Cap and trade in effect in Nova Scotia

More than a year after Nova Scotia passed legislation to create a provincial cap and trade program, regulations are now in effect. The new program means greater reporting for some businesses and greater opportunity for some lawyers.

Cap and trade in effect in Nova Scotia
Mohammad Ali Raza says legislation that’s been passed in Nova Scotia to create a provincial cap and trade program ‘will introduce a new category of practice.’

More than a year after Nova Scotia passed legislation to create a provincial cap and trade program, regulations are now in effect. The new program means greater reporting for some businesses and greater opportunity for some lawyers.

“This will introduce a new category of practice. This will create an ongoing area of trade,” says Mohammad Ali Raza, a partner with Cox & Palmer in Halifax.
“There will be trade deals,” he adds. “There are strong provisions to limit insider trading. Lawyers will need to advise on this.”

Under the regulations, companies over the accepted threshold must report their greenhouse gas emissions. The amended Environment Act (Nova Scotia) requires facilities that generate 50,000 tonnes or more of greenhouse gas emissions annually to report as well as petroleum product suppliers that place or produce a minimum of 200 litres of fuel per year for consumption in the Nova Scotia market and natural gas distributors that produce at least 10,000 tonnes a year. Electricity importers with 10,000 tonnes or more of emissions a year will also be required to report.

The legislation “establishes a baseline and creates a positive obligation on anyone producing greenhouse gas emissions above the threshold,” says Raza.
Those companies above the threshold are identified as emitters, he adds. 

“They will need to reduce over time or buy allowances. You will pay a price for continuing to produce greenhouse gas emissions at the same level.”

The Nova Scotia system, which the government contends sets one of Canada’s most ambitious greenhouse gas reduction targets, cutting emissions by 45 to 50 per cent by 2030 from 2005 levels, differs from other provincial cap and trade approaches. 

There will be no option to trade allowances across other jurisdictions and most of the allowances will be given out at no cost. 

“The initial offering is for free,” says Raza.

He points out that emissions are not as high in Nova Scotia as in many other provinces and that there are not a lot of companies that will be affected by the reporting requirement. According to Raza, the first businesses affected will be 20 large industrial emitters including Nova Scotia Power, Northern Pulp, Lafarge and large oil and gasoline companies including Exxon Mobil and Irving. However, the caps currently in place will be reduced over time and smaller businesses could also be brought into the fold of regulation in the future.

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