Environmental, Indigenous and Natural Resources Blog

On July 16, 2020, the federal government released the Strategic Assessment of Climate Change, July 2020 (“SACC”). The SACC includes rules and obligations that apply to designated projects under the federal Impact Assessment Act (“IAA”). In particular, the SACC outlines requirements for project proponents in relation to greenhouse gas (“GHG”) emissions as well as associated climate change information. In addition, the SACC will also work to guide non-designated projects such as those regulated by the Canada Energy Regulator (“CER”) or under regional assessments. The stated purpose of the SACC is to bring consistency, transparency, efficiency and predictability to the impact assessment process in the climate change context.

The SACC reflects the federal government’s goal of reaching net-zero emissions by 2050 and other climate change commitments such as those under the international Paris Agreement. Consequently, the SACC requires proponents of designated projects to provide detailed information on GHG emissions and other climate change factors at each phase of the impact assessment process. The SACC also provides some clarity regarding how the Impact Assessment Agency of Canada (“IAAC”) will review proponent submissions.

Quantification of GHG Emissions

Under the SACC, proponents of designated projects are required to provide an estimate of a project’s net GHG emissions with more detailed information requirements in each subsequent phase of the assessment process. Proponents must provide an initial estimate in the Initial Project Description, update that estimate in the Detailed Project Description, and then further refine it in the Impact Statement.

For new projects, the GHG emissions estimate should include the project’s full design capacity while replacement and expansion projects need only report the estimated additional capacity of the project compared to its original design.

Calculating a project’s net GHG emissions estimate involves a complex calculation. Simply put, net GHG emissions involves the sum of a project’s direct GHG emissions (i.e., generated by project activities) and acquired energy GHG emissions (i.e., energy acquired from third parties for the project) less a series of GHG mitigation factors (i.e., captured and stored CO_2, avoided domestic GHG emissions and offset credits).

In addition to the net GHG emissions estimate, proponents must also report a project’s estimate GHG emission intensity. This calculation is the quotient of the project’s net GHG emissions over its units processed. The SACC explains that the intensity estimate works to compare the project with similar project types in order to better situate the design within the larger project infrastructure context.

Lastly, proponents may also be required to provide an assessment of upstream GHG emissions based on its upstream GHG emissions threshold. Upstream GHG emissions include emissions from all stages of production of a project from the point of resource extraction or utilization, to the project under review. The SACC includes an upstream GHG threshold quantity (Kt CO₂ eq/year) which decreases each decade from 2020 onwards. Those projects likely to exceed the threshold will be required to complete the assessment which involves a quantitative (i.e., upstream GHG emissions estimate) and qualitative element. The qualitative analysis considers scenarios where the upstream GHG emissions could be expected to occur regardless of whether the project proceeds.

The SACC concedes that the quantification of GHG emissions is complex and will benefit from forthcoming technical guides. Until then, project proponents are encouraged to describe uncertainty variables associated with GHG emission estimates as well as the limitations of models utilized in conducting those calculations.

Climate Change Information by Assessment Phase

In addition to GHG emission quantification, the SACC imposes several information requirements on project proponents at each phase of the assessment process.

Planning Phase: both the Initial and Detailed Project Descriptions must include GHG emission estimates. In addition, proponents are encouraged to provide information on GHG mitigation measures to be considered in the Impact Statement. Further, project proponents should provide information on the project’s potential to impact carbon sinks, as well as information and an analysis of alternative means of carrying out the project.

In considering the alternative means of carrying out the project, proponents are encouraged to explain potential measures to reduce a project’s GHG emissions throughout its lifetime. Similarly, for projects with a lifetime beyond 2050, the SACC encourages proponents to outline measures that can ensure the project is a net-zero emitter by 2050. At the end of the Planning Phase, the IAAC provides proponents with Tailored Impact Statement Guidelines that detail further information requirements as the project assessment moves forward.

Impact Statement Phase: using the Tailored Impact Statement Guidelines, proponents must prepare an Impact Statement, which involves similar information requirements found in the Planning Phase but with a greater degree of detail. For example, regarding GHG emissions, proponents must outline net emissions and emission intensity by year of production and the methodologies used to generate such data. More significantly, in the Impact Statement a proponent must provide information with respect to a number of discrete climate change considerations, including the following:

• Information on the impact of the project on carbon sinks;
• An explanation of how the project could impact federal and global GHG reduction efforts;
• The proposed GHG mitigation measures;
• An analysis of “Best Available Technologies” and “Best Environmental Practices” as confirmation that, by design, the project will minimize GHG emissions;
• Information on climate change resilience such as how the project’s design can and cannot respond to the current and future impacts of climate change;
• For projects with upstream GHG emissions greater than a certain threshold, an upstream GHG assessment; and
• For projects with a lifetime beyond 2050, the proponent’s plan to achieve net-zero emission by 2050.

Impact Assessment Phase: At this stage, the IAAC or the lifecycle regulator, as applicable, provides proponents with a thorough review of a given project’s Impact Statement, including comments received by the public and Indigenous peoples in response to the Impact Statement. In reviewing the project, the IAAC or the lifecycle regulator will consider mitigation measures used in similar high-performing, energy-efficient project types and will compare the project’s emission intensity with similar projects, not only in Canada, but also internationally. Throughout this process, the IACC focuses on Canada’s climate change commitments, particularly the goal to achieve net-zero emissions by 2050.

Decision and Post-Decision Phase: In making a final decision on whether to approve a designated project under the IAA, the Minister or Governor in Council, as applicable, must decide whether the project is in the public interest. In doing so, the decision-maker must consider a number of factors, including “the extent to which the effects of the designated project hinder or contribute to the Government of Canada’s ability to meet its environmental obligations and its commitments in respect of climate change.” Therefore, climate change considerations is a factor weighed in the decision of whether to approve a designated project.

Overall, the SACC involves extensive information requirements for project proponents navigating the federal impact assessment process. These obligations reflect the federal government’s aim to fulfill a variety of climate change commitments, with major project regulation as a core focus of that aim. However, without further technical reports and guidance on the series of calculations and analyses required, proponents may find it difficult to make sense of these information requirements.

Similarly, while the commitment of net-zero emissions by 2050 reflects trends in global climate change response, the SACC provides limited information on how project proponents can adequately meet such a goal. Nevertheless, proponents should be familiar with the SACC moving forward and watch for further technical guidance in order to navigate the impact assessment process as efficiently as possible.