HR Cannabis Policy and Watching the Watchers

blur-bud-cannabis-1466335.jpg‘Got to Get You into My Life’[i]

Paul McCartney’s love song to pot

With the legalization of cannabis, employers, companies and employees now wonder how to deal with this new chemical in the workplace. Although HR departments already deal with alcohol, nicotine and other recreational drugs, (and I refer to HR staff using these drugs to handle stress) cannabis challenges them even further.

 

The provinces intend to pass their own cannabis legislation. The Ontario Cannabis Act (soon to be renamed) prohibits recreational cannabis within the workplace. And unlike medical cannabis, there is no ‘workplace cannabis’ category exception.

 

Some federal departments passed their own requirements. The RCMP members cannot use cannot use cannabis within 28 days of a shift while some police use a fit for duty criteria. The Armed Forces use much more specific terms. Here members must not partake 8 hours before performing any duty. This increases up to 24 hours if they are handling explosive ordnance. I naively thought that all ordnance was explosive, but ordinary ordinance includes things like jeeps. Explosive ordnance includes things like ordnances that explode.

 

For the rest of the provinces one of the main criteria involves a safe work environment. Companies need to ascertain what THC levels would be appropriate for their particular type of work. However, we must add a note of caution as to watching the watchers. Legal counsel must ascertain if cannabis policies slant more towards enabling cannabis use by particularly hard working, overly stressed and easily swayed HR departments. And staff in general.

 

  1. Look for memos containing chaotic numbering systems.

If the cannabis memo from the HR department starts with a rambling introduction, and the rest of memo includes numbering systems similar to

Firstly…

Nextly….

Thirdly…..

Finallidly……,

then rest assured the duty to draft the memo should be sourced out to another department.

 

  1. Unusual Training Locales

Training seminars in tropical locations are nothing new. However, if HR insists upon going to local tropical greenhouses and conservatories, then the business planning sessions may not deal with your particular business and may deal more with hydroponics. Insist upon the rooms with no windows and open doors for informative PowerPoint presentations instead.

 

  1. The HR department becomes overly familiar with legislation

In this situation, not only does the HR department know the federal and provincial cannabis legislation better than the legal department, but HR also knows far more about regulations regarding neonics pesticides and fertilizer licensing procedures. Once again facilitating hydroponics.

 

  1. Occupational Health and Safety Compliance increases substantially

Normally, the proper use of safety glasses, white work overalls and plastic gloves should be encouraged as this increases workplace safety. However, if you see such a person wearing all this equipment in your downtown law office, and you know someone already removed all the asbestos from the ceiling, then you must investigate for a potential grow op.

 

  1. All of the Alcohol and Drug Policies have been reviewed and expanded

 

A review of existing policies needs to cover the proper and legal use of cannabis. If the next policy iteration includes new a process, various unknown ingredients and ends with the words “bake at 350 for 45 minutes”, then rest assured this is not a work related process. This could be a chocolate brownie cannabis delivery system process.

 

  1. Staff Benefits have been amended

Increasing staff benefits provide organizational motivation. If your organization includes a cafeteria, then be observant for subtle changes. A cafeteria express line which only handles ‘munchies’ enables cannabis use.

 

  1. International Travel

Needless to say, travel to the US with cannabis would be prohibited, as would admitting to using cannabis, investing in cannabis companies or even having a Bob Marley song  on your smart phone. However, be on the lookout for new travel costs under the designation of ‘Mule reimbursement”.

 

  1. Cannabis Use within certain limits

Other organizations have a range of 8 hours, being fit for duty, or 28 days depending upon the function. If the rule then becomes more like no partaking within 28 feet of the front door, then the rules may be a bit too lenient.

 

  1. Discriminatory Use

 

Continued use of medical cannabis depends once again on the job function. If the cannabis impacts on the person doing the job are unknown, then the employer only has to go so far in the duty to accommodate. However, look out for any discrimination if the HR policies mandate cannabis use for those in highly stressful, unpredictable and treacherous roles such as dealing with people constantly. Like HR staff. You may have a discriminatory policy.

 

 

 

[i]  “‘Got to Get You into My Life’ was one I wrote when I had first been introduced to pot,” Paul McCartney told Barry Miles for the 1997 book Paul McCartney: Many Years from Now.

 

The Cannabis Act

blur-cannabis-close-up-606506.jpg

Sittin’ downtown in a railway station

One toke over the line.

Brewer and Shipley

 

Things surely change. Or at least circle back to where they first started. Of course, I refer to the Cannabis Act, which allows the legal use of marijuana subject to various conditions and regulations. I suggest reading the act before celebrating any newfound freedoms since you need to focus. Speaking of which, this now allows the federal government to focus its legislative powers against an even more addictive, notorious and dangerous drug. Sugar.

 

How will cannabis legalization affect Canadian Society? Recent stats suggest that five million Canadians use cannabis at least once a month. We could expect perhaps a 20% increase after legalization.  This column intends to examine this question over a four part series, more or less depending upon how the home grow-op works out. However, by maintaining focus, we intend to cover the history, the legislation, the potential impacts, and some guessing on what the future might hold.

 

Firstly, how did most of us become so conservative (old-fogie)? Cannabis can be found in various forms throughout various millennia. Cannabis use dates back to at least the third millennium BCE when the plant was valued for its use for fiber, food, medicine and for its psychoactive properties in recreation and religion. Hemp fibers could be found in 10,000-year-old Chinese pottery. For the record, industrial hemp contains far less of the psychoactive drug THC. So like members of the senate, cannabis has been around for a while.

 

In Canada, drug regulation started back in 1908. Here Mackenzie King, then DM of Labour, produced a report, which culminated in the Opium Act. This same King instead partook in spiritualism and mediums to stay in contact with the deceased. Once again showing that drugs were not required for mind-expanding exercises.

 

Shortly after this, a type of moral panic began. Emily Murphy contributed to this panic somewhat through her writing The Black Candle. Some of her writings under the pen name Janey Canuck made their way into McLean’s. Including some dubious stereotypes and questionable anecdotes, she pushed for the cannabis ban. Under the chapter “Marahuna-A New Menace” she points out there are three ways out from the regency of this addiction:

“1st-Insanity, 2nd-Death, 3rd-Abandonment. This is assuredly a direful trinity…”

 

She leaves us on the triceratop’s three-pointed horned dilemma. We would only point out that this appears to be have been written before Canada imported the letter ‘J’ from other members of the commonwealth, and the title bears a striking IP infringement by a later contender…Lucas’ “The Phantom Menace”. We assume no cause of action exists since at least 20 years have passed since its release. Mind you, some still harbour the thought of a legal process to eliminate Jar Jar Binks.

 

Other historians such as Catherine Carstairs question Murphy’s ‘contribution’ towards the war on drugs. More than likely the prohibition came from when the Director of the Federal Division of Narcotic Control returned from the discussion for control of the drug at the League of Nations. This should not be confused with the DC Justice League. Although those superheroes would have a tough time since the drug use problem would appear to be so diffuse. Beyond Superman. Perhaps Wonder Woman?

 

Cannabis finally made the big leagues by being included on the restricted list with the 1923 Narcotics Drug Act. As with all legislation, you would think that this then solved the problem, but use of cannabis continued to grow along with the number of prosecutions.

 

Of course, no discussion of an ethical dilemma would be complete without acknowledging “Tell Your Children!”, or even more regretfully known as “Reefer Madness”. Produced by a church group in 1936 as a morality fable, Dwain Esper purchased the film, and by adding some additional salacious scenes, showed it on the exploitation circuit. Admittedly, I did not even realize that this was a thing until I looked it up. But in any event, critics ranked it as the worse movie ever made. The movie dramatizes how marijuana use leads to madness, murder and mayhem. The movie resurfaced as a satire for cannabis policy reform. The new colorized version now has color of the exhaled smoke reflecting the emotion of the person, green, purple etc. Pretty awesome.

 

In the 60’s, the drug culture surged owing to the hippie psychedelic ethos at time. This conclusion sprung from the Senate Special Committee on Illegal Drugs. Considering what the senate probably looked liked at the time, sprung probably does not capture the situation. You should insert whatever verb comes to mind when a rusty machine attempts to move forward on something. Crank perhaps.

 

The medical case for cannabis made its way in the Ontario Court of Appeal in R v. Parker. The Supreme Court in R v. Malmo-Levine and R v. Caine in 2003 confirmed that the federal government had the authority to criminalize cannabis. This was unanimous which is equivalent to the court saying ‘Of course the feds can legislate this. What have you been smoking?’

 

The decriminalization initiative crept forward with the LeDain report in 1972 suggesting removing criminal penalties. In 2003, Chrétien did attempt to decriminalize possession by legislating that 15 gms and under would only result in a fine. However, this doobie attempt eventually went out. Dubious. I meant dubious.

 

On a bit of a somber note, we need to mention Huxley’s Brave New World. Written in 1931, he writes about a dystopian future based on technology and drugs, particularly Soma. “The perfect drug. Euphoric, narcotic, pleasantly hallucinant, All the advantages of Christianity and alcohol; none of their defects. Take a holiday from whatever reality you like, you come back without so much as a headache or a mythology. Stability was practically assured.” That is great writing. I wish I paid more attention in high school. Sorry Mr. Pratt.

 

In any event, Huxley was not so much writing about cannabis, as about humankind’s ability to be distracted from looking out for tyranny. So perhaps in between partaking, we should keep watching Trump and keep a firmer bloodshot eye on Ford. Notwithstanding.

 

photo by Michael Fischer

 

#cannabis

 

 

Climate Change Coming to a province near you. Pan-Canadian Redux

air-carbon-chimney-39553

Ah, you don’t believe

we’re on the eve

of destruction

Barry McGuire

 

For climate change, now might be the time to believe in case you have any doubts. NASA recently recorded CO2 to be at 408 parts per million. The previous high came in at 300 ppm over 300,000 years ago. We have to look back 3 million years to see carbon levels comparable to today. But then, temperatures were about 2 degrees higher than pre-industrial time and sea levels were about 15-25 metres higher than today. If the climate acted like the stock market, then 300,000 years ago compares to 1929 stock market levels before the crash and the present compares to dot-com market valuation levels. The point being that the repercussions of those lofty levels lingered for years afterwards. Climate wise, we can anticipate several centuries before things start to normalize again.

 

We will likely zoom right past those ancient levels. If you have doubts, then the UN has some good peer reviewed studies indicating that things may be a bit worse than they seem. http://www.ipcc.ch/

 

 

I mentioned the increasing carbon levels to give a sense of scale of what appears to be occurring. Personkind always tends to push problems off into the future in order to avoid the present cost. This became the constant theme since the early eighties when countries could not reach a conclusion on how to deal with the increasing carbon in the atmosphere. Back then, there seemed to be a great deal of confidence that we would be able to innovate to create cost effective solutions to the problem in the distant future. Moreover, that distant future is suddenly here. A cost effective solution may have been true had we been working on the problem a bit more, but subsidies for new less carbon intensive technologies have waxed and waned. We pushed back even further the practical application of the innovations we should have started back in the 90s.

 

The climate change issue came onto the science scene several decades ago. The world finally managed to agree on the United Nations Framework Convention on Climate Change back in 1992 after many attempts of trying to do something. This framework provided for the implementation through the Kyoto Protocol. Canada finally dropped out of the protocol seeing that we would not meet our stated obligations mainly due to dithering by the governments at the time. In any event, without China or the USA signing on, the protocol would not finally solve the problem of rising carbon emissions.

 

With the 2015 Paris Agreement, most of world again agreed on the need to do something. Albeit on a non-binding basis. Here the Canadian government agreed to decrease emissions 30% below 2005 levels by 2030. Canada stepped up with the pan-Canadian Framework and later the Greenhouse Gas Pollution Pricing Act. The framework uses carbon pricing, complimentary climate actions, adaptation and innovation to address the problem

 

Economists generally agree that adding a price to carbon can be the most effective and efficient way to reduce emissions as opposed to command and control regulation. This price signal assists in the modification of behaviours as businesses and individuals slide towards less carbon intensive behaviours. Some economists now wonder if carbon pricing may not be the panacea everyone hoped. So far, the end objective of stopping the increase in carbon emissions has not yet occurred as hoped.

 

The federal GHG Act provides a backstop approach in that the Act only applies if a province did not pass a similar piece of legislation that would allow the federal government to reach its objectives under the Paris Agreement. To avoid the federal backstop, any provincial system should then obtain the same level of reductions as would have been achieved under the federal system.

 

The GHG Act charges regulated emitters for excess carbon emissions at a rate of $20 per tonne in 2019 and this rate increases annually to $50 per tonne.

 

Ontario used to have about the best carbon pricing policy in Canada. Their cap and trade program integrated nicely with the Western Climate Initiative with California and Quebec.

 

Doug Ford promised to rid Ontario of this tax, which it never really had in the first place, but semantics aside, he intends to contest the federal government’s jurisdiction in applying a carbon tax. Again, the GHG Act uses ‘charge’, but even more semantics. Residents in Ontario shall live in interesting times for the next few years. Ontario joined Saskatchewan’s challenge to the carbon tax, and Ontario commenced its own challenge. Most legal scholars feel the challenge will not succeed and the other provinces declined to join in. However, since politicians do keep their promises, Ford will bring all available resources to this event, which may proceed at a receding glacial pace.

 

In the meantime, the Ontario government took a number of steps to dismantle the existing system starting with stating that emission allowances can no longer be traded. Although businesses purchased $2.8 billion in credits, Ontario does not anticipate reimbursing businesses anywhere near that amount. After all, businesses operated during this time. Any funds allocated to purchase unused emission reduction credits might add to incremental greenhouse gases (go up in smoke, so to speak). They have also canceled any future rebates on their clean technology programs and other innovation technology. They recently passed legislation allowing them to cap compensation for the cancellation of the White Pines windfarm program.

 

As of January 2019, the federal GHG Act will start to apply to apply to all provinces that do not have comparable legislation in order to reduce their emissions within the province. Ford opened the door to the carbon charge himself instead of the homegrown policy. This does allow him the luxury of pointing to how the federal government is now imposing this carbon charge and it is out of the hands of the province. The province can take all the benefits and none of the blame as the federal government then returns the carbon charge funds back to the various provinces. If Ontario simply returns the funds back to those incurring the cost, then the entire carbon-pricing concept can get lost.

 

Ontario will now face a higher carbon charge of $20 per tonne increasing to $50 tonne rather than the $18 tonne in 2016 dollars as suggested by Ontario’s policy analysts. The Ontario government would appear to be bringing in more revenue with less effort on their side. At least they fought the good fight and can sit back and allow the revenues to pour in. The federal government’s $420 million transfer to Ontario under the Low Carbon Economy Leadership fund may in jeopardy since the feds do not appreciate where Ontario is leading.

 

 

Carbon pricing maybe too little too late as climate change incidents start to accelerate. Ontario just recently announced that it will introduce a regulatory plan for reducing greenhouse gases in the province, but they will not commit to hitting the federal government’s targets. This lack of commitment allows the federal charge to start January 1st. Perhaps Ontario’s $1 beer will alleviate the heat and take everyone’s minds off their ever-increasing climate related problems.

 

Pixabay

+Source: pixabay.com

 

Pixabay

+Source: pixabay.com

Just in the NeoNic of time

bees-bloom-blur-144252Put away the DDT
I don’t care about spots on my apples
Leave me the birds and the bees 
Please! Joni Mitchell 1970.

 

Neurotoxins seem to be on my mind a lot recently. Fortunately, the mammalian blood-brain barrier ensures that this is a figurative as opposed to a literal concern. I refer to neonicotinoids, or neonics. Neonics include a class of neurotoxin pesticides in the nicotine family. Yes, this is the same chemical you used to see advertised in those cancer sticks.

Neonicotinoids interfere with neuron pathways and bind to nicotinic receptors, which then causes paralysis and death, but fortunately they are far more selective to insects. Recently, neonics became the focus regarding the collapse of bee colonies and other pollinators. Neonics provide a cute handle for this type of insecticide, almost like a small, programmable robotic toy you would get for your children — or perhaps your own inner child.

Neonicotinoids are the most common pesticides in use today. Most farmers do not seem to be given a choice these days since neonics coat almost all corn and canola seeds planted in North America. The upside and downside seems to be that these pesticides are highly water-soluble and systemic. This means that they can be taken up through the plant’s entire vascular system to combat pests.  The downside includes going down into the groundwater. Neonics have begun to show up in places where they should not.

Neonics have a short life of approximately 39 days when exposed to the sun and are not considered toxic for mammals. They are highly toxic to insects and aquatic animals such as crustaceans and fish. If neonics seep into the groundwater and are not exposed to sunlight, they can exist for up to three years. This may be sufficient time for them to reach aquifers. This can also allow them to reach wetland and impact invertebrates. With a three year time lag, we may start to see some more cumulative effects.

Other pollinators such as bees can take neonic-infused pollen and carry it back to the hive. The impact of the low-level neonics creates much debate. Some groups point to the overall increase in the number of hives in Canada as illustrating that there are no problems. Others can point to the colony collapse disorder. If neonics do not cause this directly, could they then be creating the tipping point for other problems to overwhelm the hive? The grain of pollen that broke the colony’s back so to speak.

Considering the potential risks, pesticide approval falls to Health Canada under the Pest Control Products Act and its regulations with the Pest Management Regulatory Agency. The act requires reasonable certainty that the pesticide poses no safety risks, including to the environment. The PMRA can request additional data from the registrant and this allows a pesticide to be conditionally approved while additional information is obtained. I suppose conditional can depend upon your situation. Conditional on financing could mean a couple of weeks. Back in high school, you could borrow the car on condition you get it back by 11 pm. The same day. If my folks said I could have the car on condition I get it back to them in a decade, albeit with the tank full, I would think that was pretty much permanent.

The question then becomes when does conditional seem like final? Back in 2016, Ecojustice commenced an application for judicial review of the PMRA’s conditional approval of the two previously mentioned neonics. This conditional approval has continued to be rolled over for more than a decade. Accordingly, Ecojustice commenced action against two registrant companies and Health Canada as saying the decisions were outside the parameters of the legislation. The respondents attempted to dismiss the action on the basis that the 79 decisions of the PMRA on these pesticides should be time barred. They also claim that the applicants had alternative routes to deal with the PMRA decisions. The respondents brought an application to dismiss and a further appeal. Ecojustice prevailed at both levels. This has taken two years and the matter has now been set down to be heard on the merits. Although the courts may not be the best place to go through reams of scientific data.

As the matter slowly winds through the PMRA and the courts, the concern arises as to whether we are better off with the neonics we know. If the application did prove successful or if the PMRA finally decided after several years that neonics were not safe, would the alternatives be worse?

Scott Pruitt, the previous head of the U.S. Environmental Protection Agency, made many impactful decisions. One was to remove the ban on chlorpyrifos, an organophosphate neurotoxin that is even less selective than the neonics being discussed, notwithstanding that EPA scientists concluded the pesticide caused significant health consequences. If neonics appear to be the cute programmable robot neurotoxin toy you buy, organophosphates present more along the lines of the lawn darts that you have at the cottage.

Remember DDT? It was another neurotoxin that did not have any selectivity when it came to eradicating pests. DDT opens the sodium ion channels in neurons, causing them to fire spontaneously, which leads to spasms and death. By 1945, DDT was available for public sale in the US. DDT’s impact became apparent with Rachel Carson’s Silent Spring in 1962 where she documented industry’s indiscriminate use of pesticides. After a public outcry and the near extinction of the bald eagle, it was finally banned in 1972.

In response to stress to pollinators, Ontario created the Pollinator Health Action Plan to safeguard against high mortality of wild and managed pollinators. Although some groups point to the fact that there are now more bee colonies than ever, the other side of this fact is that winter honeybee mortality reached 58 per cent in 2014. This is another case where you can always find a statistic to support your case.

This high mortality rate can be an extremely risky number considering that nearly $900 million in Ontario crops rely upon pollinators. Part of the action plan includes using neonics-treated seed only where there is a demonstrated need to deal with pests. This gets us back to avoiding the ‘indiscriminate use’ of pesticides.

Europe always appears to be the trendsetter. The European Union acted upon neonics and banned them several years ago. It determined that the impact on bee populations and pollinators in general justified the ban.

The EU relies upon the precautionary principle in some areas of the law. This principle states that, in the case that there is any doubt about the safety of a chemical or action, then policy-makers should use their discretion and use precautionary measures to safeguard human health and the environment. There are many international treaties that incorporate this principle as a necessary application.

The Federal Sustainable Development Act does include the precautionary principle in that where there are threats of serious or irreversible damage, lack of full scientific certainly shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation. This principle needs to be more strongly considered for neonicotinoids.

 

 

Pixabay

+Source: pixabay.com

 

 

 

 

 

 

 

 

 

 

 

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The Pan-Canadian Framework on Clean Growth and Climate Change-The Ontario Controversy

clean-energy-energy-sky-7865

The federal government created an eloquent solution to the problem of carbon emissions and climate change. Their backstop GHG Act allows the provinces to create a number of homegrown solutions in order to deal with emissions within their own jurisdictions.

Ontario created perhaps the best and most integrated solution to the problem of emissions. The Ontario Climate Change Mitigation and Low-Carbon Economy Act, 2016 (the Ontario Act) established a standard cap and trade system described in the earlier article. In addition, the system integrates with the Western Climate Initiative (WCI) which provides access to an even greater market to buy and sell the most cost effective carbon credits.

The Ontario system compared a number of policy alternatives in its Five Year Climate Change Action Plan. The most cost effective alternative used the existing cap and trade system integrated with WCI. The policy concluded that the existing system would result by the year 2020 in a carbon charge of $18 in 2016 dollars.

We previously described how the federal government uses a solid constitutional ground to establish a national carbon charge. Ontario intends to argue against this ground with all available resources. This would provide great relief to Saskatchewan in its intent to also contest the GHG Act. The other provinces may follow suit, but from a risk management perspective Ontario and Saskatchewan businesses would be prudent to prepare for the federal carbon tax of $20 tonne in 2019 and establish the necessary processes and infrastructure now.

The Ontario government appears to be in the enviable position of avoiding the political cost of pricing carbon and can throw the entire responsibility on the federal government. Instead of businesses and consumers facing a potential Ontario based $18 cost per tonne of carbon by 2020, they will have the federal government’s $50 tonne instead. Interestingly, the Ontario government would be receiving greater revenues under the federal system.

The federal system would also be revenue neutral, but the Ontario government would not be as constrained in the use of the revenues. They still might model the innovations and adaptations outlined in the Ontario Climate Change Action Plan, but there is no indication that they plan to do so. Indeed, the funds could go directly back to the entities paying the tax. The carbon pricing signal would be lost, and Ontario would have lost a tremendous opportunity to invest in other innovations to shift into the low carbon economy.

However, Ontario regulated entities purchased $2.8 billion worth of credits already. Ford appears to be pleased that companies would not have to incur these costs in the future. The costs under the carbon tax would be even greater. The federal government would likely not be in a position to reimburse Ontario businesses the cost they have for purchasing credits that may extend as far as 2021. These revenues would have likely gone to the Ontario government and a portion to the WCI. The revenues generated in Ontario would have flowed mainly towards funding the various emissions reductions programs.

WCI does not provide information as to whether Ontario was a net purchaser or seller of carbon credits. An estimate by Ontario’s auditor general Bonnie Lysyk estimated that in 2016 that Ontario businesses would have to pay $466 million for WCI facilitated allowances.

Under section 33 of the Ontario Act, the Minister may retire emission allowances from circulation or may cancel Ontario emission allowances in accordance with the regulations in such circumstances as may be prescribed.  A less confrontation approach would simply be to conclude the Ontario Cap and Trade program naturally. Businesses would likely have no further need for these emission allowances since the province would no longer need to cap the level of emissions coming from the regulated industries.

Effective July 3rd, 2018 the provincial government revoked the cap and trade regulation, prohibiting all trading of emission allowances. Their Carbon website does not provide any further helpful information. The GreenON rebate program will be wound down, but the program will honor arrangement where contracts were signed before June 19th, 2018 for work to be completed by October 31st, 2018.

Ontario contemplates formation of a fund to invest in emission reduction technologies. With the dismantling of the Ontario Cap and Trade, The federal government intends to review the $420 million transfer to Ontario under the Low Carbon Economy Leadership fund.

Since the federal carbon charge is a separate type of system, we would anticipate business having to pay and collect this amount commencing January 1st, 2019. We would also anticipate the carbon tax running concurrently with the no longer required but already purchased carbon credits by Ontario regulated entities.

#pan-canadian

#emissions

photos

Tookapic

+Source: stock.tookapic.com 

 

The pan-Canadian framework: Setting a price on carbon

air-air-pollution-climate-change-221012This is the second in a series of articles dealing with carbon tax and trading. The first article dealt with the history surrounding the UN treaty on climate change and the various attempts to implement the treaty which eventually culminated in the Paris Agreement. The pan-Canadian framework became Canada’s answer to reduce its overall greenhouse gas (GHG) emissions.

Carbon pricing forms the central component behind any market attempt to reduce GHG emissions other than using strict command and control regulations. Pricing sends a signal to the marketplace that products or operations relying on extensive carbon use can be less economically efficient than other products or operations that use less carbon.

The ability to emit any form of pollution into the environment without restrictions allows polluting entities to externalize those costs. This means that these entities do not have to incur the cost of cleanup while some other neighbour next door, or city or country incurs the eventual cost of that pollution. Sending a price signal essentially adds the cost of the pollution right into the cost of the product or operation itself. Anyone using that product or operation can now compare the cost with another product or operation that does not have such a carbon extensive expense attached to it. The market eventually switches to the low-carbon alternative.

This problem of externalizing costs can be seen in other areas. The globalization of the economy demonstrates this. Lower tariffs allow products that are produced more cheaply elsewhere into the country. The entire economy essentially benefits except for those that used to make the same item but at a higher cost. One group incurs the benefits while a different group incurs the cost such as job loss.

A more concrete example would the Alliance of Small Island States (AOSIS). This 44-member intergovernmental organization comprises low-lying coastal and small island countries formed to address global warming. The existence of many of these states are at risk owing to global warming and rising sea level. The group continues to threaten litigation with climate change related losses at potentially over $570 trillion.

The federal government places carbon pricing as the primary pillar to its pan-Canadian framework. The question then becomes can it legally achieve this goal.

The framework uses two basic mechanisms for this pricing under Bill C-74 which includes the Greenhouse Gas Pollution Pricing Act (GHG Act) and recently passed by the Senate. The first mechanism uses carbon taxation. The Act actually uses the term “charge” instead of tax, but tax seems to capture the concept fairly well also. The charge begins at $20 per CO2 equivalent for 2019 and increases at $10 per year until it reaches $50 in the year 2022.

The federal government’s jurisdiction over the environment can conflict with the provinces’ jurisdiction quite easily. The federal government’s jurisdiction over tax pursuant to s. 91(3) of the Constitution Act however appears quite clear. This section allows the federal government to raise money by any mode or system of taxation. However, the intent behind the GHG Act would be for it to be revenue neutral. The revenues raised would be returned to the provinces to facilitate climate adaptation and innovation in low carbon technology. The GHG Act does appear clear in that it raises revenue. The Constitution Act does not place a condition on raising money through taxes depending upon how the revenues can be spent.

The federal government can pass legislation in order to implement a treaty, but this does not override the provinces’ jurisdiction. The government also has authority under peace, order and good government. Carbon being emitted in one jurisdiction can have negative effects in another jurisdiction, but this would not seem to justify dealing with carbon on a national basis under this type of power.

A number of provinces intend to challenge the federal jurisdiction to place a charge on carbon emissions. Scholars have opined on this situation and came to the conclusion that the feds would likely succeed in any court challenge. Although this delays the inevitable, court challenges also allow a bad situation to continue. In addition, jurisdictions not modifying their economy to align themselves with a lower carbon future, shall soon become less competitive and be left behind by the global economy.

In the next article, we shall be examining how the second mechanism of carbon pricing, carbon trading, integrates with the tax proposal. Read the previous article here.

Gary Goodwin is the chief legal officer for a national conservation organization. He has been working in the environmental field for over 30 years.

Lawyers Daily July 6, 2018

 

Source: pixabay.com

The pan-Canadian framework on clean growth and climate change Thursday, June 28, 2018 @ 8:52 AM | By Gary Goodwin

 climate-cold-glacier-2969.jpg

The Canadian government now enters the final stages of implementing its Greenhouse Gas Pollution Pricing Act. The Act sets the regime for a charge on fossil fuels and for pricing industrial greenhouse gas (GHG) emissions. This provides a backstop action for other parts of the country that have not taken steps to pass their own legislation to deal GHG emissions. Concurrently, the incoming Ontario government intends to terminate its existing cap and trade legislation.

As Canadians enter interesting times with respect to federal and provincial jurisdictions and potential litigation for Ontario companies that have already started down the emissions trading path, we require some context establishing the existing socioeconomic environment. This begins a series of articles looking at how we got to this point, where we are now, and potentially what the future might look like legislatively. As others and Yogi Berra point out, it’s tough to make predictions, especially about the future.

The UN Framework Convention on Climate Change (UNFCCC) created the overall structure for 192 countries that signed and ratified this treaty dealing with GHGs. An important preamble of the treaty recognizes that the parties are concerned that human activities have been substantially increasing the atmospheric concentrations of GHGs. The importance of this should be restated in that although some commentators and politicians question the science behind climate change, we do not hear of any country wanting to withdraw from this global treaty.

We do not intend to debate the reality behind climate change, and we would only recommend self-directed research on this point. We would also recommend relying upon peer-reviewed research which is the “court of appeal” standard when it comes to climate change science. The Intergovernmental Panel on Climate Change is the international body for assessing the science related to climate change.

Historically, the 1997 Kyoto Protocol failed to fully implement the UNFCCC as it did not include the two largest emitters, China and the U.S. The Canadian government itself did not take serious steps to attempt to implement the protocol. With the legally binding obligations, the government needed to withdraw from the protocol to avoid some $14 billion in penalties.

A series of Conference of the Parties (COPs) under the UNFCCC umbrella attempted to re-establish some sort of unanimity on how to proceed further. These COPs finally culminated in the Paris Agreement in 2015. The nature of this agreement as a treaty can be somewhat questionable. President Barack Obama entered into the agreement by executive order and therefore did not require Senate approval required for treaties. This allowed President Donald Trump to provide notice by executive order of his administration’s intent to withdraw from the agreement. The U.S. can only provide notice to withdraw three years after the agreement comes into force for the country. The U.S. can then provide a one-year formal notice to withdraw. The total of all these periods finally culminates in November 2020, shortly before the end of his existing term.

As of June 2018, 195 UNFCCC members signed the agreement, and 178 became parties to it. The agreement aims to limit the increase of global average temperatures to 2 degrees C above preindustrial levels and hopefully to limit the increase to 1.5 degrees C to significantly reduce the risks and impact of climate change.

In the agreement, each country plans and reports on its own targets. The agreement does not contain any enforcement mechanism to compel countries to reach a certain level by any particular date and instead provides a method to globally drive fossil fuel divestment.

Each country determines its own “Nationally Determined Contributions” (NDCs) and that these NDCs should be ambitious.

An important aspect of the agreement includes the International Transfer of Mitigation Outcomes (ITMOS). This allows countries to use emission reductions outside their own jurisdictions. The various heterogeneous carbon trading systems require linkage in order to avoid double counting and other verification issues. The UNFCC can act as a type of global securities regulator, something that Canada was unable to do when examining a national securities regulator.

Under the agreement, Canada committed to reducing GHG emissions by 30 per cent below 2005 levels by 2030. The major strategy to reach this commitment can be found within the pan-Canadian framework. In future articles we will examine its four main pillars which include pricing carbon pollution, complementary climate actions, adaptation and innovation.

As expected, pricing carbon creates the greatest controversy. Exploring the reasoning behind pricing carbon will illuminate the further changes we can anticipate in Canada’s short-term economic future.

This is the first of a four-article series.

The pan-Canadian framework (developed with the provinces and territories and in consultation with Indigenous peoples) will ultimately impact almost all sectors of the Canadian economy. This future impact illustrates areas in which in-house counsel should be strategically reactive, and more importantly, proactive.