As foundational firms in the soon to be launched global law firm Dentons, Fraser Milner Casgrain (FMC) and SNR Denton are working closely to apprise our global networks of relevant climate change policy developments. With lawyers on the ground in Ontario, FMC gathered real-time information about the Ontario Ministry of the Environment's discussion paper regarding greenhouse gas (GHG) emissions reduction. As we watch the developments in Ontario, questions arise as to the possibility of increased cross-border arrangements supporting cap-and-trade mechanisms as part of GHG emissions programs in the US and Canada.

The Ministry's discussion paper discusses possibilities for the scope of the Ontario GHG emission reduction program, including which gases and industries may be covered and the level at which emissions targets would be set. Emitters covered by the program would be responsible for reducing emissions of those GHGs covered by the Kyoto Protocol and by Ontario's current Greenhouse Gas Emissions Reporting Regulation—namely, carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons and perfluorocarbons from covered sources.

The Ministry proposes that protocols for offsets to be used in the Ontario GHG emission reduction program would be developed in coordination with the Canadian federal government as well as with other jurisdictions, including the Western Climate Initiative (WCI) and North America 2050. However, the paper did not discuss whether an Ontario cap-and‐trade regime would officially link with the WCI market, the Regional Greenhouse Gas Initiative, the province of Alberta or another exchange or system, although Ontario has been a partner in the WCI since 2008.

In the United States, California has launched its cap-and-trade program, pursuant to its Global Warming Solutions Act (often referred to by its bill number, AB 32). As part of that effort, the California Air Resources Board has proposed to enter into an arrangement with the province of Quebec to allow trading among sources in both jurisdictions. That notion has met with criticism. Nevertheless, as both Canada and the US see the expansion of emissions programs that promote the development of offset markets, we see increasing opportunity to align and identify synergies between companies working across the border.

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