The Lexpert Guides to the Leading US/Canada Cross-Border Corporate and Litigation Lawyers in Canada profiles leading business lawyers and features articles for attorneys and in-house counsel in the US about business law issues in Canada.
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www.lexpert.ca/usguide-corporate/ | LEXPERT • June 2017 | 25 have any greenhouse-gas-reduction strategies in place will likely adopt the federal regime. "As for Saskatchewan, which presently has neither a car- bon tax nor a cap and trade regime, the province has indicated that it will not adopt the pan-Cana- dian framework," says Booth, "which may lead to a constitutional dispute between the province and the federal government." In addition to existing economic factors, the way in which each jurisdiction implements the pan-Canadian framework will also have an im- pact on companies' decisions on where to invest in Canada. For example, cast the net a little wider and US companies that at first blush may not seem to be affected may have to, for example, re- examine the cost of their supply chain. "If you're a US company," says Booth, there may be a cost impact to your supply chain com- ponents coming from Can- ada. "Did your costs go up as of January 1, 2017, for in- puts produced or manufac- tured in Alberta? If there is a very energy-intensive as- pect to inputs produced or manufactured in Alberta, that may be the reason." Bertoldi agrees that changes by the provinces as they work toward the goals in the pan-Canadian framework will have a significant impact on a wide range of the economy. Take, for example, the convergence of different expertise needed to build a power plant. There are the lenders to finance it, the de- veloper to find the location and line up the site and do the prelim- inary engineering, the contractors to build it, as well as the tur- bine supplier if it's wind, or the panel supplier if it's a solar project. "There's a whole universe of businesses that will benefit from these policies because of the opportunities to play their role in developing, financing, constructing and operating these facili- ties." As a result, according to Bertoldi, large contractors with ex- pertise in renewables who have recently completed building, for example, wind farms in Montana may find that opportunities in Canada look very attractive. Shane Freitag, also a Borden Ladner Gervais LLP partner in Toronto, adds that, going forward, it is likely we'll see existing companies wearing multiple hats, with oil and gas companies having a renewable energy arm. He says this is a way for these companies to reduce their overall environmental footprint by having these companies become more energy efficient, and in some cases, creating offsets through the development of renew- able energy projects. "Not only does it reflect increased corporate responsibility but it has become good business." Balancing Act Williams says it's important to view the pan-Canadian frame- work through the lens of larger macro-economic issues. In the context of inbound investment into Canada by both US and international investors, he says there's potential for a perfect storm. "On the one hand, there's President Donald Trump coming in and saying, 'I'm going to streamline regulatory re- quirements to make it easier for companies to extract shale and natural gas reserves, especially on federal lands,' which likely means there's going to be more oil and gas produced in the US over the short to mid term." At the same time, continues Wil- liams, "you're layering on the pan-Canadian philosophy, which at its heart espouses a carbon tax. How will this affect the competi- tiveness of the oil sands, for example, in Alberta?" This is obviously a situation that will require a balancing act by Canadian and provincial governments. If our policies make Can- adian oil and gas producers uncompetitive with carbon levies, says Williams, "this could lead to a loss of investment as investors may decide the US affords better opportunities. We see an example of the balancing act governments will need to perform with the federal government's support of the Keystone XL Pipeline." Christopher agrees, saying "balancing act" are definitely words that apply to the oil and gas sector in light of the pan-Canadian framework and the oil and gas market in western Canada. He foresees governments looking at ways to alleviate the impact on export industries through, probably, a mix of technology invest- ments, tax breaks and emissions exclusions, all in an effort to maintain competitiveness. He says there's still uncertainty, "but if I were an international investor, given the massive oil and gas resources at play and con- sidering that pipelines are being approved, with the potential consequence that export markets will open up, I would be keep- ing my eye very closely on the opportunities to see how these poli- cies end up shaking out." ENVIRONMENTAL POLICY "The potential effects of the pan-Canadian framework and existing provincial climate programs are widespread, potentially impacting oil and gas companies, both non-renewable and renewable power generators, and investors." Robert Booth Bennett Jones LLP