How laws on climate change affect Canadian businesses

Canada’s laws on climate change are more than just hot air – they now shape how businesses operate and plan for the future. As these new rules take effect, businesses must keep their cool and adapt to this fast-changing area of the law. In this article, we will look at these laws and what they mean for Canadian businesses.

What are Canada’s laws on climate change?

There are many Canadian laws on climate change, including laws that protect the country’s environment and natural resources. Canada also has specific laws on net-zero emissions or the reduction of GHG emissions. Laws on climate change and other local initiatives also exist in different provinces and territories through their own legislation.

At the federal level, here’s a summary of the laws on climate change:

Paris Agreement

Businesses must be wary of the government’s plan to achieve net-zero emissions, as existing and future laws may affect the way that they operate in the coming years. In the international arena, one of these laws is the Paris Agreement.

This is a legally binding international treaty on climate change, signed in 2015 and in force since 2016. Canada is a signatory and an active participant. Under this treaty, countries and states committed to reducing their greenhouse gas (GHG) emissions by 30 percent below 2005 levels by 2030.

Reaching net-zero emissions involves a two-fold plan:

reduction of GHG emissions to reach “zero”
carbon offsetting to eliminate the existing GHGs in the atmosphere

To implement the Paris Agreement, Canada has enacted many policies and laws on climate change at the federal, provincial, and territorial levels.

Some examples of the impact of this treaty on Canadian businesses include:

promotion of clean energy and reducing GHG-emitting sources
giving incentives to increase sales on electric vehicles (EVs)
setting up funds to support initiatives for cutting GHG emissions

Watch this video to learn more about the global net-zero plan:

To know more about how the laws on climate change in Canada can impact your business, consult with the best environmental lawyers in Canada as ranked by Lexpert.

Canadian Net-Zero Emissions Accountability Act (CNZEAA)

The CNZEAA established the accountability framework according to the objectives of the Paris Agreement through the Emissions Reduction Plan. Also referred to as the Emissions Accountability Timeline, this plan is Canada’s national roadmap to implementing the Paris Agreement objectives. As such, it is one of the most important laws on climate change in Canada.

The CNZEAA also established the Net-Zero Advisory Body, which will advise the Minister of Environment and Climate Change to achieve the net-zero target set by law. The CNZEAA sets out how the body is composed, appointed, and the reports it must provide to the Minister.

Businesses must know CNZEAA, given that:

private sector participation is important in achieving net-zero emissions, meaning the government may implement extensive changes that will affect businesses
energy-intensive businesses may have to rethink and eventually change their operations to suit the net-zero emissions goal
businesses can expect more pressure to shift to lower-GHG emitting operations, while those that have already transitioned may receive more credit (e.g., carbon price schedule)

Greenhouse Gas Pollution Pricing Act (GHG Pricing Act)

The GHG Pricing Act is the federal law on pricing carbon emissions. It sets up the federal pricing system on carbon emissions, which will apply to all provinces and territories if they either:

don’t have a local law on pricing carbon emissions
voluntarily accede that they will follow the pricing system of the GHG Pricing Act

There are two pricing charges or systems that the GHG Pricing Act has introduced:

fuel charges: under Part I of the Act, which is at $65 per tonne as of 2023
output-based pricing (OBP) system: under Part II of the Act, which requires facilities to pay the government if their carbon dioxide emissions exceed 50,000 tonnes or more

Net-Zero Accelerator Fund (NZA Fund)

To encourage and help the private sector in reducing their carbon or GHG emissions, the federal government established the NZA Fund. This will provide up to $8 billion in investments to large-scale emitters, which are industrial companies, in “decarbonizing” their operations and shift to less or carbon-free operations. It will also ensure that these companies are financially stable and competitive, while aiming for the net-zero targets of Canada.

The NZA Fund is part of the Strategic Innovation Fund (SIF), which accepts and processes applications for the Fund. Here’s an overview of the application process for the NZA Fund under the SIF:

the project must fall under one of two categories:
- Business Innovation and Growth
- Collaborations and Networks
the project objectives must match one of SIF’s investment priorities, which includes the NZA Fund, among others
the benefits to Canadians must be properly identified, such as economic, public (e.g., environmental and health), and innovation benefits

If you want to apply for the NZA Fund, you can consult an environmental lawyer and check your eligibility online.

Provincial and territorial laws on climate change

Laws on climate change in Canada include not only federal laws, but also of the different provincial and territorial statutes. We will discuss the laws from British Columbia and Manitoba below, which may have similar versions in other provinces.

British Columbia

BC has several provincial laws on climate change, such as the following:

Carbon Tax Act: similar to the federal GHG Pricing Act, this law establishes a price on GHG emissions, with revenue used for new clean initiatives in the province
Climate Change Accountability Act: sets up the provincial targets to reduce GHG emissions and the province’s climate change accountability framework
Environmental Management Act: requires certain facilities to reduce their emissions from fuels and their combustion, manage their GHGs, and set their emissions standards
Greenhouse Gas Industrial Reporting and Control Act: sets up the reporting requirements for industrial facilities on their GHG emissions and penalties for non-compliance
Energy Resource Activities Act: regulates activities related to energy resources in the province through permits, authorizations, and other orders
Zero-Emission Vehicles Act: requires automakers to meet increasing annual targets for their sales and leases of new light-duty zero-emission vehicles (ZEVs)
Low Carbon Fuels Act: sets a low carbon fuel standard that requires fuel suppliers to:
- reduce the carbon intensity of these fuels
- maintain a minimum annual renewable content in their gasoline and diesel fuel pools
Clean Energy Act: sets the province’s energy objectives to ensure access to affordable, clean, and renewable energy, while reducing carbon pollution
Utilities Commission Act: regulates the public utilities operating in the province, such as electricity, natural gas, thermal energy and propane
Energy Efficiency Act: sets the energy performance standards for devices that use, control or affect energy use in households and industries

These laws may overlap with some of the federal laws on climate change. To determine what specific laws apply to you and your business, it’s best to consult an environmental lawyer in your area.

Manitoba

To achieve net-zero emissions by 2050, the Manitoba government has released its own plan. Watch this video to know more:

Looking for firms and lawyers near you who know the specific climate change laws of your province? You can use our directory of the best Canadian law firms for environmental law, which can be filtered according to province and city.

How can lawyers help businesses with laws on climate change?

Environmental lawyers can assist businesses in learning and adapting to laws on climate change in many ways, including:

keeping a business informed about new environmental or climate change laws, including policy trends, that may affect the business’s operations
helping a business understand and comply with environmental laws, as they know the details of federal and provincial rules that are specifically applicable to that business
guiding a business through impact assessments, if they are necessary for their operations, as well as government-led inspections and inquiries about the business’s projects

Laws on climate change: Staying cool under new rules

The laws on climate change in Canada are here to stay, and their reach will only grow as public demand for governments action increases. Businesses must keep up with these changes and turn these challenges into new opportunities for growth and leadership. When the situation becomes too hot to handle, environmental lawyers are just a breeze away.

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