Environmental Law Year in Review 2020: Current trends in climate change regulation and mitigation

Robyn:    Good afternoon, everyone, and thank you so much for joining us for today's discussion. We have experts from both sides of the border with us here today. My name is Robyn Gray. I'm from Sussex Strategy Group. We're a government relations and strategic communications firm with offices in Toronto and Ottawa. We work with clients from across the country on issues pertaining to all levels of government. I manage our environment practice as part of our energy and environment team. The title of today's event is 'Year in Review - Current Trends in Climate Change Regulation and Mitigation'.

So within that spirit, if we look back a full year ago within the context of climate change in Canada and the US, Canada had just re-elected the Liberals back into power with a minority government in an election where I'd argue climate change and a need for a plan to address it did become a determining factor in the outcome. In the US, last November 4, the Trump Administration notified the International Community that it was planning to officially withdraw from the Paris Climate Accord in a years time, making it the only nation to abandon the agreement. Globally, nations were preparing for COP25 after a successful UN Climate Action Summit in New York, where we saw more nations and private entities commit to net zero targets. While I don't think we appreciated it then.

It seems like a much simpler time than where we are now, 8 months after the COVID pandemic was declared, and the impacts of which are only increasing in both countries. The urgency and imperative, however, to address climate change has not changed. But it's just been made that much more layered. Some governments see their plans for economic recovery intertwined with addressing climate change with resiliency becoming a recurring theme. We have seen this in the EU, with the European Green Deal being part of the pandemic recovery plan, as well as intentions from Canada and from the now President Elect in the US, which we will discuss shortly, because I cannot believe it's only been 8 days since the election took place. So with all of this going on I'm sure we could have a 3 hour discussion. We won't. So we are going to focus in on some key issues around climate change regulation, and its challenges and sovereignty, and private governance. We will finish off the discussion with some Q&A so with any Zoom call you'll see the Q&A box at the bottom. So please put your questions in there and we'll get to them at the end of the session. We will try to add a bit of time if we find the discussion's going on a bit longer but if we don't get to your question we'll ensure that we follow up with you just to make sure that everybody gets their questions answered. 

It's my pleasure to introduce to our panelists, in no particular order. Jennifer King is a partner of Gowling WLG's environmental law group with a national practice in environmental law and it's intersections with indigenous, constitutional, municipal, land use planning and regulatory law. Jennifer is an active member of the firm's Canada North, Indigenous, Advocacy and Municipal Law groups. Jennifer provides strategic regulatory advice and representation on matters including environmental impact assessments, natural resource development, major infrastructure projects and endangered species approvals included in Canada's near and far North. She is a tenacious litigator who represents clients before all levels of Ontario courts and the Supreme Court of Canada and regularly appears before Tribunals, including the local Planning Appeals Tribunal. She has a special expertise in constitutional division of powers, foremost in the areas of climate change, municipal law and transportation. 

Liane Langstaff is an associate lawyer in Gowling WLG's Toronto office. She practices environmental law with a focus on environmental litigation, environmental assessments and climate change. She assists her clients with complex issues at the intersection of business, law and the environment, drawing on her Bachelor of Science in environmental sciences, MBA and various doctor degrees. She is the co-author of 'A Guide to Canada's Impact Assessment Act' and frequently lectures at schools of law and planning. She acts as climate governing expert with the Canadian Climate Law initiative presenting to corporate boards on the risks and opportunities presented by climate change. 

Brook Detterman is an principal in the Boston Office of Beveridge & Diamond where he co-chairs the firm's air quality and climate change practice. He has represented clients on nearly every form of climate change regulation in the US, including Federal programs adopted under the Clean Air Act, State and regional cap and trade programs, carbon off-set development and private governance actions. Brook has also worked on a range of international climate governance matters including those arising under the Kyoto Protocol, Paris Agreement and Coursera. 

Finally, Eric Christensen as counsel in the Seattle office of Beveridge & Diamond. He is a leading energy practitioner in the Pacific Northwest. With more than 30 years of experience Eric has a successfully represented clients in litigation and regulatory matters ranging from the US Supreme Court to proceedings before Federal and State agencies. His expertise encompasses energy regulation and transactions for both renewable and traditional energy producers, environment permitting, renewable energy credits, electricity markets and greenhouse gas regulation. So welcome to our panelists. Thank you for joining us today. Very clearly expertise across the board which is great.

So, I think as I mentioned, we will be getting through a few different topics, if I can change my slide, but I think what we want to focus on at the beginning is the outcome of the election. As I mentioned these are the topics that we will be covering but big old number one we're going to be looking at the US election. So, turning to Brook and Eric. What happened and what does this mean for climate change policy? 

Brook:    Yeah, thanks, Robyn, and I should say that it's a real pleasure to be here with my fellow panelists and to be invited back to the annual Year in Review hosted by Gowling WLG. So thank you for that. What is a Biden Presidency mean for climate change? Right. I think quite a bit. President Elect Biden has named climate as one of his top four priorities, right alongside addressing COVID-19 economic recovery and racial equity which are, of course, being macro factors at work in the US right now and has announced that the US will rejoin the Paris Agreement and I would expect that to occur pretty quickly, next year. Alongside rejoining Paris, it's potential that the US will reset it's national determined contribution to the Paris Agreement, potentially with deeper cuts than were initially proposed when the US initially joined under President Obama. Then proceed with developing some pathways for achieving those targets. Now, what could a Biden Administration in a divided government in the US? A few things. Carbon pricing may be less of a long shot than it first appears. Some groups, including the US Chamber of Commerce, have actually supported a national price on carbon. So it's not a black and white issue across industry in the US. Nonetheless, a divided a Congress will make that challenging. I think we'll see incremental action under existing programs and laws too. Things the Administration can do without really any congressional support. A number of former regulators and experts have proposed a list of things. Among these are adjustments to ... pricing rules for renewable energy, ... , EPA's Office of Air and Administration to use the Clean Air Act to develop increasingly aggressive GHG targets for motor vehicles, for power plants, potentially for the oil and gas sector, including updating the methane standards for oil and gas drilling that have been undergoing rule making over the past couple of years, the Office of Chemical Safety and Pollution Preventions, also likely to tackle increased HFC regulation under the Kigali amendments to the Montreal Protocol and bring the US more in line with that and do a number of other things under the Clean Air Act that may not require any congressional action.

A couple of other things that the Biden Administration can do is place an increase climate change focus in Federal permitting processes under the National Environment Protection Act, Federal leasing actions for example and drive more local policies and help States pursue those as well, buildings and electrification for example, developing carbon sinks through the US Department of Agriculture programs that have been recently launched could get expanded there. We could see an expanded application of the 45Q Tax Code which supports carbon sequestration. I'm sure we'll see some action in biofuels. So a number of things I think that a Biden Administration can tackle. We'll also see how the Democratic Party comes together, or not, on this given that there's some friction within the party itself and certainly a more aggressive than  less aggressive element there.

Those are some high level thoughts and I'll hand it over to Eric to talk more specifically about Biden's climate and energy plan. 

Eric:    Thank you, Brook, and welcome everyone. I think it bears emphasis, as Brook said, that the Biden Administration has identified climate as one of its four highest priorities and they have developed this part of their campaign a very extensive plan for addressing climate change. I think, if you read through all the 250 or 300 pages, there's a lot there and I think it's pretty clear that they thought carefully about what they can do without additional legislation as well as what they would like to do in terms of legislation with the new Congress. I think there is some possibility for new legislation. There's, I think, by partisan agreement on some of the things that are listed here such as new energy research. I think there's a good chance for new infrastructure investment program that would emphasize green investments of various kinds. That being said I think that the economy wide cap on emissions is probably not going to be enacted as legislation. Probably just as an Executive Order. Similarly the plan includes making the electricity sector entirely renewable by 2035. Again I think that's very unlikely, as a legislative package, but certainly possible in terms of an Executive Order.

There's a lot of other things that are pretty interesting that have been proposed and I think pretty imaginative in some cases. For example, US Department of Agriculture is likely to get a carbon bank, the idea being that farmers can sink carbon into their land and get some kind of economic credit for that. I think there's going to be almost every agency will be involved in some way. For example, the US Department of Transportation will be emphasizing, expanding, the infrastructure for electric car charging and the General Services Administration will be promoting conversion of the government's vehicle fleets to electric vehicles as a means to stimulate the EV market. I think the last bullet point there is a very heavy element of environmental justice in the Biden plan and I think they'll be working, they have a lot of flexibility within existing legislative authority to carry that out. So I think there'll be a specific office for that in EPA. There'll be a cabinet advisory agency on carbon and climate change as well. 

Robyn:    Great. Thank you very much for that. Jennifer, maybe just looking at it from the Canadian context. What do you think this means for us when we see the Biden Presidency come in? 

Jennifer:    I'm curious to hear what you have to say too, Robyn. I think that certainly it appears that the Canadian Federal Government sees this election as significant. After some of the American television networks announced that Biden had won, the Infrastructure Minister, Catherine McKenna who we know as the former Environment Minister, Tweeted, "It's been a long, long slog these past 4 years, internationally, on climate action and it will make a big difference to have the US back in the Paris Agreement joining Canada and like minded countries pushing hard for ambitious climate action." So certainly Minister McKenna sees this as significant and there's been a lot of discussion over the last 8 days about this issue. Certainly there's general consensus that the Biden Presidency will strengthen climate action in Canada and that generally there is expected to be more collaboration and cooperation. I think it's notable that the Biden/Harris campaign and now the transition team uses the same phrase as the Liberal Government used in their Throne speech in September, 'Build back together', and that's further to what you were saying earlier in your introduction, Robyn, just this idea about reducing GHG emissions and green investment in the recovery after the pandemic. Certainly that's what commentators are saying, that I've been reading about, and from my perspective, Liane and I are counsel to an intervener on the Greenhouse Pollution Pricing Act Reference which we'll talk about in a few minutes, but certainly if the US does start enacting more carbon pricing. Whether it's national or States.

That could reduce the argument for carbon leakage as in, if Canada has robust carbon pricing, some of the arguments against it is there could be carbon leakage. We could have the movement of innovation or jobs into the States but if the US also has carbon pricing that will reduce that argument. Certainly the other argument we see is that perhaps Canada can't afford to be more aggressive in their climate action because they could become uncompetitive if they're getting too far ahead of the US on climate policy. Again, the Biden Presidency might reduce that argument and could push Canada to be more aggressive in their climate action. What do you think, Robyn?

Robyn:    I agree with that. I mean it's taking one step back and it'll be such a change in tone and I'm sure this applies to all issues across the board between the two countries. But it will be, like you said, I think one of the key criticism or statements that any opponents to the climate change action that the Trudeau Government has taken has been to say, "The US isn't doing this. We're a smaller country. Why are we doing this?" That's gone, hopefully now. That won't be an excuse that one can use anymore, so hopefully it does kind of push beyond those types of statements and really look to making this a less partisan issue, at least in Canada when it comes to acting on climate change. I think there's a lot of different elements that I've heard Biden commit to when it comes to methane emission reductions, putting some more clear messaging around climate risk disclosure and how financial entities deal with that. Those will have roll on effects into Canada as well and the other aspect that I had heard was that Biden is looking to create a climate change office within the White House and to have a climate change czar who will look at all of government policy through that climate lens. So whether this will be something that Trudeau can then emulate, we'll see if this kind of opens the door for some of these more aggressive policies that perhaps Trudeau just hasn't been able to do because of the political reluctance to do so. 

So, I think we're going to have to keep track of how quickly all of these things move. But there's still so much to talk about. But in keeping with the recent election, in context, I'll look to Eric and Jen to talk a bit more about climate change regulation in the Canada and US. As the slide will turn. It's being a bit aggressive today. 

Jennifer:    Thank you, Robyn. 

Eric:    So I think, just briefly, that one of the first acts out of the Biden Administration will be to re-enter the Paris Agreement and I think they intend to be front and center in the international arena addressing the climate crisis. I think that we can leave it at that. Can you add anything, Jen? 

Jennifer:    No. I think we can launch right into the kind of Federal aspect of it because we don't often get to have conversations with colleagues in the US and vice versa and just to say, briefly, obviously both Canada and the US are federations, in the State of the States and in Canada the Provinces, and I will start off by saying that the federations are very different. So Canada has a Parliamentary model that is quite distinct from the Presidential system operating in the US as I think all of us in Canada recognize by trying to follow what's going on in the US elections. So it's very different. Obviously we have the monarchy still involved in Canada and in Canada our Constitution was passed in 1867. It specifically defined the power of the Provinces and gave residual power to the national government. So you would assume more of a centric type federation whereas in the US the residuary powers were reserved to the States, which are the people, and the powers of the central government were defined and limited. So we don't have the time to talk about this in detail. I will leave it to the scholars to compare, as they do, but what is clear is that over time, over the last 100 years or more, our understanding of federalism and division of powers in both countries has evolved as our courts have interpreted it. What I have read, and what the scholars say, is that we have become less centric in Canada and more centric in the US and our courts continue to wrangle or consider wrangling's over jurisdiction.

Despite our differences in the way our federations work both countries are facing, currently, jurisdictional issues over who, the States or the Provinces or the national government and in some cases local governments, who has the authority over certain aspects of the environment and in particular climate change. We're facing these things right now. So what is clear is that the debate about the division of powers, despite these Constitutions being quite old, a bit younger in Canada but still pretty old to all of us, is that these wrangling's over division of powers continue. Particularly in the area of environmental law. Why is that? Why is it environmental law that we continue to have these leading Supreme Court cases in Canada dealing with the constitutional division of powers? Why are they in the area of environmental law? That's because the environment is not a subject matter that was specifically assigned to one level of government or the other in our 1867 Constitution. Rather, the Supreme Court has recognized that the environment is an amorphous topic and it's all encompassing, so it lacks the definition to categorize it under Federal or Provincial power. It's not listed in sections 91 or 92 of our Constitution. So jurisdiction over the environment is shared. So regulation of GHG emissions is no different, it appears, as I will discuss in a few minutes and it continues. This is currently what's before the Supreme Court on figuring out who has jurisdiction over this, how do we regulate GHGs while still being respectful of the Canadian federalism. As we know the impacts of GHG emissions, I don't have to explain this really to anyone who I am sure is on this call, the impacts of GHG emissions and climate change don't respect political borders. We all saw that this year and I'm sure Eric could tell us more about this.

The immediate example of the forest fires in the Western United States this summer. Those US wildfires directly impacted air quality in Canada and posed a health risk to some of the most vulnerable citizens of British Columbia while those same people were facing the threat of the pandemic. So the impacts of this are even beyond national. They're international, that's well known, but many of the sources of GHGs fall under both Provincial and Federal heads of power. But many fall under Provincial. So Canada's 10 Provinces hold legislative authority under the Constitution over electricity generation, natural resource extraction, forestry, local works as well as property and civil rights, whereas the Federal government has authority over marine shipping, railways, criminal law, trade and commerce and the residual power of peace, order and good government, which I'll talk about more in a few minutes.

So who has the jurisdiction over GHG emissions in Canada? Is it, can everybody regulate it, or is it something that's going to be limited to one level of government or the other and the Supreme Court has considered a reference on that matter and will hopefully be telling us soon. I think that's probably enough about the Canadian regulation, other than to say that this jurisdictional wrangling over which level of government can regulate it, probably it has some import beyond just climate change regulation, just this issue about the clash between the Provincial and Federal governments regarding climate change, what's the national government's scope of power to impose minimum standard legislation on Provinces? So it kind of goes beyond climate change but as some of the Provinces mentioned in their reference, which we'll be talking about, is the Federal government a babysitter of the Provinces if they aren't keeping up. So, Eric, I'll turn to you. 

Eric:    Yes. From the US perspective, the general trend has been in the absence of Federal action the States have stepped into the breach, and as we'll talk about in a few minutes, adopted some pretty aggressive climate policies. I'll just leave it at that. 

Jennifer:    Thanks, Eric. So we go to the next slide. Canada's a significant piece of Federal climate action, not the first, but what's really at issue right now is it's Greenhouse Gas Pollution Pricing Act, or GGPPA. The GGPPA was enacted by the Federal Liberal Government in 2018 to implement something called the Pan-Canadian Framework on Clean Growth and Climate Change which was a non-binding national climate strategy that named carbon pollution pricing as one of its four pillars. This framework was signed in 2017 by 9 of the 10 Provinces in Canada. Simply put, the GGPPA is a Federal legislation that prices carbon pollution to reduce greenhouse gas emissions and encourage innovation in clean technologies. It does so in two ways. First, it places a regulatory charge on carbon based fuels. This charge is imposed on certain fuel producers, distributors and importers and will increase through to 2022. Second, it establishes a regulatory trading system for large industrial emitters known as the Output Based Pricing System, or the OBPS. It includes limits on emissions, a credit to those who operate within their limit and a charge on those who exceed it. The OBPS is independent of the fuel charge. But the GGPPA does not apply to all Canadian Provinces. Instead it serves as a backstop in Provinces that have not adopted sufficiently stringent carbon pricing mechanisms and it's the Federal government that gets to decide whether or not the Provinces have applied sufficiently stringent carbon pricing mechanisms.

So the intention of the Act is that it permits Provinces to enact laws to reduce greenhouse gas emissions, through any legislative framework, provided that the Federal government decides that the Provincial laws satisfy the minimum national standards. So what of the Canadian Provinces and municipalities being doing to take action against climate change? What's interesting is that leading up to the enactment of the GGPPA in 2018, a number of Provinces had enacted carbon pricing, including Quebec, British Columbia, Alberta, Ontario, Manitoba and Nova Scotia. But in 2018 Ontario's government changed, and Ontario cancelled their cap and trade system and when Premier Kenney took power in Alberta in 2019, he also scrapped the carbon pricing scheme in that Province. But the map continues to change. So the map that you see here about the state of carbon pricing in Canada is not accurate anymore because Canada announced in September, a few days before the hearing of the carbon pricing reference, that they had approved Ontario's standards which Robyn will tell us about in a second. Perhaps, Robyn, maybe you can jump in and tell us. 

Robyn:    Sure. So it was timely in terms of the hearing that took place for the Supreme Court. It was 2 days I think before that started that there was a very early morning announcement by the Ontario government and the Federal government that the Federal government will approve the EPS, the Emissions Performance Standard as an alternative to the OBPS, which I think was a decision that many had been waiting for since the Provincial government had submitted the EPS as a proposed alternative more than a year before. So I think it took some people by surprise in terms of the timing but it also led to questions as to, so what happens now? This is now Ontario's third carbon pricing system in 3 or 4 years so it is something that obviously took people by surprise but also, okay, so what is the next step? Right now we don't know what that is. But the transition timing has not been announced and we could see the Provincial program actually being in place as of January 1, 2019. It could be January 1, 2020 or beyond. We'll just have to see. But it is something that, at least from the emitter's side, they need to know because they need to know who to report to. So it will add another column onto this ever changing map. 

Jennifer:    Yes. I'll now turn to Eric. I just wanted to also add that on top of all of that local governments and indigenous governments in Canada are also taking action. I'm sure we're going to hear from Eric about subnational groups in the US are doing but, and I won't give you the long list, but our indigenous governments and our municipal governments are all taking action as well. They're not waiting to see what the Provinces and Federal government are doing. They're acting as well. Eric. 

Eric:    Okay. So next slide, please. In the US, the States have a police power that allows them to protect the health and safety of their citizens and environment and so the constraints on that are primarily what the States can do in terms of how far they can go before they step on the rights of either the Federal government or other States. Using that power, the States have enacted a wide variety of programs intended to address climate change. These are two categories here. On the left you see the carbon pricing cap and trade regimes would have been introduced into the US by US States. The one that we're particularly going to focus on is California's which they have an agreement to trade carbon credits back and forth with Quebec. But there's also the RGGI program in the Northeast States. All these States have gotten together and developed cap and trade program where they can trade credits back and forth. On the right side we see the 100%25 clean energy mandates.

These are sort of the outgrowth of renewable portfolio standards that started cropping up about 20 years ago, which required a certain amount of electricity delivered in a particular State, to be from renewable resources and so, for example, in Washington the law in 2006 was adopted that will require 15%25 renewables by 2020. Similar laws were adopted in 27 States and the District of Columbia, I believe.

More recently they've gotten considerably more aggressive. The States noted here adopted 100%25 clean energy mandates. This has kind of just happened in the last couple of years. Even since this map was developed in April several other States have gotten on board and we anticipate that a few others will also jump on the bandwagon here pretty soon. These generally require the States to convert their electricity sectors to 100%25 renewables by some time in mid-century, and some have adopted even economy wide caps on carbon emissions, with the aim of reducing to net zero by roughly mid-century. So next slide, please. This is your slide, Jen, sorry. 

Jennifer:    Ha ha ha ha ha. Should I jump in here? I'll make this brief because I think there's been a lot of talk in Canada about these challenges. The Ontario, Saskatchewan and Alberta governments all challenged the constitutionality of the Act that I just discussed, the GGPPA. The Ontario and  Saskatchewan Courts of Appeal, the majorities found that the Act was constitutional, or is constitutional. Alberta came out with a decision a bit later and found that it was not constitutional. All of these were split decisions and all of them were focused on this residual power, the national concern under the peace, order and good government under section 91. So all three decisions were appealed to the Supreme Court and were heard in September at the Supreme Court of Canada. It was the first post-COVID hearing, I believe, at the Supreme Court at least in person. Liane and I, as I mentioned, act for one of the interveners.

The Supreme Court heard from multiple Provinces, dozens of interveners and the focus again was on this national concern branch. So the tension is really clear in Canada's submissions versus the Provinces that opposed it. Canada said that to deny Parliament jurisdiction to address this matter would leave a gaping hole in the Constitution. We would be a country incapable of enforcing the measures necessary to address this existential threat. On the other hand you have Ontario's factum which said that conferring Parliament jurisdiction over greenhouse gas emissions would radically alter the balance of the Canadian federation. So this shows really how kind of live these issues were. There's many other arguments. One of the interesting ones that I'd like to mention is just the emergency branch POGG. Over the course of arguing these references more and more jurisdictions have been declaring climate emergencies. But really the focus was argument on the national concern.

Every Canadian jurisdiction that participated in this acknowledged the existential threat of climate change and no one disputed that it needs to be regulated. The question is who gets to decide how to address it and whether or not Canada has this oversight role that they've established in the GGPPA. Back to you, Eric. That's all I'll say on that matter. If anyone has any questions let me know. 

Eric:    Alright. So, Robyn, can you slip to the next slide? Before I get into the details of this I forgot to mention when I was talking about the 100%25 renewable mandates at the State level, similar mandates have been adopted by over a 100 municipalities all across the US. They've stepped into the backing of the Federal government as well. So as I mentioned earlier, the Constitution in the US allows the States to regulate to protect the health and safety of their citizens and environment. But it's limited by the States can't step into the province of the Federal government. In the area of foreign affairs, the Federal government basically is supposed to be speak with one voice on foreign affairs. So this particular law suit involves the California/Quebec linkage on the trading of greenhouse gas emissions credits.

The Trump Administration filed suit last year against California arguing that this violates four specific areas of the Federal Constitution that gives the Federal government the right to conduct foreign affairs. The suit was dismissed earlier this year and basically the judge said this is just an agreement between California and Quebec. Doesn't rise to the level of a treaty or alliance or confederation, all of which are specific things in international law, and it's not a compact which is sort of a special Congressionally approved agreement between the States, and there are few of those in the US generally used to regulate shared rivers and things like that. But this isn't a compact. Just sort of a contract between the two sovereigns. Under the foreign affairs doctrine it said there's no interference with the US foreign policy because the US really doesn't have a foreign policy right now with respect to greenhouse gas emissions.

The fourth cause of action was ... by the Federal government. I suspect it will have a very strong challenge there. But one implication of the election is that I would be very surprised to see this kind of Federal action try to limit State powers to address greenhouse gases in the absence of a really egregious overstep by one of the States. So next slide, please. There's a number of other grounds where State actions in this area have been challenged. Probably the most important one is the so-called Dormant Commerce Clause. Under our Constitution the Federal government has the power to regulate interstate commerce. The courts have construed that to prevent the States from enacting discriminatory legislation that gives local economic interests artificial advantage over out of State economic interests. A number of renewable portfolio standard State laws have been challenged on this ground. None were successful other than Minnesota was successfully challenged on the grounds that it was attempting to regulate commerce where transactions never even entered the State of Minnesota. So that creates an important limitation on State power to address greenhouse gases.

You can't regulate transactions that occur entirely outside your State boundaries even if you want to. That creates complications for the leakage issues that Jen referenced before. The Supremacy Clause is the second important one. This is primarily played out in the area of Federal regulation of electricity markets in the US. Could probably have a graduate seminar on this particular topic but the short of it is that the Federal government regulates wholesale electricity prices, and there is an ongoing controversy about the extent to which the Federal government can use that power to limit the incentives and support that the States give to renewable energy resources, on the theory that those subsidies or encouragements artificially distort the wholesale electricity prices.

Federal standing and Federal court jurisdiction are important considerations right now because there's a number of States and localities that have sued greenhouse gas producers on the theory that greenhouse gas generation has created a nuisance or other common law sort of tort that's affected those States. The US Supreme Court has just taken a case from that was filed by the City of Baltimore that will determine whether those cases should be heard in State or Federal court.

The general view is that the States are more favourable for the States and local jurisdictions. So that's a decision to watch. I guess one other note is that there was a case brought by a small village in Alaska called Kivalina arguing on the grounds of Federal common law that greenhouse gas production created a nuisance in the form of erosion of the shoreline undermining that village. That suit failed in the Ninth Circuit, US Court of Appeals here, on the ground that there was no standing because the courts couldn't order an effective remedy for this kind of generalized harm that they were talking about. One other note, depending on Federal legislation the Supremacy Clause may come into effect again if you get a national carbon price, the extent to which actions like AB 32, which is the California program, interfere with the national carbon pricing regime could become an important question, similar to the question about whether State actions to support renewable energy interfere with the Federal role in regulating wholesale electricity prices. 

Robyn:    Great. Well, thank you, Eric and Jennifer, for that. I just wanted to note too if you have any questions please submit them in the box below and we'll get to them at the end. If we could just go to the next slide we'll turn the conversation over to Brook and Liane to talk about private governance. We've talked about climate change regulation so what can you tell us about the latest developments when it comes to private and corporate governance? 

Liane:    Thanks, Robyn. I think one thing that's important to understand when you talk about corporate action on climate change is that, despite the pandemic, climate is still on the corporate agenda. One of the interesting things is that it's actually potentially sharpening our focus about what do we do about these external threats and how can you prepare for them as a business. Some people are looking at this as the preliminary round, and if you we go to the next slide, a parallel to this is calls for green recovery.

So we're in the pandemic right now. We know we need to build back. How are we going to do that? I might throw it back to you, Robyn, because I know you've had your ear to the ground on this about what's happening in Canada more specifically about green recovery. 

Robyn:    Yeah, thank you. I'll be quick. I think there was, when we were leading up to the speech from the Throne from Federal government in October, there was a lot of momentum and a lot of discussion about what could be included in that to really align the green recovery with the pandemic recovery. We heard some really, really ambitious language that we thought we would hear when it comes to more initiatives needed to surpass their 2030 goals. How can we move towards the net zero goals? How can we focus on the ... transition in the Western Provinces? But I think a lot of that was taken over by the fact that we started coming back to a second wave of COVID and you could not square those two. There was still some language within the speech from the Throne in terms of next steps. Looking to develop and refine the climate change plan and the company legislation this fall.

Depending on how long you look at the fall, we haven't seen anything yet, but there is still some strong language out there that I think we'll see unfold because there are a lot of commitments that were in the Liberal Party's election platform just last year in terms of how to move on climate change. So I think they'll come. Maybe we'll see some in the new year and there's also a full economic statement that we'll be looking out for as well. But it hasn't got there yet because of COVID. 

Liane:    Yeah, we're not at the recovery stage yet, unfortunately. 

Brook:    Just from a US perspective too. This has been talked about quite a bit. I think just to build on something here. Talked about right at the outset. This has kind of fallen flat so far, the idea of a big Federal stimulus ... focused on green infrastructure spending to help boost the economy but it might occur next year. At least in a limited way. There's precedent for with the American Recovery and Reinvestment Act that followed the recession in 2008. I think there is by far an interest in increased infrastructure packages so that could be one way we see a little bit of this in the US, anyhow, but there certainly hasn't been much appetite for it, to date, at the Federal level. Some States and cities are thinking about this with different bond initiatives and different ways to tackle sort of job creation through a green infrastructure developments. A lot of it's on the adaptation side but that's another area. As Liane was getting at, despite whatever may or may not be going on in any given country in terms of governmental regulation, lots and lots of companies have committed to differing levels of GHG reduction. There's some pretty interesting data out there on the volume of this.

A recent study indicates that almost 25%25 of major companies, now I don't know how this was defined by this study, but major companies have committed to meaningful GHG reductions by 2030 which is certainly a significant number. This is according to a Fast Company article that was out I think last week and the numbers basically quadrupled over the last 4 years. There's been a lot of growth in this area in terms of private governance and what individual companies are due to develop net zero commitments or even just reduction commitments. It's across lots of different sectors. It's really, really a broad based effort. There's some differences within sectors, for example within the oil and gas industry, some companies have made really aggressive greenhouse gas announcements and others haven't. So it's not always even across industries but it's definitely underway and a trend, at least in the US, and I think, Liane, similar in Canada?

Liane:    Yeah, and we're seeing similar things in Canada. The Government of Canada itself made a commitment to be net zero by 2050 and then we're seeing it also in our major corporations that this is where it's going and it's including the oil and gas sector. This is just one of many examples but Cenovus' long term ambition is to reach net zero emissions by 2050 and it has some of those interim goals in place, like you're saying, by 2030. Cenovus plans to reduce per-barrel greenhouse gas emissions by 30%25 by the end of 2030 using 2019 as it's baseline and to hold absolute emissions flat by the end of 2030. So we're seeing the same types of goals set out there to reach these net zero commitments. 

Brook:    It's really coming from a number of angles at least from our perspective. Consumers are demanding it to a certain degree. It's becoming even a competitive thing in certain industries. The outdoor products industry, outdoor recreation, for example. You see a lot of movement towards aggressive standards or even climate neutral type certifications because seeing other industries that rely on snowfall and cold weather use this as part of their marketing. Other industries it's more just a general demand from consumers and investors who are focusing on both operational or financial risks related to climate, and we'll talk a little bit later about some of the disclosures that go along with that. Sometimes within we see action. A lot of the large technology companies in the United States, for example, vie for activist employees, pushing large tech companies to do more internally even in the absence of a Federal or a State requirement to do that. So there's a number of sort of drivers there and there's some challenges on the other hand. There's a lack of ease in terms of calculating GHG footprints. Lots of different standards. The World Resource Institute GHG protocol is really the sort of the most robust, and probably the most widely accepted, but it's complex. It takes some work to get your head around that especially if your kind of a mid-sized company. It's certainly an issue.

Then there's a lot of difference in terms of how deep the efforts go or how deep you can measure your footprint or your reduction efforts. It's hard to do that once you get into scope 3 emissions and the supply chain or the value chain for product. Then these other questions about reducing direct emissions and contracting for renewable power or carbon off-sets to off-set what you can't. Just a number of moving pieces here. I think we're starting to see an industry coalesce around some of this and provide service offerings to help companies. But certainly some work to do. From an off-set market perspective there's been a lot of growth. I'm seeing, at least in our practice here, a lot more inquiries come in for new carbon off-set projects. A lot more transactional volume in the voluntary markets than historically there has been in the US, at least from a limited perspective, and there's a whole bunch of registries out there developing new methodologies, it seems like weekly or monthly, for GHG sequestration, in particular nature based programs. Agriculture, forestry, ocean sequestration and so a lot of science happening there and technical work that kind of creates the foundation for these programs, helping drive it, sourcing incredibility remains key. There were a lot of problems with some of the CDM off-sets and red projects that occurred and so I still think there's a little bit of trust issue sometimes, as well as this important consideration to make sure your off-set program isn't actually hurting some local group or people in some sort of social harm kind of way, and people are actually looking for off-sets, I find, that kind of go beyond. That provide a social good in addition to the environmental benefit. All that kind of comes up when you're managing off-set project development and procurement and some of it relates to the contracts as well when you're putting those together. Any other thoughts there, Liane? 

Liane:    I enjoy hearing you talk about the off-set programs in the States, just because I think it is a little bit more further along than what's happening in Canada, but that's not to say that nothing is happening. I think it's just that we have been a little bit behind you due to the regulatory changes that Jen spoke a little bit about. So just for Ontario, as an example, they had an off-set program under the prior cap and trade regime. But when that program was repealed so too were the off-set protocol. That being said in other Provinces we do have more guidance on off-sets. Alberta and BC, for example, have off-set programs and with the Federal government with that Greenhouse Gas Pollution Pricing Act that was at the heart of the Supreme Court case that we just argued. There is going to be a recognition of off-set credits as part of the second part of that Act, the output based pricing system, so you can use off-set credits to meet our requirements. It's just that we're waiting on proposed regulations. They also were to be released in the fall of 2020. Here we are. They're not here yet. But we'll be watching for them.

But we do have several government guidance documents that indicate that off-sets will be consistent with international ISO standards so hopefully that will help when we're dealing with kind of cross border transactions of off-sets. At the end of the day off-sets will be only issued to real quantified, verified and unique greenhouse gas emissions. That picks up a little bit on what you said, Brook, that people who want to make sure that these are actual reductions. There's hopefully going to be harmonization. The Federal government has said that they will accept Alberta and BC's emission off-sets under the OBPS. It will be similar types of projects, anaerobic composting, afforestation projects, landfill methane management, so all of those we can see that those are going to come on line, hopefully, once we get this better guidance. Then I guess this takes us to the last piece of the puzzle, when you talk about corporate action on climate change, is these disclosure obligations which are increasingly key to lending to other qualifications.

We're seeing the news out of the UK, is really interesting to me, so they've said that companies need to report on the financial impacts of climate change in the next 5 years and it's the first country to make those disclosures mandatory. But at the same I think it's not that this doesn't exist in Canada in a certain way already. That's because securities legislation in Canada always required reporting issuers to disclose the material risks affecting their business and the financial impacts of those risks. But I think what's changed in Canada recently is just a greater understanding of climate change as a material risk. So we saw, initially, the comments from Mark Carney in 2015, those just have been piled on by many members of the business community. I think the CEO of BlackRock coming aboard with that. We're also seeing the regulators kind of supporting these efforts or clarifying how do you do good disclosure and reporting. So last year the Canadian securities administrators issued a specific notice about reporting on climate change related risks. Basically some of the advice was to move beyond your vague disclosures. It's not enough to just say climate change is a risk. You have to start to look at what are the specific litigation, transition, regulatory risks to your business from climate change and then how are you going to mitigate those risks?

The last thing I'll say is there is also kind of an increased body of knowledge about what does this all mean for boards of directors. So the Canada Climate Law Initiative, which is a group that Jen and I work with, this summer they commissioned a legal opinion that concluded that corporate board members and officers are legally obligated to address climate change risk and opportunities. This is all through the corporate duty of care. So you have to be looking, make yourself informed about the risks of climate change and then be satisfied that something is being done about this material risk. There is movement on that in Canada, even if it hasn't been made mandatory, like in the UK. Is there anything you'd like to add on that, Brook?

Brook:    No. I can just say quickly that current SCC requirements in the US don't specifically address climate or related risks but 2010 SCC ... requires disclosure for risks that are material. So that's always a question. What's material? And encompasses physical risks to infrastructure, supply chain, etcetera, and also transition risks, as well as change, and that shapes markets. Voluntary disclosure under PCFD is alive and well and major investors, BlackRock I think and State Street, are requiring that for some projects. I think that's certainly building in the US. But yeah, it's probably not as robust as it is, for example, in the UK and I think there's some questions about how do you define material and how you disclose these risks in a comprehensive and meaningful way.

So this is our last slide talking about anyone who's trying to get credit here for this program. If you are doing so in the United States you might need a secret password which is Canada. So write that down and submit it along with your evaluation form at the email address shown here on the bottom slide and we'll submit your COE credits for you. I don't know how that works in Canada but I think the Gowling folks have got it under control. 

Robyn:    Great. Well, thank you, Liane and Brook, for that. It's really interesting to see how these things are running in parallel really and how they're, in some places, there's some type of complimentary work and in others there just so different. Not even remotely close to what government is doing and just doing what the market is determining. Really interesting parallels there. So, I think you've answered everyone's questions as they came up so well done, panel. We don't have any standing questions and answers but since I do have this time and maybe just see if there's any last minute Q, oh! As I said that one comes up. Nope. Just thanking us. Great presentation. That's great. So, I'll ask one question and see if we have anything come up but maybe just of each of you quickly, what do you want to see next given the results that we saw in the US, given what's happening on the private governance side, what's one thing as one who's invested in this area quite a bit, what's one thing you want to see happen in the short term between the US and Canada? Let's start with, who wants to start? Let's go with Jennifer because you looked at me. 

Jennifer:    Did I? This is hard on these Zoom calls. You don't know who you're looking at. You can get in trouble. I think it's really conversations. This is what we're hearing about that there's going to be more collaboration. I want to hear what it's going to look like. I think not waiting until January. I think we're all very eager to understand how the two countries are going to be working together. So really that and then I think some action in the Arctic. I think is going to be really important going forward. Obviously the Arctic is the most impacted by climate change and by all metrics has the least input into it. Anything that the governments can do to work together on that really shared area of responsibility. 

Robyn:    Great. 

Eric:    I'll take another shot at this. So this comment probably reflects my particular bias as an energy nerd from the Pacific Northwest, but one of the really important issues for our region that's been percolating along for the last 4 years, is the Columbia River Treaty which currently governs hydroelectric operations on the Columbia River system which is shared between Canada and the US. This dates back to the early 60's. There's an agreement with the Johnson Administration in which basically there was an agreed river operations so that the storage reservoirs, which are primarily in Canada, worked in coordination with the energy generation reservoirs which are primarily in the US. Like Grand Coulee Dam. In return for that we sent some of the power generation, that was enabled by the cooperation, back to Canada. I think there was a great deal of public involvement about 4 years ago on both sides of the border and then it kind of went into a black box. We haven't been able to figure out what, if anything, the US State Department has been doing about it but I anticipate that that will, at some point, bubble up to the surface and that's, as I said, a really important issue here in the Northwest. I anticipate that the Treaty will be expanded to address endangered species, aquatic ecosystems connected with the Columbia River system and so on rather than just focusing, very narrowly, on power and water rights. 

Robyn:    Great. Thank you. Liane, how about you?

Liane:    I think I'll just pick up on something that I think you said at the beginning, Robyn, it's what we see here is a tone shift and I think because climate is a collective action problem it has been really difficult, at least for this Federal government to implement its priorities when it's largest trading partner maybe isn't aligned with that. So I think what we'll see is those impediments are now going to be reduced and you'll see corporations kind of leapfrogging what's being done now that they are almost secure in the fact that both sides of the border there's a recognition that there is a threat of climate change. We can have reasonable discussions about how do we fix it? But at least there's some consensus that some movement is needed. 

Robyn:    Great. And, Brook. What do you think? 
Brook:    Just briefly to build on what Jen said. Dialogue, coordination and a focus on trade. I think Canada's one of the US's largest trading partners. Mexico's about to launch a carbon scheme supposedly this year. It's going to be delayed and I think coordinating North American actions in a positive way, that helps all the economies is important. You see Europe starting to do that more with a proposed border adjustment mechanism that might come into effect next year that would place, essentially, an import carbon tax on products made in higher emitting country jurisdictions, so not saying that's the right policy or even a good policy for any particular jurisdiction, but that's an example of coordination by a group that is trying to work together. To the extent there is further action on climate, any of the sort of North American countries, I think it would be wise to coordinate that and ensure our mutual trade interests are protected at the same time.

Robyn:    Great. Thank you. Okay, so we have one question and I think this would be a good rapid fire wrap it kind of question. So we'll keep it to a quick answer. From Albert, what do you think is the easiest initiative for both or either country to get done first? Start at the end, Brook. 

Brook:    I've got two. One thing that could happen pretty quickly in the US is an extension of the renewable energy tax credits. They're sunsetting the investment tax credit and the production tax credit for wind. That's number one. Number two is just improvements in Federal permitting processes. There's been some improvement in the past couple of years under the Trump Administration in terms of a one Federal decision which has sort of streamlined all the various, or attempted to streamline, all the various Federal permitting actions. In particular for energy infrastructure projects and that could be something that could support all forms of energy including offshore wind and its build up. 

Eric::    I think the easiest step, and probably the first one that will be taken by Joe Biden when he's sworn in, is to rejoin the Paris Agreement and I think you'll also see a large pile of Executive Orders that will be issued within the first few days of the Biden Administration that address climate change and energy policy. 

Robyn:    Great. Liane. 

Liane:    I think in terms of what's happening in Canada the easiest actions will be those related to resiliency. Climate adaptation and investments and infrastructure that can also spare the economy post-COVID. I think that's where we'll see a lot of consensus in Canada. 

Robyn:    Great. Last word to Jennifer. 

Jennifer:    Well I'll agree with Liane. I think that that's fair and in Canada we're in a different situation than Brook and Eric are in where they're facing a big change. So some of the priorities of our different governments are continuing rather than changing. So we have a better sense of maybe what it is difficult or easy for them to manage. I think that right now what we're waiting for is what's the US going to do as our largest trading partner. As Liane mentioned we want to hear what they're going to do. I think the runoff elections in January are going to be really important in the Senate and then we can see how Canada and the US can cooperate. 

Robyn:    Great. Great answers. Thank you. So, that concludes our session today. I wanted to thank Liane, Eric, Jennifer, Brook and your firms, Beveridge & Diamond and Gowlings and thank you for letting me join in the conversation. I think we're all in agreement that we love talking about this so it's nice to dedicate a good hour and a half to doing that. Thank you to everyone who joined in and the comments at the end that, "appreciated the session", so thank you for those. With that I'll wish you a happy afternoon and a great rest of the week. Thank you. 

Jennifer:    Thank you. 

Liane:    Thank you. 

Brook:    Thank you.