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Canada Publishes Finalized Clean Electricity Regulations

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Canada’s Minister of Environment and Climate Change (the “Minister”) yesterday announced the finalization and publication today of the Clean Electricity Regulations (“CER”) in the Canada Gazette, Part II (see our earlier bulletin on the draft CER here). CER establishes significant annual emission limits (“AEL”) to reduce greenhouse gas (“GHG”) emissions from fossil fuel-generated electricity generation facilities in all provinces and territories across Canada starting in 2035. Requirements to reduce emissions under CER start in 2035 with a pathway to reaching net-zero in 2050. Environment and Climate Change Canada (“ECCC”) estimates that the CER would reduce approximately 181 megatonnes of cumulative GHG emissions between 2024 and 2050. The CER imposes significant registration, record keeping, and reporting obligations on covered electricity generation facilities.   This bulletin briefly summarizes the key provisions of CER and federal financial support to help decarbonize and expand Canada’s electricity system.   Scope. A “unit” is regulated under the CER if it meets all of the following three criteria: It has an electricity generation capacity of 25 megawatts (“MW”) or greater (or is a new unit located at a facility where the sum of all new electricity generation unit capacity is 25 MW or greater); It generates electricity using fossil fuel; and It is connected, directly or indirectly, to an “electricity system” that is subject to North American Electric Reliability Corporation (“NERC”) standards. A unit that has an electricity generation capacity of less than 25 MW is deemed to meet the first criteria if the unit’s commissioning date is on or after January 1, 2025 and the sum of the electricity generation capacity of all units, other than planned units, that are located at the facility where the unit is located and that also have commissioning dates on or after January 1, 2025 is at least 25 MW.   CER does not apply…

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Canada Implements Clean Economy Investment Tax Credits

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This bulletin complements last week’s update on the Fall Economic Statement Implementation Act, 2023 (Bill C-59). In addition to the climate-related amendments to the Competition Act (read our earlier bulletin here), Bill C-59 implements significant clean economy investment tax credits (ITCs), for clean technology (CT) and carbon capture utilization and storage (CCUS), as well as clean hydrogen (CH) and clean technology manufacturing (CTM). This bulletin briefly summarizes the amendments to the Income Tax Act (the Act) and Income Tax Regulations (the Regulations) that implement the CT ITC and CCUS ITC. Clean Technology Investment Tax Credit. Bill C-59 amends the Act and Regulations to implement the CT ITC, initially proposed in the 2022 Fall Economic Statement and expanded in both the 2023 Fall Economic Statement (FES) and 2023 Budget (read our earlier bulletins here and here). Key provisions of the now implemented and expanded CT ITC include: refundable tax credit for capital invested in the adoption and operation of new clean technology property in Canada from March 28, 2023, to December 31, 2034; rate may be up to 30% of the capital cost of CT property that is acquired and that becomes available for use from March 28, 2023, to December 31, 2033; rate may be up to 15% for property acquired and that becomes available for use in 2034, and will be unavailable after 2034; available for investments in the following types of CT property: equipment used to generate electricity from solar, wind and water energy; stationary electricity storage equipment that does not use any fossil fuel in operation (such as batteries and pumped hydroelectric storage); active solar heating equipment, air-source heat pumps and ground-source heat pumps; non-road zero-emission vehicles and related charging and refueling equipment that is used primarily for such vehicles; equipment used exclusively for the purpose of…

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ECCC Publishes 2030 Nature Strategy and Nature Accountability Bill

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Environment and Climate Change Canada (ECCC) on Thursday published Canada’s 2030 Nature Strategy: Halting and Reversing Biodiversity Loss in Canada (the Strategy) alongside proposed legislation titled the Nature Accountability Act (the Bill), which received its first reading in the House of Commons last week. The Strategy outlines how Canada will implement its nature protection goals under the Kunming-Montréal Global Biodiversity Framework (GBF) (see our earlier bulletin here), building on existing initiatives across Canada, and defining clear areas of action and improvement. The Bill aims to enshrine the government’s commitment to protecting nature in legislation.    At the fifteenth meeting of the Conference of the Parties (COP15) on biological diversity in Montreal in 2022, Canada committed to protecting 30 per cent of its land and water by 2030, and putting nature on a recovery path by 2050. Canada’s Strategy is mandated to outline the actions that will be taken to achieve these goals.   This bulletin briefly summarizes the Strategy and the Bill.   The 2030 Nature Strategy:   With the aim of ensuring an inclusive, adaptable and evidence-based pathway, the Strategy sets out six pillars: Recognize and uphold Indigenous rights. Honour Indigenous peoples’ roles as original caretakers of the land, waters, and ice, and advance reconciliation through the protection of the rights of Indigenous Peoples set out in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP); Ensure a whole-of-society approach. Foster policy coherence and collective action across government, society, and industries; Support a resilient economy. Build a resilient economy that acknowledges the intrinsic link between prosperity and healthy environment; Adopt flexible community-based approaches. Support regional differences, empower communities, and adopt flexible approaches that reflect local needs; Use the best available science and equal weight to Western and Indigenous Knowledge. Combine Western science and Indigenous Knowledge to inform decision-making and share information transparently; and  Ensure a holistic approach. Embrace…

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Resilient Run/Walk on June 11, 2024

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Are you attending Carbon Forward North America in Toronto? Join Resilient LLP for an early morning run or walk on June 11, 2024 before the conference begins. Your Toronto Hosts: The Resilient LLP Team What: A fun and easy run (5-7km) or walk (3-4km) along the Toronto waterfront. Rain or shine! Where: Meet at 6:30am at Grange Park – Henry Moore’s Large Two Forms, right behind the AGO. After the run/walk, we’ll gather at Jimmy’s Coffee (166 McCaul St, at Elm). When: June 11, 2024, 6:30am (Conference registration starts at 8:30am, with the welcome address at 9:00am.) Apple  Google  Outlook RSVP: Let us know to expect you! (There is no obligation to RSVP in advance.) Please contact Lisa DeMarco (lisa@resilientllp.com) or Jonathan McGillivray (jonathan@resilientllp.com) with any questions or comments. We look forward to seeing you on June 11!

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Canada Growth Fund Announces First Transaction under CCfD and Offtake Mandate

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Canada Growth Fund (CGF) today announced that it has completed its first transaction under its mandate to use nearly half of its $15B budget for carbon contracts for difference (CCfDs) and offtake agreements. CGF is the federal agency (a subsidiary of Canada Development Investment Corporation) with a mandate to “build a portfolio of investments that catalyze substantial private sector investment in Canadian businesses and projects to help transform and grow Canada’s economy at speed and scale on the path to net-zero.” PSP Investments acts as the investment manager for CGF through a wholly-owned subsidiary. Via a hybrid security, CGF has agreed to invest $200M in Entropy Inc., a Calgary-based developer of carbon capture and sequestration (CCS) projects. Alongside the investment, CGF and Entropy have entered into a “carbon credit offtake commitment” agreement (CCO) whereby CGF has committed to purchase up to 9M tonnes (up to 600K tonnes per annum (tpa) over a 15-year term) of TIER or equivalent carbon credits from Entropy projects. The initial project to benefit from the CCO is intended to be the Advantage Glacier Phase 2 project, drawing up to 185K tpa at an initial price of $86.50 per tonne, for a total of approximately 2.8M tonnes over the 15-year term. Upon successful deployment of the initial 600K tpa of CCO, CGF may make available a further 400K tpa of CCOs for additional Entropy CCS projects in Canada. This initial transaction notably appears to be in the form of an offtake agreement, rather than a contract for difference. The Globe and Mail reported that other project proponents, including larger oil and gas producers and members of the cement and chemical industries, have been attempting to negotiate contracts with the CGF at rates higher than the initial price of $86.50 per tonne agreed in this initial transaction. For further information or to…

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