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The Climate Emergency and Human Rights: Reflections on the Report of the Special Rapporteur on Extreme Poverty

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By Professors Sara Seck and Meinhard Doelle, and Killam Post Doctoral Fellow, Lisa Benjamin.

On June 25th, 2019, the Special Rapporteur on extreme poverty and human rights, Philip Alston, released a report on climate change and poverty.  This much-anticipated report offers an opportunity to focus on an often neglected aspect of climate change, the disproportionate, devastating impact of unmitigated climate change on those living in poverty. While heatwaves in Europe have attracted attention, it is the existing climate-induced impacts on vulnerable communities in the Global South which are often overlooked. The water crisis in India and ongoing migration crises are just recent examples of what is to come.

The report starts out with some shocking statistics.  It estimates that hundreds of millions of people will face food insecurity, forced migration, disease and death.  The report classifies the human rights impacts of climate change as an emergency without precedent, and emphasizes that the scale of the emergency very much depends on the level of effort the global community puts into mitigation.  The difference between a 1.5-degree and a 2-degree increase above pre-industrial levels is estimated to expose an additional 457 million people to climate related risks, including risks related to sea level rise, flooding, droughts, forest fires, damage to ecosystems, food production, and the availability of drinking water.

A 2-degree world would put an additional 100-400 million people at risk of hunger, and 1-2 billion may not have access to adequate water.  140 million people in the poorest parts of Africa, Asia and Latin America could be displaced by climate change by 2050.  Already, in 2017, more people were displaced by disasters than by conflict, with most of the displacement affecting those living in poverty in developing countries.

Of course, current mitigation commitments are likely to result in an approximately 3-degree or higher world.  Unfortunately, the report does not offer the same level of detail of the human impacts resulting from the path the world is currently on, either based on commitments under the Paris Agreement, or based on current policies.  While this is understandable given the commitment of the global community in the Paris Agreement to collectively work toward “well below 2 degrees”, current nationally determined commitments (or NDCs) leave a significant gap, and many countries are not yet on target to meet their existing NDC commitments.

The scale of the overall impact, even at 1.5 degrees, is unprecedented, and the report estimates that developing countries will bear 75-80 percent of the costs and impacts.  In short, climate change will exacerbate existing poverty and inequality, between developed and developing countries, but also within countries.  The higher the global impact, the worse the plight of the world’s poor. The report details incidents of loss and damage, or effects which exceed the adaptive capacity of communities and states, with the impacts of loss and damage being more drastic in the Global South. The authors of this blog have researched the legal and policy implications of climate-induced loss and damage, with two of the authors editing a Research Handbook on Loss and Damage along with existing work on the topic.

Of course, the inequity of this disproportionate impact is exacerbated by the fact that those in poverty have to date and will continue to contribute the least to the problem.  The poorest half of the global population is responsible for only 10% of global GHG emissions, and a person in the top 1% (which includes most middle-class citizens in developed countries) is on average responsible for 175 times more emissions than a person in the bottom 10%. In short, the problem is created by the world’s affluent (many of whom do not consider themselves to be affluent), and it disproportionately affects the world’s poor. These urgent issues of climate justice have been a constant refrain by many vulnerable, developing countries during the climate negotiations, with particularly difficult negotiations around loss and damage. The report paints in stark language the unjust position of those in the Global South watching as developed countries grew rich by burning an irresponsible amount of fossil fuels, and the failure of treaty bodies to determine the responsibility of wealthier countries to provide financial and technical assistance to developing countries for climate action.

Having set the stage with a troubling account of the expected impact of climate change on the most vulnerable, the report proceeds to take stock of the human rights community to date.  The report covers efforts by the Human Rights Council, the Office of the High Commissioner for Human Rights, the Committee on Economic, Social and Cultural Rights, the Human Rights Committee, regional human rights bodies, reports from a variety of other Special Rapporteurs, and civil society.  The inevitable conclusion is that awareness of the scale of the crisis is low, and that actions have been inadequate, including by key human rights NGOs Human Rights Watch and Amnesty International, although there are signs of change.

Not well covered in the report are actions by state actors and the business community, though the inadequacy of actions to date are pointed out.  The report points to the persistence of government subsidies to the fossil fuel industry and the failure to take effective steps to fundamentally transform the global economy as the most obvious signs that governments and the business community are failing to tackle the issue.  The report also points out the shameful history of many in the fossil fuel industry of denying the science of climate change  and thereby delaying action, and also warns of the dangers of climate-induced privatization of natural resources in the future which may exacerbate negative impacts for those living in poverty.

However, the report fails to mention the significant role of state owned corporations and nation states in the fossil fuel industry. Richard Heede’s groundbreaking report notes that of 914 billion of CO2 equivalent emitted by 90 oil, coal, natural gas and cement producers, roughly one third was emitted by investor-owned companies, and the remaining two-third by state-owned entities and nation states. While it is clear that developed countries are largely responsible for historic emissions, some of the major emitters listed in Heede’s report are located in the Global South, including in countries such as Saudi Arabia, Iran, China, India, Venezuela, Mexico, Kuwait, Abu Dhabi, and Algeria. This activity accumulated vast wealth for these industries and countries (or at least their governments), but has contributed to devastating climate-induced impacts for others in the Global South.

The report also points to the gaps in transnational environmental governance, with states agreeing to binding international agreements on investor protection and trade, but no correlative enforceability of commitments to reduce carbon emissions. The same can be said in the transnational corporate governance sphere, with no binding international legal obligations currently imposed on companies to reduce emissions. However, the report fails to mention important Human Rights Council developments on business responsibilities for human rights or to consider how these developments apply to climate-induced harms.

The Alston report proceeds on the assumption that states have obligations under international human rights law, but that businesses, including fossil fuel companies, do not, absent state regulation. This is contrary to the OHCHR’s own Key Messages on Climate Change and Human Rights, developed as a submission to the Paris Agreement negotiations, which states in part that ‘businesses are also duty-bearers’ and that businesses must ‘be accountable for their own climate impacts’ . The OHCHR’s position is consistent with that adopted by the Committee on Economic, Social and Cultural Rights in its 2018 statement on climate change which expressly notes that ‘Corporate entities are expected to respect Covenant rights regardless of whether domestic laws exist or are fully enforced in practice’ . These claims are not surprising, as they reflect the endorsement by the UN Human Rights Council in 2011 of the Guiding Principles on Business and Human Rights , the implications of which are also noted in the 2016 Report on Climate Change produced by the Special Rapporteur on Human Rights and the Environment [see here at para 66].

Various non-UN initiatives have attempted to grapple with the implications of the business responsibilities for human rights for climate change harms, including the International Bar Association’s 2014 Report on Climate Justice , the 2015  Oslo Principles  and the 2018 Principles on Climate Obligations of Enterprises , although none are entirely consistent with the business responsibility to respect human rights under the Guiding Principles [see here and here]. Other initiatives such as the recommendations of the Task Force for Financial Disclosures on Climate Change are also gaining traction. Notably, some corporate actors have taken significant actions to reduce their emissions consistent with an acceptance of their social responsibility, and the activities of some of these largest actors can fill temporal and governance gaps under the Paris Agreement, whether or not more transformative global climate regulations are agreed upon.

The report does point to signs of hope, such as the decoupling of economic growth from GHG emissions in 23 countries while reducing poverty faster than other countries.  This has been achieved through a combination of green subsidies, carbon pricing, and regulation driving a transition from fossil fuels to renewable energy. The report also details some of the ongoing climate litigation activity against both governments and companies, but misses some important cases in Global South which are driving climate ambition in those countries, and which are also allocating innovative legal rights to natural resources such as rivers.

The report concludes with some recommendations on how to move forward with decarbonization in a manner that is more attentive to the connection between climate change and poverty.  It is here that the report fails to impress, as while the report calls for radical, transformative changes it does little more than repeat the need to decarbonize while ensuring a just transition.  A key question may be whether international human rights law already provides underutilized and frequently overlooked tools that could be called upon to harness state and non-state actors to take effective climate action both to reduce GHG emissions and to remedy climate harms. It is crucial that all Special Rapporteurs take seriously the independent responsibilities of businesses, as organs of society, and not inadvertently propagate the message that business conduct that contributes to the violation of human rights including climate harms is somehow acceptable in the absence of state regulation. The report rightly points out that urgent action is needed by governments, businesses as well as the human rights community, but it is now time to move from outlining the risks to crafting and implementing global solutions which benefit the most vulnerable.

Ontario Court of Appeal Holds Federal Government Can Set National Climate Mitigation Standards

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On June 28, 2019, the Ontario Court of Appeal released its much-anticipated ruling on the constitutionality of the federal Greenhouse Gas Pollution Pricing Act (GHGPPA). It is the second reference case involving this Act, following the previous Saskatchewan Court of Appeal ruling that the Act was a valid federal exercise of jurisdiction under the national concern branch of POGG. Both cases, while also dealing with other issues (such as whether the pricing mechanism amounts to a tax, or whether it may be justified under the emergency branch of POGG), focus on the question whether greenhouse gas (GHG) emissions, or some other appropriate subject matter, meet the national concern test under POGG so as to grant the federal government jurisdiction to pass the GHGPPA. The Saskatchewan case upheld the GHGPPA on the narrow basis that the pith and substance of the Act is the “establishment of minimum national standards of price stringency for GHG emissions”.

With the two cases clearly heading to the SCC in December, 2019, a key question with respect to the Ontario Court of Appeal is whether it offers any new perspectives on the application of POGG’s national concern branch to GHG emissions. Ultimately, the short answer to this question is yes. The decision offers three perspectives on how the POGG national concern analysis should be carried out. One of the three follows the majority of the Saskatchewan Court of Appeal. The other two offer new perspectives that may be helpful to the SCC as it grapples with the issue.

There is little doubt that the applicable test for the national concern branch of POGG is as set out by Le Dain J. in the SCC decision in Crown Zellerbach, at pp. 431-32:

1. The national concern doctrine is separate and distinct from the national emergency doctrine of the peace, order and good government power, which is chiefly distinguishable by the fact that it provides a constitutional basis for what is necessarily legislation of a temporary nature;
2. The national concern doctrine applies to both new matters which did not exist at Confederation and to matters which, although originally matters of a local or private nature in a province, have since, in the absence of national emergency, become matters of national concern;
3. For a matter to qualify as a matter of national concern in either sense it must have a singleness, distinctiveness and indivisibility that clearly distinguishes it from matters of provincial concern and a scale of impact on provincial jurisdiction that is reconcilable with the fundamental distribution of legislative power under the Constitution;
4. In determining whether a matter has attained the required degree of singleness, distinctiveness and indivisibility that clearly distinguishes it from matters of provincial concern it is relevant to consider what would be the effect on extra-provincial interests of a provincial failure to deal effectively with the control or regulation of the intra-provincial aspects of the matter.

As was the case in previous environmental cases that considered the national concern test under POGG, a critical issue in the analysis of all three judgements by the Ontario Court of Appeal (two for the majority, one dissenting judgement) was how they define the “subject matter” to which they then proceed to apply the Le Dain test.

• Minimum standards to reduce GHG emissions (Strathy C.J.O.)
• Minimum national GHG emissions pricing standards to reduce emissions (Hoy A.C.J.O.)
• GHG emissions (Huscroft, J.A.)

The majority (Strathy C.J.O., Hoy A.C.J.O., MacPherson, and Sharpe JJ.A.), in two separate judgements, applies the first two subject matters to the Le Dain test to conclude that the federal government has jurisdiction under the national concern branch of POGG to enact the GHGPPA. The dissenting judge, Huscroft, J.A., applies the third subject matter to conclude that the federal government does not have jurisdiction under POGG to enact the GHGPPA.

The choice of subject matter, of course, has important implications. It drives the POGG analysis with respect to the third and fourth part of the Le Dain test, and has particular implications for the singleness, distinctiveness, and indivisibility test and the impact on the distribution of power between federal and provincial governments. A more narrowly defined subject matter will more easily pass the requirements of the POGG test. At the same time, however, the choice of subject matter also has implications for the ultimate ability of the federal government to take effective measures to control GHG emission in Canada. The more narrowly defined the subject matter, the more limited the federal power to control GHG emissions.

In this post, I briefly explore the implications of this fundamental choice, and offer some perspectives on the choices made and the analysis applied, particularly with respect to parts three and four of the Le Dain test in the three sets of reasons offered by the Ontario Court of Appeal.

Strathy C.J.O. concludes that the subject matter that offered the most appropriate basis for the POGG analysis was “the setting of minimum national standards to reduce GHG emissions”. He differs from the Saskatchewan majority ruling in defining the subject matter more broadly than the specific subject matter of the GHGPPA. The starting point for this determination is the pith and substance of the legislation being challenged. Clearly the pith and substance is setting a minimum national price for carbon. While the Saskatchewan Court of Appeal proceeded to also accept this as the subject matter for purposes of the POGG analysis, it is clear from the case law that this is not necessary, and that the question of the subject matter is a separate determination that flows from, but is not prescribed by the determination of the pith and substance of the impugned Act.

Having selected minimum national standards for GHG emission reduction efforts, the majority then went on to conclude that this subject matter met the third and fourth parts of the Le Dain test.

Hoy A.C.J.O., who agreed with Strathy C.J.O. and the rest of the majority on the ultimate outcome, reached her conclusion on the basis of the same subject matter as the Saskatchewan Court of Appeal. She appears to apply the narrower subject matter based on case law that has suggested that the subject matter should be defined as narrow as reasonably possible to prevent unnecessary intrusion into provincial areas of jurisdiction. Having selected the narrow subject matter of setting a minimal national carbon price, she had little difficulty concluding that the subject matter met the third and fourth parts of the Le Dain test.

The dissenting judge, Huscroft, J.A., applied the broadest subject matter, and proceeded to conclude that the GHGPPA was not valid federal law. He defined the subject matter to be the reduction of GHG emissions. He did so on the basis that the reference to minimum national standards and a minimum national carbon price went beyond defining a subject matter to defining the tools that could be used to address the subject matter. Huscroft, J.A. concluded that while it was appropriate to seek to define the subject matter narrowly to avoid any unnecessary intrusion into provincial areas of jurisdiction, this did not allow the court to define the subject matter with reference to a particular method or other tool to address the subject matter.

Having concluded that the subject matter is the reduction of GHG emissions, Huscroft, J.A. concluded that this subject matter did not meet parts three and four of the Le Dain test. He did so on the basis that the reduction of GHG emissions does not have a sufficient singleness, distinctiveness and indivisibility to be a federal head of power separate from existing provincial heads of power, and that the scale of impact on provincial jurisdiction was not reconcilable with the distribution of powers under the Constitution. In other words, the impact on provincial jurisdiction of granting exclusive federal jurisdiction over the subject matter in question was too high.

The case raises three key questions with respect to the application of the POGG test to GHG emissions:

1. What is most the appropriate way to choose the subject matter for purposes of the POGG test?
2. How should the court determine whether the subject matter meets the singleness, distinctiveness and indivisibility requirement under part three of the Le Dain test?
3. How should the court determine whether the scale of impact on provincial jurisdiction is reconcilable with the distribution of powers under the Constitution?

With respect to the first issue, the reasoning of justice Huscroft has some attraction. It certainly does seem preferable to narrowing the federal government’s ability to address the subject matter to the single issue of carbon pricing. The more difficult question is whether justice Huscroft is correct in suggesting that limiting the subject matter to setting minimum national standards of efforts to reduce GHG emissions more broadly is also an inappropriate way to narrow the subject matter. What is interesting is that he criticizes the majority for narrowing the subject matter by limiting the tools at the federal government’s disposal, while at the same time criticizing Strathy C.J.O. for not specifying the type of standard. A reasonable interpretation of the subject matter defined by Strathy C.J.O. is that it actually addresses Huscroft’s concern, as it narrows the scope of the subject matter to setting minimum national standards of mitigation, but it does not limit what the federal government can do, as it does not limit what type of standard the government can set. Rather than limiting the tools available, as the focus on carbon pricing would do, justice Strathy’s reasoning allows the federal government to use any tool, but only for the purpose of setting minimum standards, thereby allowing flexibility for provinces on how to meet the standard, and, perhaps more importantly, to exceed the standard. Under the subject matter as defined by Strathy, the government can set a minimum carbon price, or any one of a range of emission, efficiency, performance, or technology standards.

Presumably, it would also be within the range envisaged by justice Strathy for the federal government to set a carbon budget for each province, and leave it to each province to determine how to stay within the budget. This was raised by the court in oral arguments, with the lawyer for the province of Ontario suggesting he had less difficulty with such an approach than with the approach in the GHGPPA. By defining the subject matter as the power to set minimum national standards of mitigation, Strathy C.J.O. has given the federal government the tools to ensure emissions are reduced sufficiently to meet international commitments or otherwise ensure Canada makes a fair contribution to the global effort, while allowing the provinces still lots of room to act in the field of GHG emission reductions.

In short, while perhaps a bit more difficult to defend in light of the details of the legal test as expressed by Le Dain in Crown Zellerbach, the approach taken by Strathy C.J.O. appears most consistent with cooperative federalism, and with the underlying goals of the Le Dain test of ensuring the federal government can act on subject matters of national concern that provinces individually are unable to address effectively. It is also consistent with La Forest’s urging in R. v. Hydro Quebec of a flexible approach to the interpretation of the division of powers to ensure both levels of government have the ability to address what he called “one of the great challenges of our time”. Strathy C.J.O. eloquently points out the need for national jurisdiction over the level of effort by pointing to the discrepancy between emissions and impacts felt in some provinces and the territories.

Strathy C.J.O. and Hoy A.C.J.O. take a similar approach to the application of the Le Dain test to the subject matter. The approach seems sound, as is the conclusion that the subject matter as they have defined it meets the test. This leaves the question whether justice Huscroft’s approach, applying the broader subject matter of GHG emissions, is sound. His reasoning on the singleness, distinctiveness and indivisibility of the subject matter is difficult to follow. As is the case with other decisions on this part of the Le Dain test, he seems to be confusing the singleness, distinctiveness and indivisibility with the impact on provincial powers. A factual comparison with the Crown Zellerbach case is helpful here. In that case, justice La Forest for the dissent pointed to the difficulty of separating marine pollution from fresh water pollution, given that the transition from fresh to marine waters in river estuaries is very gradual. There is no similar difficulty in delineating GHG emissions. Through the UN climate regime, there is clarity on the 6 gases that are included. As a result, the subject matter is easy to delineate and separate from other subject matters.

The impact on provincial jurisdiction would appear to be the real issue. It is unfortunate that none of the three separate reasons actually carry out a detailed analysis. While the majority can be excused for not going into too much detail, as the outcome seemed clear based on their narrower definition of the subject matter, justice Huscroft really needed to deal with the issue given his broader definition of the subject matter. As clear from the oral arguments before the court, no current conflict was ever identified. No examples of a potential future conflict were discussed by justice Huscroft in his reasons. Rather, he seems to assume that because GHG emissions are connected to most human activities, this necessarily meant that giving the federal government control over the reduction of GHG emissions would take away too much power from the provinces.

So what would the impact be? Under the double aspect rule, provinces could still regulate the many activities that contribute GHG emissions for other purposes, such as air pollution or economy or social considerations. What the province could not do is to take action to ensure activities that violate federal GHG rules can still go ahead. More concerning, under justice Huscroft’s definition of the subject matter, provinces might not be able to pass stricter GHG emission reduction laws than those imposed by the federal government, unless they could do so using the double aspect principle or the SCC deviates from the current understanding that the national concern branch of POGG creates exclusive federal jurisdiction. That is the real problem with the broader subject matter applied by justice Huscroft.

The SCC has two reasonable options. It can accept the majority’s approach and define the subject matter as setting minimum standards for GHG mitigation action. Alternatively, it can apply the broader subject matter suggested by the dissent, and clarify that the national concern branch of POGG does not create exclusive federal jurisdiction, but permits provinces to continue to legislate subject only to federal paramountcy. Either approach would result in both levels of government retaining the ability to contribute to addressing the climate crisis, and both approaches would be consistent with the cooperative federalism model, and with justice La Forest’s plea in R. v. Hydro Quebec for pragmatic application of constitutional law principles in the environmental field.

 

meinhard_doelle_10-007

Meinhard Doelle,

Professor, Schulich School of Law

Canadian Chair, Marine Environmental Protection, World Maritime University, Malmö, Sweden

Upcoming Canadian Country Visit of the Special Rapporteur on Human Rights and Toxics

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By Associate Professor Sara Seck and JD candidate Meg Williams, Schulich School of Law, Marine & Environmental Law Institute, Dalhousie University. Sara.Seck@dal.ca

 

It has just been announced that the UN Special Rapporteur on human rights and toxics, Baskut Tuncak, will conduct an official country visit to Canada from 24 May to 5 June 2019. The Special Rapporteur has issued an invitation to all interested individuals and organizations in Canada, including civil society organizations, activists, and academics, to submit information that they consider relevant in preparation of this visit by 15 April 2019 to srtoxicwaste@ohchr.org. The information may be sent in English or French and must not be longer than 10 pages.The call for submissions is now online and is available in both English and French. The Special Rapporteur is interested in receiving information on “human rights and and exposure to toxic substances and wastes in Canada, including on pollution, contamination, occupational diseases linked to toxic exposures, toxic consumer products, and other sources of exposure to hazardous substances and wastes.” He has also expressed interest in receiving information on “cases concerning activities of Canadian businesses operating abroad.” Among priority concerns are “circumstances involving toxic exposures of children, indigenous peoples, workers, low income communities, and other groups at high risk.” Information on legal frameworks for the regulation of human rights and toxics in Canada is also invited, as well as contact information for organizations and civil society representatives who wish to meet with him during the country visit.

 

In our last blogpost, we reflected on recent work of a different United Nations Human Rights Council Special Rapporteur, the Special Rapporteur on human rights and the environment, and drew attention to the 2018 Framework Principles on Human Rights and the Environmentand its implications for local environmental justice concerns. In light of the upcoming visit by the Special Rapporteur on Toxics, we will consider a selection of his reports, building on our previous consideration in an earlier blogpost of Mr. Tuncak’s 2015 reporton the right to information. Specifically, this post will focus on Mr. Tuncak’s 2016 report on The Rights of the Child and Hazardous Substances and Wastes(2016, A/HRC/33/41), as well as his  2018 report on the The Rights of Workers and Toxic Chemical Exposure(2018, A/HRC/39/48), while also referring to the 2017 Guidelines to Good Practices(2017, A/HRC/36/41).

 

Mr. Tuncakassumed the mandateas the Special Rapporteur on Toxics in 2014, taking over from the previous Special Rapporteur, Mr. Calin Georgescu. The UN Human Rights Council mandates the Special Rapporteur to provide comprehensive and current information on the impacts of hazardous substances on human rights, and covers all hazardous substances and wastes that are used, produced and released by human activity. Mr. Tuncak’s 2014 mandate reaffirms the commitments of the 2012mandate of Mr. Georgescu which notably calls for the monitoring of not only States but also “transnational corporations and businesses enterprises in connection with the environmentally sound management and disposal of hazardous substances and wastes” (para 2(a)). As a result, Mr. Tuncak’s reports pay close attention to the responsibilities of business enterprises in regards to the issue of toxics and human rights.

 

Mr. Tuncak’s2016 report focuses specifically on childhood exposure to toxic substances and the resulting human rights impacts. The report examines how children’s rights are violated by State and business actors through exposure to toxic chemicals and pollution. Mr. Tuncak describes the impacts of toxics and pollution as the “silent pandemic” as children are born “pre-polluted” resulting from maternal exposure that continues after birth and into childhood (para 5). He takes notice that children of low-income, Indigenous, or marginalized communities are at greater risk to exposure, leading to questions of environmental racism that undermine equality and non-discrimination (para 6). The report recognizes that the impacts of toxics and pollutants on children are affected by their familial, communal, and environmental situation.

 

The Convention on the Rights of the Childprovides guiding principles for State obligations in preventing childhood exposure from toxics and pollutions, and Mr. Tuncak elaborates upon eleven State obligations in his report. These include implementation of the best interests of the child framework (para 19-21) as well as the right to be heard (paras 22-26), the right to life, survival and development (paras 27-28), the right to physical and mental integrity (paras 29-38), the right to effective remedy (paras 39-43), the right to the highest attainable standard of health (paras 44-48), the right to a healthy environment (para 49), the right to adequate standard of living (para 50), the right to non-discrimination (paras 51-53), the right to be free from the worst forms of child labour (paras 54-56), and the right to information (paras 57-61). The report observes that “toxics released into air, wind and water can directly or indirectly lead to childhood exposure, impacting on the child’s right to health.” (para 49). In this sense, children are not treated as bounded autonomous individuals but instead are understood as embodied beings who are inseparable from the environments in which they live.

 

The 2016 report also considers the business responsibility to prevent the exposure of children to toxics. Businesses are to undertake human rights due diligence to prevent childhood exposures (paras 75-78), to prevent toxic exposure at all points in business activities (paras 79-89), to ensure responsible business relationships (paras 90-97), and to ensure effective remedy through non-recurrence, rehabilitation, and compensation (paras 98-106). Notably, Mr. Tuncak links business activities and industrialization to toxics and pollutants in the environment, and in turn to the adverse effects on children. However, this report does not link labour and employment conditions, and the exposure of workers, to childhood exposure, an issue that is taken up in subsequent reports.

 

In 2017, Mr. Tuncak released a Guidelines for Good Practices report in response to the disparities existing within and among countries in reducing the impacts of hazardous substances. The Guidelines acknowledge both the duties of States and the responsibilities of businesses in addressing these disparities. The Guidelines highlight the foundational obligation of States to “respect, protect, and fulfill recognized rights implicated by the production, use, release, storage and disposal of hazardous substances and wastes” (para 4), including the rights of those impacted by transboundary and transnational harms. Additionally, the report confirms that special attention is required with regard to the rights of vulnerable populations, including low-income communities, children, workers, older persons, Indigenous peoples, minorities, post-conflict communities, and vulnerable genders. With regard to businesses, the Special Rapporteur confirms that “virtually all businesses bear some responsibility” (para 81) to respect the human rights that are impacted by their activities, supply chains, products, policies, procedures, and business relationships. He notes that due diligence is fundamental to this responsibility, and then outlines a number of responsibilities of businesses in regards to reducing human rights impacts of toxics. These include the duty of businesses to identify and assess the potential human rights impacts of their activities. Importantly, this means that businesses must “go beyond mere compliance with existing legislation and regulations” (para 83) which is usually behind compared to rapid industrial sector expansion. Second, businesses have the responsibility to prevent and mitigate the impacts on human rights. Prevention of impacts is most effectively achieved through the elimination of hazardous substances from business activities while mitigation should occur immediately, even before the State gives orders to do so. The third responsibility outlined is the duty to account for efforts to address the impacts on human rights. This involves publicly communicating information about the risks created by business activities as well as mitigation plans to address the actual and potential impacts involved.

 

While the 2017 Guidelines Report focuses briefly on the rights of workers, the2018 report “The Rights of Workers and Toxic Chemical Exposure” is devoted to this issue, and proposes principles to guide State and non-State actors in protecting workers from toxic occupational exposures and to provide remedy for rights violations. The report examines the human rights of workers affected by their occupational exposure to toxic and hazardous substances, a summary of the current challenges facing workers globally, and proposed principles to respect and protect the rights of these workers (para 10). He notes that worker’s rights and human rights are “interrelated, indivisible and universal” (para 14) in that no worker can be deprived of their civil, political, economic, social or cultural rights based on the work that they perform (para 14). The Special Rapporteur also examine the challenges in realizing the rights of workers affected by toxic substance exposures. These challenges include inadequate standards of protection (para 38), limited progress in preventing exposure (paras 39-41), poor monitoring and enforcement gaps (para 42), the exploitation of those most at risk, including those living in poverty (paras 45-46), women (para 48), children (paras 49-50), migrant and temporary workers (para 51-52), workers with disabilities (para 53), and older worker (para 54). Additionally, the report notes the challenges introduced by the informal economy (para 55), the deliberate efforts to delay or obstruct protection (paras 56-58), the opaque nature of supply chains (paras 59-60), the disconnected efforts on occupation and environmental health (para 61), failures to realize the right to information (paras 62-66), limited implementation of ILO instruments (paras 67-68), restrained freedom of association (para 69), and inaccessible remedies, justice, and accountability (paras 70-71).

 

Following an examination of the current state of workers’ rights in light of exposure to toxic substances, and challenges for realizing such rights, the Special Rapporteur proposes 15 Principles to assist States, businesses and other stakeholders to protect, respect, and fulfil the human rights of workers who have been victims of occupational exposures to toxic and hazardous substances (para 73). These are grouped into three subsections: (A) Principles on duties and responsibilities to prevent exposure, (B) Principles regarding information, participation and assembly, and (C) Principles regarding effective remedies. Without going into detail on the 15 Principles, some are worth further reflection. For example, Principle 7 acknowledges that protecting workers from exposure to toxic substances will in turn protect their families, their communities and the environment. Additionally, Principles 13 and 14 recognize the importance of considering the burden of exposure on workers’ families.

 

These principles, together with the observation in the 2016 report on Children’s Rights that“toxics released into air, wind and water can directly or indirectly lead to childhood exposure, impacting on the child’s right to health” suggest an awareness that individuals, whether adults or children, should not be viewed as surrounded by impermeable boundaries that are capable of protecting individual autonomy from the toxins that exist in workplaces and local environments. This need to move beyond an understanding of the worker as a bounded autonomous individual is something that I have explored in a recently published article in the Canadian Journal of Law and Society entitled Transnational Labour Law and the Environment: Beyond the Bounded Autonomous Worker.* There, I suggest that reconceptualizing the worker as a relational being, rather than a bounded autonomous citizen, may help to bridge labour and environmental law, two disciplines that too often operate in silos.

 

Currently, the focus of international and transnational labour law is primarily on workers and their rights so that they may work without fear and with the assurance of a sustainable livelihood. However, I propose that it may be helpful to reframe transnational labour law to better embrace environmental rights. For example, we might reimagine the individual worker as a corporeal citizen who is embedded in a material environment, and so better appreciate that workers and children exposed to toxics arising from industrial activities cannot be viewed as autonomous individuals separate and distinct from families, communities, and environment. This holistic approach reinforces the interdependent duties of both States and businesses to protect both workers and the environment in which they and their families live. As I observe in my article, signs of such a conceptual shift are evident in a2015 studyby UNICEF which recognizes that the rights of children of predominantly female garment workers in Bangladesh were affected by the working and living conditions of the garment worker through impacts relating to the conditions inside and outside of the factory. This focus on the worker as a family and community member, and specifically their role as a parent, aligns with the Special Rapporteur’s reports on Children’s Rights and the Rights of Workers which, in light of their focus on toxic substances, illustrate a shift from thinking of the worker as an autonomous bounded individual to viewing the rights of workers as interdependent with rights to live in a clean and healthy surrounding environment.

 

The upcoming Canadian country visit by the UN Special Rapporteur on Toxics provides an opportunity to reflect upon these issues and, more pressingly, to take action to prevent and remedy harms. For further information on previous country visits by other UN human rights Special Rapporteurs to Canada, as well as other human rights reviews, see here. For outcome reports of other country visits by the UN Special Rapporteur on Toxics, see here.

 

*Sara L Seck, “Transnational Labour Law and the Environment: Beyond the Bounded Autonomous Worker” (2018) 33:2 Canadian Journal of Law & Society 137-157, published online 5 September 2018, https://doi.org/10.1017/cls.2018.15

The Bilcon NAFTA Arbitration: The Damages Ruling

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The decade long legal saga over the Whites Point Quarry project in Digby Neck, Nova Scotia appears to be finally coming to a close. For an overview of the key steps in the NAFTA process, see https://investmentpolicyhub.unctad.org/ISDS/Details/304. The NAFTA tribunal, which had previously found in favour of Bilcon at the liability stage of the NAFTA Chapter 11 process, recently issued its ruling on damages, awarding Bilcon only a tiny fraction of the damages it was seeking. While Bilcon could make a last-ditch effort to apply to have the damages finding set aside, a change in the outcome is unlikely at this point.

As I previously reported (https://blogs.dal.ca/melaw/2015/03/25/clayton-whites-point-nafta-challenge-troubling/), the project, initially proposed in the early 2000’s, was rejected in 2007 by both the federal and Nova Scotia governments following an unfavourable assessment by a federal-provincial review panel. In response, rather than challenge the decision in a Canadian court by way of judicial review, the proponent, Bilcon, filed a $500 million damages claim under Chapter 11 of NAFTA, alleging that as a US investor, it was unfairly treated by the review panel and by government decision makers.

After 7 years of motions, submissions and hearings, the NAFTA tribunal, in a split decision, agreed with the proponent on liability. Two out of the three members of the tribunal concluded that the review panel (and the two levels of government who relied on the panel report in rejecting the project) had not treated Bilcon fairly. They found that the panel had erred by imposing a “community core values” test on the project without notice to the proponent, and by failing to complete the ‘likely significant adverse effects after mitigation’ analysis required under the Canadian Environmental Assessment Act (CEAA). I previously commented on the liability phase of the NAFTA ruling here: https://blogs.dal.ca/melaw/2015/03/25/clayton-whites-point-nafta-challenge-troubling/. The government of Canada sought judicial review of the finding of the NAFTA tribunal on the basis that the panel’s work was consistent with the provisions of the applicable provisions of the CEAA and the Nova Scotia Environment Act, but lost before the Federal Court (https://www.italaw.com/sites/default/files/case-documents/italaw9696.pdf).

In the meantime, the NAFTA tribunal proceeded to the damages phase of its process. The tribunal was, of course, bound by its previous ruling on liability. Essentially, having found that Bilcon was treated unfairly as a result of the errors made by the panel, and as a result of the two levels of government deciding to reject the project on the strength of the panel report, the tribunal then considered what damages Bilcon had suffered as a result of the unfair treatment it had received. The key issue for the tribunal was to determine what losses or harm the claimant had suffered as a result of the respondent’s failure to conduct an EA process in compliance with NAFTA.

Bilcon sought in the range of $500 million on the basis that but for the errors made by the panel, the Whites Point Quarry project would have been approved by federal and provincial decision makers, and the proponent would have been able to operate the quarry at a profit over a period of 50 years. The basis for this claim was twofold. First, Bilcon argued that if you take the errors out of the panel report, there was nothing left that provided a basis for rejecting the project. Second, Bilcon argued that until the Whites Point Quarry, the province of Nova Scotia had never ‘seen a quarry proposal it did not like’.

Canada took the position that even if the panel had not made the errors it did, there was no certainty that the project would have been approved, in fact it was reasonable, based on the evidence before the panel, to conclude that the project would still have been rejected. Canada particularly argued that the proposed project could reasonably have been rejected by the federal government based on significant adverse effects on whales and lobster, and by the province of Nova Scotia based on these same adverse effects, as well as the negative socio-economic effects of the project. Based on this, Canada argued that the claimants had not proven any harm resulting from the errors identified by the NAFTA tribunal at the liability stage.

The tribunal rejected Bilcon’s core contention that but for the errors made, approval of the project was a virtual certainty. It concluded that the claimants failed to prove that the proposed project would have been approved, or that it would have been approved on conditions that would have made it economically viable or profitable. The tribunal went on to consider what damages the claimants would be entitled to in light of its finding that the claimants had failed to prove that the project would have been approved.

As a preliminary matter, the tribunal concluded that while the claimants had a general duty to mitigate their losses, it was reasonable in the circumstances for the claimants not to seek JR of the panel report and the government decisions to reject the project. The tribunal was clearly reluctant to require the pursuit of a domestic remedy as mitigation measure, given that under Chapter 11 of NAFTA, the exhaustion of domestic remedies is not a prerequisite for a claim. The tribunal furthermore appears to have shared the claimant’s concern that even if it was going to be successful in a JR application, the outcome would likely have been a new EA process rather than a project approval, and given the circumstances, its project may not have been given fair consideration in a second EA process.

The tribunal then proceeded to assess damages based on the claimants’ loss of a “fair opportunity to have their case considered and assessed” in the course of the EA process from 2001 to 2007. Essentially, the tribunal concluded that all the proponent had was an opportunity to have the project reviewed fairly. Its value could therefore not be assessed assuming project approval, but would rather have to be assessed based on the value of the opportunity at the time Bilcon applied for approval. The tribunal concludes that Bilcon is entitled to damages based on “the value of the opportunity to have the environmental impact of the Whites Point Project assessed in a fair and non-arbitrary manner”.

The tribunal goes on to conclude that damages, at a minimum, would be the claimants’ cost of going through EA process, which was estimated at $5 million. This conclusion appears to be based on the assumption that the proponent would not have spent the money to go through the EA process if the value of the opportunity was not at least as much as the cost of the EA process. In addition to considering the cost of going through the EA process, the tribunal also gave consideration of the value of the business opportunity before the fate of the project was known. Based on the limited evidence before it, in part because Bilcon had focused on lost profits as its basis for assessing damages, not the value of the opportunity before the EA decision, the tribunal ultimately concluded that the value of the opportunity was $7 million.
Ultimately, while Bilcon won the initial battle on liability, it ultimately was awarded very little in damages. Furthermore, with NAFTA due to be replaced with a new agreement that does not include an equivalent to Chapter 11, and Canada’s trade agreement with the EU due to set up a somewhat different process, the precedential significance of the ruling may turn out to be minimal.

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Meinhard Doelle,

Professor, Schulich School of Law

Reflections on Orphan Well Association v Grant Thornton Ltd, 2019 SCC 5

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This post has been prepared jointly by Lisa Benjamin (Killam Post-doctoral Fellow, Schulich School of Law), and Meinhard Doelle, Colin Jackson and Sara Seck (all Faculty Members, Schulich School of Law, Dalhousie University)

The recently released Supreme Court of Canada decision in Orphan Well Association v Grant Thornton has been warmly welcomed by those who are concerned that the burden of environmental remediation too often falls upon taxpayers when companies run into financial difficulties and seek bankruptcy protection. In this post, we will examine the decision itself, and reflect upon its implications for oil and gas development in a climate vulnerable world and for environmental liability more broadly.

Factual Background

At the heart of the case is the relationship between the provincial regulatory system for oil wells and other oil infrastructure and assets in Alberta and federal Bankruptcy and Insolvency Act (BIA). Part of the provincial regulatory system seeks to prevent companies from walking away from depleted oil wells without proper abandonment, which includes the proper capping of the well and remediation of the surface.

The Licensee Liability Rating Program is a key part of the provincial effort to ensure proper abandonment of oil wells. Under this program, the Regulator creates a Liability Management Rating (“LMR”) for each company operating in Alberta. The LMR is the ratio between a company’s licensed assets and the liability attributed by the Regulator to the eventual cost of abandoning and reclaiming those assets. When the LMR drops below the acceptable ratio between assets and liability, the company will be required to take action to satisfy the regulator that it has the ability to ensure the proper abandonment of its well, usually by paying a security deposit.

Redwater was an oil company that operated 84 wells, 36 pipelines, and 7 facilities in Alberta. Redwater began to experience financial difficulties in 2014. By the time Grant Thornton Limited (“GTL”) was appointed as trustee in bankruptcy in 2015, Redwater owed its major creditor, the Alberta Treasury Branches (“ATB”, now called ATB Financial), approximately $5.1 million. By this time, 72 of the 84 wells were inactive or spent, but, since Redwater’s LMR did not drop below the prescribed ratio until after it went into receivership, it never paid any security deposits to the Regulator.

GTL decided to only take possession of the active, profitable wells, and to disclaim the inactive wells. Its plan was to sell the assets it deemed profitable and distribute the proceeds to secured and preferred creditors in accordance with the provisions of the BIA, leaving nothing for the proper abandonment of the inactive wells. The regulator, in turn, ordered GTL, as Redwater’s trustee in bankruptcy, to properly abandon the inactive wells, which would require GTL to apply the proceeds to properly abandon any inactive wells, leaving nothing for secured and preferred creditors, such as ATB. This action was justified under provincial law on the basis that Redwater’s LMR was below the ratio deemed acceptable, allowing the regulator to step in and demand action, including the abandonment of the inactive wells.

The key issue in the case, ultimately, was whether GTL was required to use the remaining assets of Redwater to properly abandon the inactive wells, or whether it was entitled to disclaim Redwater’s inactive wells, distribute the proceeds from the sale of the profitable wells and other assets to secured and preferred creditors without spending money on the abandonment of inactive, unprofitable wells.

A previous decision of the SCC involving the province of Newfoundland and Labrador and AbitibiBowater loomed large over this case. In that case, the SCC had established the following three-part test for when a provincial regulator’s actions amount to a provable claim under the BIA and therefore would rank below secured and preferred creditors of the bankrupt company.

• First, there must be a debt, a liability or an obligation to a creditor.
• Second, the debt, liability or obligation must be incurred before the debtor becomes bankrupt.
• Third, it must be possible to attach a monetary value to the debt, liability or obligation.

Where this three part test was met, the SCC in Abitibi found that the principle of federal paramountcy would apply to hold provincial law inoperative to the extent that it was in conflict with federal bankruptcy law.

The Lower Courts’ Decisions

Applying this test, the lower courts in the Orphan Wells case held that the provincial energy regulator was a creditor whose liability was incurred before Redwater became bankrupt, and that it was possible to attach a monetary value to the debt. Essentially, the trial judge and the Alberta Court of Appeal both took the position that the provincial regulator’s true purpose in ordering the trustee to properly abandon the inactive wells was to avoid having to spend public funds on the abandonment of these wells.

At the Alberta Court of Appeal, Justice Martin dissented, taking the position that the regulator was not a creditor of the company, and that there was no obvious or clear monetary value attached to the claim, in part because it was not clear that the regulator would ever spend any money on the proper abandonment of the wells. Rather, this was left to an independent, though underfunded entity, the Orphan Well Association, which was funded by the industry and would decide on how to spend its limited resources to abandon orphan wells. The dissent further concluded that while the BIA does protect the trustee from personal liability, it disagreed with the majority that the protection extended to the bankrupt company. On that basis the dissent found that there was no conflict between the BIA and the order of the provincial regulator ordering the trustee to properly abandon the inactive wells.

The Majority Opinion

Ultimately, the majority of the SCC largely agreed with Justice Martin’s dissent at the Alberta Court of Appeal. At the first stage of the Abitibi test, the Court pointed to the scholarship of the University of Calgary’s Fenner Stewart and the University of Alberta’s Anna Lund to help draw a distinction between a creditor collecting a debt and a regulator enforcing the law. Here, the regulator was seeking to have the corporation perform duties it owed to the public, and so the court concluded that it was not a creditor. On the third step of the Abitibi test, the Court found that the obligation the regulator seeks to enforce is not a monetary one. Generally, future and contingent claims can be provable claims in bankruptcy, so long as the possibility of the claim actually coming due is not too remote or speculative. In the context of environmental liabilities, this was reframed in Abitibi to ask whether there is sufficient certainty that the regulator will perform the environmental remediation and seek reimbursement. In this case, the Court found that there was not the sufficient certainty that the obligation to properly abandon the wells would “ripen into a financial liability.” Redwater’s abandonment obligations, therefore, remain non-monetary obligations rather than provable claims that would be dealt with within the bankruptcy framework.

Furthermore, the majority of the SCC agreed with Justice Martin’s analysis of the applicable provisions of the BIA and concluded that they did not allow the trustee to disregard the company’s liability with respect to the inactive wells. The trustee was protected from personal liability, not shielded from having to deal with the companies’ liabilities.

The Dissenting Opinion

In dissent, two members of the court expressed complete disagreement with the analysis and result of the majority. The dissent highlighted that GTL had assessed Redwater’s valuable assets at just over $4 million, while GTL’s assessment of the abandonment and reclamation liabilities of the non-producing properties put their net value at -$4.7 million. (para 173) This valuation made it impossible for GTL to comply with the conditions that the regulator had imposed before agreeing to allow GTL to sell any of the valuable assets. As the net value of the properties was negative, it would be impossible for GTL to find a single buyer. Moreover, GTL could not complete the abandonment and reclamation work itself as the environmental liabilities exceeded the estate’s value. (paras 166-167) The practical result of the regulator’s attempt to get GTL to “comply with its obligations as a licensee, including the obligation to abandon the non-producing properties” must be understood, according to the dissent, as “an effort to hold GTL personally liable. Where else would the money required to abandon the disclaimed properties come from?” (para 228) Yet this is precisely what the BIA provision at issue was designed to avoid.

Of equal concern to the dissent was that if all of the value of the valuable assets would be required for abandonment and reclamation, this would create a disincentive for insolvency professionals ever agreeing to serve as receivers and trustees as there would be no money available even to cover their administrative costs. (para 221) It would also, the dissent suggested, lead to an increase in the number of orphan wells as debtors and creditors would not bother to petition for bankruptcy and “none of a bankrupt’s estate’s assets will be sold – not even an oil company’s valuable wells.” (para 221). This result would be contrary to the 1997 BIA amendments which were designed to encourage greater acceptance of mandates by insolvency professionals by ensuring that bankruptcy trustees would not be subject to personal liability for environmental remediation costs. (The majority contested these claims in paragraph 113).

Analytically, the dissent came to an entirely different conclusion in its interpretation of the relevant statutory provisions of the BIA, and as a result concluded that there was both an operational conflict and frustration of purpose between the federal statute and the provincial regulatory regime. The dissent took issue with the majority’s conclusion that the regulator was not a creditor under the Abitibi test, and concluded that it was sufficiently certain that the regulator (whether AER or the OWA) would “ultimately perform the abandonment and reclamation work and assert a monetary claim for reimbursement.” (para 225). As a result, the dissent found the third Abitibi test was met in its entirety.

Notably, the dissent concluded by framing the problem as one that necessitates a balance between “environmental protection and economic development” (para 289). It then provided a list of alternate regulatory measures that could be implemented to avoid the problems at issue here, including “up-front bonding” as found in some US jurisdictions, or increased industry levies to properly resource the orphan well fund. (paras 289-290). The dissent’s penultimate paragraph claims that the majority’s decision displaces the ‘polluter pays’ principle enacted in the BIA, “in favour of a ‘lender-pays’ regime’.”

Ultimately, however, the question may be whether it is possible to ensure both that the polluter pays and that creditor financial institutions fully anticipate future environmental remediation costs and so integrate these costs into financing. While the effect in the case of Redwater’s bankruptcy may be that the lender pays, we can reasonably expect that lenders will take the Orphan Well decision into account as they make decisions around loan amounts, collateral requirements and interest rates. In other words, if lenders are forced to pay in bankruptcy, we can expect that polluters will be forced to pay before bankruptcy. As discussed below, the potential environmental costs would ideally include not only the costs of remediating environmental damage, but also the costs of climate change.

Implications for the ability of regulators to go after companies in receivership or bankruptcy

While the outcome of the case in the majority opinion is described by most commentators as aligning with the polluter pays principle, the reasoning is more nebulous. Part of the SCC’s reasoning relied heavily on the assumption that the regulator and the OWA would not necessarily foot the bill for end of life obligations for these inactive wells. The background to this reasoning may have been the considerable backlog of orphans’ wells remediation due to OWA’s lack of funding. If the regulator had declared the wells orphan wells and triggered OWA’s clean up responsibility, the regulator or OWA would likely have been categorized as a creditor, and its claims would then be subsumed into the bankruptcy process. The case therefore encourages regulators to not convert, or at least delay converting, a regulatory claim into a financial claim.

The Court is clear that trustee’s status as “licensee” in the regulatory scheme and the obligation to abandon the wells can survive the commencement of bankruptcy; however, it is less clear how the abandonment obligations can be enforced. If the regulator attempts to enforce them by collecting money, the regulator likely becomes a creditor, the obligation becomes a debt, and the regulator is left with an unsecured claim in bankruptcy—precisely the result that the regulatory in Orphan Well sought to avoid. No penalties can stick against the corporation itself, which, in most cases, will soon be wound up or dissolved. The judges in the case all agree that the subsections 14.06(2) and 14.06(4) of the BIA protect the trustee from personal liability for environmental damage or failure to perform environmental remediation.

The answer, at least in the context of the Alberta energy sector, may lie in the regulator’s continued control over the transfer of licenses. While Redwater would have other assets that a trustee could liquidate—mineral rights, surface rights, drilling equipment, contractual rights—it seems that much of Redwater’s value was tied to the licences to extract oil or gas. The SCC’s affirmation of the regulator’s continued power to deny the sale of the licences forces the trustee in bankruptcy to find a solution that satisfies the regulator or be prevented from realizing much of the estate’s value. Alternatively, broader financial arrangements for licensees could be contemplated to ensure financial recourse for the regulator, such as increasing the LMR or securing up-front bonds.

Implications for fossil fuel industries in Alberta and beyond

The number of ‘orphan wells’ in Alberta is increasing dramatically, up from 80 in 2013 to almost 700 in 2015. In addition, as the balance of energy sources shifts away from coal, oil and gas, and traditional energy companies become less profitable, some will enter bankruptcy. In 2016, a number of coal companies entered into bankruptcy, including Arch Coal Inc., Patriot Coal Inc., Walter Energy Inc., and Peabody Energy. The impact of bankruptcy law on environmental law will likely gain a higher profile as the question of who foots the bill for bankrupt companies’ environmental liabilities becomes more pressing. In Canada, insolvency law prioritizes the repayment of secured creditors and gives preferential treatment to certain claims of other creditors, including employees, municipalities, and landlords. However, its treatment of environmental liability has been rightfully criticized. The BIA’s preference scheme thus risks leaving more of the bill for the clean-up of environmental damage in the hands of regulators, and therefore taxpayers.

But local environmental costs and liabilities are not the only part of the equation in the bankruptcy and energy field. Alberta’s oil and gas industry is 8th largest in the world, and contributes a significant amount of greenhouse gas emissions globally. As the impacts and costs of climate change mounts, in particular loss and damage due to climate change, claims against fossil fuel intensive corporations are exploding. In 2017, three municipalities in California sued a number of fossil fuel corporations, including Peabody Energy, for abatement costs due to the impacts of climate change. Their claim against Peabody was dismissed as the company was shielded from climate impacts incurred before its 2016 bankruptcy filing under its bankruptcy plan. In 2019, one of the largest electricity utilities company in California, PG&E, filed for bankruptcy due to the costs incurred from the catastrophic wildfires last year which were exacerbated by years of drought. As global temperatures continue to increase, so will the impacts of climate change, and with them liabilities for energy and utility corporations. Bankruptcy law, as currently interpreted in the Orphan Well case, does not provide a secure legal footing for the prioritization of repayment and remediation of environmental liabilities for the public benefit.

Saskatchewan Case on Federal Jurisdiction over Climate Change Going to Court

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In Saskatchewan this week, the first of two reference cases to challenge federal jurisdiction over climate change is going to court. The two cases, brought by the governments of Saskatchewan and Ontario respectively, both involve the federal Greenhouse Gas Pollution Pricing Act. The key aim of the Act is to impose a federal carbon price for provinces that either do not have one at all, or who have developed a carbon price that does not meet the minimum federal requirements. The federal pricing mechanism distinguishes between large industrial emitters and emissions that result from the use of gasoline, heating oil and similar uses at the individual level. The price imposed on individuals starts at $10 per ton and goes up to $50 by 2022. Notably, most of the revenues generated will be returned to citizens on the basis that the price will encourage individuals to reduce emissions where they can, and the rebate will compensate them for the additional cost, while still creating an incentive to reduce emissions where possible.

The province of Saskatchewan is going to court to argue that the federal carbon pricing backstop is an invasion of provincial jurisdiction. The case has attracted an unprecedented number of intervenors, with almost 20 in support of the federal position and 6 in support of Saskatchewan’s position. The immense interest in this case is not surprising. Constitutional arguments have been at the center of efforts to undermine strong environmental laws in Canada for a long time. Some have been resolved through court cases, cases which the federal government has mostly won. Others, such as the jurisdiction of the federal government to regulate greenhouse gas emissions, have lingered in the background of efforts at federal-provincial cooperation on this issue for the last two decades. As I have explored in previous posts, we have gone through cycles of federal leadership with provincial resistance, followed by federal apathy with some provinces leading the way. Questions over the limits of federal jurisdiction to deal with climate change have brewed below the surface every time the federal government has sought to lead on this issue. This, however, is the first time the legal issue is going to court.

There is such broad interest in this case, because the stakes are high. In the past two decades of lack of effective cooperation and action on climate change, we have lost valuable time in ensuring a smooth and just transition to a carbon free world. The longer these battles continue, the less we will be able to take advantage of the economic opportunities associated with the transition, the more our economy will suffer from the unplanned and abrupt loss of the jobs of the past, and the harder the transition will be for the workforce that currently relies on jobs in sectors in need of transition.

There are different ways the court can resolve the case. It may just decide narrowly whether the federal government has jurisdiction to implement the specific carbon pricing backstop it has introduced through the Greenhouse Gas Pollution Pricing Act. It could, however, also answer more general questions about federal jurisdiction over climate change. This is in part because the federal government has a number of arguments it can make. They include the federal government’s power over taxation, the federal criminal law power, and the power of the federal government to legislate in case of matters of national concern and emergencies. Some of these federal powers offer opportunities to clarify that the federal government has broad powers to regulate greenhouse gas emissions. Declaring climate change to be a matter of national concern or an emergency would be a way for the court to grant broad powers to the federal government. Federal powers to regulate greenhouse gas emissions would be more narrow if the court decided to grant federal jurisdiction using the federal taxation power or the criminal law power.

What is least likely is that the courts will depart from the well-established principle of cooperative federalism in dealing with this case by holding the federal government has no power to regulate greenhouse gas emissions. The court will be looking for ways to ensure the federal government has the legislative power to deal with climate change, while not excluding provinces from sharing this responsibility. One way to do that would be for the court to limit the federal power to a specific tool, such as the taxation power or the criminal law power. Another option for the court would be to grant broad federal jurisdiction based on federal national concern or emergency powers, but to clarify that those powers do not take away from the ability of provinces to also regulate the same activities.

A final option would be for the courts to reverse old case law in Canada and decide that the federal government has the power to implement international treaties, such as the Paris Climate Agreement. This would bring Canada in line with countries with similar constitutions, such as Australia, and avoid jurisdictional squabbles over the implementation of Canada’s international commitments and obligations.

Ultimately, whatever the specifics of the outcome, there is every reason to expect that the guiding principle for the courts will be cooperative federalism. This was emphasized most recently in the Orphan Wells decision of the SCC on the relationship between federal bankruptcy law and provincial environmental regulation, and it is a point the SCC has made again and again on environmental cases over the past few decades. The courts will be looking for ways to ensure both levels of government have the ability to address climate change, the greatest environmental emergency of our time. It is hard to see how a court will find that the federal government, after 20 years of efforts at a common approach, was unreasonable in imposing a carbon price on provinces unwilling to set their own.

The stakes are high, but the court, with the active involvement of well over 20 intervenors from all segments of Canadian society, has the opportunity in this case to remove a long-standing barrier to the effective regulation of greenhouse gas emissions, and thereby ending a two decade long stalemate on one of the most critical issues facing Canada and the world.

 

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Meinhard Doelle,

Professor, Schulich School of Law

The Future Of Environmental Law

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Sabbaticals are an opportunity for reflection. When I started mine last summer, I promised myself that in addition to getting caught up on some of my ongoing research projects and starting a few new ones, I would take the opportunity to reflect on the state of my chosen field. Among the issues on my list was the state of environmental law, and, more broadly, the state of efforts toward sustainability, toward human civilization living within planetary boundaries, along with a range of social goals and the realization of basic human rights for all. The 2015 Sustainable Development Goals are one articulation of what many of us are aiming to achieve.

It is not hard to conclude that we are further away from these goals now, including their environmental elements, than even a decade ago, let alone two or three. The evidence is overwhelming. Particularly at a planetary level, things are looking increasingly bleak. We have reduced the global animal population by 60% since 1970, the list of endangered and extinct species continues to grow with every passing year, nature continues to be converted to serve consumption purposes at alarming rates, plastics, other waste and pollutants are becoming more prevalent in our oceans than fish, and climate change threatens to undermine the ability of the planet to sustain natural systems and humans alike.

Increases in human population over time have made living sustainably on a planet with finite resources more challenging, but by far the most dominant causes of the sustainability crisis have been overconsumption and the wasteful use of the planet’s resources. We are fundamentally mismanaging of our relationship to nature, as evident from the land and natural resource demands associated with human consumption, and the pollution and waste associated with the way we provide the goods we consume and services we use. The depletion of natural resources and the destruction of natural systems is not an inevitable consequence of meeting the needs of a growing human population, but rather the result of poor choices. We can respect and protect natural systems while improving the quality of life of the many who still don’t have access to basic human needs such as adequate food, water, shelter, education and basic health care.

Much has been written about the failure of environmental law to solve the growing sustainability crisis. I was inspired to write this reflection in part by Professor Inara Scott’s contribution to a recent special issue on the state of environmental law. In it, she describes the way we conceive environmental law as consisting of three problematic limitations:

1. Environmental law addresses interactions between humans and the natural environment, and ways to limit human actions in order to protect the environment.
Conversely, environmental law does not focus on human-to-human interactions or economic transactions. Matters having to do with corporate law, tax, and business are generally not included. It is only recently that energy law—including fossil fuel extraction and electric utility regulation—has been considered alongside or even linked to environmental law.

2. Environmental laws address narrow targets with narrow solutions. For example, the ESA creates a mechanism for protecting individual species. It was not intended to create a mechanism for considering bigger questions (i.e., how do we protect biodiversity?).

3. Environmental law is furthered by liberal white activists. Environmental law is not relevant to conservatives, people of color, or people living in urban settings
who do not like the woods.

Some accuse elements of the environmental movement of having been co-opted by governments and business interests to accept unacceptable levels of harm in return for a seat at the table. Others point to a failure of democracy, of international law and of multilateralism.  Yet others focus on corporate power applied in the pursuit of short-term greed over sustainability and prosperity. Many disciplines and individuals have contributed to a better understanding of how we got here, and how we could have done better. It is not my intention to go over this well covered ground. My modest proposition in this post is that assessing what has and has not worked in the past, while important, is no longer enough, as past experience is no longer an adequate predictor for how to solve the problems of the future. Let me explain.

As explored in a 2016 book called “Thank You for Being Late” by Thomas L Friedman, we live in a period of human history that is dominated by exponentially accelerating change. Friedman identifies three critical areas of such change, environmental harm, (computer) technology, and globalization. His basic proposition is that at least in these three areas, change has accelerated exponentially over the past few decades, and is showing no signs of slowing down. Whether one agrees with Friedman on the details, it is hard to dispute that we can expect the world to change in unimaginable ways in the next one or two decades. It is becoming increasingly difficult to predict what the world will look like even a decade from now, except that it won’t be anything like it is today. It is also increasingly difficult to predict how individuals, and even governments and businesses, will be able to influence the path of humanity.

What will happen to nation states when so much power transcends national borders? How will democracies fare in a world of alternate facts, trolling, the decline of independent media, and political leaders with dictator-like tendencies who offer simplistic solutions in an increasingly complex world? How will humans fare in a world dominated by artificial intelligence? What will happen to the climate system, to the oceans, to safe water and adequate food? My basic proposition is that in order for the natural services critical for human survival and that of other species on this planet to be secured, those concerned about the sustainability crisis, including those of us thinking about the role of law, policy, and governance systems to protect natural systems, must look beyond past experience to look for solutions.

We cannot rely on what has worked in the past, and we similarly cannot simply fix and adjust what has not worked. Rather, we need to reflect on what is ahead, and rethink how to protect the natural systems and resources we all depend on in light of new, emerging, and constantly evolving circumstances. We will have to continue to do so again and again for as long as this period of accelerating change in technology, globalization and environmental harm continues. In short, we have to become adaptable as never before.

In the remainder of this post, I will illustrate the opportunity for previously unpredictable solutions to emerge quite quickly. I will do this with a brief exploration of two emerging technological innovations that, when put together and applied effectively, have the potential to offer a powerful tool for sustainability. However, each also carries with it the risk of perpetuating the status quo. The two technologies I have in mind are artificial intelligence (AI) and blockchain. To be clear, my point here is not that they are the solution to our sustainability challenge, but to illustrate that that new thinking is needed to identify the solutions of tomorrow, that the tools of the past may not be the most effective tools to solve the sustainability challenges we face today, and that adaptability to new and emerging circumstances will be critical to finding and implementing sustainability solutions in an ever-changing world.

Blockchain technology is essentially a system of decentralized electronic records shared among users. They key contribution of blockchain is its promise to ensure that these records are secure, traceable, and auditable, and are maintained on a peer-to-peer network that can be publicly accessible. One potential application of blockchain is to track the supply chain and life cycle of goods and services. In theory, blockchain technology could ensure full transparency of all key social and environmental determinants of the sustainability of products and services offered, no matter where they are manufactured, sold, used, reused, recycled or discarded. Of course, achieving this would require a coordinated effort to ensure the right information is tracked, and adequate oversight to ensure the data collected is accurate and properly reflects the social and environmental performance of the product or service in question.

Similarly, in theory, governments and citizens, through artificial intelligence based ‘virtual assistants’ such as Amazon’s Alexa or Google Assistant, could have access to, analyze, and make purchasing and regulatory decisions based on all this blockchain data made publicly available on all products and services. This could give governments and individuals the information needed to ensure only environmentally responsibly products are purchased, that preference is given to the most environmentally and socially responsible products, and that the durability, and the operating, maintenance and repair costs of products are factored into price comparisons. Products that don’t meet a certain sustainability threshold could be banned by regulators, while others would be rejected by virtual assistants based on either built in or stated preferences for more sustainable products, or for products that are more cost effective over their life cycle. The end result could be a global race to the top, a world, where businesses who are able to produce the most sustainable products are rewarded, rather than those with the most effective marketing strategy.

There appear to be at least two key elements to making effective use of these technologies to reduce the environmental (and other) harm of products and services. One is to ensure blockchain or similar technologies are used effectively to collect accurate, reliable and comparable information about the environmental and social impacts of products and services. The second is to ensure this information is used to prevent unsustainable products and services from being made available for purchase, and to encourage consumers to purchase those that are the most socially and environmentally responsible. In short, human societies could put such technologies to effective use in the effort to become sustainable.

Of course, that is not what is happening so far, in part because those who understand the scale of the sustainability crisis tend not to be at the table to help shape the use of these technologies. They are not the ones negotiating the rules of engagement between manufacturers and Amazon’s Alexa or Google Assistant. They are not the ones deciding whether and how blockchain is used to track the life cycle of a product, or how ‘smart contracts’ are designed based on the supply chain information available through blockchain. They are not the ones designing the algorithms that tell us what to buy and what not to buy, nor are they at the table where decisions are made about the regulation or application of these technologies.

That task, by default, appears to be left to those who tend to view environmental protection as a luxury, as a fringe issue that cannot be permitted to interfere with economic growth, people who continue to live in a fantasy world of unlimited resources, and unlimited assimilative capacity of natural systems to clean up our messes. So, while we fight to protect the last bit of wilderness and the last few orcas or right whales, Amazon and Google, not represented by sustainability advocates and not regulated by sustainability oriented governments, negotiate with manufacturers around the world about the recommendations Alexa will make when you decide to buy your next gadget, kitchen appliance, car, or piece of clothing.

I am not suggesting that the environmental movement should stop fighting to protect important natural ecosystems, endangered species or stop pushing for laws that reduce pollution and waste. At the same time, we have not been able to win the battle using these tools, and there is every reason to expect that these tools will continue to become less powerful over time. More importantly, with change, there will be new opportunities, ones we are likely to miss if we continue with the mindset that environmental protection is something separate from the rest of society, separate from corporate law, from trade law, from technology and internet law.

To save the planet, nature, and human civilization, environmental protection and sustainability need to become mainstream, an integral part of everything we do, including the regulation of AI, of research, development, and the dissemination of new technology, of the regulation of corporations, the internet, AI, and international trade. We cannot afford to think of environmental law as distinct and separate from the governance of human society. Environmental law needs to be integrated and adaptable, and we need to regularly re-evaluate where the opportunities are to shift human civilization toward sustainability.

Things will continue to get more complex, but hidden in the complexity are opportunities to achieve things that were unthinkable before. Emerging technologies such as blockchain and AI illustrate this, as they have the potential to put a stop to misinformation about the environmental and social impact of products and services, and encourage a race to the top. They have the potential to put a stop to planned obsolescence, greenwashing, and consumer misinformation. However, they will not do so unless directed to. They will only do so if those who understand the seriousness of the sustainability crisis identify these opportunities and get involved in making them happen.

What it will take to identify and realize such opportunities are individuals in all sectors of society looking for them, not just a few committed individuals working or volunteering for ENGOs pushing for stronger environmental laws. It will take innovative thinkers in corporate boardrooms, in research labs at Google, Apple and Microsoft, at cabinet tables and in government bureaucracies to identify and realize these opportunities. It will take those who understand the significance of the sustainability crisis and are committed to working to addressing it to work for businesses and governments, not just for ENGOs. We need those committed to this cause to include all races, all cultures, and all demographics, and we need them all to look for and pursue solutions in unlikely places.

As an academic and a teacher, I am mindful that to achieve this, we need to reach all students, and we need to educate with a message of modesty that is based on the premise that the world is changing too fast for us to have and teach answers, and to instead give our students the tools for critical analysis, so that they can diagnose the problem in light of ever changing circumstances and find their own solutions, solutions that are today still inconceivable, and are designed for problems that will look very different when our students are ready to take them on.

Selected References

Inara Scott, et al, “Environmental Law. Disrupted” (2019) 49 ELR 10038.

Mahtab Kouhizadeh and Joseph Sarkis, “Blockchain Practices, Potentials, and Perspectives in
Greening Supply Chains” (2018) 10 Sustainability, 3652

Thomas L Friedman (2016) Thank You for Being Late (Farrar, Straus and Grioux, New York)

 

meinhard_doelle_10-007

Meinhard Doelle,

Professor, Schulich School of Law

Negotiating the Paris Rulebook: Compliance in Transition

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In December, 2018, Parties to the UN Climate Regime are set to negotiate a Rulebook on how to implement the Paris Agreement. The Rulebook will cover a broad range of issues, from market mechanisms, to finance, reporting, and the 5 year review cycles build around the global stocktake. Key among the elements of the Rulebook is the compliance system. In this post, my intention is to briefly highlight some of the issues before negotiators of the compliance system. A more detailed assessment of the draft negotiating text is available in my article entitles “Compliance in Transition: Is Facilitative Compliance Finding Its Place in the Paris Climate Regime?”. It is published in CCLR, and a draft is available at SSRN: https://ssrn.com/abstract=3228766.

In the transition from the Kyoto Protocol to the Paris Agreement, some parties took great lengths to distance themselves from the architecture and institutions of the Kyoto Protocol. Key among this architecture was the Kyoto compliance system, which was seen as a departure from the norm for multilateral environmental agreements (MEAs). The system included an enforcement branch that applied automatic consequences in case of non-compliance with key obligations of developed country parties. It is therefore not surprising to see a focus on facilitation in Article 15 of the Paris Agreement and specific direction that the compliance system is to be non-adversarial and non-punitive.

The differences between the Kyoto compliance system and that to be developed under the Paris Agreement are, of course, also driven by substantive differences between the two agreements. Most notable among these differences is that the Paris Agreement establishes a much broader range of commitments and obligations covering mitigation, adaptation, funding, technology access, education, capacity building, and loss and damage. The commitments, furthermore, have been made by a much broader range of parties, including all developing countries, in particular the least developed countries and small island states. Many of the commitments are self-determined in the form of nationally determined contributions (NDCs) to be updated by parties every five years.

While there are many important differences, some of the core challenges of ensuring compliance are, on closer examination, remarkably similar to the Kyoto Protocol. Both agreements include a range of commitments from voluntary to binding. Both include provisions for market mechanisms, which will be dependent on compliance to be effective. Both include a range of reporting obligations that are fundamental to the functioning of the regime. These parallels suggest parties would be well advised to draw on the compliance experience under the Kyoto Protocol in negotiating the design of the Paris compliance system.

This post assesses the state of play in the negotiations under Article 15 heading into the COP 24 negotiations in Poland from December 2-14, 2018. The negotiations are taking place in the context of the provisions of Article 15 itself as well as provisions 103 and 104 of the Paris COP decision. Before delving into the current state of the negotiations, it is helpful to identify the key relevant elements of the agreement parties reached in Paris.

The overall purpose of the compliance process under Article 15 is to facilitate the implementation and promote compliance with the provisions of the Paris Agreement. It is important to highlight that Article 15 refers to “the provisions”, not just some provisions, and not just obligations. It seems clear, therefore, that the mandate of the compliance committee should be broad in scope, include individual and collective commitments, and include binding obligations as well as non-binding commitments.

Another set of provisions in Article 15 clarify the overall approach to be taken in the design of the compliance system. They refer to the facilitative, non-adversarial and non-punitive nature of the process, and the principle of transparency. These elements offer important guidance to negotiators on the design of the compliance process and the measures the compliance committee should have at its disposal to facilitate implementation and promote compliance.

A key message in Article 15 relates to the “respective national capabilities and circumstances of the Parties”. This reference to the revised principle of common but differentiated responsibilities (CBDR) in the Paris Agreement signals that the process needs to be sensitive to the capacity challenges of the least developed countries in particular. Article 15 is clear that with respect to compliance, differentiation based on capabilities and other relevant circumstances is the job of the compliance committee. This suggests that the compliance modalities and procedures should provide flexibility for the committee to apply certain aspects of the compliance system to parties that have capabilities and circumstances that may warrant either relaxing process requirements or warrant the application of different measures at the conclusion of the compliance proceedings.

The agreement reached in Paris offers considerable direction on the process to be designed.  Included is the composition of the compliance committee (12 members, two from each of the 5 UN regions plus one each from a least developed country and a small island developing state), required areas of expertise, and the importance of gender balance on the committee.  The committee is to report annually to the Conference serving as the Meeting of the Parties to the Paris Agreement (CMA).  This is the context within which parties are now negotiating the modalities and procedures for compliance. Among the key issues are the following:

  1. Purpose, Principles and Nature of Compliance Procedures
  2. Functions of the Compliance Committee
  3. Institutional Arrangements
  4. Scope of Work of the Compliance Committee
  5. Initiation of Proceedings before the Committee
  6. Process to be followed by the Committee
  7. Measures and Outputs at the Committee’s Disposal
  8. Identification of Systemic Issues (ie beyond individual party issues)
  9. Sources of Information for the Committee’s Work
  10. Relationship with and Accountability to the Conference of the Parties (COP)
  11. Who Carries out Reviews of the Modalities and Procedures
  12. Secretariat Support for the Work of the Committee

A particular source of complexity in the negotiations is that the compliance modalities are being negotiated in parallel with the overall Paris Rulebook. Not only is there uncertainty about the nature of substantive rules on mitigation, emissions trading, and finance, but as discussed elsewhere in this special issue, the Paris Agreement contemplates a comprehensive 5 year review cycle that consists of parties reporting on their efforts to implement their NDCs, review of those efforts and reports, a global stocktake of progress against the long term goals, and revised NDCs. Even though the Paris Agreement clearly provides for a compliance system, it seems that some parties would prefer to subsume the compliance effort under the work of the transparency framework and the global stocktake.

To be effective, the compliance process under Article 15 will have to find its place within the Paris Climate Regime, both substantively (i.e. its role with respect to mitigation, emissions trading, finance, adaptation, technology, capacity building, coordination among institutions and connection among commitments) and in relation to the overall institutional structure being developed. The aim must be to complement the bottom up NDC approach with appropriate top down elements to help close the significant ambition gaps that currently exist in all key areas of the Agreement. A key contribution of the compliance process will be its relative independence and its resulting opportunity to impartially assess compliance with individual and collective commitments. This will help inform the broader discussion about the effective implementation of the Paris Agreement.

There is much to be resolved in developing an effective, efficient, and fair compliance process under Article 15. Key among them are effective triggers for the compliance process, an adequately broad mandate to be able to effectively facilitate implementation and promote compliance with all important commitment in the Paris Agreement whether binding or not and whether made by a developed or a developing country Party. The inclusion of “implementation and compliance” and the language of “the provisions” in Article 15(1) clearly enables the process to deal with all important commitments. Any differentiation between binding and non-binding and differentiation among parties should focus on applying appropriate measures in the circumstances. This can be assured through an appropriate combination of general direction to the committee and appropriate discretion. A fair and effective process will depend on the full implementation of the commitment to transparency and on procedural fairness to any Party being investigated.

It will be important to keep the focus of the committee on technical issues and to avoid having it dragged into political issues and equity judgement calls. This seems particularly important and tricky when it comes to the assessment of systemic issues. The committee will be well advised to stick to assessing whether the collective goals are on track and to technical assessments of the causes, without being seen to point fingers at any particular party or group of parties unless they have clearly failed to meet their individual commitments. This means the focus should be on commitments that allow for a technical assessment of compliance or implementation, rather than political consideration or judgements. Committee has the potential to make an important contribution to progress on collective commitments, particularly those that involve all parties or a clearly identified group of parties, as this can be assessed without getting to any assessment of who within the group of parties needs to do more. Having said this, to ensure the committee has the full opportunity to pursue important systemic issues as they arise, the triggers for systemic issues should include the CMA, the Article 13 outcomes, and the committee based on its own assessment of reports generated under the PA.

It will be important to properly integrate the work of the committee with Article 13 and 14. Not much can be said about the details of how to ensure this is done until there is more clarity on the review process under Article 13 and the global stocktake under Article 14. However, it is clear that the compliance committee can benefit greatly from the work proposed under Article 13, and its conclusions and recommendations have the potential to be important for the global stocktake.

For binding commitments, it will be important for the committee to make a finding of compliance/non-compliance and to apply other appropriate consequences including a compliance action plan, and other non-punitive measures. It would be helpful for negotiators to recognize in this regard that compensatory measures are different from punitive measures, and that for markets under Article 6 to function, it may be important to include compensatory measures in the toolbox of the compliance committee. Special access to support should be limited to LDCs and SIDS.

Conclusion

It is too early to say whether the compliance system is finding its place among the many institutions and processes under the Paris Regime. There are still many issues unresolved within the compliance negotiations, and many more issues to be worked out on other key aspects of the Paris rulebook, such as the reporting, transparency and global stocktake provisions. In the absence of significant progress in other areas in advance of COP 24, negotiators may be well advised to develop the modalities and procedures for compliance at a fairly high level, and to leave some of the detail for the compliance committee to work out after there is more clarity on how other aspects of the Paris Agreement, including Articles 6, 13 and 14, will be implemented. As a result, while this year’s COP should be an important milestone in the development of the Paris compliance system, it is unlikely to mark the end, as much of the detail will inevitably have to be finalized later, either by the CMA or by the compliance committee once it is established.

meinhard_doelle_10-007

Meinhard Doelle,

Professor, Schulich School of Law

Reflections on the IPCC’s Report on 1.5 °C

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On October 6th, 2018, the Intergovernmental Panel on Climate Change (IPCC) released its much anticipated report on the implications of the 2015 Paris Climate Agreement’s goal of keeping global average temperature increases to 1.5 °C. This IPCC Report was commissioned by the Parties to the Paris Agreement because when they agreed to the 1.5 °C goal, only limited analysis on 1.5 °C had been done by the scientific community, and none by the IPCC.  Until then, the IPCC’s scenarios had been based on 2 °C and higher, pointing to the increasingly disastrous consequences of these higher temperature scenarios.  It is through this higher temperature scenario work that it gradually became clear that 2 °C was not an adequate goal to ensure a stable climate.

The 1.5 °C Report offers a first opportunity for Parties to the Paris Agreement to assess how their current “Nationally Determined Commitments” (NDCs) and their national efforts (such as the Pan Canadian Framework) stack up against the 1.5 °C goal they all accepted in Paris in 2015.  In this post, I will offer highlights of the key conclusions of the IPCC Report (http://www.ipcc.ch) and consider its implications for Canada.

What the IPCC Report Says

The report starts by providing important context for the consideration of the 1.5 °C goal. It points out that the Earth is already experiencing over 1 degree of warming, will reach 1.5 °C between 2030 and 2050 at the current rate of increase ( ~0.2 °C per decade).  It also points out that global average temperature increases are not distributed evenly.  They tend to be higher over land than over oceans, higher inland, and higher in polar regions. Regions at disproportionately higher risk from the effects of climate change include northern regions, inland dryland regions, small-island developing states at risk from sea level rise, and least developed countries because they lack resilience.  Many of these regions are already experiencing significant impacts and losses from crop failures, erosion, storm damage, water shortage, and loss of biodiversity.

The Report offers the following key conclusions on its assessment of the 1.5°C goal:

  • Impacts on health, livelihoods, food security, water supply, and human security will be less for 1.5 °C than for 2 °C, and the global economy will be harmed less by climate change impacts at 1.5°C than at 2°C.
  • Unless we are prepared to rely on risky, expensive, and/or unproven removal technologies to meet the 1.5°C goal, global emissions have to decline by about 45% by 2030, and reach net zero around 2050.
  • In addition to reducing CO2, we need deep reductions in emissions of methane and black carbon.
  • Pathways limiting global warming to 1.5°C require rapid and far-reaching transitions in energy, land, urban and infrastructure (including transport and buildings), and industrial systems. These systems’ transitions are unprecedented at a global scale, but are doable. They imply deep emissions reductions in all sectors, a wide range of mitigation options and a significant upscaling of investments in those options. Carbon pricing is an important part of this effort, but much more that a price on carbon is needed.
  • The lower the emissions are by 2030, the more likely it is that the challenge in limiting global warming to 1.5°C after 2030 will be manageable.
  • There are many synergies between 1.5 °C pathways and the 2015 UN Sustainable Development Goals, but there are also significant risks of trade-offs, particularly with respect to large scale efforts to enhance sinks and other efforts to remove carbon from the atmosphere.

What the IPCC Report Means for Canada

First, I think it is important to recognize that the IPCC Report would have important implications for Canada even if we decided not to change our GHG emission reduction targets or increase our domestic effort to decarbonize.  I say that because the Report makes it clear that regardless of our actions, somehow preserving the status quo is a practical impossibility.  Even if we don’t decarbonize, the world around us will change in significant ways.  If we don’t act, and in the process discourage others from acting, climate change will accelerate, causing economic, social and environmental hardship for all.

Even if we were to free ride, meaning we decided not to act on climate change while other countries do act, we would lose export markets for the GHG intensive products we currently rely on for our economic wellbeing.  Even in that scenario, we would need to transition our economy, something that will not happen without domestic markets for the solutions to climate change.  Domestic markets for these products and services in turn depend on investor friendly policy and regulatory environment for decarbonization solutions.

The basic message in the report is that GHG emissions come at a high cost in terms of human health, future economic growth, human security, and our ability to meet our basic needs of food and water.  The cost at 1.5 °C may be manageable, but the cost increases significantly if temperatures are allowed to go higher, and may quickly become unmanageable.  The time delay between emissions and impacts means that by the time we know for sure the impacts will be unmanageable, it will be too late to prevent them from becoming unmanageable.

It is clear that a significant part of the global community is committed to the transition that is needed, though we are at a critical time to ensure the global action will be at the scale needed to avoid worst-case scenarios.  The transition is well under way in many countries. A key message from the IPCC is that it needs to be accelerated, and that there are global economic (among many other) advantages to accelerating the transition.  All Parties to the Paris Agreement will be challenged, starting in Poland this December, to increase their targets, and to match the more ambitious targets with more ambitious action at home and internationally.  This means that industries dependent on fossil fuels and other sources of significant GHG emissions are increasingly at high risk of becoming unprofitable.  It also means that there are huge economic opportunities for those who find ways to accelerate the decarbonization of societies around the world.

For Canada, the message of the IPCC Report, therefore, is that we need to decarbonize from a domestic consumption perspective, and we need to prepare for export markets drying up for our fossil fuel based (and other GHG intensive) products.  We should, over the next year, set new targets for 2030 and 2050 that are in line with the IPCC report and with our commitment under the Paris Agreement to make a fair contribution to the global effort to keep global temperature increases to 1.5 °C.  We should increase our domestic efforts to decarbonize in line with our revised targets.  We should continue to diversify our economy by supporting industries that are part of the solution, and stop investing public resources or otherwise subsidizing industries that are not part of the solution.  Finally, we should make every effort to ensure the transition of our society from a fossil fuel based one to a carbon neutral one is fair.  A priority in this regard is to ensure a transition of the workforces that are currently working in sectors that we will lose (such as the production of fossil fuels), and to help other sectors to thrive through the transition (by doing everything we can to support a shift to carbon neutral agriculture, manufacturing, and buildings, for example).

As importantly, the IPCC report means that we have to change the nature of the discourse on climate change in Canada.  We have to change from trying to protect the status quo to accepting the need for the transition.  Rather than continue to fight or delay the inevitable, we need to ensure that the transition that we need to make is fair, and that we thrive economically and socially through the transition.  This is not accomplished by trying to hang on to what “we have” for as long as possible, and then face the collapse of our economy along with the collapse of the climate system.  Rather, it is accomplished by taking seriously both the climate threat and the challenges and opportunities associated with the transition that is now so clearly inevitable.

Priority Actions for Canada

The following are priority actions the IPCC Report demands of Canada:

  • We need to update our Nationally Determined Contribution (NDC) under the Paris Agreement by 2020 in light of the findings in the IPCC Report.
  • We need to significantly accelerate the electrification of transportation and heating and any other significant uses of energy, and develop our own manufacturing capacity along the way (such as leading on the manufacture on electric vehicles, and on innovative approaches to carbon neutral buildings).
  • We need to make the production of electricity itself carbon neutral, by completing the shift to renewables, through investment in production capacity along with storage, demand management, and smart grid approaches. We are well on our way on this front in many provinces, but do need to accelerate this effort, especially if the electrification of transportation and heating is to accelerate decarbonization.
  • We need to continue to improve the efficient use of energy, particularly in buildings, transportation and energy intensive industries.
  • We need to stop subsidizing and otherwise supporting the exploration and use of fossil fuels, and shift that support to industries and technologies that are part of the solution
  • We need to prepare for the phase out of fossil fuels by diversifying our economy around the solutions to climate change.
  • We need to protect and enhance our carbon sinks in a manner that supports biodiversity, indigenous cultures, and food production.
  • We need to transition our food production and diets to low-carbon or carbon neutral food sources.

Continuing to fight this inevitable transition will exhaust us as a country, and leave us ill prepared for the challenges ahead.  It is time to put our energy into embracing the transition, and thriving through it.  Swimming upstream in the hope that the current will weaken (when we know better) is not the way to avoid the waterfall downstream.  It is time instead to stand up and get out of the water while we still can make it to shore, and before we are swept downstream by the growing current.  Perhaps, in the process, we will learn that living on dry land is not so bad after-all.

 

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Meinhard Doelle,

Professor, Schulich School of Law

Implications of Federal Court of Appeal Decision to Quash Trans Mountain Approval

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From a narrow legal perspective, the August 30, 2018 Federal Court of Appeal decision in Tsleil-Waututh Nation v. Canada 2018 FCA 153, is about compliance with the Canadian Environmental Assessment Act, 2012, the Species at Risk Act, and the federal duty to consult under section 35 of the Constitution Act, 1982. Its implications are, of course, much broader. Even more than the Keystone, Northern Gateway and Energy East pipelines, the Trans Mountain Pipeline Expansion Project has become a flash point over economic, energy and climate policy in Canada.

On one side of the debate are those who continue to ignore the climate crisis itself, and the social, economic and environmental implications of a continuation of an economic and energy policy that is centered around the extraction of fossil fuels. The governments of Ontario and Saskatchewan, as well as conservative opposition parties in Alberta and at the federal level are clearly in this camp.

A second camp in the debate would continue with the exploration of Canada’s fossil fuel resources, while making various levels of effort to decarbonize other elements of the Canadian society, such as electricity and transportation. Many in this camp have made their commitment to addressing climate change in other sectors conditional on continued support for the fossil fuel extraction industry. The federal government and the government of Alberta are clearly in this camp, but so are other mainstream parties in Canada. Members of this camp have yet to demonstrate a commitment to meeting Canada’s 2015 Paris climate commitments.

A third camp advocates for the complete decarbonization of Canadian society as quickly as reasonably possible, including a transition away from the production of fossil fuels. This camp takes the view that Canada has delayed action on climate change too long to be able to implement an approach that separates the fossil fuel industry from the decarbonization of other sectors of the economy, and that nothing short of best efforts to decarbonize is an adequate response to the climate crisis we are in. This camp also points out that nothing short of this level of effort is consistent with Canada’s commitments under the 2015 Paris Climate Agreement.

Ultimately, the first two camps essentially advocate for continued investment in the fossil fuel industry, while the third camp views the continued investment in this industry as counter-productive to the economic, energy and environmental prosperity of Canada. The Trans Mountain Pipeline Expansion Project has been at the center of this debate because it represents a major investment in the fossil fuel industry. For advocates, it represents an opportunity to grow the industry and to increase the revenues generated from Canada’s vast fossil fuel resources. For opponents, it represents at best a stranded asset, as it will have to be abandoned as we transition away from fossil fuels, and at worst, a failure to take seriously the commitments Canada made under the 2015 Paris Climate Agreement, an agreement Canada ratified only two years ago, and that will require the vast majority of the remaining global fossil fuel resources to remain in the ground.

The recent Federal Court of Appeal decision is the latest step in a drawn-out battle over the expansion of this pipeline among these three camps. The public debate over this project started in 2013, when the proponent, Kinder Morgan, applied for approval to significantly increase the capacity of the existing pipeline, an approval that was granted in 2016 following an environmental assessment under the much-criticized Canadian Environmental Assessment Act, 2012. In its decision, the Federal Court of Appeal quashes that approval, putting the future of the pipeline expansion into question.

The Court reached three key conclusions that led it to quash the federal approval of the pipeline expansion project. It found that the federal approval did not comply with the Canadian Environmental Assessment Act because the assessment failed to include the increased tanker traffic resulting from the pipeline expansion. The court also found that the federal government did not comply with section 79 of the Species at Risk Act in failing to identify mitigation measures to avoid or lessen the impact of the project on endangered species, particularly the effects of increased tanker traffic on an affected killer whale population. Finally, the court found that the federal government failed to comply with its constitutional duty to consult with affected First Nations communities by failing to engage in a two-way dialogue to seek to accommodate reasonable concerns raised by a number of affected First Nations communities.

On the third issue, the Court concluded that the federal government made the following key errors with respect to its duty to consult:

• It failed to engage in a meaningful two-way dialogue with affected indigenous communities to explore solutions to the concerns they had raised
• It was not enough for the NEB to conclude that the project would have minor impacts on First Nations communities. In fact, such a finding triggered the need for consultation.
• It was not enough for the Crown to take First Nations concerns back to the NEB; the Crown has to engage in meaningful two-way discussions with First Nations on how to address the concerns leading to reasonable efforts to accommodate the concerns
• It was wrong for Cabinet to suggest that it could not or would not alter or add to the terms and conditions proposed by the NEB when deciding whether to accept the recommendations of the NEB to approve the project based on public convenience and necessity. Rather, the cabinet as the ultimate project decision maker has the power and responsibility to make its own adjustments, as needed, to meet its duty to consult and accommodate.

In the days following the decision, the federal government has made it clear that it intends to proceed with the pipeline expansion project in spite of the court decision. It has two options in this regard. It can seek leave to appeal the decision to the Supreme Court of Canada. This option would most certainly delay any further action on the project beyond the next federal election. The alternative would be to comply with the decision by correcting the errors the court has identified. A detailed assessment of the outcome of an effort to comply with the court decision is not possible without more detailed information about the impact of increased tanker traffic and the various impacts on First Nations communities along the pipeline corridor, but some preliminary comments on each of the three issues the court identified can be offered.

With respect to section 79 of the Species at Risk Act, the key task will be to identify mitigation measures to protect endangered species affected by the increased tanker traffic resulting from the pipeline expansion, and to monitor the effectiveness of these measures. An implication of this requirement is that it will likely result in restrictions and other conditions imposed on tanker traffic, which will likely affect the cost and timing of shipping, and could affect the volume of product that can be shipped.

With respect to the failure to include the increased tanker traffic as part of the project to be assessed, the key implication is that by including tanker traffic, the conclusion that the project will not cause significant adverse environmental effects is no longer defensible. This means the federal cabinet will have to grapple with whether the significant adverse effects of increased tanker traffic, such as its impact on the endangered killer whale population, are justified in the circumstances.

The most difficult problem with the federal approval identified by the Federal Court of Appeal is the federal government’s failure to engage adequately with affected First Nations communities. The Court is clear that what is required is a two-way dialogue with each affected community that represents a genuine effort to accommodate the specific concerns of that community. It seems clear that the concerns of each community have been adequately documented, so the starting point for the two-way dialogue seems well established. Nevertheless, a meaningful two-way dialogue to seek to identify ways to accommodate reasonable concerns will take time, and must be expected to result in significant changes to the project.

Of course, none of these efforts will necessarily do anything to resolve the underlying divide over the future of economic, energy and climate policy in Canada. An assessment under the proposed Impact Assessment Act (IAA), recently passed by the House of Commons, and currently before the Senate, would have brought these issues squarely within the four corners of the assessment process. There are those who are happy that this assessment largely avoided the issues of climate change, energy policy and fossil fuel exploration. However, other than a strategic or regional assessment of the broader issues, a well-run project assessment process offers perhaps the best hope of a reasoned and well-informed debate in Canada on this critical issue.

We have, for too long, had this debate in Canada without the scientific rigour and independence that a thorough assessment carried out by an impartial expert review panel (not the industry regulator) would bring to the debate. A well-designed independent assessment would offer an opportunity for mutual learning of all who decide to actively engage in the assessment, and thereby an opportunity to develop more common ground and gradually diminish the divisiveness of this critical debate over the economic, energy and environmental future of our country. It would publicly test arguments about how to integrate economic well-being, energy security, indigenous concerns and environmental protection where possible, and balance among them where necessary. Good assessments help build common ground, respect and understanding, whereas poorly designed assessments tend to be divisive.

We need a much more nuanced assessment and public discussion of the relationship between climate policy and the fossil fuel industry than what we have seen in recent years. The discussion needs to be about a just, and an environmentally and economically responsible transition to full decarbonization, not a debate that ignores the climate crisis, and not a debate that ignores the economic challenges associated with the full decarbonization of our society. That does not necessarily mean no more fossil-fuel-based Infrastructure, but it does mean no more fossil-fuel-based infrastructure without asking and answering critical questions, such as the fate of such infrastructure through the transition to full decarbonization, and the implications of this for the economic viability of such infrastructure. This was missing from the Trans Mountain EA, and this has been missing from the public discourse on the pipeline debate in Canada. We need an honest discussion of what our climate commitments mean for fossil extraction in this country in 2030, 2040 and 2050, we need to consider the economic viability of new infrastructure so they do not become stranded assets, and if we approve new infrastructure while we transition away from fossil fuels, we need to impose terms and conditions that ensure that new infrastructure does not become an obstacle to this transition. This is what a well designed and implemented EA should have contributed to the public discourse and to decision makers.

We only need to look to projects such as Muskrat Falls in Labrador and Site C in British Columbia to know that taking the time to fully explore, understand and consider the economic, social and environmental benefits, impacts, risks and uncertainties is time and money well spent. Those are just two recent examples of project decisions that were rushed because decision makers were blinded by certain obvious benefits, and as a result made multi-billion dollar decisions that very quickly proved to be short sighted and not in the public interest.

An assessment under the new IAA would not have magically resolved all these issues, but it could have made an important contribution. It could have helped us all to better understand the issues. Essentially, the assessment would have determined whether the project would contribute to or hinder efforts to meet Canada’s climate commitments, and whether it will contribute to sustainability. To be clear, an assessment under the new IAA would not have prescribed whether the conclusion on this point would result in the project being approved or not. The debate about the approaches advocated by the three camps identified at the start, however, would have been better informed by independent analysis and credible information, and less dominated by politics and rhetoric.

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Meinhard Doelle,

Professor, Schulich School of Law

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