Investing in carbon credits and renewable energy

The need to move Canada and India to a lower carbon emission profile creates opportunities for astute investors and businesses representatives in both countries.

Opportunities in offsets

Alberta, where a little over 10% of Canada’s population lives, accounts for approximately 35% of the country’s greenhouse gas (GHG) emissions. This has prompted the province to implement an emissions control system that requires reductions in GHG emissions intensity by large emitters in the province and allows trading among those entities to the extent the targets are over-achieved. The Alberta system also permits the use of offsets that can be produced from a range of changes in agriculture and other practices. Investments in renewable energy facilities that “displace” electricity from the grid, which would otherwise have been produced using fossil fuels, are also given offset credits. The creation of these tradable offsets provides incentives for the production of renewable energy. There is an effective cap on the cost of GHG emission reductions, including using offsets, which is set at C$15 (US$15.20) per tonne (on a carbon dioxide equivalent basis).

There is no reason why Indian investors and businesses with their broad experience with renewable energy technologies could not participate.

Gray Taylor is a partner at Bennett Jones LLP and co-chair of its climate change & emissions trading group. Hugo Alves is a partner at the firm and a member of this group. Bennett Jones has particular expertise in the energy and natural resources sector, especially oil and gas. It has more than 400 lawyers and advisers in major cities across Canada as well as in Dubai and Abu Dhabi.