Initiatives to address climate change continue to permeate developments in energy regulation, with significant implications for both regulators and the industries they regulate. This issue of Energy Regulation Quarterly includes three articles analyzing current and emerging issues and illustrating the pervasiveness of various measures directed towards the widely-adopted goal of “net zero” carbon emissions.

The federal Impact Assessment Act^[1] (still often referred to as “Bill C-69”) is now law and, while the controversy that accompanied Bill C-69 continues, attention is turning to the Act’s application and its implications for project developers. As David V. Wright notes in the lead article in this issue on “Climate Change Considerations in the Federal Impact Assessment Act: Step Forward or Business As Usual?”, while the Act contains prominent climate-related requirements in both the assessment and decision-making phases, the statutory provisions themselves are “relatively succinct.” Wright discusses key features of the guidance to support implementation of the Act’s climate change provisions found in the federal government’s “strategic assessment on climate change” released in July 2020 and updated in October.

Some jurisdictions have enacted legislation that explicitly adopts the net zero goal for carbon emissions, often drawing support for such steps by reference to the 2015 Paris Agreement. For example, Nova Scotia’s 2019 Sustainable Development Goals Act^[2] states that the government’s goal is that “greenhouse gas emissions in the Province are…by 2050, at net zero…” In introducing the legislation, the Minister of the Environment told the legislature that the goals were being established because “they are in line with the recommendations made by the United Nations Intergovernmental Panel on Climate Change.” The potential implications of explicitly drawing such links are discussed by Melanie Gillis and James MacDuff in their article “When Climate Change and Construction Collide: How Net Zero Legislation Might Be Used to Challenge High-Emitting Infrastructure Projects.”

In “The New World of Climate Change and ESG Disclosure,” Elisabeth DeMarco et al observe that many policy responses and economic stimuli that are intended to facilitate economic recovery from the COVID-19 pandemic have “green strings” attached, in the form of enhanced climate change and environmental, social, and governance (ESG) disclosure obligations. For example, recipient companies under the federal government’s Large Employer Emergency Financing Facility (LEEFF) are required to demonstrate a long-term commitment to addressing climate change and commit to publish annual climate-related financial reports in accordance with the Task Force on Climate-related Financial Disclosures (TCFD). In the authors’ view, “it is only a matter of time before the TCFD requirements and related carbon consumer protection standards become mandatory.”

Electricity market contracts are also the subject of Nathan Lev’s “Enabling Bilateral Contracting in Ontario’s Electricity Market.” He concludes that “Ontario’s resource adequacy framework would benefit from enabling a robust bilateral market, characterized by increased contracting activity from demand-side participants…in contrast to the current model where the IESO is de facto the only viable contractual counterparty in the province.”

Positive Energy is a research and engagement program at the University of Ottawa that seeks to strengthen public confidence in Canadian energy decision-making through evidence-based research and analysis, engagement and recommendations for action.^[3] Articles based on Positive Energy research projects have been published in ERQ from time to time.^[4] Positive Energy is now undertaking a collaborative research project with the Canadian Association of Members of Public Utilities (CAMPUT) that seeks to identify successful innovations and opportunities in energy regulatory decision-making. In “What Drives Energy Regulatory Innovation?”, Patricia Larkin and Brendan Frank report the findings from an online survey that focused on regulatory innovation. The survey was jointly designed by Positive Energy and CAMPUT.

Pursuant to a Ministerial Directive to undertake a targeted review of existing generation contracts for viable cost-lowering opportunities, the Ontario Independent Electricity System Operator (IESO) commissioned the Boston consulting firm Charles River Associates, which submitted its report “Independent Electricity System Operator: Contract Savings Review” in February, 2020. The Report is reviewed in this issue of ERQ by Ron Clark. Clark notes that the report was submitted to the IESO before the COVID-19 pandemic had taken hold. He suspects that, given the likely reduction in energy consumption for the foreseeable future, resulting from the pandemic, some of the options presented “could very well be more expensive than forecast in the report.” Further, “even using the pre-COVID figures, it is clear that efforts to reduce current electricity costs would have severe costs in the long-term, often outweighing the short-term benefits.”

The 2019 decision of the Supreme Court of Canada now known as the Vavilov^[5] decision significantly reshaped the law of judicial review of administrative actions, with clear implications for future challenges to the decisions of energy regulators. Jonathan Drance et al provide a case comment in “The SCC Vavilov Decision: Will it Increase Regulatory Risk?”^[6]

1. SC 2019, c 28, s 1.
2. SNS 2019, c 26.
3. See Positive Energy, online: <www.uottawa.ca/positive-energy>. One of ERQ’s Managing Editors, Rowland Harrison, is a member of the Positive Energy Faculty.
4. See e.g. Michael Cleland & Monica Gattinger, “Canada’s Energy Future in an Age of Climate Change: Public Confidence and Institutional Foundations for Change” (2019) 7:3 Energy Regulation Q 19.
5. Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65.
6. Vavilov was analyzed in an earlier issue, See David Mullan, “2019 Developments in Administrative Law Relevant to Energy Law and Regulation”, (2020) 8:1 Energy Regulation Q 28.