CHAPTER 23 A MULTI-JURISDICTIONAL PERSPECTIVE ON GREENHOUSE GAS (GHG) EMISSIONS IN RESOURCE PROJECT DEVELOPMENT

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment (Apr 2019)
CHAPTER 23
A MULTI-JURISDICTIONAL PERSPECTIVE ON GREENHOUSE GAS (GHG) EMISSIONS IN RESOURCE PROJECT DEVELOPMENT
Dufferin Harper
Blake, Cassels & Graydon, LLP
Mariana Herrero
Galicia Abogados, S.C.
Felipe Meneses
Carey

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DUFFERIN (DUFF) HARPER is an environmental law partner at Blakes in Calgary, and practices in the areas of environmental/regulatory law and litigation. He advises clients on a variety of environmental and regulatory matters including greenhouse gas emissions and emissions disclosure, renewable energy projects, renewable fuels, traditional oil and gas, oil sands, LNG, transportation of dangerous goods and industrial/chemical facilities. His practice encompasses both corporate/commercial and litigation matters. On the corporate side, he represents clients on matters involving corporate governance and environmental aspects of corporate transactions, particularly as they relate to environmental liabilities and indemnities. As a litigator he represents clients involved in regulatory investigations, quasi-criminal offences, contaminated sites litigation and regulatory approvals. Duff also provides strategic advice to clients on environmental management systems, regulatory compliance, spill response activities and due diligence issues. He is a past chair of the National Environmental Law Section of the Canadian Bar Association and is nationally recognized as one of Canada's leading environmental lawyers. In addition to his law degree, he possesses both a Bachelor of Science degree and a Masters of Science degree. His Masters' thesis was in the area of environmental toxicology.

MARIANA HERRERO is a partner of Galicia Abogados, S.C. leading the Environmental Practice Group since 2006. She is an attorney specialized in all aspects of environmental law and has experience in other areas such as Energy, Infrastructure and Real Estate; she advised both sponsors and lenders on the environmental aspects of the financing, structuring and development of infrastructure projects, mainly in the water, roads and energy and oil & gas industries. Mariana Herrero has also broad experience in dealing with the environmental aspects of M&A projects related to different business and industries, including the acquisition of renewable energy projects (mainly wind, solar and min-hydro). She also participates in the development and implementation of corporate environmental and permitting strategies for the development of infrastructure, industrial and real estate projects. She has been recognized by several publications including Chambers & Partners and The Legal 500, as an expert lawyer in Environmental Law and Energy. In 2018, Mariana Herrero received the recognition as "Mexico Lawyer of the Year" by Chambers & Partners (Chambers Women in Law Awards: Latin America 2018), this award is granted to those lawyers committed to the gender equality and pioneers in opening opportunities to women throughout Latin America. She is a founding member of the Board at Abogadas MX, a non-for profit organization that promotes strategies to advance women in the legal profession to leadership positions in Mexico.

FELIPE MENESES is Counsel of the Environmental Group, at the law firm of Carey, in Santiago. He concentrates his practice in environmental law, indigenous regulations and regulatory matters in general by advising in project development and environmental assessment, legal opinions, environmental audits, litigation, amongst others.

INTRODUCTION

Greenhouse Gases

Greenhouse gases (GHGs) are gases that absorb and re-emit infrared radiation (sunlight).¹ As the sun's rays reflect off the earth, GHGs trap some of this reflective heat in the earth's atmosphere. In appropriate quantities, this creates the natural "greenhouse effect", which makes the earth warm enough to sustain life.² However, in greater quantities, the atmosphere and surface of the earth are further warmed, to a level where natural and human ecosystems may be adversely affected.³

The most abundant GHG emitted by human activity is carbon dioxide (CO₂). Other GHGs include various fluorinated gases, nitrous oxide and methane, which are often converted into equivalents of CO₂ (CO_2e) in order to standardize and compare overall GHG emissions.

International Legislation

In 1992, motivated by concerns that human activities were substantially increasing the atmospheric concentrations of GHGs, 165 countries including the USA, Canada, Mexico, and all countries in Central and South America, signed onto the United Nations Framework Convention on Climate Change (UNFCCC).⁴ The countries agreed to adopt policies and take actions to limit

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their GHG emissions and protect and enhance GHG sinks and reservoirs,⁵ in order to stabilize GHG concentrations at a level that would prevent dangerous interference with the global climate.⁶

The UNFCC was followed by the Kyoto Protocol in 1998. It imposed more stringent requirements, including binding GHG emission reduction targets and penalties for failing to satisfy them.⁷ The Kyoto Protocol focused on GHG reductions by developed countries⁸ and had 83 signatories, including the majority of South American and Central American countries. Canada, who originally signed and ratified the agreement, ultimately withdrew from it.⁹ Conversely, the United States signed the treaty, but never ratified it.¹⁰

The most recent renewal and elaboration of an international commitment to regulate GHG emissions was the Paris Agreement, which was signed by 195 nations in 2015,¹¹ including all of the countries in North, Central¹² and South America. The Paris Agreement commits its signatories to reduce their national GHG emissions and reiterates the goal to keep global GHG emissions below a level that will prevent dangerous interference with the global climate,¹³ although it does not provide concrete reductions targets or penalties for failing to comply.¹⁴ In December 2018, negotiators met in Katowice, Poland, with the aim of setting down rules for the implementation of the Paris Agreement. This resulted in procedural guidelines setting out how countries will provide information about domestic climate actions,¹⁵ as well as the deadline for demonstrating compliance with targets and setting new, more stringent targets.

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As detailed below, Canada has taken steps on both local and national levels to achieve reductions in GHG emissions in order to meet its international commitments.¹⁶ The United States however has indicated its intention to withdraw from the Paris Accord,¹⁷ and under President Trump's administration, has been removing regulatory requirements to reduce GHG emissions wherever possible.¹⁸

Mexico has taken several steps towards the implementation of the UNFCC and the Paris Agreement. The public policy instruments aimed at complying with its National Determined Contribution under the Paris Agreement and other international commitments are set forth in the General Climate Change Law enacted on June 2012.¹⁹ Other instruments and policies have been implemented pursuant to the so called Energy Reform in 2013 through the Energy Transition Law, the Electricity Industry Law, and the 2016 Transition Strategy to Promote the Use of Cleaner Technologies and Fuels.²⁰

Central American countries generally have some of the lowest contributions of GHG emissions and are very vulnerable to the effects of climate change. Countries in the region have all individually submitted their National Determined Contribution.²¹

In 2010, the Central American Environment and Development Commission (CCAD) and the Central American Integration System (SICA) formed by El Salvador, Guatemala, Nicaragua, Panamá, Honduras, Costa Rica, Belize and the Dominican Republic, established a Regional Climate Change Strategy. More recently, in 2017, SICA countries designed and launched a 5-year, Regional Action Plan to target climate change and a five-year action plan on climate change learning, training and awareness-raising.

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In turn, Chile subscribed to and ratified the UNFCC and the Paris Agreement and is currently implementing several actions in order to comply with its National Determined Contribution. Some of these actions are described in the National Action Plan on Climate Change,²² the Energy Agenda²³ and the National Strategy for Climate Change and Vegetation Resources (ENCCRV).²⁴

Some countries in South America have specific laws on climate change in order to contribute to the reduction of GHG emissions and fulfill their National Determined Contribution under the Paris Agreement. This is the case in Ecuador,²⁵ Peru,²⁶ Brazil²⁷ and Colombia.²⁸ The remaining countries, taking a similar approach as Chile, have implemented public policies and sectorial regulations.

It is worth mentioning that the newly elected president of Brazil, Jair Bolsonaro, has stated that Brazil may abandon the Paris Agreement and may withdraw the country's offer to host the UN's climate conference in 2019 (COP 25). Brazil is the country with the highest contributions of GHG emissions in South America.²⁹

GHG REGULATION BY JURISDICTION

Canada

GHG Emissions Laws and Regulations in Connection with Resource Project Development

The Canadian Constitution divides the powers of government between the provinces and the federal government.³⁰ For example, provincial governments can legislate with respect to property and civil rights, whereas the federal government is responsible for criminal legislation. Each government is sovereign within the jurisdictional powers it has been granted. However, the environment and GHG emissions are not specifically delegated by the Constitution to one

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government or the other. Therefore, the potential for overlapping jurisdiction regarding GHG emissions exists in Canada.³¹

Historically, the federal government has been slow to act, and provinces have taken...