Climate Change Considerations in the Federal Impact Assessment Act: Step Forward or Business As Usual?

INTRODUCTION

After many years of inconsistency in assessing greenhouse gas emissions (GHG) in federal environmental assessments,[1] integration of climate change considerations is now explicitly required under the new Impact Assessment Act (IAA or the Act).[2] The Act contains prominent climate-related requirements in both the assessment and decision-making phases.[3] As one might expect, the statutory provisions themselves are relatively succinct; details are left to guidance that was not initially in place when the Act came into force in August 2019. In July 2020, the federal government released its final “strategic assessment on climate change” (SACC),[4] updated in October 2020,[5] which contains the final guidance to support implementation of the Act’s climate change provisions. This article presents and discusses key features of this guidance, as well as remaining areas of uncertainty and concern.

Overall, the final SACC is an important step forward for implementation of the IAA as it provides some — but far from complete — clarity with respect to what the IAA’s climate change provisions will mean in practice. For example, as discussed below, the SACC will guide proponents in providing information regarding project-specific GHG emissions and the new 2050 net-zero emissions commitment,[6] it explains what information must be provided with respect to emissions intensity and best-available technology, and it clarifies when upstream emissions data will be required. However, the guidance does not provide complete clarity, and there are several features that are cause for concern, particularly with respect to use of carbon offsets and the ability of a proponent to discuss how a project “may displace emissions internationally” without providing a downstream emissions analysis. Forthcoming technical guidance will no doubt provide further clarity on some of these areas. However, to the extent that one is looking to the SACC, and the IAA regime in general, as a tool for achieving Canada’s international climate change commitments, it remains uncertain how implementation of the IAA will assist Canada in achieving its commitments in respect of climate change. In many ways, the SACC sets a basis for business as usual.

BACKGROUND AND CONTEXT

Since the 2015 election, the Trudeau government has engaged in a number of initiatives to address climate change and GHG emissions. These include the Pan-Canadian Framework on Clean Growth and Climate Change,[7] Canada’s mid-century long-term low-greenhouse gas development strategy,[8] a commitment to achieve net-zero emissions by 2050,[9] accelerated phase out of coal-fired electricity,[10] and inclusion of climate change considerations in the Impact Assessment Act. This set of initiatives aims to, among other things, put Canada on track to achieve its emissions reduction commitments in the Paris Agreement[11] and deeper reductions beyond.

After a lengthy and at times contentious law reform process,[12] which included input from the Canadian public, industry, experts, and Indigenous communities and individuals,[13] the IAA came into force in August 2019, bringing with it the first ever explicit climate-related statutory provisions in the federal assessment regime. While the IAA does not represent a wholesale redesign of the previous regime under the Canadian Environmental Assessment Act, 2012,[14] (CEAA 2012), one area of significant change is with respect to climate change considerations.

Specifically, the Act now includes explicit reference to climate change in the preamble:

Whereas the Government of Canada recognizes that impact assessment contributes to Canada’s ability to meet its environmental obligations and its commitments in respect of climate change…[15]

More consequentially, the Act explicitly requires that climate change considerations be taken into account during the assessment phase:

22 (1) The impact assessment of a designated project, whether it is conducted by the Agency or a review panel, must take into account the following factors:

(i) the extent to which the effects of the designated project hinder or contribute to the Government of Canada’s ability to meet its environmental obligations and its commitments in respect of climate change.

The Act also makes climate considerations a core factor in final decision-making. Specifically, the IAA features a new public interest determination that turns on several explicit factors, one of which is climate change:

63 The Minister’s determination under paragraph 60(1)(a) in respect of a designated project referred to in that subsection, and the Governor in Council’s determination under section 62 in respect of a designated project referred to in that subsection, must be based on the report with respect to the impact assessment and a consideration of the following factors:

(e) the extent to which the effects of the designated project hinder or contribute to the Government of Canada’s ability to meet its environmental obligations and its commitments in respect of climate change.

When the Act came into force it was unclear what these provisions would mean in practice — i.e. what information proponents would have to provide, how the Agency or review panel would use and assess that information, and how all of that analysis would then be used by decision-makers. With the July 2020 final SACC, and an unexpected update in October 2020,[16] some clarity — but not complete clarity — has arrived. Further details are set to be released with forthcoming technical guides.[17]

Before moving on to discuss the structure and specific features of the SACC, it is important to point out that the SACC is a “strategic assessment” in name only. It does not resemble what typically constitutes a strategic assessment, which would, for example, include a comprehensive review of Canada’s existing and future policies, plans, and programs with respect to climate change and GHG emissions reductions.[18] Rather, the SACC process was simply an exercise in developing guidance for implementing the provisions of the IAA that explicitly mention climate change.[19] This narrow scope is evident in the opening description in the SACC executive summary (at i):

“This strategic assessment of climate change:

  • describes the greenhouse gas (GHG) and climate change information that project proponents need to submit at each phase of a federal impact assessment;
  • requires proponents of projects with a lifetime beyond 2050 to provide a credible plan that describes how the project will achieve net-zero emissions by 2050; and
  • explains how the Impact Assessment Agency of Canada (IAAC) or lifecycle regulators, with support from expert federal authorities, will review, comment on and complement the climate change information provided by proponents.”

In other words, the SACC does not:

  • take stock of Canada’s existing climate change laws, policies, plans and programs;
  • review and assess what additional measures need to be put in place to achieve Canada’s Paris Agreement Commitment (30% below 2005 levels by 2030) and the goal of net-zero emissions by 2050;
  • recommend or dictate what projects or types of projects ought to be assessed under the IAA (e.g. those that are most likely to have high GHG emissions);
  • set out any kind of explicit ‘climate test’ that a project must satisfy in order to be approved; or[20]
  • consider tools of integrating the monetized costs of GHG emissions into the assessment process.[21]

To be fair, the 2016 Pan-Canadian Framework on Clean Growth and Climate Change does include a relatively thorough inventory of emission reduction measures across the country.[22] However, that framework is already outdated, did not offer a detailed roadmap for future policies and tools, and included no mention at all of federal impact assessment let alone the role it is expected to play. In any event, whatever view one takes regarding what constitutes a proper strategic assessment, the Minister of Environment and Climate Change has now spoken. Pursuant to the deeming provision in section 95(2) of the IAA, Minister Wilkinson has deemed the SACC to be a strategic assessment under section 95(1) of the Act, meaning it must be taken into account at certain stages of the impact assessment process, including Ministerial designation of a project,[23] agency screening decisions,[24] and in the assessment itself.[25] This clears up any ambiguity that may have arisen due to the SACC being commenced prior to the IAA coming into force.

The remainder of this article sets aside these high-level concerns and focuses on the substance of the final SACC, offering commentary along the way.

STRATEGIC ASSESSMENT ON CLIMATE CHANGE

Basic Structure and Application

The final guidance will apply to all designated projects undergoing a federal impact assessment.[26] This would include projects on the project list under the Physical Activities Regulations[27] and any project designated by the Minister as requiring an assessment pursuant to section 9 of the IAA.[28] Proponents will be expected to provide an initial estimate in the initial project description submitted early in the planning phase,[29] and then more detailed updated information as part of the detailed project description that will inform the assessment phase.[30] The basic requirement to provide such information flows from the above-cited IAA provisions and Information and Management of Time Limits Regulations,[31] which state that for both the initial and detailed project descriptions the proponent must provide “[a]n estimate of any greenhouse gas emissions associated with the project.”[32] Early examples of such descriptions are observable in the first projects proceeding under the new Act,[33] such as the Gazoduq natural gas pipeline project.[34]

To summarize at a high level, the final guidance provides details on what information must be submitted during each phase of the assessment process. The first substantive part of the guidance sets out how a proponent is to quantify a project’s GHG emissions, including with respect to “net emissions”[35] as well as upstream emissions.[36] It also clarifies that estimates of downstream emissions are not required.[37] The remaining parts of the guidance are set out sequentially according to each phase of the assessment process, from the planning phase through to the post-decision phase.[38] Rather than walking through each phase, the balance of this article focuses on key features of the guidance, offering commentary throughout.

Emissions Intensity

Proponents will be required to estimate the GHG emissions intensity of a project for each year of the operation phase of the project.[39] This information will be used to “compare the project to similar high-performing, energy-efficient project types in Canada and internationally.”[40] The guidance invites proponents to explain why the emissions intensity of the project is different from comparators.[41] While this type of information veers away from the pure megatonnes calculations required for the Agency and decision-makers to directly assess the extent to which the effects of the designated project hinder or contribute to the Government of Canada’s ability to meet its climate change commitments, it is presumably included to introduce some relativity in the assessment process that may inform Agency analysis of mitigation measures and development of project approval conditions. This requirement will no doubt increase the reporting burden on proponents; however, it should provide a more robust basis for the Agency to track the accuracy of operator forecasts and actual emissions throughout the operations phase. It may also encourage proponents to incorporate better technologies where feasible, which complements the SACC direction to provide detailed consideration of best available technologies and best environmental practices (BAT/BEP).[42]

Inclusion of emissions intensity in the SACC is a step forward in generating project-specific climate-related data; however, a close look at the formula for calculating emissions intensity raises a significant concern. The equation states: emissions intensity equals net GHG emissions divided by units produced. [43] This is problematic because, as discussed below, the final SACC allows for unlimited use of offset credits for the purposes of calculating net GHG emissions. This could render the emission intensity calculation meaningless because the GHGs per units produced would not actually represent the performance of the project itself. Instead, Equation 2 would generate more useful projections if it were as follows: emissions intensity equals net GHG emissions (not including offset credits) divided by units produced. This calculation would generate figures that allow for meaningful comparison of “the project to similar high-performing, energy-efficient project types in Canada and internationally.”[44] At the very least both calculations (i.e. with and without offsets) ought to be required. Perhaps the forthcoming technical guide on the quantification of net GHG emissions will correct this oddity.

Offset Credits

The SACC explains the role of offset credits in the IAA regime and directs proponents with respect to informational requirements. For example, the SACC explains that credits must be “sourced from a project that is registered in a Canadian regulatory offset program that aligns with the best practices outlined in the Canadian Council of Ministers of the Environment Pan-Canadian Offsets Framework.”[45] This should provide proponents with a reasonably clear methodology for generating, using and calculating offset credits, and presumably further details will be provided in forthcoming technical guidance. As one would expect, the SACC also explicitly requires that offset credits must be verified “to a reasonable level of assurance.”[46] Offset credits are also distinct from “avoided domestic GHG emissions,” a concept that was significantly expanded in the October 2020 SACC revision to allow proponents to count non-project, “corporate level” action taken elsewhere in Canada as part of net emissions calculations.[47] The SACC also clarifies that credits must not be more than five years old, and must be issued on the basis that the GHG reductions and removals have already occurred.[48]

The SACC also sets parameters on where the credits come from, and, in so doing, it explicitly speaks to the linkage between the IAA regime and the Paris Agreement. Specifically, the guidance indicates that offset credits must be sourced from offset projects within Canada unless the offsets “fully comply with rules for Internationally Transferred Mitigation Outcomes (ITMOs) established under Article 6 of the Paris Agreement, and applicable decisions adopted by the Conference of the Parties” and any further criteria developed by Environment and Climate Change Canada.[49] Article 6 is sometimes referred to as the “carbon markets” part of the Paris Agreement, and the emerging international rules will govern countries’ use of several mechanisms available for the purposes of meeting Paris targets (e.g. emissions trading and offset credits). An explicit aim of Article 6 is the “avoidance of double counting,” whereby two countries try to claim the same emissions reduction as their own.[50] The SACC provides helpful clarity on this issue by transparently presenting the linkage between the IAA regime and the Paris Agreement rules. This is critical for avoiding double-counting. While Article 6 rules are still fluid and under development,[51] this is a welcome explicit clarification in the SACC that presumably will be fleshed out further as the international rules and further IAA guidance are finalized.

Further on the point of double-counting, the SACC also clarifies that offset credits must not have been used for compliance with any other regulatory requirement, nor any other voluntary or compliance purposes.[52] This appears to set the basis for credits generated under other federal or sub-national regimes to be used by proponents of designated projects so long as those credits have not been used for other compliance or voluntary programs.

The most surprising feature of the SACC regarding offsets comes from what is not included: limits on use. The SACC includes no limits on the amount of credits a project proponent can use to calculate net emissions. Where the draft SACC left some ambiguity around whether offset credits could be applied in calculating net emissions or whether they were confined to just mitigation measures,[53] the final SACC provides clarity by opening the door wide open to unlimited use of offset credits in calculating net emissions. Under this guidance, a proponent could theoretically use credits to offset all of a project’s GHG emissions, thus achieving net-zero emissions today without actually changing the physical project as proposed. In a significant shift from the draft SACC, this feature of the final guidance is in part facilitated by removal of the reference to ISO-14064[54] and The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard,[55] which were included in the draft SACC.[56] Those standards would not actually permit such broad and unlimited reliance on offset credits in net-emissions calculations. For example, the GHG protocol states, “[t]he uncertainties that surround GHG project accounting make it difficult to establish that an offset is equivalent in magnitude to the internal emissions it is offsetting…This is why companies should always report their own internal emissions in separate accounts from offsets used to meet the target, rather than providing a net figure.”[57]

At a broader policy level, unrestricted access to offsets in the IAA regime is likely to raise long-standing concerns around the use of GHG offsets, particularly with respect to credibility and verification of the emission reductions (i.e. does the credit actually represent real emission reductions?), fairness between regions that continue to emit and those that host the offset, and a perception that offsets allow jurisdictions and firms to carry on with carbon-intensive behavior.[58]

Notwithstanding such concerns, offset programs are taking root in Canada, as outlined in a recent ECCC report setting out options for a federal GHG offset system.[59] In this context, the offset credit aspect of the IAA stands to have a significant impact both in terms of supply and demand for credits. For example, a large renewable energy project reviewed under the IAA could likely generate credits by demonstrating emission reductions that are additional to what would have occurred in the absence of the project, and large conventional energy projects may well seek to use offset credits to reduce net emissions. There will be many details to work out in future technical guides, but this is a significant and consequential feature in the new IAA regime.

UPSTREAM EMISSIONS ASSESSMENT

The SACC employs a threshold-based approach that dictates whether a proponent is to prepare estimates of upstream GHG emissions.[60] These thresholds change each decade, lowering over time.[61] For example in the 2020–2029 period, only projects with upstream emissions above 500 kt CO2/year must complete an upstream emissions assessment. This threshold lowers to 300 kt CO2/year in 2030–2039, 200 in 2040–2049, and 100 in 2050 and beyond. Whether an upstream assessment is required for a particular project will be definitively set out in the Tailored Impact Statement Guidelines issued by the IAAC at the end of the planning phase.[62] Subject to significant breakthroughs in specific sectors and technologies, logic would suggest that the cascading thresholds will mean more projects will be required to conduct upstream assessments in decades to come. Presumably, this information will be helpful to the government as it monitors progress toward the 2050 commitment. Again, further guidance is forthcoming on upstream GHG emissions.[63] It should be noted that a proponent’s plan to achieve net-zero emissions does not need to include upstream emissions,[64] and the final SACC confirms that downstream emissions analyses are not required (though see related discussion below).[65]

IMPACT OF THE PROJECT ON FEDERAL EMISSIONS REDUCTION EFFORTS AND GLOBAL GHG EMISSIONS

Under the final guidance, proponents must provide information regarding how the project could impact global GHG emission reductions and how it may impact Canada’s efforts to reduce GHG emissions.[66] While this applies to all projects, the final SACC acknowledges that “[f]or some projects, there will be nothing to add in this section.”[67] Regarding the global emissions aspect, the guidance invites proponents to “describe how the project is likely to result in global emission reductions,” and then points to “a project that enables the displacement of high-emitting energy abroad with lower-emitting energy produced in Canada could be considered as having a positive impact.”[68]

This feature of the SACC is interesting and concerning on several fronts. First, it creates dissonance within the guidance by on one hand scoping out analysis of downstream emissions[69] while on the other hand providing this basis for a proponent to selectively present data about a project’s downstream impacts. For a proponent to comment on displacement of emissions internationally, they must engage in some degree of downstream emissions analysis with respect to their own products’ emissions and with respect to the other jurisdiction’s emissions. For example, if a proponent of a liquefied natural gas (LNG) export facility were to suggest that the project will result in displaced emissions elsewhere,[70] that proponent must calculate the emissions from combusting the product and compare that figure to emissions that would have come from burning a different fuel source (e.g. coal). It is hard to see this as anything but an exercise in estimating downstream emissions.

Further, given that this part of the SACC is framed as optional,[71] information generated under this part of the regime is likely to be imbalanced. The Agency, or review panel as the case may be, is likely to receive detailed information on this matter from projects where proponents expect ensuing emissions reductions downstream, whereas proponents of projects that are likely to increase emissions internationally would rationally choose to not comment on this aspect.

Finally, as ECCC and the Agency develop the more detailed guidance on these aspects of GHG calculations, it may be difficult to sustain this dissonance. One key aspect is how this project-specific “displacement” calculation (in addition to the above-described offsets dimension) relates to the international rulebook that is being negotiated to implement Article 6 of the Paris Agreement. In the new Canadian IAA context, subject to details emerging from the UNFCCC Conference of the Parties negotiations, ECCC and the Agency will need to ensure that if product from a Canadian project (e.g. LNG) results in emissions reductions in a foreign country (i.e. “displaces emissions internationally”) and that destination country claims those reductions for the purposes of achieving its own climate change commitments, then those same reductions must not be claimed by Canada for the purpose of achieving its own reductions. Put another way, from a Paris Agreement rules perspective it may ultimately be fine for a Canadian project proponent to point to expected global emissions reductions benefits in a narrative way for the purposes of securing project approval in the domestic realm. However, Canada may not then count those foreign emissions reductions as emissions reductions achieved by Canada, nor should a Canadian project proponent expect to obtain the monetary value for those emissions reductions other than through whatever premium is already priced in by the global energy market. And it must be noted that all of this may be moot, given the tenuous nature of the assertion that exported Canadian LNG will actually result in global emission reductions.[72]

Net-Zero by 2050

The Trudeau government has set a target of net-zero carbon emissions by 2050,[73] a target pledged by numerous jurisdictions around the world, including New Zealand, the United Kingdom, the EU, Japan and others.[74] This target now figures prominently in the IAA regime through incorporation into the final SACC, building on reference to Canada’s Paris Agreement commitments and Canada’s Mid-Century Long-Term Low-Greenhouse Gas Development Strategy.[75]

The SACC directs “proponents of projects with a lifetime beyond 2050 to provide a credible plan to achieve net-zero emissions by 2050.”[76] This is then integrated throughout key stages of the IAA process. Specifically, the Tailored Impact Assessment Guidelines, which are issued at the end of the planning phase, will direct “[p]roponents of projects with a lifetime beyond 2050” to “provide a credible plan for the project to achieve net-zero emissions by 2050.”[77] In the impact statement phase, proponents of such projects will be required to “provide a credible plan that describes how the project will achieve net-zero emissions by 2050” and that plan “will need to demonstrate how the net GHG emission[s]…will equal 0 kt CO2e / year by 2050 and thereafter for the remainder of the lifetime of the project.”[78] Interestingly, the SACC also provides a basis for proponents to “identify any supportive actions by the Government that they would need in order to be able to achieve net-zero emissions…for example, identifying the need for the construction of a grid intertie to enable access to clean electricity.”[79]

The October 2020 revision provided additional information regarding the “credible plan” concept, indicating that: “[a] net-zero plan does not need to describe every technology or practice the project will implement over time to achieve net-zero emissions…A net-zero plan should describe emissions reductions at specified intervals up to 2050 and seek to maximize absolute emissions reductions in the earlier years of a project’s lifespan.”[80] The revision also added that a credible plan “can refer to the corporate’s [sic] net-zero emissions plan.”[81] This latter point revives a conclusion of the Kearl Oil Sands joint review panel, reconvened in 2008, finding that despite the proponent not developing a project-specific GHG management plan, the proponent’s corporate energy efficiency program along with other measures, were “an effective surrogate.”[82] In this way, the October 2020 SACC revision to the net-zero guidance, coupled with the above-mentioned reference to corporate level action in relation to avoided domestic GHG emissions, offers significant latitude for proponents to point to actions and operations far removed from the specific project at issue.

Turning to the assessment phase, which is when the content of the net-zero plans will be assessed, the SACC indicates that the “IAAC or the lifecycle regulator will review the proponent’s plan to achieve net-zero emissions by 2050 and will also consider the supportive government actions identified by the proponent in order for the project to be able to achieve net-zero emissions.”[83] In the decision-making phase, the SACC clarifies that conditions attached to a project approval “may also include a reporting program in which the proponent would demonstrate progress towards implementing these mitigation measures and the plan for reaching net-zero emissions by 2050 for projects with a lifetime beyond 2050.”[84] Similarly, in the post-decision phase, a proponent may be required “to report progress in implementing these GHG mitigation measures and in implementing the plan for reaching net-zero emissions by 2050 for projects with a lifetime beyond 2050.”[85] Surprisingly, the October 2020 revision stated that “[t]he submission of a plan that does not specify how a project will achieve net-zero emissions by 2050 will not disqualify a project from proceeding through the impact assessment process,” and that if such a without-plan project is approved the Minister may impose a project approval condition requiring updated plans from the proponent over time.[86]

Taken together, these parts of the SACC clarify expectations of the regime in several ways. First, they clarify which project proponents need to provide information in relation to the 2050 commitment — only proponents of projects with a lifetime beyond 2050. Second, they also describe in general terms what information such proponents must provide. Though there is ambiguity in the “credible plan” standard, the October 2020 revision provided additional details,[87] even if those additions further weakened the net-zero plan requirements (i.e. no plan actually required, and the plan may simply refer to a corporate net-zero emissions plan). Third, the requirements provide a formal basis upon which this information will be considered in the assessment and decision-making phases. As discussed below, however, it remains unclear precisely how the assessment and final decision-making will relate the project information to Canada’s ability to meet its commitments in respect of climate change, but the SACC at least articulates the general basis for doing so. Fourth, by indicating a link between reporting programs in project approval conditions and a proponent’s plan for reaching net-zero emissions, the SACC sets out a basis for ongoing monitoring and accountability that could ensure proponents follow through. Fifth, the SACC clarifies that the “commitments in respect of climate change” language in the IAA includes the new 2050 net-zero commitment. Finally, the SACC reveals that the federal government will, at least to some extent, use the IAA as a tool to pursue longer term emissions reductions by requiring that designated projects have a plan in line with the net-zero commitment.

ASSESSMENT OF GHG INFORMATION AND DECISION-MAKING

The SACC is relatively thin with respect to how all of the project-specific information will be reviewed and analyzed by the Agency,[88] and how the Governor in Council will then use the information in making a final decision as to whether the project is in the public interest.[89] The guidance explains in quite general terms what is going to be done — i.e. review of the project’s GHG information, including mitigation measures, and relating of that information to Canada’s emissions “targets and forecasts.”[90] However, there is minimal information about how this will be done. Given that it is during these stages of the assessment process that the Agency and decision-makers will really be considering the core climate-related requirement of the IAA — i.e. “the extent to which the effects of the designated project hinder or contribute to the Government of Canada’s ability to meet its environmental obligations and its commitments in respect of climate change” — it is interesting to see such thin coverage, particularly with respect to the assessment phase.

Regarding the assessment phase, it is unclear how the Agency or review panel will conclude and formulate a recommendation on the extent to which any particular project contributes to or hinders Canada achieving its commitments with respect to climate change. While there are analytical approaches available such as carbon budgeting and decarbonization pathways,[91] these are not mentioned in the guidance beyond reference to “Canada’s emissions targets and forecasts, such as Canada’s 2030 emissions targets, Canada’s Mid-Century Long-Term Low-Greenhouse Gas Development Strategy, and Canada’s goal for achieving net-zero emissions by 2050,”[92] and an indication that the analysis “may include considering, for example, whether the project’s emissions are built into the sector projections in ECCC’s national forecast in Canada’s National Communications and Biennial Reports submitted to the United Nations Framework Convention on Climate Change.”[93] This dimension is also not listed as the focus of future technical guides.[94] Furthermore, there is little additional detail provided in a new “policy context” document published by the Agency: Policy Context: Considering Environmental Obligations and Commitments in Respect of Climate Change under the Impact Assessment Act.[95] That document does explain that the Agency analysis will look at “whether a project’s effects could hinder or contribute to the Government of Canada’s ability to meet an environmental obligation or climate change commitment” and “the extent to which these effects could hinder or contribute to the Government of Canada’s ability to meet the applicable obligation or commitment.” However, it fails to meaningfully explain what parameters would be applied in such an analysis.

Regarding final decision-making, the thin detail in this regard is perhaps not surprising given considerations such as Cabinet confidentiality, the poly-centric nature of the IAA public interest determination, and the associated broad discretion granted by the Act. The Agency has also released the document Policy Context: Public Interest Determination under the Impact Assessment Act;[96] however, the discussion of climate change simply refers one back to the SACC and the other climate change policy context piece. While this lack of detail may make it challenging for the public, industry, and interested parties to understand how project-specific GHG information affect project approvals (or rejections) and associated approval conditions, over time these concerns should be addressed through the requirement under IAA section 65 for “detailed reasons” to accompany public interest determinations. It is speculative to say, but one might anticipate that future Governor in Council reasons accompanying a high-emitting oil and gas project could look like the description from the federal government explaining how carbon pollution from the TMX project “is already accounted for in Canada’s national emissions projections.”[97]

CONCLUDING COMMENTS

In some ways, the SACC and resulting final guidance represent a significant step forward in the impact assessment realm. Jurisdictions around the world have struggled for many years with integrating climate change considerations into project-level assessments. Canada is now engaged in something of a trailblazing exercise and the SACC is an important part of the path ahead. Given that a key purpose of any project assessment regime is to generate information for informed decision-making, the final guidance will help guide proponents in generating detailed information that will serve as a key basis for decision-makers in determining whether a project is in the public interest. A number of highlights stand out, such as the direction to proponents with respect to emissions intensity, BAT/BEP, and upstream emissions.

However, there are significant reasons for concern. First and foremost, it remains unclear precisely how a project’s GHG information will be assessed by the Agency (or a review panel, as the case may be) and then used in final decision-making. The framework for such assessment, to the extent it is articulated in the SACC and other policy context documents, contains an enormous amount of room for the assessment to maneuver toward recommending that a project will not hinder achievement of Canada’s climate change commitments. There is also an enormous amount of room to maneuver for proponents, including unlimited use of offset credits in net emissions calculations, emissions intensity equation allowing offsets to be integrated into the net emissions figure, the exclusion of downstream emissions analysis while allowing for discussion of how a project “may displace emissions internationally,” and the ability of proponents to point to corporate level actions outside the scope of the project being assessed. Taken together, the content of the SACC sets the stage for approval of carbon-intensive projects well into the future.

Putting all this in real terms, aside from generating additional GHG information (which, in fairness, does have value on its own) and feeding forthcoming domestic and international offset markets, the SACC structures the entire regime to more or less facilitate business as usual. As such, implementation of this part of the IAA does not stand to have a significant role in helping Canada meet its climate change commitments. Put another way, the SACC does not meaningfully act on the above cited preambular provision recognizing “that impact assessment contributes to Canada’s ability to meet its environmental obligations and its commitments in respect of climate change.” While project-level impact assessment was never likely to be the primary part of Canada’s climate change action (indeed there was no mention of it in the Pan-Canadian Framework), the new Act and the explicit climate change provisions raised expectations and provided a basis for the IAA to play a significant role.

In months and years to come, it will be interesting to observe implementation of the climate change-related requirements of the IAA as fleshed out in the final guidance. Unfortunately, a recent preliminary analysis suggests that the Agency has taken steps inconsistent with the final guidance by allowing proponents to sidestep information requirements in the planning phase of the assessment.[98] One would hope that practice improves in the near and long term. While the new regime is bound to experience growing pains, loose or weak implementation of the climate change provisions of the IAA risks undermining public confidence and regulatory certainty, values that were at the core of the law reform initiative that led to the IAA.[99] Forthcoming technical guidance and the first five-year review of the SACC, coupled with federally legislated five-year emissions reduction milestones,[100] will be key opportunities for generating further clarity and coherence. As jurisdictions around the world work to implement the Paris Agreement, which is premised on a “managerial” approach to compliance that is rooted in trust and good faith efforts by all parties,[101] the stakes are high and Canada needs to follow through on its commitments.

*David V. Wright, Assistant Professor and Member of the Natural Resources, Energy & Environmental Law Research Group, Faculty of Law, University of Calgary. I am grateful to my research assistants, Niall Fink, for his invaluable input on earlier drafts, and Jared Armstrong, for his valuable assistance. Sincere thanks as well to my colleagues Martin Olszynski and Sharon Mascher for their input. This article is based on a series of blog posts focused on the Strategic Assessment of Climate Change that can be found at ABlawg.ca. Any errors are the author’s alone.

  1. See Mark Friedman, “Assessing Greenhouse Gas Emissions in the Oil Sands: Legislative or Administrative (in) Action?”, (2016) 6:3 Western J Leg Studies 5; See also Flavia Vierira de Castro, “Canada’s Climate Change Mitigation Commitments and the Role of the Federal Impact Assessment Act” (2020) 33:3 J Envtl L & Prac 211.
  2. Impact Assessment Act, SC 2019, c. 28, s 1, ss 22, 63 [IAA]; See also Toby Kruger, “The Canadian Environmental Assessment Act and Global Climate Change: Rethinking Significance” (2009) 47:1 Alta L Rev 161.
  3. Ibid; For a general discussion of the new regime, see Evan W, Dixon et al, “Bill C-69: Introducing the Canadian Energy Regulator and the Impact Assessment Agency” (2019) 7:4 Energy Regulation Q 31, online (pdf): <www.energyregulationquarterly.ca/wp-content/uploads/2020/01/ERQ_Volume-7_Issue-4-2019.pdf>.
  4. Canada, Environment and Climate Change Canada, Final strategic assessment of climate change (July 2020), online (pdf): <www.strategicassessmentclimatechange.ca/16736/widgets/65686/documents/40845>.
  5. Canada, Environment and Climate Change Canada, Revised Strategic Assessment of Climate Change (October 2020) [SACC], online: <www.strategicassessmentclimatechange.ca/16736/widgets/65686/documents/40846>.
  6. Environment and Climate Change Canada, News release, “Government of Canada releases emissions projections, showing progresses towards climate target” (20 December 2019), online: <www.canada.ca/en/environment-climate-change/news/2019/12/government-of-canada-releases-emissions-projections-showing-progress-towards-climate-target.html>; See also Privy Council, “Speech from the Throne to open the First Session of the Forty-Third Parliament of Canada” (5 December 2019), online: <www.canada.ca/en/privy-council/campaigns/speech-throne/moving-forward-together.html>.
  7. Environment and Climate Change Canada, Pan-Canadian Framework on Clean Growth and Climate Change (Gatineau, Quebec: Environment and Climate Change Canada, 2016) [Pan-Canadian report], online (pdf): Government of Canada <publications.gc.ca/collections/collection_2017/eccc/En4-294-2016-eng.pdf>.
  8. Environment and Climate Change Canada, Canada’s Mid-Century Long-Term Low-Greenhouse Gas Development Strategy (Gatineau, Quebec: Environment and Climate Change Canada, 2016) [Gas Development Strategy], online (pdf): Government of Canada <publications.gc.ca/collections/collection_2017/eccc/En4-291-2016-eng.pdf>.
  9. Jonathan Arnold & Nancy Olewiler, “Getting to zero: Canada plans to hit net-zero emissions by 2050. What’s next?” (21 January 2020), online (blog): Canadian Institute for Climate Choices <climatechoices.ca/getting-to-zero-canada-plans-to-hit-net-zero-emissions-by-2050-whats-next>.
  10. Environment and Climate Change Canada, News release, “Canada’s coal power phase-out reaches another milestone” (12 December 2018), online: Government of Canada <www.canada.ca/en/environment-climate-change/news/2018/12/canadas-coal-power-phase-out-reaches-another-milestone.html>.
  11. Paris Agreement, 22 April 2016, Can TS 2016/9 (entered into force 4 November 2016) at Article 4(3) [Paris Agreement].
  12. See Government of Canada, “Environmental and Regulatory Reviews” (11 September 2019), online: <www.canada.ca/en/services/environment/conservation/assessments/environmental-reviews.html> (Environment and Climate Change Canada explaining the law reform process and input); See e.g. Maura Forrest, “New environmental assessment process a compromise between industry, activists”, National Post (8 February 2018), online: <nationalpost.com/news/politics/government-reveals-far-reaching-new-review-process-for-major-resource-projects> (media coverage outlining some of the tensions in the law reform process).
  13. See e.g. Canada, Canadian Environmental Assessment Agency, Review of Environmental Assessment Processes (2017), online (pdf): <s3.ca-central-1.amazonaws.com/ehq-production-canada/documents/attachments/649ccce3c9cfabb07a79b718f7c63837c735e322/000/007/065/original/Summary_of_What_Weve_Heard.pdf>.
  14. See Martin Olszynski, “In Search of #BetterRules: An Overview of Federal Environmental Bills C-68 and C-69” (15 February 2018), online (blog): ABlawg <ablawg.ca/2018/02/15/in-search-of-betterrules-an-overview-of-federal-environmental-bills-c-68-and-c-69>.
  15. IAA, supra note 2, preamble.
  16. SACC, supra note 5.
  17. Ibid at 4 (Section 2.2).
  18. Robert B. Gibson, Karine Péloffy & Meinhard Doelle, “Challenges and Opportunities of a Forthcoming Strategic Assessment of the Implications of International Climate Change Mitigation Commitments for Individual Undertakings in Canada” (2018) 10:10 Sustainability 3747, DOI: <https://doi.org/10.3390/su10103747> (Providing an in-depth discussion of what the SACC might have looked like under a broader approach).
  19. IAA, supra note 2, ss 22(1)(i), 63(e).
  20. Anna Johnston, “A strategic assessment, a climate test, and the spaces in between: who is left holding the SACC?” (19 August 2020), online (blog): West Coast Environmental Law <www.wcel.org/blog/strategic-assessment-climate-test-and-spaces-in-between-who-left-holding-sacc> (for discussion of climate test).
  21. See David V. Wright & Meinhard Doelle, “Social Cost of Carbon in Environmental Impact Assessment” (2019) 52:3 UBC L Rev 1007.
  22. Pan-Canadian report, supra note 7 at 9–26, Annex II.
  23. IAA, supra note 2, s 9(2).
  24. Ibid s 16(2)(e).
  25. Ibid s 22(1)(p).
  26. SACC, supra note 5.
  27. Physical Activities Regulations, SOR/2019-285.
  28. IAA, supra note 2, s 9.
  29. SACC, supra note 5 at 10.
  30. Ibid.
  31. Information and Management of Time Limits Regulations, SOR/2019-283.
  32. Ibid, Schedule 1 at 23; Schedule 2 at 23.
  33. See e.g. Gazoduq Inc., “Gazoduq Project: Initital Project Description Summary” (October 2019), online (pdf): <ceaa-acee.gc.ca/050/documents/p80264/132884E.pdf>.
  34. Canadian Impact Assessment Agency of Canada, “Gazoduq Project” (1 September 2020) online: <iaac-aeic.gc.ca/050/evaluations/proj/80264>; For early observations, see Niall Fink & David V. Wright, “Climate Change in Federal Impact Assessment: An Early Look at Two Energy Projects” (28 August 2020) online (blog): ABlawg <ablawg.ca/2020/08/28/climate-change-in-federal-impact-assessment-an-early-look-at-two-energy-projects>.
  35. SACC, supra note 5 at 5 (As defined by the calculation set out in 3.1.1).
  36. Ibid at 8–9 (Section 3.2).
  37. Ibid at 5 (Section 3).
  38. Ibid at 2.
  39. Ibid at 5 (Section 3).
  40. Ibid at 5 (Section 3.1.2); See also ibid at 17 (Section 6).
  41. Ibid at 13 (Section 5.1.4).
  42. Ibid at 14 (Section 5.1.4.1).
  43. Ibid at 8 (Equation 2: Emission intensity calculation)
  44. Ibid at 8 (Section 3.1.2).
  45. Ibid at 7 (Section 3.1.1).
  46. Ibid.
  47. Ibid.
  48. Ibid.
  49. Ibid.
  50. For a good overview, see Simon Evans & Josh Gabbatiss, “In-depth Q&A: How ‘Article 6’ carbon markets could ‘make or break’ the Paris Agreement” (29 November 2019) online: CarbonBrief <www.carbonbrief.org/in-depth-q-and-a-how-article-6-carbon-markets-could-make-or-break-the-paris-agreement>.
  51. Yamide Dagnet et al, “COP 25: What We Needed, What We Got, What’s Next” (23 December 2019) online: World Resources Institute <www.wri.org/blog/2019/12/cop25-what-we-needed-what-we-got-whats-next>.
  52. SACC, supra note 5 at 7 (Section 3.1.1).
  53. The text of the draft SACC was rather confusing on this point, but seemed to confine to only the latter (see ibid at 8).
  54. International Organization for Standardization, “ISO 14064-1:2018” (December 2018), online: <www.iso.org/standard/66453.html>.
  55. Greenhouse Gas Protocol, “A Corporate Accounting and Reporting Standard” (2015), online (pdf): <ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf>.
  56. Environment and Climate Change Canada, Draft strategic assessment of climate change (2019) at 6 (Section 3.1.1), online (pdf ): Government of Canada <www.canada.ca/content/dam/eccc/documents/pdf/sacc/Draft_Strategic_Assessment_of_Climate_Change.pdf>.
  57. Greenhouse Gas Protocol, supra note 55 at 82.
  58. See this explainer for succinct overview: Umair Irfan, “Can you really negate your carbon emissions? Carbon offsets, explained.” Vox (27 February 2020) online: <www.vox.com/2020/2/27/20994118/carbon-offset-climate-change-net-zero-neutral-emissions>.
  59. Environment and Climate Change Canada, Carbon Pollution Pricing: Options for a Federal GHG Offset System, (Gatineau, Quebec: Environment and Climate Change Canada, 2019) online (pdf): Government of Canada <www.canada.ca/content/dam/eccc/documents/pdf/climate-change/pricing-pollution/Options-GHG-Offset-System.pdf>.
  60. SCAA, supra note 5 at 8 (Section 3.2: Upstream GHG emissions are defined as, “domestic and non-domestic emissions from all stages of production, from the point of resource extraction or utilization, to the project under review”).
  61. Ibid at 9 (Table 1: Upstream GHG emissions thresholds for conducting an upstream GHG assessment).
  62. Ibid at 11 (Section 4.2).
  63. Ibid at 4 (Section 2.2).
  64. Ibid at 16 (Section 5.3).
  65. Ibid at 5 (Section 3).
  66. Ibid at 13 (Section 5.1.3).
  67. Ibid.
  68. Ibid.
  69. Ibid at 5 (Section 3.1.1).
  70. As has been asserted in recent years. See Peter Kent, “LNG Canada’s export terminal will enable coal-reliant customer nations to reduce GHG Emissions” (14 January 2019) online: LNG Canada <www.lngcanada.ca/news/lng-canadas-export-terminal-will-enable-coal-reliant-customer-nations-to-reduce-ghg-emisssions-1>; See also Rob Shaw, “B.C. and Alberta find common ground on international LNG credits” Vancouver Sun (3 December 2019) online: <vancouversun.com/news/politics/b-c-and-alberta-find-common-ground-on-international-lng-credits>.
  71. SACC, supra note 5 at 13 (Section 5.1.3; could).
  72. See Jason Dion, “No Canada cannot get credit for its low-carbon exports” (17 June 2019) online: Ecofiscal<ecofiscal.ca/2019/06/17/no-canada-cannot-get-credit-low-carbon-exports>; see also “No, Canada can’t save the planet by exporting more natural gas” The Globe and Mail (12 December 2019), online: <www.theglobeandmail.com/opinion/editorials/article-no-canada-cant-save-the-planet-by-exporting-more-natural-gas>.
  73. Privy Council, supra note 6.
  74. Kelly Levin & Chantal David, “What Does “Net Zero Emissions” Mean? 6 Common Questions, Answered” (17 September 2019), online: World Resources Institute <www.wri.org/blog/2019/09/what-does-net-zero-emissions-mean-6-common-questions-answered> (twenty countries as of June 2020).
  75. See e.g. Pan-Canadian report, supra note 7; Gas Development Strategy, supra note 8.
  76. SACC, supra note 5 at 1.
  77. Ibid at 11 (Section 4.1.3).
  78. Ibid at 16 (Section 5.3).
  79. Ibid.
  80. Ibid.
  81. Ibid.
  82. Canadian Environmental Assessment Agency, “Joint Panel Report Kearl Oil Sands Project Addendum to EUB Decision 2007-013 Additional rationale for the joint review panel’s conclusion on air emissions” (6 May 2008), online: <aeic-iaac.gc.ca/052/document-html-eng.cfm?did=26766> (this was the finding of the joint review panel after it was forced to reconvene following the decision in Pembina Institute for Appropriate Development v Canada (Attorney General), 2008 FC 302).
  83. SACC, supra note 5 at 17 (Section 6).
  84. Ibid at 18 (Section 7).
  85. Ibid.
  86. Ibid at 16–17 (Section 5.3).
  87. Ibid.
  88. Ibid at 18 (Section 7).
  89. Ibid.
  90. Ibid at 17–18.
  91. See detailed discussion Robert Gibson et al., “From Paris to Projects: Clarifying the implications of Canada’s climate change mitigation commitments for the planning and assessment of projects and strategic undertakings” (January 2019), online (pdf): <uwaterloo.ca/paris-to-projects/sites/ca.paris-to-projects/files/uploads/files/p2p_full_report_23jan19.pdf>; See also Meinhard Doelle, “Integrating Climate Change into Environmental Impact Assessments: Key Design Elements” (26 October 2018), online: SSRN <papers.ssrn.com/sol3/papers.cfm?abstract_id=3273499>.
  92. SACC, supra note 5 at 17–18.
  93. Ibid at 17.
  94. Ibid at 4 (Section 2.2).
  95. Impact Assessment Agency of Canada, “Policy Context: Considering Environmental Obligations and Commitments in respect of Climate Change under the Impact Assessment Act” (17 January 2020), online: Government of Canada <www.canada.ca/en/impact-assessment-agency/services/policy-guidance/practitioners-guide-impact-assessment-act/considering-environmental-obligations.html>.
  96. Impact Assessment Agency of Canada, “Policy Context: Public Interest Determination under the Impact Assessment Act” (10 January 2020), online: Government of Canada <www.canada.ca/en/impact-assessment-agency/services/policy-guidance/public-interest-determination-under-impact-assessment-act.html>.
  97. Environment and Climate Change Canada, “Greenhouse gas emissions from the Trans Mountain project” (18 June 2019), online: Government of Canada <www.canada.ca/en/environment-climate-change/news/2019/06/greenhouse-gas-emissions-from-the-trans-mountain-project.html>.
  98. See Fink & Wright, supra note 34.
  99. Justin Trudeau (Prime Minister of Canada), “Minister of Environment and Climate Change Mandate Letter” (12 November 2015), online: <pm.gc.ca/en/mandate-letters/2015/11/12/archived-minister-environment-and-climate-change-mandate-letter>.
  100. Environment and Climate Change Canada, News release, “Government of Canada releases emissions projections, showing progress towards climate target” (20 December 2019), online: Government of Canada <www.canada.ca/en/environment-climate-change/news/2019/12/government-of-canada-releases-emissions-projections-showing-progress-towards-climate-target.html>.
  101. See Vegard Torstad, “Evaluating the Effectiveness of the Paris Agreement: An Integrative Approach” (January 2018), online: ResearchGate <www.researchgate.net/publication/326709177_Evaluating_the_Effectiveness_of_the_Paris_Agreement_An_Integrative_Approach>.

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