Climate Change Essentials: Navigating Carbon Pricing Mechanisms And Guide To Canadian Federal And Provincial Regulatory Framework

Introduction

Over the years, climate change policy has experienced its ebbs and flows. Climate change arrived on the international stage at the Rio Earth Summit in 1992, where 154 countries signed the United Nations Framework Convention on Climate Change (UNFCCC) to stabilize atmospheric concentrations of greenhouse gas (GHG) emissions at a level to prevent "dangerous anthropogenic interference with the climate system". The UNFCCC entered into force on March 21, 1994 and 195 countries have ratified the UNFCCC to date. Subsequent international negotiations led to the Kyoto Protocol, an international treaty which extends the UNFCCC and commits its signatories to reduce GHG emissions. The Kyoto Protocol was adopted in December 1997 and came into force on February 16, 2005. There are currently 192 signatories to the Kyoto Protocol. While Canada withdrew from the Kyoto Protocol effective December 2012, a newly elected federal government has indicated its willingness to re-engage in international talks to reach a new global climate change treaty for the post-Kyoto era.

Following the anticlimactic outcome of the 15th session of the Conference of the Parties to the UNFCCC (COP 15) which produced the non-legally binding Copenhagen Accord in 2009, there is cautious expectation of a legally binding successor agreement — or at least certain legally binding components of an agreement — to the Kyoto Protocol as countries gather for the next round of international climate change talks to be held in Paris from November 30 to December 11, 2015 (COP 21). So what has changed since the Copenhagen climate talks? There are four key international drivers:

Pressure from sub-national and local governments around the world, many of which have undertaken their own initiatives to implement policies and programs to reduce GHG emissions and are now calling for more coordinated national strategies to address climate change. From energy efficiency standards and green building codes, to investments in clean energy and infrastructure, Canadian provinces, territories and municipalities have been leading the way on climate change action. Calls from industry leaders and investors around the world for governments to put a price on carbon, aimed not only at reducing GHG emissions, but also at facilitating business planning, an "even playing field", and risk management. The 2014 Global Investor Statement on Climate Change, signed by 385 investors with more than $24 trillion in...