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Bennett Jones is an internationally recognized Canadian law firm founded

and focused on principles of professional excellence, integrity, respect and independent thought. Our firm’s leadership position is reflected in the law we practise, the groundbreaking work we do, the client relationships we have, and the quality of our people.

bennettjones.com/climatechange

Climate Change and Emissions Trading


Adopting a multidisciplinary approach to our work, we help clients address the strategic, business and financial issues related to climate change.


Climate Change and Emissions Trading


C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

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limate change has become an important and complex business concern—one that can have a direct impact on a company’s profitability, growth prospects, governance, risk analysis and compliance assessments, as well as reputational branding and corporate social responsibility performance. Addressing climate change issues involves multiple stakeholders, jurisdictions, and evolving legal and regulatory regimes at both domestic and international levels. Risks relating to climate change include mandatory mitigation and reporting of greenhouse gas emissions, increasing pressure on companies to be “green” and adapt to the effects of climate change, and litigation and arbitration. An array of opportunities and incentives are available to those who understand climate change issues and are proactive in dealing with them, such as participating in emissions trading markets, achieving competitive advantage, reducing costs and gaining the goodwill of stakeholders.

The Bennett Jones Climate Change and Emissions Trading Group has unique and extensive domestic and international experience in assisting clients on a wide variety of climate change matters. Our lawyers are often at the forefront of groundbreaking transactions and policy developments, and have been acknowledged internationally as leaders in their fields by industry publications and directories. Chambers Global: The World’s Leading Lawyers for Business has recognized Gray Taylor, the firm’s climate change practice chair, as one of ten individuals in the first tier for climate change law and as “one of the fathers of the climate change industry.” Our clients include leading domestic and international energy companies (both renewable and traditional), various domestic and multinational manufacturers, natural resource and industrial companies, retailers and service providers, real estate concerns and property owners, carbon funds, carbon offset originators and aggregators, clean technology companies, private equity firms, non-governmental organizations and charities, governmental entities, entrepreneurs and project developers around the globe in Asia, Europe, Latin America, Africa and the Middle East. Bennett Jones adopts a multidisciplinary approach to assist clients as they address the strategic business issues associated with climate change. We draw upon the firm’s many areas of expertise as required by each set of circumstances to provide informed, responsive, comprehensive and cost-effective counsel that enables our clients to reduce risk and capitalize on opportunities related to climate change.

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Practice Highlights & Key Transactions


C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Regulatory and Strategic Advice Bennett Jones is actively engaged in domestic, regional and international climate change policy developments. Our understanding of existing and proposed domestic and global climate change legislation and policy initiatives allows us to counsel our clients on the real-time impact of shifting priorities on hotbutton topics such as cap-and-trade systems, carbon taxes and greenhouse gas reporting obligations. We help our clients understand how to take advantage of regulatory and voluntary markets to achieve their goals relating to climate change, particularly with respect to generating and selling carbon offsets, developing greenhouse gas inventories and executing carbon neutral strategies. Our firm works closely with public issuer clients on carbon and climate change disclosure in response to regulatory obligations and voluntary initiatives by helping them to identify, assess and describe the relevant risks, opportunities and impacts in their corporate filings and communications. We also have expertise in corporate governance and internal policy matters relating to climate change, and routinely assist clients in preparing internal corporate climate change policies. In every case we integrate our understanding of the complexities of relevant markets and jurisdictions to provide solutions that meet the business goals of our clients, whether they are to ensure legal compliance, realize additional revenue streams, gain reputational benefits, or meet internal performance goals. Our experience includes acting for: •

A Canadian quasi-regulatory body, in providing advice relating to climate change legislative developments around the world and relevant emission trading programs;

A large Canadian-based energy company with international operations, on the development of its domestic and international greenhouse gas strategy, its participation in emissions trading transactions and its engagement in policy development;

A large Canadian retail company, on a nation-wide strategy to capitalize on its initiatives to reduce greenhouse gas reductions and generate renewable energy;

An industrial waste management company, on the impact of carbon tax legislation in British Columbia and Quebec on various aspects of its operations; and

A regulatory body, on environmental benefits (including greenhouse gas emission reductions) created by renewable energy projects benefitting from government support programs.

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Sustainability and Carbon Neutrality Many companies are considering the interaction between profitability and broader environmental, social and economic costs and have decided to strive for sustainability in their business practices. Companies are also becoming aware of the benefits of taking responsibility for the impact of their greenhouse gas emissions on the environment and are seeking to reduce their carbon footprint or become “carbon neutral”. The business case for taking such initiatives is frequently compelling and includes reputational benefits, employee satisfaction, reduced costs, potential increased revenues, and participation in new markets. Bennett Jones helps clients understand the issues at the heart of sustainability and carbon neutrality and how these issues may complement their business models. Our knowledge of policy developments, performance and measurement standards, technical consultants, and offset generation and suppliers enables us to help our clients achieve their goals in a way that makes business sense. Our experience includes advising:

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A pension fund, on the development of a plan to meet the sustainability objectives of its operations, including the implementation of a greenhouse gas management and measurement system and the creation of a carbon footprint for its portfolio of real estate assets;

A large Canadian bank, on implementing its carbon-neutral strategy; and

A manufacturing client, on employee involvement programs to reduce its carbon footprint.

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Emissions Trading in Compliance Markets Bennett Jones has been a pioneer in enabling our clients to participate in the international and domestic carbon markets created by the Kyoto Protocol and the Alberta Specified Gas Emitters Regulation (SGER). We have helped our clients structure, negotiate and execute carbon emission transactions involving in excess of 100 million tonnes of international carbon emission reductions in the aggregate (equal to taking approximately 18 million cars off the road for one year). Two of these transactions were recognized by Lexpert magazine as “Big Deals”. Our experience includes acting as principal counsel to:

Clean Development Mechanism •

Natsource LLC, in a Kyoto Protocol Clean Development Mechanism (CDM) transaction involving the acquisition and immediate syndicated on-sale to purchasers in North America and Europe of approximately 45 million certified emission reductions (CERs) to be generated from an adipic acid plant conversion and nitrous oxide (N2O) decomposition project in China;

The purchasers of approximately 25 million CERs to be generated by a N2O decomposition project in China;

A U.S.-based fund manager, on the structuring and implementation of call-option rights over CERs to be generated from a portfolio of CDM projects;

The two largest private sector participants in the World Bank’s US$1-billion Umbrella Carbon Facility, in connection with our clients’ combined purchase commitment of approximately 22 million CERs;

The U.S. and Canadian purchasers of millions of CERs in the aggregate, generated or to be generated by various international projects in Brazil, China, Indonesia, South Korea, Argentina and Kenya; and

The Canadian project developer, in connection with a fuel switching CDM project in Egypt.

Afforestation/Reforestation (A/R) CDM •

The purchaser of approximately 500,000 temporary CERs (tCERs) to be generated by a portfolio of afforestation projects to be implemented in Chile.

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Joint Implementation •

The purchaser of approximately 1.2 million Kyoto Protocol Joint Implementation emission reduction units (ERUs) to be generated by gas distribution leak reduction projects in the Ukraine.

Alberta Offset System Alberta is currently the only jurisdiction in Canada with an operating greenhouse gas regulatory regime for large industrial emitters and an associated market for compliance offsets. Bennett Jones has unparalleled expertise on all matters related to the Alberta regulatory system—greenhouse gas reporting, facility compliance and offset creation, trading and use. We have acted as counsel to: •

Royal Bank of Canada, on the purchase and subsequent onward sale of Alberta-based compliance offsets during each of the applicable SGER compliance periods;

Acciona Wind Energy Canada Inc., on the sale of Alberta compliance offsets generated by an Alberta-based wind energy power plant;

An oil sands operator, on the purchase of Alberta offsets for an SGER compliance cycle;

A power plant operator, in negotiating a rolling put option in favour of the power purchaser to sell variable amounts of Alberta offsets to the operator for each applicable SGER compliance cycle; and

An aggregator of agriculture-based offsets, on all of its commercial arrangements, including those with individual farmers and purchasers of both SGER offsets and voluntary carbon offsets.

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Voluntary and Pre-compliance Carbon Trading Bennett Jones provides valued expert advice relating to voluntary and pre-compliance carbon trading matters. We have enabled our clients to develop, implement and monetize voluntary emission reduction projects across a broad spectrum of voluntary carbon standards. Representative experience includes acting for: •

The purchaser of approximately 500,000 Voluntary Emission Reductions (VERs) to be generated by a fuel-switch project in India;

An offset provider, on the sale of offsets generated in the U.S. to a major Canadian financial institution;

Carbon Capital Management Inc., on the provision of carbon credit consulting services to the provincial government of Prince Edward Island; and

A large school board, on the sale of greenhouse gas emission reductions to a Canadian carbon offset fund.

Voluntary Carbon Standard (VCS)

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Successfully making submissions to the VCS Association to obtain an amendment to VCS rules that had previously prevented the issuance of Voluntary Carbon Units (VCUs) for emission reduction projects in Canada;

Carbon Capital Management Inc., on the purchase of VCUs from Chinese hydropower and coal mine methane projects;

A consultant to a project developer, on the generation of VCUs from small-scale hydro power projects in Sri Lanka and Uganda;

An aggregator of agricultural offsets, on the creation and monetization of VCUs;

The purchaser of all of the VCUs to be generated by a large-scale biodiesel plant in the United States of America;

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

ISO 14064 •

A Canadian carbon manager, on the purchase of ISO 14064 based VERs from Canadian landfill gas projects and the sale of VERs to a Schedule 1 Canadian financial institution;

A Canadian consulting company working with various clean technology companies (including white roof, engine additive and advanced insulation technologies) to generate additional revenue streams through the generation and sale of VERs.

Chicago Climate Exchange (CCX) •

The project developer, on various landfill gas emission offset projects in the U.S. to be implemented in accordance with CCX protocols and the sale of the resulting Carbon Financial Instruments (CFIs) generated by the projects.

Reducing Emissions from Deforestation and Degradation (REDD) •

A project developer, on the implementation of a REDD project in Ecuador and the structuring of marketing and sale arrangements for the carbon offsets to be generated by the project;

A project developer, on the implementation of a combined reforestation/sustainable forest management project in the Caribbean and the marketing and sale of the carbon offsets to be generated by the project; and

A charitable foundation on the possibility of structuring its reforestation and forest conservation activities so as to generate carbon offsets.

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Carbon Finance Bennett Jones is at the forefront of complex business transactions involving carbon finance, helping our clients create and access innovative financing sources, including acting for: •

Natsource Asset Management Corp., in its creation and administration of the Greenhouse Gas Credit Aggregation Pool with original committed capital of €510 million for investment in CERs, ERUs and other greenhouse gas credits;

The majority investor, in connection with the structuring and financing of a Chinese cooperative joint venture to implement waste heat recovery projects that generate CERs and clean electricity in China;

The borrower, in connection with a credit wrap and stand-by letter of credit facility in excess of €500 million to support the purchase of CERs; and

A U.S. fund manager, in connection with the reorganization of its pool of international carbon assets including CERs and ERUs.

Green Leases and Green Real Estate Bennett Jones has leading experience in addressing climate change issues that affect the real estate sector. We have advised:

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A large property owner on green leases entered into with commercial tenants in Ontario and a template green lease agreement for use with future tenants; and

The Real Property Association of Canada (REALpac), an industry group representing commercial property owners, in connection with drafting a template green office lease for use by group members.

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Carbon Capture and Storage and Enhanced Oil Recovery As the largest law firm in Alberta, Bennett Jones is a leader in responding to the climate change related opportunities and challenges faced by our oil, gas and electricity clients conducting business in the province. We have acted for a wide variety of industry leaders and pioneers on projects involving innovative technologies to address greenhouse gas emissions, including acting as counsel to: •

An oil sands upgrader developer, on all environmental and regulatory permits for a carbon capture-ready facility in northern Alberta;

A producer of liquefied carbon dioxide, in its negotiations with a natural gas plant operator to capture, purify and liquefy carbon dioxide from the plant for subsequent use in the oil and gas industry (thereby preventing the carbon dioxide from being vented to the atmosphere);

PanCanadian Petroleum, now EnCana, in the development of the Weyburn CO2 flood oil recovery project which imported CO2 via the Souris Pipeline and sequestered it in their oil reservoir;

A Canadian-based oil recovery company, on the creation of a pipeline to capture, transport and distribute CO2 for injection for enhanced oil recovery from various types of reservoirs;

An oil producer, in the purchase of CO2 to be used for an enhanced oil recovery scheme; and

An energy producer, on all environmental and regulatory permits associated with a carbon capture and storage project in Western Canada.

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Related Experience


C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Renewable Energy An increased focus on climate change issues has contributed to the growth of renewable energy as a key component of Canada’s and other countries’ energy needs. Our renewable energy experience spans a variety of sectors, including hydro, wind, solar, biogas, biomass, biowaste, biofuels and geothermal. A selection of our experience includes acting as counsel to: •

A wind power developer, on all environmental and regulatory permits for the construction and operation of a wind power project located in southern Alberta;

A biodiesel producer, on all environmental and regulatory permits and land use for the construction and operation of a bio-diesel manufacturing plant;

SkyPower Wind Energy Fund LP, on the development of the 166 MW Terrawinds wind energy project in Quebec; the divestiture of the Terrawinds project for $300 million; tax structuring and implementation of a $77-million public equity financing vehicle; turbine supply arrangements; power purchase arrangements; and ongoing corporate/commercial, real estate and regulatory advice;

GenGrowth Renewables Inc. on the negotiation and sale of nine wind farms across Ontario (representing approximately 200 MW in aggregate) to a TSX-listed renewable project operator, and ongoing corporate/commercial, real estate and regulatory advice;

Ameresco Geothermal Inc., on the development and commercialization of geothermal systems for commercial and industrial applications; and

A major utility company, on a master planned solar community utilizing solar heating and a district system to store solar energy underground for use during the colder seasons;

Various domestic and international companies, regarding the Ontario Green Energy Act, including the Ontario Power Authority’s Feed-In Tariff program and the Renewable Energy Approval regulations under the Ontario Environmental Protection Act.

Clean Technology Many technologies and applications are being developed that mitigate greenhouse gas emissions or address other environmental impacts. We act for clean technology enterprises and investors in clean technologies on financing, commercial arrangements, intellectual property protection and exit strategies, including as counsel to:

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Catch The Wind Ltd., a U.S. developer and manufacturer of laser wind-sensing technology used in wind turbine electricity generation, on its listing on the TSX Venture exchange and its subsequent equity financings;

A large United States-based clean technology fund on various Canadian investments, including in a carbon software solutions developer;

A large European clean technology fund on various Canadian investments, including in a large diameter water and wastewater pipeline condition assessment technology company;

A United States-based solar company in connection with a pre-initial public offering financing;

Regen Energy Inc., a manufacturer of intelligent control equipment to manage HVAC usage, on corporate finance and shareholder and employment arrangements;

EA Riley & Associates, a distributor of a product line of control systems that significantly reduces the power consumption of fluorescent lights, on corporate organization and negotiation of distribution rights agreements; and

Hydrogenics Corporation, a company that produces hydrogen systems for fuel cells, on corporate matters, corporate finance, sale of a business line and corporate governance.

Litigation and Arbitration We represent and advise clients in litigation and arbitration matters relating to climate change and renewable energy, using our extensive knowledge of the legal, business and political landscape in these areas to resolve disputes quickly and effectively. Our experience includes advising:

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A client, on a contractual dispute regarding an alleged failure to deliver VERs pursuant to a Voluntary Emissions Reduction Purchase Agreement (VERPA);

A partner in a joint venture established to generate carbon credits, on a dispute arising from the failure of the joint venture;

A U.S. purchaser of CERs, on a dispute regarding a condition of the seller’s obligation to deliver CERs pursuant to an Emission Reductions Purchase Agreement (ERPA); and

A wind farm owner in Ontario, on a conflict with a power purchaser regarding the effect of new regulations on the ability of the wind farm owner to meet its obligations under a power purchase agreement.

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C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

Tax In addition to advising on carbon tax matters, Bennett Jones regularly provides tax advice on domestic and international tax treatment of carbon credits, including advising on the establishment of carbon funds and the income and commodity tax (GST/HST) implications of domestic and international investments. We have provided tax advice concerning the tax implications of carbon credit revenues and renewable power and energy conservation investments with respect to tax-exempt entities such as REITs, pension funds and aboriginal-owned enterprise. In the renewable energy space, we have provided tax advice to wind, solar and biogas developers relating to project structuring and financing, including the availability of tax incentives for renewable energy projects. We have acted on restructuring and mergers and acquisitions transactions involving renewable power assets and have also been involved in discussions with government officials regarding municipal property tax assessments for power projects and anticipated changes to property tax levies for renewable projects.

International Trade and Anti-Corruption Compliance Bennett Jones provides international trade regulation advice in relation to CDM and other cross-border transactions, including anti-corruption compliance under the Corruption of Foreign Public Officials Act (Canada), the Foreign Corrupt Practices Act (United States), and other applicable international anti-corruption laws and standards. We also provide advice on legislative and international treaty initiatives with respect to border measures such as carbon tariffs and permit allocations for imported products, and compliance with World Trade Organization (WTO) rules, free trade agreements and investment treaties. Bennett Jones advised a Canadian industry coalition in its submissions to the United States Environmental Protection Agency (EPA) on the potential trade impact of the EPA’s proposed use of the Clean Air Act to regulate greenhouse gas emissions.

Environmental Assessments We ensure our clients receive appropriate administrative treatment of greenhouse gas issues in obtaining project approvals under the Canadian Environmental Assessment Act, the Alberta Environmental Assessment Regulation, the Ontario Environmental Assessment Act and other regulatory statutes requiring environmental assessment or submissions for approvals.

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About Bennett Jones


C L I M AT E C H A N G E A N D E M I S S I O N S T R A D I N G

About Bennett Jones Bennett Jones LLP is an internationally recognized Canadian law firm founded and focused on principles of professional excellence, integrity, respect and independent thought. Our firm’s leadership position is reflected in the law we practise, the groundbreaking work we do, the client relationships we have, and the quality of our people. With many of the brightest legal and business minds in Canada, our professional practice encompasses virtually every sector of business, industry and government. Operating as an integrated unit across our geographic locations, our business practise is to assign lawyers to work on client files who have the skills and experience that best meet our clients’ needs. Our ranks are filled with leaders in the fields of energy, bankruptcy and restructuring, intellectual property, technology, banking and finance, tax, corporate and commercial, regulatory, emissions trading and international business and trade law, recognized as such in peer review publications. Among our group we count a former provincial premier, a former Governor of the Bank of Canada, a deputy prime minister of Canada, a former Supreme Court of Canada judge, and two former Canadian ambassadors to the United States of America.

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Main Contacts: Ontario Gray E. Taylor

E: taylorg@bennettjones.com T: 416.777.5769

For more information about the firm, please visit online at www.bennettjones.com Calgary

Hugo M. Alves

E: alvesh@bennettjones.com T: 416.777.5735

4500 Bankers Hall East 855 2nd Street SW Calgary, Alberta T2P 4K7 Canada Tel 403.298.3100

Michael R. Barrett

Toronto

E: barrettm@bennettjones.com T: 416.777.4657

Alberta Thomas W. McInerney

E: mcinerneyt@bennettjones.com T: 403.298.4484

3400 One First Canadian Place P.O. Box 130 Toronto, Ontario M5X 1A4 Canada Tel 416.863.1200

Edmonton

3200 TELUS House South Tower 10020 - 100th Street Edmonton, Alberta T5J 0N3 Canada Tel 780.421.8133

Ottawa

Suite 1900 World Exchange Plaza 45 O’Connor Street Ottawa, Ontario K1P 1A4 Canada Tel 613.683.2300


Bennett Jones is an internationally recognized Canadian law firm founded

and focused on principles of professional excellence, integrity, respect and independent thought. Our firm’s leadership position is reflected in the law we practise, the groundbreaking work we do, the client relationships we have, and the quality of our people.

bennettjones.com/climatechange

Climate Change and Emissions Trading


Climate Change & Emissions Trading