Federal government releases climate change assessment guidance

On July 16, the Government of Canada released its final Strategic Assessment of Climate Change (SACC) with the stated goal of enabling consistent, predictable, efficient and transparent consideration of climate change in the federal impact assessment process. The report outlines the climate change-related information to be provided by project proponents during a federal impact assessment and requires projects with an operating life past 2050 to have a “credible plan” for achieving net-zero greenhouse gas (GHG) emissions by 2050.

The final SACC report builds on a draft version that was published in August 2019. In that same month, the Impact Assessment Act came into force, replacing and repealing the Canadian Environmental Assessment Act, 2012. Under the IAA, the Impact Assessment Agency of Canada (IAAC) leads the assessment of designated projects (in collaboration with other regulators, as applicable) to consider the projects’ environmental, health, social and economic effects within federal jurisdiction.

What you need to know

According to the final SACC report:

• A project’s effects on Canada’s ability to meet its climate change commitments (including targets for reductions by 2030 and net-zero by 2050) are among the factors that must be considered in an impact assessment of a designated project.
• An upstream emission assessment will be required for certain projects if their upstream emissions are likely to exceed 500 kilotons (kt) CO₂e (carbon dioxide equivalents) per year. After 2029, that threshold will decrease to 300 kt for 2030-2039, 200 kt for 2040-2049, and 100 kt for 2050 and beyond.
• An estimate of downstream emissions is not required.
• A designated project expected to operate past 2050 must have a “credible plan” to achieve net-zero emissions by 2050 (excluding any upstream emissions associated with the project).
• ECCC plans to publish a technical guide to further detail specific elements of the SACC.

Highlights of SACC

Quantification of GHG emissions

Proponents of projects undergoing a federal impact assessment will need to estimate the projects’ net GHG emissions (though an estimate of downstream emissions is not required). Key elements to be quantified or explained by the proponent include:

• Net emissions: which is the difference between: (1) the sum of direct emissions (from activities within defined project scope) and acquired energy emissions (from the generation of electricity, heat, steam or cooling, acquired from a third-party for the project), and (2) the sum of CO₂ generated by the project that is captured in an eligible storage project, emissions avoided in Canada as a result of the project, and any eligible offset credits.
• Emission intensity: For each year of a project’s operation phase, the proponent needs to estimate the project’s GHG emission intensity, determined as the net GHG emissions divided by units produced.
• Upstream emissions: For projects with Tailored Impact Statement Guidelines published in the 2020-2029 period, an assessment of upstream GHG emissions will be required if the project’s upstream GHG emissions are likely to exceed 500 kt CO₂e per year. That threshold will decrease to 300 kt for 2030-2039, 200 kt for 2040-2049, and 100 kt for 2050 and beyond. The intent is to reflect domestic and non-domestic emissions from all stages of production (i.e., from the point of resource extraction/utilization to the project under review). Proponents need to provide a quantitative estimate and discuss the conditions under which the estimated emissions would occur regardless of whether the project proceeds.
• Uncertainty in assessment: Proponents must explain the uncertainty associated with the net and upstream emission estimates from both a data and methodological perspective, including assumptions used and scenarios based on different project designs and external conditions.

Climate change information in the planning phase

Potential project impacts are shared with the public in the planning phase, early in the impact assessment process. Climate change-related information will be provided through: the initial and detailed project description; engagement with Indigenous peoples, the public and governmental stakeholders (which will inform the IAAC’s Summary of Issues to outline issues relevant to the assessment); and any additional submission by the proponent (e.g., response to the Summary of Issues). Specific information relevant to the planning phase includes:

• Initial and detailed project description: Pursuant to the Information and Management of Time Limits Regulations under the IAA, proponents must provide, among other things: (1) estimated maximum annual net GHG emissions for each project phase (including the components of the net emissions calculation noted above), (2) a description of the land areas impacted during the project’s lifecycle and the activities that would impact carbon sinks, and (3) a listing (for the initial project description) or description (for the detailed project description) of the alternative means of carrying out the project, including the consideration of GHG emissions as a criterion for alternatives selection.
• Tailored Impact Statement Guidelines: At the end of the planning phase, the IAAC will publish Tailored Impact Statement Guidelines to outline the scope of climate change information required for the Impact Statement. In addition to certain core requirements that apply to all projects and upstream emission assessment for projects that meet the threshold, projects with operating life beyond 2050 are required to have a plan to achieve net-zero emissions by 2050 (as discussed below).

Climate change information in the Impact Statement phase

Pursuant to the IAAC’s Tailored Impact Statement Guidelines, each proponent will prepare an Impact Statement. In addition the requirements highlighted above under “Quantification of GHG Emissions”, other required information includes:

• Impact of carbon sinks: Description of project activities in relation to significant landscape features and ecosystem types, and estimate of project impact on the quantity of carbon that an area would have accumulated (over the project’s lifespan) if the project did not proceed.
• Impact on federal emission reduction efforts: Discussion of the project’s impact on Canada’s efforts to reduce GHG emissions and on global emissions (e.g., where there is a risk of carbon leakage if the project is not built in Canada or where the project may displace emissions internationally).
• GHG mitigation measures: Description of mitigation measures that the proponent will take to minimize emissions through all project phases, including a Best Available Technologies and Best Environmental Practices (BAT/BEP) determination, any offset credits obtained, and comparison of emission intensity to similar projects that are high performing and energy efficient. As part of the BAT/BEP determination process, the proponent must identify relevant technologies and practices (including emerging technologies), eliminate options that are not technically feasible, rank remaining options based on GHG reduction potential, eliminate options that are not economically feasible, and justify any chosen solution that is not a BAT/BEP.
• Climate change resilience: The Tailored Impact Statement Guidelines will require all proponents to explain (in the Impact Statement) how the project is resilient to and at risk from current and future impacts of a changing climate, including the scope and timescale of the resilience assessment and the project’s vulnerabilities to climate change in average and extreme conditions.

Further, projects operating beyond 2050 must have a credible plan to achieve net-zero emissions by 2050. The plan will complement and be informed by the proponent’s GHG mitigation measures, and may identify any supportive or enabling governmental actions that would be needed (e.g., construction of grid intertie to access clean electricity). The plan does not apply to upstream GHG emissions (even if an upstream assessment was conducted).

IA decision and post-decision phase

At the conclusion of the impact assessment, the federal Minister of the Environment or Governor in Council (practically, the cabinet) will decide whether the project is in the public interest. As part of that decision, the Minister or Governor in Council must consider, among other factors, the extent to which the effects of the project hinder or contribute to the Government of Canada’s ability to meet its environmental obligations and its commitments in respect of climate change.

For each project that is allowed to proceed, the decision statement will contain enforceable conditions, which may include: conditions that apply to a project’s net GHG emissions (but not to upstream activities), mitigation requirements to reduce or control project emissions, and reporting of progress toward implementing mitigation measures and reaching net-zero emissions by 2050.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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