once the CBAM is fully in place on January 1, 2026. The price of certificates will be calculated depending on the weekly average auction price of EU Emission Trading System (ETS) allowances expressed in €/tonne of CO2 emitted. Importers into the EU are required to declare the direct and indirect emissions embedded in imports and, once fully operational, “surrender” the corresponding number of CBAM certificates each year; however, initially, importers will only be required to pay for direct emissions. Importers may reduce the number of certificates to be surrendered if they can prove that a carbon price has already been paid during the production of the imported goods and this price will then be deducted from the overall obligation. Applicability The CBAM will initially apply to the following imports of certain goods and selected precursors that are carbon intensive and at significant risk of carbon leakage: cement; iron and steel; aluminium; fertilisers; electricity; and hydrogen. The EC noted that…

SCC Finds Impact Assessment Act Largely Unconstitutional

EU CBAM Enters Transitional Phase