Environment and Climate Change Canada (ECCC) has published proposed amendments to the Output-Based Pricing System (OBPS) Regulations (the Regulations) under Part 2 of the federal Greenhouse Gas Pollution Pricing Act (GGPPA) (read our earlier bulletin on the GGPPA here). The proposed amendments seek to maintain the incentive to reduce greenhouse gas (GHG) emissions in the OBPS and increase the accuracy of the values output and GHG emissions and emissions limits calculated by covered facilities. In addition, the proposed amendments are an attempt to clarify certain provisions of the Regulations to ensure compliance is consistent with the policy intent of the OBPS and GGPPA. This bulletin briefly summarizes the proposed amendments: Rules relating to surplus credits and payments. The proposed amendments provide new rules for when a province is removed from the OBPS including: increasing the circumstances that allows the Minister to suspend surplus credits; limiting the use of surplus credits by not allowing them to be used to meet a compensation obligation -for a compliance period during which a province is not participating in the OBPS; and providing for the lifting of the suspension of surplus credits, provided they are still eligible for use, when they are used to meet a compensation obligation for a compliance period during which a province was part of the OBPS. Rules relating to quantification and verification. The proposed amendments will: repeal the provisions related to improved precision in a covered facility’s assessment of GHG emissions and replace it with a requirement that the difference between a covered facility’s GHG emissions during a compliance period and its emissions limit during that same period be rounded to the nearest whole number; update emission factors used in the quantification of GHG emissions from fuel combustion by incorporating the emission factors from the 2020 version of Canada’s Greenhouse…

Nature United (NU) last week released its peer-reviewed study titled Natural climate solutions for Canada (the Study). The Study outlines and provides substantial research into the mitigation potential for natural climate solutions (NCS) to reduce Canada’s GHG emissions and help contribute to meeting Canada’s commitments under the Paris Agreement and reaching net-zero by 2050. NCS are action to protect, manage, and restore forests, grasslands, agricultural lands, and wetlands. This bulletin provides an overview of the key findings of the Study.   The Study determines that Canada may reduce its GHG emissions by up to 78 Mt CO2e annually in 2030, representing 11% of Canada’s current annual emissions. Specifically, the Study identifies the following NCS and their potential for reducing emissions: Agricultural Land. Improved agricultural practices would reduce emissions by 37.4 Mt CO2e/yr. Grasslands. Protecting and sustaining grasslands from conversion would reduce emissions by 12.7 Mt CO2e/yr. Wetlands. Protecting wetlands as well as peatlands from harvesting and avoiding disturbance would reduce emissions by 13.5 Mt CO2e/yr. Forests. Conserving old-growth forests in managed forests lands, not burning woody residues for conversion into bioenergy, and maintaining and planting trees would reduce emissions by 3.8 Mt CO2e/yr. The Study explored the mitigation potential of protection, management, and restoring pathways for NCS at both $50/t CO2e and $100/t CO2e, noting the expected new jobs and revenue streams for Indigenous communities, farmers, ranchers, and foresters. Key findings include: Protect. The mitigation potential for protection pathways for NCS are 7.6 Mt at $100/t and 6.4Mt at $50/t. Manage. The mitigation potential for management pathways for NCS are 30.3 Mt at $100/t and 19.6Mt at $50/t. Restore. The mitigation potential for restoring pathways for NCS are 1.7Mt at $100/t and 0.3Mt at $50/t. The Study estimated the annual mitigation potential for each province, determining that Saskatchewan, Ontario, Quebec, British Columbia,…

A Hague District Court today ordered Royal Dutch Shell (Shell) to reduce the CO2 emissions of the Shell group by net 45% in 2030, compared to 2019 levels, through the Shell group’s corporate policy. The lawsuit was brought by Milieudefensie/Friends of the Earth Netherlands on behalf of 17,000 plaintiffs and alleged that Shell has a duty of care to reduce GHG emissions in line with the Paris Agreement. The plaintiffs alleged that Shell’s current policy, which seeks to achieve carbon neutrality by 2050 and reduce emissions by 20% by 2030, is inadequate to meet the necessary emissions reductions. The decision today, supporting the plaintiffs’ position, is said to be the first example of a court requiring a company to reduce its emissions and follows Urgenda v The Netherlands, a similarly successful case brought against the Dutch government for its own insufficient GHG reduction plan. The Court found that Shell bears individual responsibility for limiting climate change and ordered that Shell, inclusive of all the company’s legal entities forming the Shell group, must reduce the aggregate annual volume of all Scope 1, 2, and 3 CO2 emissions in its entire energy portfolio that are a result of its business operations, including all “energy-carrying” consumer products, by a minimum of 45% by 2030 relative to its 2019 levels. The Court determined that such reductions must be achieved through Shell’s own corporate policy, to be developed and designed by Shell. In addition, the Court made clear that the reductions with respect to Shell’s own emissions are an “obligation of result”, whereas reductions as they relate to the business relations of the Shell group including end-users are a “best-effort obligation”. With respect to end-users, the Court noted that Shell may be expected to take the necessary steps to remove or prevent serious climate-related risks associated with CO2 emissions and that…