Lexpert Magazine

LEXPERT MAGAZINE | MAY 2018 49 | CARBON PRICING | addressed "to ensure the alignment and equivalency of provincial and federal poli- cies, especially as it affects provincial com- petiveness within and outside Canada." He noted, in "A New Era of Carbon Pric- ing in Canada and another East-West Di- vide," published by Burnet, Duckworth & Palmer, that "perhaps the greatest question remains is how these policies will fare given the interconnected nature of the North American economy and what appears to be a divergence on carbon policy under Presi- dent Trump." e east-west divide Dixon alludes to is clearly seen in how most provinces east of Manitoba have decided to meet the frame- work's requirements. Ontario and Quebec have both opted for a cap and trade approach, under which their governments set a cap on the amount of emissions allowed and permit compa- nies that exceed the limits to purchase al- lowances, through auctions, as they are called, from those that did not. In 2017, the two provinces signed a linking agreement with California, as part of the US Western Climate Initiative, which allowed all three to use carbon allowances issued by any of and regulatory regime in Ontario and elsewhere in Canada and also have a good working knowledge of the regimes in key foreign jurisdictions. I have been helping clients in the power business, for instance. Non-emitting power in Ontario may be desirable in certain US states that have re- newable portfolio standards and may place a value on the clean emission attributes of our power. Part of the analysis is looking into the eligibility in certain states of On- tario power: how is [it] treated, is it eligible and how are the environmental attributes treated? Similarly, if you import electricity in Ontario, there is an emission factor add- ed and the importer is required to acquire a specified amount of allowances." In reference to carbon pricing, he says, one question that is oen asked is, how does the province price the cost of emis- sions from business? "is is a function of understanding who is captured in the cap and trade, carbon tax or similar regime, what are the requirements, who is covered, who is required to acquire allowances at auction or in the secondary market [in a cap and trade regime], can the costs be passed on to end-users, and so forth," he says. their governments, interchangeably, and to hold joint carbon auctions. ere are reasons why Ontario, as an ex- ample, was able to choose a different solu- tion than a province such as Alberta or Sas- katchewan, says Kro. "In Ontario, there's been a lot of progress on the emissions intensity and emissions aspects of power and electricity. We are off coal and we have a very clean power grid with non-emitting power, which is wind and solar and nuclear, [the latter of which] is very clean." Keeping up with the complexities of the various initiatives across the country and in the US - and bear in mind that all the governments had existing plans to combat emissions prior to the announcement of the framework - is a critical service Kro says he brings to his clients. "At Stikeman Elliott, which is a na- tional firm, we oen find ourselves having to understand the cost and opportunities to businesses presented by the difference carbon pricing and cap and trade regimes that apply, and oen involve cross-border or cross-jurisdictional issues," he says. "So, in the case of carbon and climate change, we need to know the current legislative

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