Monday, December 27, 2010

US Initiates Response to its "Sputnik Moment"

As 2010 drew to a close, the US Government increased its rhetoric and action in support of its clean technology industry.  On November 29, the Obama Administration's Secretary of Energy, Dr. Steven Chu, led the charge with the following speech at a National Press Club luncheon:

Dr. Chu likened recent cleantech advances by China and other countries to a "Sputnik moment" for the United States and personalized his plea by pointing out that he had "benefited from the investments [the US] placed on science education and research in order to catch up with the Soviet Union in the the space race." He called on his country to apply the same amount of focus, ingenuity and resources to clean energy so they could lead in creating the clean energy technology and clean energy economies that will be central to the 21st century. However, he acknowledged that the US had to get moving or risk being left behind.  Perhaps a message that too few Canadian politicians are willing to make.

The Administration followed up this clarion call to action with an early mid-December Christmas present to its renewable energy industry. After a pitched battle of legislative priorities following the US mid-terms, Republican legislators were sufficiently satisfied with the Administration's compromise on tax legislation (i.e. extension of Bush era tax rates) that they worked with the President to pass the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the Bill). The Bill extends several expiring renewable energy and fuel tax incentives and includes some new incentives that could provide significant benefits to renewable energy projects. The highlights are as follows: 

Section 1603 Grant

The Bill extends the grant program created by Section 1603 of the American Recovery and Reinvestment Act for one year, now applying to projects that begin construction in 2011 and are placed in service before the applicable credit termination date:
  • January 1, 2013 - large wind; 
  • January 1, 2014 - biomass, waste, marine and other enumerated facilities; and 
  • January 1, 2017 - solar, geothermal, fuel cells, microturbines, CHP and small wind.
Section 1603 provides for a cash grant of up to 30% of project costs for qualifying renewable energy projects. The grant has proven to be extremely popular, with $5.5 billion paid with respect to $l8.5 billion of renewable projects through November 8, 2010. According to the Solar Energy Industry Association, the grant program has contributed to the installation of approximately 1,000 MW of solar-electric capacity in 2010 which is enough power for about 200,000 homes.

Bonus Depreciation

The Bill extends and temporarily increases bonus depreciation for investment in "qualified property":
  •  For property acquired and placed in service after September 8, 2010 and before January 1, 2010, the Bill provides for a 100% first-year deduction.
  • For property placed in service in 2012, the Bill provides for a 50% first-year deduction. 
To qualify for bonus depreciation, property generally must have a recovery period of 20 years or less.

Fuels Credits

The Bill also provided a variety of incentives for alternative fuels including: 
  • Ethanol: Extension of the Volumetric Ethanol Excise Tax Credit (VEETC) through 2011 at the current rate of $0.45/gallon US and the existing tariffs on imported ethanol. The Bill also extends through 2011 the $0.10/gallon producer tax credit for small ethanol producers producing no greater than 60 million gallons per year; applicable to the first 15 million gallons of production. 
  • Biodiesel and Renewable Diesel. An extension through 2011 of the $1.00 per gallon tax credits for the sale or use of biodiesel, renewable diesel, and biodiesel mixtures. There is also an  extension through 2011 of the $0.10 per gallon small agri-biodiesel producer credit. 
  • Alt Fuel and Alt Fuel Mixtures: Extension through 2011 of the $0.50/gallon production tax credit for alternative liquid fuels derived from biomass, compressed or liquefied biogas, national gas and propane but excluding "black liquor", which is liquid fuel derived from a pulp or paper manufacturing processes. 
  • Alternative Fuel Vehicle Refueling Property: Extension of the 30% investment tax credit for alternative vehicle refueling property for one year, through 2011.
A comprehensive tax review of the Bill was completed by KPMG and can be viewed here.

The Sputnik Catalyst

Despite a continued commitment to promoting US leadership in clean technology development, the Administration was faced with a barrage of reports at year's end, led by this competitive analysis from Ernst & Young, that recognized China as "the clear global renewables leader."

Saturday, December 18, 2010

Ontario Moving Forward with Combined Heat and Power

The Ontario Power Authority (OPA) has recently provided updates on its progress towards integrating 1,000 megawatts (MW) of Combined Heat and Power (CHP) into Ontario's electricity system. During its management teleconference and webcast on December 3, 2010, the OPA indicated it was on track to introduce draft rules on a feed-in tariff (FIT) program for CHP projects under 20 MW. It has followed that up by publishing this update on its website.

Ontario's energy industry has been aware of the value of CHP for some time, but the desire to incorporate this technology into existing infrastructure has only recently picked up some serious steam. The OPA previously procured and developed CHP projects such as Markham District Energy, Durham College District Energy and the London Cogeneration Project. Since it is currently managing contracts that represent more than 450 MW of CHP-based technology procured through past initiatives, this leaves approximately 500 MW for additional projects.

To better understand how to develop and integrate these projects, the province's Electricity Distributors Association (EDA) coordinated a fact-finding tour to Denmark in the summer of 2009 for a number of its members. A video of the EDA excursion can be viewed here.

The EDA's choice of Denmark was an inspired one because of the leadership demonstrated by Danish cities such as Copenhagen which use CHP to supply 97% of the city with heating. The Copenhagen district heating system is one of the world's largest, oldest and most successful. It was set up in 1984 to capture waste heat from garbage incineration and CHP plants - normally released into the sea – and channel it back through pipes into residents' homes.  The system has cut household bills by 1,400 EUR annually, and saved Copenhagen the equivalent of 203,000 tons of oil every year thereby reducing CO2 emissions by 665,000 tons.

The current push by the OPA to develop CHP emerged from a Ministerial directive on November 23, 2010.  It instructed the OPA to continue to individually negotiate CHP contracts for projects over 20 MW, while implementing the FIT program for anything under 20 MW while limited to "cost-effective projects located in areas of the province where they can be accommodated in the local distribution system and where there are local benefits."

Interested parties can visit the OPA CHP update page to sign up for updates or get more information from the OPA.

Monday, December 6, 2010

Manitoba Follows BC Lead in Consulting Public on Cap-and-Trade Scheme

In a previous post, I noted that British Columbia's Ministry of Environment announced a 45-day public consultation period on its proposed regulations for large greenhouse gas (GHG) emitters. As that province recently concluded its consultation period, another province embarked on one of its own.  The Government of Manitoba is seeking public input on using a cap-and-trade system as its primary mechanism to reduce its GHG emissions.  It will offer a slightly extended comment period of approximately three months once it has finally concluded on March 15, 2011.

As with BC, Manitoba is expected to integrate its system into the Western Climate Initiative (WCI), which is scheduled to commence with the first phase of a trading system among Ontario, Quebec, California and a number of other U.S. states by January 1, 2012. A cap-and-trade system will permit these governments to issue allowances to entities that emit GHGs and then if those entities reduce emissions below their limits, the entities will be able to sell or bank surplus allowances for future use. If successful, the system would impose a broader cap on GHGs three years later.

The WCI’s objective is to reduce GHG emissions in the region by 15% below 2005 levels by 2020. However, some members have more ambitious targets than the WCI as a whole. For instance, Manitoba has a stated goal of reducing net emissions in the province to below 1990 levels by 2012. In 2008, Manitboa’s estimated GHG emissions was 21.9 megatonnes (Mt) (measured in carbon dioxide equivalent units or CO2e). This was approximately 3% of Canada’s 734 Mt of total emissions.

According to the Government, Manitoba’s GHG emissions profile is unique in Canada. Unlike other  provinces - where GHG emissions originate from a small number of large emitters - the majority of Manitoba’s GHG emissions are from many smaller emitters across a wide range of sectors.

Interested parties can pose questions about submitting a response to:

Manitoba Conservation
Climate Change Branch
Climate Change and Environmental Protection Division
1200 -155 Carlton Street, Winnipeg, MB R3C 3H8
Telephone: 204-945-3268 (in Winnipeg)
Toll free: 1 - 866-460-3118

COP16: Dispatches From the Front Lines

I have recently had the good fortune of receiving some insight from friends and colleagues participating as observers at the United Nations Climate Change Conference (UNFCCC) taking place in Cancun, Mexico, from 29 November to 10 December 2010. It encompasses the sixteenth Conference of the Parties (COP) and the sixth Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP), as well as the thirty-third sessions of both the Subsidiary Body for Implementation (SBI) and the Subsidiary Body for Scientific and Technological Advice (SBSTA), and the fifteenth session of the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP) and thirteenth session of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA). 

I have attempted to compile and summarize their thoughts as best I can. I hope you will find them as helpful as I have to better understand the current status of the negotiations as they move into their second week.

As in Copenhagen, the critical divisive issue in the Cancun negotiations is whether or not there will be a second commitment period under the Kyoto Protocol.  A decision in Cancun would set the foundation for a new international agreement at COP17 in Durban, South Africa.  Most developing countries are very concerned about "form" - i.e. that commitments are enshrined in a second commitment period under the Kyoto Protocol - whereas most non-EU Annex I countries are emphasizing "substance" - i.e. if there are significant mitigation commitments by all major economies post-2012, it should not matter that these are not made under the Kyoto Protocol.  The EU negotiating bloc is open to a second commitment period under Kyoto, but is urging flexibility and trying to broker a compromise between the Annex I and developing country blocs.

Currently, there are two negotiation tracks - the AWG-KP and the AWG-LCA. The Chair of the AWG-LCA released an unofficial text on Saturday which has become the basis of the UNFCCC negotiations from now on. It is available here:  In addition to their political aversion to Kyoto, many Annex I countries are frustrated about the inefficiencies and duplication of negotiation efforts that result from a two-track process.

In the COP/MOP (Meeting of the Parties to the Kyoto Protocol) plenary Saturday evening, the UMBRELLA GROUP negotiating bloc advocated for a single, comprehensive agreement instead of a second commitment period under the Kyoto Protocol.  (The UMBRELLA GROUP generally includes most non-EU industrialized countries, including Canada, United States, Australia, Russia, Japan, New Zealand, Iceland, Norway, and Ukraine.)

In contrast, the G77 & CHINA negotiating bloc (which includes most developing nations) was very firm that a second commitment period under Kyoto is essential to any agreement.  The LDC (Least Developed Counties) and AOSIS (Alliance of Small Island States) blocs supported the G77's strong stance on a second Kyoto commitment period.  Most individual developing countries that made statements in addition to their respective negotiating blocs emphasized the importance of the continuation of Kyoto.  India, in particular, spoke very strongly in favour of Kyoto and the fact that it rests on industrial countries' historical responsibility for emissions, as opposed to the UMBRELLA group's desire for commitments from "all major economies".

The UNFCCC process requires consensus for decision-making, and it is doubtful at this point that any compromise will be reached between the pro- and anti-Kyoto states.  Realistically, the developing countries will not be able to force the UMBRELLA group - especially Japan, Canada and Russia - to accept a second commitment period under Kyoto.  In the opinion of one observer, G77/LDC/AOSIS efforts would be better spent at this point negotiating a single, comprehensive agreement including ambitious mitigation targets and the aspects of Kyoto - such as emphasis on historical responsibility - that they are so concerned about maintaining.  It is possible that they are engaging in "positional" negotiation tactics and maintaining their strong pro-Kyoto position in order to extract maximum concessions in an alternative agreement.  However, there may be too much domestic political pressure for many countries to abandon their Kyoto positions.  A non-Kyoto agreement may be considered a political "loss", regardless of the substance of the agreement.

On a more positive note, however, there is still a lot of momentum and commitment by government and observer participants at COP16 on action against climate change.  The scientific imperatives are ever stronger, and everyone recognizes that immediate action is necessary.  It is predicted that Bolivia and Venezuela will soften their positions and allow an agreement on REDD+ to be finalized, although Saudi Arabia may condition their agreement on the inclusion of CCS under the CDM.

In addition, efforts have been made since Copenhagen to create obligations and initiatives that are independent of the UNFCCC process. The EU ETS caps have been set for 2020 regardless of whether there is a successor to the Kyoto Protocol, and voluntary and regional emissions trading initiatives are gaining strength across the globe.  International action on climate change is fragmenting, but it is still progressing.  Party negotiators are aware that the relevance and credibility of the UNFCCC process is at stake, which may be the greatest motivation towards compromise and an agreement in Cancun.

Saturday, December 4, 2010

Ontario Seeks Comment on its Long-Term Energy Plan

The Government of Ontario's Ministry of Energy released its Long-Term Energy Plan (LTEP) on November 23, 2010. It provides the government's proposal for meeting the province's energy needs over the next 20 years. Much of the policy and initiatives contained in the LTEP are affirmations of previous announcements; however, there is some additional clarification and guidance provided.

The LTEP proposes a diverse supply mix including an increase in the target for wind, solar and bio-energy from 10% by 2030 to about 13% by 2018. It maintains the province's commitment to eliminating coal plants by 2014. A draft supply mix directive to the Ontario Power Authority (OPA) has been posted to the Environmental Registry (EBR Registry Number - 011-170) where it will remain for a 45-day comment period. Interested parties have until January 7, 2011 to submit comments or ask questions.

Following the closing of the comment period, the Ministry of Energy will issue a formal supply mix directive to the OPA, which will form the basis for a new Integrated Power System Plan (IPSP). During a recent public OPA Management teleconference on December 3, senior OPA executives indicated the step after that would be public hearings with the ultimate objective of publishing the IPSP in August 2011.

Thursday, December 2, 2010

CCLN Calls for Federal Direction on Climate Policy

Background - Climate Change Lawyers Network

What do you get when you mix three lawyers just starting out their careers, a few adult pops and a lack of federal climate policy?  Well, in the Fall of 2008, the answer turned out to be the Climate Change Lawyers Network (CCLN) based in Toronto. Together with the visionary Laura Zizzo, a founding partner of Zizzo Allan Climate Law, and the passionate Sheila Ritson-Bennett, a former counsel at the Ministry of Natural Resources, I enthusiastically agreed that we should find a way to corral more lawyers in more watering holes to talk more often about climate policy.

At the time, we were primarily focused in providing a platform for junior lawyers to meet each other and receive guidance from experts in climate law and policy. Since those halcyon early days, when CCLN members actually believed a Canadian federal government might take its responsibility in international climate negotiations seriously, the network has expanded to include law students and taken on a more activist role in the Canadian climate policy community.  To wit, CCLN members worked with Islands First in building the capacity of Small Island States to respond to developments during COP15 in Copenhagen, provided the Ontario Securities Commission with a significant submission on carbon disclosure rates among Canadian public issuers and, in this letter, the Honourable Roy McMurtry wrote in support of international climate law action and endorsed the CCLN's efforts.

While my early involvement in the CCLN has recently been cut back in order to focus more energy on building my emerging legal practice, I know the current executive is doing an amazing job of educating the profession and thinking critically about one of the world's most pressing issues - the Canadian response to climate change. The network recently met to hammer out a statement reflecting the desire to see Canada take a more constructive role in developing an effective and predictable policy framework.

COP 16 Statement

The CCLN's most recent contribution to the climate policy debate in Canada has been to issue the following request to the Federal Government:

As trusted advisors, we commit to incorporating climate change considerations into our everyday work and lives. We take responsibility for helping our clients understand the risks and opportunities associated with climate change. We believe that every profession, community and nation must make a deliberate contribution to finding climate solutions.
COP 16 is an opportunity for Canada to regain international credibility as a consensus builder. The first step is to get back to the negotiating table in a meaningful way.
Our national circumstances require action on climate change.
  • Many of Canada’s communities, particularly those in northern or remote areas, are extremely vulnerable to the effects of a changing climate, such as changing water levels and melting permafrost.
  • Our timber stocks and prime agricultural land are under serious threat from avariety of climate change effects, including pest habitat expansions, changing water levels and more frequent and intense storms.
  • International criticism and mistrust caused by our failure to abide by Canada’s Kyoto commitment are reducing our influence abroad.
  • Canada is missing opportunities to become a leader in the inevitable shift to a low-carbon economy.
  • The Canadian economy is dependent on trade with the rest of the world. The CCLN has concerns about trade consequences if Canada continues to block progress on reducing greenhouse gases internationally. 
Canada has an opportunity to use its natural and human capital to find political and technological solutions that work for Canadians and the world.
    We ask that the Canadian Federal Government: 
    • Provide certainty to businesses and the public by committing to honour existing emission reduction commitments;
    • Fund and mandate a comprehensive national greenhouse gas inventory to allow for appropriate and efficient policy creation;
    • Allocate meaningful funds to help northern and other vulnerable communities toplan for and adapt to climate change;
    • Support provincial Greenhouse gas reduction measures and show leadership by integrating them into an effective national system;
    • Accept international consensus and agree to 1990 as the baseline year; and
    • Enable and facilitate Canadian participation in the Kyoto Protocol Flexibility Mechanisms.
    For people interested in getting in touch with the CCLN, you are encouraged to reach out to the following fine folks:

    Laura Zizzo
    Co-Chair, Climate Change Lawyers Network


    In Cancun (November 30-December 10, 2010)
    Travis Allan
    Outreach and Education Officer

    Monday, November 29, 2010

    Guest Post: Shaun Chapman and PACE Financing

    Ontario has been moving aggressively toward a renewable future that is both profitable and sustainable. To that portfolio of financing options Ontarians have taken an interest in PACE (Property Assessed Clean Energy) financing. Fresh from the 2010 Ontario Community Power Conference it is clear that Ontarians would enjoy a bit more information on how this program works, and why it might be a good fit for green energy proponents.

    First, how does PACE work? Or at least, how has it worked in the United States?

    Sunday, November 21, 2010

    ClimateSpark Seeks to Challenge Communities to Reduce Carbon

    As the world’s national governments prepare to gather for the first post-Copenhagen United Nations Climate Change Conference in Mexico later this month, sub-national and regional governments are moving ahead with low carbon initiatives on their own. One of the most recent examples is the Low Carbon Economic Strategy plan published by the Scottish government last week. It is an attempt to focus the government’s approach in exploiting Scotland’s natural resources and competitive advantages towards the creation of 60,000 new green jobs by 2020 and grow its economy.

    Closer to home, the City of Toronto is attempting to leverage the power of social networking to help the city mitigate its impact on climate change. The Toronto Atmospheric Fund (“TAF”) launched its ClimateSpark Challenge on November 3, 2010 in an effort to discover and nurture low carbon solutions.

    Tuesday, November 16, 2010

    An Historical Review of Ontario's Electricity Sector by Paul McKay

    On Monday, November 15, 2010 attendees at the 2nd Annual Community Power Conference were fortunate to hear investigative reporter and author Paul McKay commemorate 100 years of community power in Ontario with an informative and insightful speech.  As a member of that audience, I thought it was important to put Paul's message in the public realm so that all Ontarians can better understand the value and importance of their investment in sustainable energy through the Green Energy and Green Economy Act (2009). Paul's latest book is Atomic Accomplice:  How Canada Deals in Deadly DeceitWhile you wait for your copy to arrive, I hope you will read his speech, reprinted here in its unedited entirety:

    Canadians are widely reputed to be a peaceably pragmatic lot, not prone to claims of revolutionary high drama, divine destiny, or prima donna self-promotion. We can't claim a Paul Revere, a Joan of Arc, a Donald Trump or Lady Gaga.

    Instead, we have Banting and Best's quiet discovery of insulin, Dr. Norman Bethune's battlefield blood transfusion kit, Alexander Graham Bell's crackling telephone, Massey-Ferguson tractors, the RIM Blackberry, the Tim Horton's drive-thru - innovations which succeeded because they worked.

    So it may be tempting to assume that a condensed version of Ontario's 100-year history of electric power might be worthy of only a bored yawn, or an early exit for an advance coffee break.

    I am here to convince you otherwise.

    Friday, November 12, 2010

    A Bright Idea: Energy Services Agreement

    Versions of this entry can also be seen at Tyler Hamilton's Clean Break blog ( and here at Energy Management (


    Energy retrofits of industrial and commercial buildings have recently proven to be one of the more popular initiatives for Canadian landlords and tenants (“project proponents”) seeking to brandish their green credentials or, simply enough, to save money. However, comprehensive retrofits can be quite costly with high initial capital costs and long payback periods. Incentives such as the federal government’s ecoENERGY Retrofit, BOMA Toronto’s Conservation and Demand Management (CDM) $60 million fund and Toronto Hydro’s Business Incentive Program have been attempts to make some of these investments more palatable to building owners and operators.

    Unfortunately, for energy efficiency enthusiasts, these programs are generally limited-time offers and may not coincide with building maintenance or budget cycles. (In fact, both the ecoENERGY Retrofit and the BOMA Toronto CDM programs will be shut down by March 31, 2011.) What other options does a cash-strapped business have to conduct electricity conservation projects on their properties? One solution that is currently overlooked, but may prove more appealing as incentive programs are phased out, is employing an Energy Services Agreement (“ESA”).

    Friday, November 5, 2010

    Community Power Developments in Canada


    In a previous post, I discussed the importance of embedding acceptance for the objectives of Ontario's Green Energy and Green Economy Act (Ontario) (the "Act") within communities. Only by developing widespread support for renewable energy would the province be able to ensure enough support is entrenched to weather future storms and transfers of political power.  Recent developments suggest the province is on track to incorporating local communities in this transformative change.

    Ontario's Track Record

    Developing community-owned renewable generation is an objective of the Act and a major goal of the Feed-in Tariff ("FIT") Program. Early reviews of the effort by the Ontario Power Authority ("OPA"), which administers the FIT Program, suggest it is realizing some considerable headway in this regard. It has signed contracts for 264 MW of community renewable generation and an additional 120 MW from Aboriginal renewable generation according to an October 12, 2010 report.

    Energy analyst Paul Gipe has stated that once these projects are completed, "Ontario will have the largest installed base of community-owned renewable generation in North America, surpassing community ownership of renewable generation in Minnesota." This could put the province on track to have the largest installation of community-owned renewable generation outside of traditional powerhouses Denmark and Germany. However, there is still a palpable sense of uneasiness among the sector's most enthusiastic supporters who see limited financing options and low returns as two significant barriers for these groups to overcome.

    Thursday, November 4, 2010

    Wakulat | Law to Participate at Power Conference

    Thanks to the jolt provided by the passage of Ontario's Green Energy and Green Economy Act last year, a variety of newcomers have taken on leadership roles in bringing clean, green and distributed energy to the province.  Chief among these varied groups is the Ontario Sustainable Energy Association, which is a province-wide, member-based non-profit organization dedicated to supporting the development of Community Power projects and renewable energy. It includes an eclectic membership of private citizens, cooperatives, farmers, First Nations, businesses, institutions, consultants and municipalities.  Though not necessarily a "newcomer" since OSEA was a key member of the Green Energy Act Alliance, it has most definitely expanded its role and influence since the Act was introduced.

    OSEA is also responsible for putting on the only Community Power-focused conference in Canada, if not the world.  The second annual Community Power Conference will take place November 14-16, 2010 in Toronto, Canada.  It will bring together approximately 600 delegates from the above-mentioned groups along with a selection of international speakers and participants from such places as Australia, Brazil, Denmark and Japan.  One of these special guests includes Fabio Rosa, who is a Brazilian social entrepreneur focused on promoting rural electrification and the use of sustainable energy sources. His inspirational story was featured earlier this year on PBS' series The New Heroes:

    I am a proud supporter of OSEA and in order to demonstrate my commitment to grassroots energy generation, I have dedicated at least two days per week since mid-August to volunteering with the amazing folks planning the conference.  The commitment and passion of OSEA staff, volunteers and advisors has given me hope that despite the learning curve and challenges of developing community power in Ontario that progress will continue to be made.

    Our communities are already benefiting from ground-breaking work by groups such as the Toronto Renewable Energy Co-Operative, Pukwis Energy Co-op and the Neighbourhood Unitarian Universalist Congregation, to name but a few. They have demonstrated despite the imperfections of the current Green Energy Act and Feed-In Tariff Program, that successful Community Power projects are possible in Ontario.

    Thus, it is with great pleasure that I will be participating with OSEA's co-organizer, the Association of Power Producers of Ontario as a moderator for a panel in their Power Networking Centre.  APPrO is holding its conference alongside OSEA which will be the 22nd Annual Canadian Power Conference. It will take place on November 16-17, 2010 and its theme is Making Green Sustainable: Responsibly Rebalancing the System.

    If you would like to work with these groups or attend the conference, please contact me and I can plug you into the right people.  It is only by working together and supporting one another that we will truly embed an ethic of conservation and renewable generation in our communities.

    Thank you,

    Wednesday, November 3, 2010

    California Midterms: Reading the Tea (Party) Leaves

    This posting follows a previous post discussing the potentially far-reaching impact of California's midterm choices on, not only the U.S., but also North American climate change mitigation efforts.

    California's midterm election results are in and it appears voters have handed climate change proponents a mixed but generally positive message:
    1. Governor:  Democratic candidate Jerry Brown's return to the governorship came at the expense of former eBay CEO Meg Whitman and her spending record of US$141 million on the race. Brown holds a position that is generally seen as more favourable to continuing the development of the state's climate change policies than Whitman would have been. He has expressed the view that "adjustments" may be required but has pointed out that maintaining investor certainty is key to continuing California's leadership in cleantech.
    2. Proposition 23:  Climate change proponents can exhale (and continue to buy offsets for those exhalations) thanks to an overwhelming rejection of Prop 23.  Prop 23 was largely funded by oil companies, and proposed suspending the Global Warming Solutions Act of 2006 - a timetable to bring California into compliance with the provisions of the Kyoto Protocol - along with a suite of programs designed to promote innovation in cleantech. Thus, this will be welcome news to Silicon Valley technology companies who have invested heavily in greener technologies. It is also good news for California's partners in the Western Climate Initiative such as the Canadian provinces of B.C., Manitoba, Ontario and Quebec who are moving forward with the development of a linked set of cap-and-trade systems for greenhouse gases.
    3. Proposition 26:   The fly in the otherwise green ointment, is the passage of Prop 26, which changes the state’s constitution by requiring cities, counties and the state legislature to have a 2/3 vote instead of a simple majority to increase or enact a fee. It has been dubbed the “Polluter’s Protection Act.” The goal is to reverse the 1997 California Supreme Court unanimous decision in Sinclair Paint Company v. Board of Equalization which upheld a fee on paint producers that would help pay for children at risk from lead-based paint. The court found that such a fee is not a tax but a regulatory fee that could be imposed by a majority vote. Prop 26 also contains a provision that the legislature is not allowed to pass revenue-neutral bills that raise some taxes but lower others, which is a key plank in many cap-and-trade or cap-and-dividend schemes.  A more comprehensive analysis by three UCLA professors explains the impact of Prop 26 on pollution prevention measures generally and climate specifically.  The upshot is it will be trickier to implement the Global Warming Solutions Act. 
    Generally speaking, this is all relatively good news for climate change mitigation efforts in California and more broadly across the continent.  It may simply require more creative thinking on the part of the California state legislature or its Air Resources Board (ARB) in maintaining progress in this area.

    In fact, the ARB is not wasting any time as it has recently issued its proposed greenhouse gas cap-and-trade program building on the conceptual framework released in November 2009. The 45-day public comment period on the regulation opened November 1, 2010 and closes on December 15, 2010. In addition, ARB staff will present an overview of the proposed program to the Board at its November 18, 2010 meeting. The ARB will then hold a public hearing to consider the cap-and-trade program on December 16, 2010 following the comment period.

    Tuesday, November 2, 2010

    Ontario's Solar Incentive Cutbacks: FITting in the Bigger Picture

    Earlier this year, the provincial Government of Ontario came under heated criticism when its industry regulator, the Ontario Power Authority, abruptly proposed a rate cut to its microFIT (Feed-in Tariff) program. Coming just nine months after the program launch, the proposal was to scale back the tariff rate for ground-mounted solar PV installations from 80.2 cents per kWh to 58.8 cents per kWh. After a month-long consultation process in which industry proponents argued vociferously against the move, the Ontario Power Authority compromised and settled on a rate of 64.2 cents per kWh while essentially banning the practice of commercial aggregation under microFIT.  

    There was considerable concern that the OPA's process as opposed to the actual decision could serve to  undermine investor confidence in the province's much-larger FIT program designed for big producers of energy from sources like the sun and wind. However, it is interesting to note that the OPA decision fits a wider trend affecting FIT programs on a global scale. Presumably still recovering from the Great Recession, many other governments have also reconsidered their financial commitment to renewable energy generation.  Some in a much less adroit manner than Ontario.  For example:
    • Germany:  Both the leading exemplar of how to develop a FIT program and also perhaps how to make effective adjustments on the fly, the government is teaching the German solar industry how to adapt to a much less lucrative home jurisdiction. Following an intense political debate, the German Bundestag decided to invoke a mid-year reduction to its solar FIT program. By early July politicians had agreed on a two-step reduction, with reductions taking place on July 1 and October 1, 2010. For a comprehensive summary of the changes check out the very thorough German Energy Blog.
    • Australia:  At the other end of the competency spectrum, we have the state Government of New South Wales (NSW). Overnight and without warning, NSW slashed its rates from the highest to the lowest in the country. The NSW Solar Bonus Scheme was introduced via legislation in 2009 and provided a FIT tariff rate of 60 cents (Australian) per kWh but starting October 28 is only offering 20 cents per kWh. Similar to the OPA, NSW found its program to be more popular than it anticipated and felt it needed to rein in its long-term financial obligation to renewable energy generation. And like Ontario, local industry has been in an uproar, suggesting the change will eliminate jobs and investments.
    • Spain:  On an even more serious note, the Spanish Energy Ministry has initiated a probe of over 9,000 cases with an eye to any potential fraud by proponents. It has already forced a new deal on 907 installations requiring that they accept 32 euro cents per kWh instead of the 46 euro cents to which they were originally entitled.
    • Italy:  In another sobering situation that goes beyond solar, the Italian government has become involved in embezzlement investigations of alleged criminal organizations that have attempted to take advantage of various renewable incentive programs. 
    Abengoa Solar Platform, SanlĂșcar la Mayor, Sevilla (Photo by me!)
    Despite all this seeming gloom, there is at least one international bright light for solar proponents. The penny-pinching coalition government in the United Kingdom announced a couple a weeks ago that it would improve the efficiency of its solar FIT rates at the next formal review. An attempt will be made to refocus tariffs on the most cost-effective technologies in 2014-15.  Leave it to the Brits to be true to their word.

    One last point on the issue of FIT cuts is that proponents should keep in mind that these programs are actually designed to embed rate cuts at predictable intervals. The point of these programs is to provide the boost needed to get renewable technologies to be cost competitive with more established, but dirtier, energy options. As industry moves along their cost curves, the idea is to pass the savings on to the broader market and not have industry capture excessive returns. The question at this point is how best to provide predictability and incorporate public consultation into this decision-making process.  The partial answer in Ontario has been to create an Advisory Panel for the microFIT program which will hopefully ensure smoother price transitions in the future.

    Without a doubt, there will be further incentive cutbacks as FIT jurisdictions adjust to the market responses they experience. Ontario appears to be safely applying a middle-of-the-pack approach to its adjustment process, but there is hope that it is starting to work towards being an international leader in working and communicating with its stakeholders.

    Keep smiling,

      Sunday, October 24, 2010

      BC Opens Consultation Period on Cap-and-Trade Regulations

      While California's low carbon regime faces an existential crisis (see previous post California Dreaming: Why Ontarians Need to Wake-Up to Proposition 23), its Western Climate Initiative (WCI) partner British Columbia is moving full speed ahead with its introduction of a greenhouse gas (GHG) offset and emissions trading regulation. 

      The BC Ministry of Environment announced on October 22 that a public consultation period had begun on its proposed regulations for large GHG emitters. The Ministry is seeking comments from stakeholders including First Nations and the general public on the proposed regulation. The consultation period will last for 45 days and end on December 6, 2010. The timing is in line with BC's commitment under the WCI to meet a planned start date of January 1, 2012 for linking a live cap-and-trade system with the other WCI members including seven US states and the Canadian provinces of Manitoba, Ontario and Quebec.

      A cap-and-trade system will permit these governments to issue allowances to entities that emit GHGs and then if those entities reduce emissions below their limits, the entities will be able to sell or bank surplus allowances for future use.

      For further information on the BC consultation process, please click here.

      For a more in-depth review of the process, please check out my colleague Svend Andersen's site GHG Accounting.

      California Dreaming: Why Ontarians Need to Wake-Up to Proposition 23

      The UK’s George Monbiot recently declared the international process to address climate change to be broken beyond repair and called on like-minded folks to begin a dialogue that could provide an alternative path to reducing global greenhouse gas (GHG) emissions. Since attending COP15 in Copenhagen, I have shifted my faith to local and regional actions that encourage the experimentation and development of locally appropriate responses to emission reductions. For instance, British Columbia is committed to creating carbon neutral municipalities and Ontario has witnessed the implementation of its Green Energy and Green Economy Act. I’d like to see this turn into a novel kind of race-to-the-bottom whereby these movements lead to successful initiatives that prompt neighboring jurisdictions to outdo each other in reducing their GHG emissions.

      For Ontarians interested in seeing our province continue its participation in this race, I suggest you turn your attention to events transpiring in California. As the 2010 U.S. midterms draw to their climactic conclusion on November 2, California voters face a few choices that could radically impact on how (or if) climate change is addressed at the state, national, continental and perhaps even global level. When they go to the polls, Californians will be asked to choose a new governor and cast their votes on Propositions 23 and 26, which could all impact the development of climate change solutions.

      Last week, I furthered my understanding of the issues at stake by listening in on the Climate Action Reserve’s October 21 webinar that included as speakers California State Senator Fran Pavley and Erin Rogers, Western Region Manager for the Union of Concerned Scientists.

      All three choices facing California voters turn on how much support its landmark 2006 Global Warming Solutions Act, also referred to as Assembly Bill 32 (AB 32), will continue to enjoy from the state government. AB 32 is bipartisan piece of legislation designed to reduce the California’s overall GHG emissions in the year 2020 back to 1990 levels.

      The choice of the Guvernator’s successor is significant because of the proposed approaches to the implementation of AB 32. The Democratic nominee has vowed to move “full speed ahead.” On the other hand, the Republican candidate is more inclined towards suspending all activity on AB 32 for at least a year until the economy improves.

      Similarly, approval of Prop 23 would suspend the implementation of AB 32 until the state’s current 12.4% unemployment rate drops to 5.5% for four consecutive quarters (a phenomenon that has occurred exactly three times in the past 40 years). Rogers predicts this will not happen for at least the next 6 - 11 years. This would create a situation where the affected programs might not even start until past their 2020 end date. She cautions this would create huge uncertainty in the state’s business climate as its clean energy initiatives are put on indefinite hold (or cancelled outright) and the development of a GHG cap-and-trade system is effectively terminated.

      The timing is particularly discouraging as the state’s Air Resources Board is preparing to release its draft rule for a proposed compliance carbon offset market in the next couple of weeks. This is consistent with its obligations under AB 32 to adopt a cap-and-trade regulation by January 1, 2011 and put the program itself into operation in 2012. While creating a large offset market in California, it would also link up with six other Western U.S. states and four Canadian provinces in the Western Climate Initiative (WCI). Rogers believes if this process is blocked through the passage of Prop 23 that it “will spell the demise of the WCI initiative.”

      The WCI’s stated objective is to reduce overall member GHG emissions by 15% from 2005 levels by 2020. A cap-and-trade system is the lynchpin of this process. And with just over half of all emissions among WCI members (approximately 480 million tonnes), California is the keystone of the proposed trading system. Ontario is the next largest emitter at 190 million tonnes and has actually put in place its enabling legislation (see Environmental Protection Amendment Act (Greenhouse Gas Emissions Trading), 2009) but it has not yet announced the specifics of its proposed system. The incentive to do so diminishes considerably without the market liquidity provided by California’s inclusion.

      Rogers identified Prop 26 as a “backdoor approach to achieving same goals of Prop 23.” Prop 26 has a lower profile, but could be just as harmful to the low carbon economy transition. This proposition claims to stop “hidden taxes on goods like food and gas,” but it actually redefines certain “fees” as “taxes.” According to Rogers, this will make it impossible to levy fines on organizations causing an adverse environmental or health impact.

      According to California law, taxes go to government general funds, while fees must go to address problems linked to the activity the fee is attached to. Thus, passage of Prop 26 could be another way to block the state’s cap-and-trade system, as a fee would be levied on GHGs. At the very least, the resources required to run the AB 32 program would be tied up in litigation for the foreseeable future.

      According to both Rogers and Senator Pavley, the majority of funding in favour of these propositions is coming from out-of-state sources. The suggestion is that these organizations are wary of effective climate change policies emerging on a national level once California’s are firmly in place. Senator Pavley contrasted this apprehension with the “$10 billion that has flowed into California for research and development in cleantech, renewable energy and other alternative fuels” since AB 32 came into existence. The powerful signal that the state is open for business would be abruptly switched off. While it is possible that Ontario could continue its North American leadership role as a haven for cleantech investment, widespread business uncertainty in other jurisdictions would undoubtedly make the business case less robust.

      Fortunately, Senator Pavley indicated that recent polls show voters are opposed to Prop 23 by a margin of 49-32%. In addition, Rogers assured listeners that the campaign against both propositions  recognizes the harm that Prop 26 could also inflict and resources are now being marshaled to ensure the same fate befalls that proposition. Over 1000 California-based groups and business, 45 newspaper editorials and 118 PhD economists are endorsing the “no” vote.

      As Ontario moves into an election year, politicians of all stripes are no doubt watching California to see which way the wind is blowing. With growing public concern emerging around the province’s green energy strategy, GHG mitigation proponents could use some sunny news from California to indicate there remains sufficient support for the development of a North American cap-and-trade system. Otherwise, it’s a rather hollow victory if the race’s fiercest competitor has dropped out.

      Sunny Days,

      PS  A big shout-out to Joseph Pallant at Carbon Project Solutions for putting this issue on my radar over a nice cuppa in Van earlier this month.

      Monday, October 18, 2010

      Canada's Role in Exterritoriality Environmental Liability Issues

      Just over a week ago, I had the honour of attending the International Bar Association's Annual Conference in Vancouver as a panel speaker on the topic of Establishing National Young Lawyers' Associations and discussed how social media could play a useful role in that process (procrastination can apparently be considered useful). While participating on this panel was a definite highlight of the week, there was another aspect of the conference that left an indelible impression on me.

      As a "young" lawyer, I was given the privilege of undertaking the role of rapporteur (fancy law-speak for "note-taker") during a full-day session on the issue of Environmental Responsibility of Resource Companies Under Host Country and Home Country Laws put on by the IBA's Section on Energy, Environment, Natural Resources and Infrastructure Law (lawyers are huge fans of long names for their committees). I do not profess to have any expertise in this area of law, but as my friends will note that has never stopped me from spouting my thoughts.

      And I thought this was an incredible session co-chaired by experienced lawyers David Estrin of Toronto and Eugene E. Smary from Grand Rapids, Michigan. They assembled an international panel of legal and non-legal speakers that:
      • brought first-hand accounts of environmental and access to justice challenges in developing countries that host foreign-based resource development with an emotionally stirring focus on the plight of residents in the Niger delta;
      • discussed cases in EU, US and Canadian courts arising from host country environmental contamination claims in Africa, Southeast Asia and South America;
      • provided a platform for the mining and petroleum industry perspective; and
      • discussed the need for and efficacy of a Canadian private member's called Bill C-300 "An Act Respecting Corporate Accountability for the Activities of Mining, Oil or Gas Corporations in Developing Countries".
      The gist of the panel discussion was to review the growing rationale for greater access to justice based on international law principles and identify plausible mechanisms for achieving this for host country environmental claims. These jurisdictions are seeking not only more accessible statutory and civil remedies in the home countries of resource companies, but also the potential enforcement of home country environmental standards within host country boundaries. The issue arrived on the IBA's radar at the 2009 annual conference where Nigerian members spearheaded addressing this significant challenge facing their citizens and others living in the developing world.

      The stirring case for action was articulated by the Nigerian representatives who punctuated their point with the presentation of this video created by Friends of the Earth:

      Canada has a special role to play in the development of extraterritorial liability for resource-extraction companies for at least two reasons:
      • according to the speakers, 75% of global exploration and mining companies are represented on Canadian stock exchanges while many also have their head offices here; and
      • Canada has become a laboratory for holding these companies accountable.
      Two recent developments may have resource extraction companies taking note of how Canada is treating their actions abroad. First, in a novel case, at least one Canadian-based company (Copper Mesa Mining), and the stock exchange that listed it (Toronto Stock Exchange), has been taken to court in Canada for allegedly encouraging its security forces to assault local citizens in Ecuador where the latter group opposed the company's proposed open pit mine. While the case was dismissed by an Ontario court in May 2010, the plaintiffs' lawyer Murray Klippenstein has been instructed to appeal the decision.

      Second, Bill C-300 is winding its way through the federal parliament with the intent of promoting responsible environmental practices and international human rights standards among Canadian-based resource extraction firms. It would deprive companies that fail to live up to these standards from accessing any support (e.g. grants) from the Government of Canada. However, the panelists agreed that the greatest threat would be reputational to any company found violating its obligations under the proposed statute.

      For more information on Bill C-300 and the broader extraterritoriality issue, click here for the National Roundtable's report on Corporate Social Responsibility and the Canadian Extractive Industry in Developing Countries or check out the amazing work of Professors Richard Janda and Sara Seck.

      Having spent the past year focusing on renewable energy from a corporate/commercial perspective, it was a nice shift to get some of my human rights juices flowing again at this session as I found myself a mass MSN conversation away from making me feel as though I was back in law school.

      Friday, October 8, 2010

      Sustainable Services for Sustainabilty Entrepreneurs

      As someone hoping to assist clean green innovators see their sustainable ideas germinate and flower in our local communities, I was curious to understand the challenges these entrepreneurs face in securing access to legal or professional services.  Having recently been asked by the International Bar Association to present my experience with social media at their annual conference, I thought it made sense to try and find some answers to this question by starting a LinkedIn discussion group.

      To my wondrous surprise, a few other people have given some thought to this issue as well. I don't know if we came to the most authoritative of conclusions, but I think some important points were raised and discussed. One contributor even kindly created a direct link here to the full discussion for other members of LinkedIn. However, if you just want the highlights, here is what I learned:
      • Fee Structure:  A fixed price for advice or at least a base price for templates would help start-ups with cost certainty and management of their cash flow (subject to complexity of the task at hand).  Entrepreneurs also suggested they would (i) be willing to do some legwork themselves in order to reduce legal fees; or (ii) like to see service professionals work on a delayed gratification/sweat equity model.  A more innovative approach is to request bids from lawyers on Elance, thus taking advantage of the large cohort of legal professionals that may still be under-capacity in the current economy.
      • Lawyer Selection:  Trust is a key aspect of the lawyer-client relationship and referrals help to build that early on in the process.  Seeking those referrals from local funding sources is a good way to stay in their "sweet spot." However, some people are apparently willing to use LinkedIn as pool of potential providers. Perhaps those lawyers benefiting from effective recommendations are in a good position to attract these seekers. And in the case of start-ups looking to places such as Elance, they should do their due diligence by asking for credentials and references. 
      • Services:  Some of the more common legal requirements of start-ups included (i) non-disclosure agreements; (ii) patent or trademark protection; and (iii) employment contracts. 
      • Timing:  Legal advice and tailored agreements are sometimes overlooked in the early phases of a start-up, but having them "in place at the very beginning is paramount" and "day [one] of a start isn't soon enough for legal." At the same time, experienced founders suggest they may be able to wait until the "right time" before seeking legal advice. Perhaps a rule of thumb for the less experienced entrepreneur is to have a lawyer join the team as it is ready to incorporate, especially if there are multiple founders or investors involved. One tool that was suggested was to check this post:    
      A spirited debate broke out around the idea of having professional service providers work for equity and whether it's fair to expect them to take on the same level of risk as the entrepreneur who stands to benefit to a greater degree.  One poster summed it up thusly: "As a service provider, if you put too much time into equity deals that don't pan out, you start getting your meals through the local food bank. I look forward to this being the start of a discussion that helps both lawyers and entrepreneurs understand each other's situations, in turn moving us towards a model that is more sustainable for both sides.
      Sunny days,

      Friday, October 1, 2010

      Wakulat | Law in Local Media

      SNAP Etobicoke, a free community-based publication, recently published a piece highlighting September's Solar & Conservation Fair on the Lakeshore. SNAP wrote:

      Source:  SNAP Etobicoke; Photographer Jerry Lem
      Visitors came armed with tons of questions and left with a wealth of information. Experts like Ken Traynor and John Scheffer discussed residential issues while Travis Allan, Scott McLorie, Robert Wakulat, Osman Sediqi and Roberto Garcia discussed commercial applications. Participants enjoyed the various seminars designed to educate, promote, and encourage solar use and conservation. Afterward the smell of sausages cooking on the solar cooker welcomed them outside where commercial vendors were set up to discuss how to install solar solutions in their homes.

      I established Wakulat | Law with the express purpose of working with community groups, local businesses and individuals after recognizing the lack of willpower at the international level to address important issues such as climate change. Attending the United Nations Framework Convention on Climate Change in Copenhagen last year made me realize how important it is to work towards more sustainable living at local and regional levels. Moreover, local initiatives are likely to have greater community buy-in and achieve longer term success than top-down edicts from federal or international bodies.

      Recently, famous climate change journalist George Monbiot, writing in the UK's Guardian newspaper and his own blog declared the global climate change process to be dead. He has called for a conversation to start on how we can work towards a low-carbon future in a post-Kyoto world.  I believe it starts at home at the dinner table and moves out into our communities from there.

      Sunny days,

      Thursday, September 30, 2010

      Article: Driving Green Power via Ontario's Communities

      I recently reviewed the benefits of local community buy-in to ensure the success of Ontario's green energy policies in an article for an upcoming International Bar Association newsletter.  The article, Ontario's Green Energy Act: the Answer to (Public Acceptance) is Blowing in the Wind, will be published in the October 2010 edition of the IBA's Environment, Health and Safety Law Committee newsletter (Vol 7, No 1). 

      This article also works as a primer for an international audience interested in learning the basics about the province's Green Energy and Green Economy Act (GEGEA).  It highlights some key components of the GEGEA; identifies issues that have recently been raised as concerns by certain groups and canvasses the Government of Ontario's response to some of these challenges.  As is my wont, it also mixes metaphors to ensure that solar and wind energy feel as though I'm treating them as equal brothers in the province's drive to a lower carbon future.  (My apology if any bio-energy fanatics were snubbed in the authorship of this piece.)

      The article is reprinted below:

      IBA Environment Health and Safety Law Committee Newsletter Oct 2010

      International Bar Association
      The IBA was established in 1947 and works to influence the development of international law reform and shapes the future of the legal profession throughout the world.  It currently has three main objectives:

      • To promote an exchange of information between legal associations worldwide;
      • To support the independence of the judiciary and the right of lawyers to practise their profession without interference; and
      • To promote, protect and enforce human rights under a just rule of law via its Human Rights Institute.

      Monday, September 27, 2010

      Got Java? My Afternoon Coffee Industry Education

      On Sunday, September 26, 2010 I took my complimentary pass (courtesy of local indie cafe and roaster Te Aro Roasted) to the Canadian Coffee & Tea Show as the latter made its return to Toronto. I arrived looking for my daily cuppa and left with a buzz that could have powered more of the city than its landmark urban windmill.

      I'm a bit of a Johnny-come-lately to the coffee world having only embarked on my java journey three years ago, but I feel that my four years in Japan at least provided me with a crash course in tea appreciation. Realistically, my goal was more along the lines of identifying legal issues unique to the coffee and tea industry than it was to find the next post-Kopi Luwak trend.

      Some of the fun highlights from the trade show included:
      • Ice-Drip Coffee:  Te Aro's booth hosted the first ice-drip coffee maker I have ever seen (or tasted). The process looks like something out of a science class where every couple of seconds, a drop of ice water falls into a coffee filter, soaks the grounds and then winds its way into a glass pot. Viola! Six to eight hours later you have a deliciously smooth cup of coffee.
      • Cups of Excellence:  I learned there is a global competition that selects the best coffee produced in a country for a particular year and sells these coffees to the highest bidder during an Internet auction. Apparently 80-85% of all coffees so designated end up in Asia while only a very few, if any, arrive in the Canadian market and are made available to the general public.
      • Innovation:  Besides the ice-drip process, I discovered both the coffee and tea industry continue to innovate with new processes, new flavours, localized growing methods and gorgeous presentation. One personal favourite was the delicate rosewater tea on offer by a Chinese tea supplier. 
      • Marketing:  Hands down, the Social Coffee & Tea Company wins the award for cheekiest marketing based on the names of their coffee blends. For instance, depending on how aggressive you feel, you may have a hard time choosing between Imperialiste Noir and Western Liberation.
      Now all of these lessons were well and good but did I have any take-aways from a legal perspective?  While I'm hesitant to suggest there were broad trends, a few anecdotes stuck out:
      • Carbon Credits:  A number of roasters have established close relationships with coffee growers in developing countries and are looking for ways to increase the growers' ability to benefit from sustainable practices. One roaster even directed me to a Smithsonian report demonstrating that shade-grown coffee farms outshine sun-grown coffee farms on sustainability measurements. However, no one has yet heard of a way for these growers to benefit from any additional carbon sequestration that may occur on a shade-grown farm.
      • "Fair Trade":  More than one roaster and supplier indicated that not all "fair trade" labeled products are easily traced and in those cases they may choose not to offer a fair trade blend (e.g. chamomile) or, more likely, they attempt to source a coffee or tea that is "beyond fair trade." One roaster in particular mentioned that he prefers to purchase a Cup of Excellence crop and then work in a long-term relationship with that grower to develop their sustainability methods.
      • Labeling Consistency:  A Japanese importer of matcha tea bemoaned the patchwork of national labeling standards for "organic" products. This made it a challenge to encourage consistent standards among growers who may have to select a particular market for their "organic" tea rather than be able to offer their matcha as "organic" on a global basis. This lack of consistency was echoed by some of the fair traders.
      • Leases:  One of the more interesting anecdotes was provided by a coffee/tea distributor who suggested that cafes owners may not always find themselves in advantageous lease situations.  Apparently, a lack of standards is endemic in the industry and provisions that might be useful in a cafe context are not always found in cafe leases. 
      I am intrigued by some of the feedback I received at the Show and would love to hear from more experienced industry hands to see if anything I heard is something you've experienced or heard about.  Perhaps it's something we can discuss over a cup of Social's Western Decadence!

      Saturday, September 25, 2010

      Domestic Content: Storm Clouds on the Horizon?

      Update: Check out this blog post at Clean Break for an economic/policy perspective on the Domestic Content issue.
      Despite considerable optimism around Ontario's nascent Green Energy and Green Economy Act ("GEGEA"), the province continues to experience growing pains with this transformational piece of legislation. As has been widely reported, the most recent storm clouds gathering on the horizon arrived with a Japanese complaint to the World Trade Organization ("WTO") related to the GEGEA's domestic content requirements.

      The Feed-in-Tariff ("FIT") Program, implemented under the GEGEA, provides 20-year guaranteed contracts at premium rates to generators of qualified renewable energy installations. For instance, rooftop solar projects between 10 kW and 250 kW receive 71.2 cents per kWh for energy delivered to the provincial grid. However, project proponents for solar and wind must meet prescribed domestic content levels in their projects in order to qualify for a FIT contract. In the case of solar, subject to an exception for certain microFIT projects, proponents will have to achieve a level of 60% domestic content starting in 2011 in order to maintain their eligibility.

      The domestic content obligation is the lynchpin in the government's attempt to create 50,000 green energy jobs in three years. It is essentially the guarantee for Ontario's return on investment from the subsidies it is providing to encourage companies to set up their facilities in the province.

      The Japanese complaint alleges that the FIT Program's domestic content requirements are a violation of Canada's WTO obligations. Lawyer Tim Armstrong has summarized the key questions as to whether the requirements are consistent with the WTO's Trade Related Investment Measures (TRIMS) and Agreement on Subsidies and Countervailing Measures:

      "The former explicitly prohibits developed economies from imposing local content requirements on goods manufactured for export. Some argue that the Ontario legislation is justified since it involves 'government procurement.' But Japan’s complaint extends beyond government procurement and involves the production by private companies of green energy equipment and supplies for export.
      Alternatively, are the subsidies justifiable since they originate in subnational (provincial) rather than national (federal) legislation? If not, are there alternative defences?"

      So what happens now?  How will these questions be answered and what does it mean for the FIT Program?

      The WTO dispute resolution process was created in order to have members use a multilateral system to settle disputes instead of taking action unilaterally. This means following an agreed-upon procedure and the observation of the WTO panel's decision. Ideally, the process is designed to arrive at a prompt settlement taking no longer than 12-15 months including the potential for an appeal.  In practice, only about 136 of 369 cases had reached the full panel process by January 2008, while others were settled "out of court" or continued to follow the consultation process from as far back as 1995.

      Japan and Canada are now in the first stage of consultations between the governments, which lasts for 60 days.  The next stages of the process are as follows:

      45 days
      Panel set up and panelists appointed
      6 months
      Final panel report to parties
      3 weeks
      Final panel report to WTO members
      60 days
      Dispute Settlement Body adopts report (if no appeal)
      Total = 1 year
      (without appeal)
      60-90 days
      Appeals report
      30 days
      Dispute Settlement Body adopts appeals report
      Total = 1y 3m
      (with appeal)
      Source:  World Trade Organization

      Reports have stated that the federal government believes the FIT Program to be WTO compliant.  While this may simply be diplomatic posturing, the Ontario government has made this an important part of its program and will likely do everything it can to defend it. I am no International Trade lawyer but this would seem to suggest a strong likelihood of pursuing the full WTO process rather than finding a negotiated solution unless Japan is willing to compromise for something less than a full repeal of the domestic content requirement.

      Thus, a certain level of uncertainty has been created for producers (e.g. solar module manufacturers) who may otherwise have been willing to set up operations in the province to ensure their products meet the domestic content obligation. Now, they may prefer to hold off an a multi-million dollar investment to see if they will eventually be able to enter a domestic content-free market. Naturally, this would be weighed against the risk of ceding one of the hottest renewable energy markets in the world to those producers who were willing to be first-movers and have already set up shop and may become established as market leaders.

      It will be interesting to see which producers decide to grab their umbrella and enter this turbulent market and which ones lock the door and come out once the sun is shining again.

      Sunny Days(?),

      Tuesday, September 21, 2010

      The Solar Access Issue: Will You Get Burned?

      Update:  This blog entry was recently featured on Toronto Star reporter Tyler Hamilton's blog Clean Break:  www.cleanbreak.caTyler writes a weekly column of the same name that discusses trends, happenings and innovators in the clean technology and green energy market.

      Having drawn widespread comparisons to a gold rush, Ontario’s welcoming market for solar photovoltaic (PV) investments under its year-old Feed-In Tariff (FIT) program has prompted a race among solar developers to secure commercial rooftops across the province. The FIT program is widely regarded as providing the most lucrative incentive to generate electricity in the world. The Government of Ontario has committed to paying up to 80.2 cents per kilowatt-hour (kWh) for electricity generated by solar rooftop systems under guaranteed 20-year power purchase agreements. This compares quite favorably to the price of electricity sold to the end-user, which can dip as low as 5.3 cents per kWh during off-peak hours.

      Simultaneously, cities across Ontario are incorporating infill development as a significant part of their smart urban growth programs. It’s almost certain these two green trends will eventually experience an increased degree of friction as they continue to rollout across the province’s urban landscapes. In fact, the issue has already attracted media attention in non-PV contexts:

      • in Toronto, a local restaurateur found his home severely shaded by a neighbouring infill project that was eventually resolved with the developer’s offer to install a solar-thermal unit that would replace 50-60% of the annual energy used to heat hot water in the home1; and
      • an Ottawa homeowner who employed a solar “architect” to incorporate passive solar heating for the home is now under threat from a nearby five-storey condo development2.

      Although the former situation resulted in a happy ending, both stories are cautionary tales for aspiring solar electricity generators, adopters of solar water heaters, and anyone else considering more passive solar heating options. As homeowners, businesses and communities are increasingly drawn to these technologies, protecting one’s sunlight will transform from a mere aesthetic concern to an important economic one.

      Solar access has been defined as “the ability to have uninterrupted direct rays of sunlight fall onto one’s property.” A “right to light” would be a legally enforceable right to access a natural and unobstructed flow of solar light. There is currently no “right to light” for Canadian property owners.

      Typical legal advice to more commercially oriented rooftop solar generators includes ensuring that their solar lease incorporates covenants from the landlord that it will not take or permit any action which would block or otherwise interfere with light reaching the solar PV array. In addition, a solar lease will also need to address the tenant’s right to terminate if at some point something happens which impairs the availability of sunlight or otherwise prevents the tenant from operating its facility. However, these provisions do not address the root cause of the problem – a lack of an effective and predictable solar access policy framework in Ontario.

      Canadian courts have not been eager to recognize a right to light. The Ontario Court of Appeal tackled the issue in the 1978 case Earl Putnam Organization Ltd. v MacDonald. A property owner sued its neighbour for constructing an opaque fence directly in front of a window. The plaintiff argued that the fence interrupted the building’s right to light.

      In tossing out the Putnam’s case, the Court of Appeal affirmed that “at common law, there is no natural right to lateral light.” Thus, the court confirmed that property owners enjoy an unrestrained right to build on their land even if their construction will cause shading on neighbouring properties. It has been left up to local politicians and planners to ensure that owners and tenants will not be left in the dark by the encroachment of nearby property developments.

      Fortunately, legal developments have occurred that may provide a small ray of hope to future adopters of solar energy. One such tale involves two solar enthusiasts who nearly had a significant solar investment rendered useless by a condo project at King and Spadina in Toronto. Their case was heard by the Ontario Municipal Board (“OMB”), which had to decide whether a developer’s proposed 14-storey condo would be allowed to cast a shadow on their solar array. The OMB cited the extra two hours of shading on the PV panels for an additional four months as having an adverse impact on the community. It was unequivocal in its disapproval stating, “[a]fter all is said and done this proposal is simply too big; it is too massive; it flies in the face of the … [Toronto Official] Plan; its impacts on surrounding properties are too great.”

      Municipal zoning by-laws and development agreements are, in fact, attuned to the impact of shadows on neighbouring properties and go some way to ensuring that light, view and privacy can be enjoyed by members of the community. As in the situation above, this approach has resulted in right-to-light issues generally coming before a Committee of Adjustment or the OMB on an application to vary the strict provisions of a zoning by-law.

      However, solar proponents considering significant financial investments and 20-year commitments may not be reassured by the “protection” offered by the current regime in Ontario. One option would be for provincial and municipal policymakers to look south and review the panoply of solar access laws that have proliferated in the United States. A number of U.S. jurisdictions have taken it upon themselves to ensure that their property owners can rely on their access to light in order to recoup investments made in solar energy technologies. Until then, it is at least worthwhile reviewing an Official Municipal Plan and local zoning bylaws to determine if your potential solar generator could be left in the dark.

      FUTURE BLOG POST - Let the Sun Shine In: Solar Access Options for Policymakers



      Saturday, September 18, 2010

      Green Energy and Green Economy Act 101: Acronyms & Abbreviations


      Perhaps you've heard a lot of fuss over the past year about the Ontario government's new Green Energy and Green Economy Act ("GEGEA")and how it enables individuals, businesses and community groups to generate their own power.  You may also know that the Ontario Power Authority ("OPA") will sign a 20-year power purchase agreement ("PPA") under its Feed-In Tariff ("FIT") program with each new generator.  This PPA guarantees a set tariff to the generator for each kilowatt-hour ("kWh") the generator supplies to the provincial grid.

      Unfortunately, you may also realize after reading the last paragraph that becoming an electricity generator will require navigating a minefield of acronyms, abbreviations and industry lingo that are used as shorthand by more experienced players. Wouldn't it be nice if someone just made it easy for you to tell the difference between a CanWEA and a CanSIA, or a FIT and microFIT?

      Well, look no further!  Below is a list of key terms that should get you started in understanding who is who and what is what in the Ontario renewable energy industry.  Hopefully, this is just the first baby step en route to establishing your own residential rooftop solar installation or a community wind farm.  If you come across any terms that should be added to the list, please fire them my way.

      Sunny days,

      Key Players:

      CanSIA:  Canadian Solar Industries Association, nonprofit trade association working to strengthen the Canadian solar industry and promote the use of solar energy.

      CanWEA:  Canadian Wind Energy Association, nonprofit trade association promoting the development of wind energy in Canada.

      ESA: Electrical Safety Authority, inspects all new construction and renovation involving electrical work as required by the Ontario Electrical Safety Code.

      IESO:  Independent Electricity System Operator, balances the supply of and demand for electricity in Ontario and then directs its flow across the province's transmission lines.

      LDC:  Local Distribution Company (e.g. Toronto Hydro)

      MEI:  Ministry of Energy and Infrastructure

      OEB:  Ontario Energy Board, regulates the province's electricity and natural gas sectors in the public interest

      OPA:  Ontario Power Authority, responsible for ensuring an adequate, long-term supply of electricity in Ontario and administers the FIT programs

      OSEA:  Ontario Sustainable Energy Association, works to initiate, facilitate and support the work of local sustainable energy organizations through membership services, province-wide capacity building and non-partisan policy work.

      TREC: Toronto Renewable Energy Co-Operative, non-profit environmental co-operative that develops community-owned renewable energy projects and educates Ontarians about renewable energy, energy conservation and the community power model.

      Other Terms:

      AEPP: Aboriginal Energy Partnership Program

      BIA:  Business Improvement Area

      CEPP:  Community Energy Partnerships Program

      CP: community power

      DAT:  Distribution Availability Test
      EA:  Environmental Assessment

      ECT:  Economic Connection Test

      FIT:  Feed-in Tariff

      GEA: Green Energy Act, 2009, S.O. 2009, c. 12 Schedule A

      kW:  kilowatt

      kWh:  kilowatt hour

      microFIT:  micro Feed-in Tariff

      MW:  megawatt
      MWh:  megawatt hour 

      NRCan:  Natural Resources Canada

      O&M:  operation & maintenance

      PPA:  power purchase Agreement

      PV:  photovoltaic
      REA:  Renewable Energy Approval

      REC:  Renewable Energy Co-operative

      TAT:  Transmission Availability Test