[getsmart-l] Work begun to establish carbon offsets program

[John O'Gorman]

 You can access it at the following url:
 http://www.lawtimesnews.com/index.php?option=com_content&task=view&id=3518&Itemid=82

      Target to have full plan in place by 2010
      Work begun to establish carbon offsets program
      By Derek Hill | Publication Date: Monday, 19 November 2007

      Work is finally underway to establish a carbon offsets program in 
Ontario, which will have significant ramifications for local farms and 
forestry projects, industry in the province, the planet as a whole - and 
lawyers.

      A carbon offsets program is not just an important development for 
environmental lawyers, but for the whole profession, says Douglas Tingey.The 
Ministry of the Environment is currently establishing protocols for the 
program, setting standards for the supply side (what counts and how many 
tonnes of carbon can be reduced), and it plans to have pilot projects for 
farms and forests up and running in 2008.

      Its greater goal is to have a full-fledged provincial offset plan in 
place with a series of offsets developed and registered when the proposed 
federal emissions trading system goes live in 2010, as set out in the 
Regulatory Framework for Air Emissions issued this past April, wherein the 
federal government declared its intention to impose mandatory reductions in 
greenhouse gas emissions for heavy industrial emissions producers.

      "We're trying to develop a series of offsets which reflect Ontario's 
circumstances in agriculture and forest management, and provide those as 
possible carbon offsets to be viewed as part of a national cap and trade 
system," says Jim Whitestone, acting director of the ministry's policy and 
climate change branch.

      The idea behind a carbon offsets system is that financial incentives 
are given to projects that wouldn't ordinarily happen, says Whitestone, and 
that reduce emissions beyond "business as usual"; which in the context of 
farms and forests may include sponsoring such activities as manure 
management, soil sequestration, planting trees, sustainable forestry 
practices, etc.

      On the other end of the equation, the regulated industrial emitters 
will be able to buy and sell credits amongst themselves, and/or to invest in 
projects that create verified emission reductions - which might include new 
technologies, wind power facilities, etc.

      "I think we aren't going to limit it to farms and forests," says 
Whitestone. "Those are sort of early pilots we want to get going . . . we're 
definitely not precluding other areas - and we're working with other 
jurisdictions on developing protocols that could apply to the electricity 
sector as well as other sectors, for example."

      "The whole idea behind cap and trade . . . it's really a compliance 
tool," he says. "It allows you to set, in some cases, real reductions in 
greenhouse gases - but you're giving industry some flexibility, and 
potentially lower cost options to meet those requirements."

      Whitestone adds that the project will provide positive benefits for 
developers by creating new income streams, potentially offsetting the costs 
of replacing old equipment, etc.
      And although it's early yet, he says that both the provincial and 
federal governments are cognizant of not wanting to have the large emitters 
delay implementing changes prior to 2010.

      "They will try and give credit for early action, just so that there's 
no chill sent into industry. You don't want them to be waiting to see the 
final regulation before taking action - you want them to feel [the 
incentive] to take action while the final system's being put into place."

      As for the question of what the project might mean for the planet as a 
whole, Whitestone acknowledges there has been "a broad debate" around cap 
and trade offsets. Since emitters in Ontario are regulated under an 
intensity-based approach (targets are measured as a fraction of greenhouse 
gas emissions per unit of economic output), reductions in the targets don't 
necessarily result in a reduction of the total greenhouse gas output, as 
emitters can increase their production, maintaining - or even increasing - 
their aggregate emissions.

      Under the proposed federal program, the emissions intensity reduction 
targets for each sector are based on an improvement of six per cent a year 
from 2007 to 2010, plus two per cent per year thereafter until 2015, 
producing an industrial emission intensity reduction of 26 per cent, 
resulting in a projection that there will be a 20 per cent reduction of GHG 
emissions by 2020 - assuming the proposed intensity reductions outstrip 
production.

      Although ultimately the larger issue is aggregate emissions, says 
Douglas Tingey, associate counsel with Davis LLP, carbon offsets programs 
still have their uses.
      ''On a project-by-project basis, they're very effective," says Tingey. 
"I mean, a windmill's a good thing, from a greenhouse gas perspective, isn't 
it? . . . We should be encouraging any of these projects."

      "We have people taking pot shots at the offsets program because of its 
policy context - it's not that it's bad, or that it's not an effective 
incentive, or that there aren't projects out there that are deserving," he 
says.

      "I'm happy with the intensity approach personally - not 
professionally - if it's in the context of greenhouse gas emissions 
regulation," he said. "It's a very important tool, it's a good approach. But 
from a big picture, though, it doesn't make a lot of sense to be using 
offsets to allow people to meet intensity targets if all we're doing is 
increasing our aggregate emissions in a more efficient way," says Tingey.

      As the debate continues over the greater merits of a carbon offsets 
program will likely continue, another question remains: what, if anything, 
will the new carbon offsets program mean for Ontario's lawyers?
      Tingey says that it's important to recognize that this is not just an 
important development for environmental lawyers, but for the whole 
profession.

      "There's work here for securities lawyers, for tax lawyers, for 
banking lawyers, for just basic commercial lawyers who put deals together; 
there's work for almost every business law discipline out there - 
international stuff.

      "This is not an 'environmental lawyer's problem.' There are 
environmental law issues, there are a whole host of compliance issues, 
getting companies compliant with the system; but the offset projects, they're 
not about environment law - they're about business law. It's project law. It's 
putting deals together, it's financing projects, it's putting shareholders' 
agreements together - it's linking the projects together to the people who 
are motivated to participate in the offset creation process," he says.
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