This bulletin is to advise that Environment Canada has now opened Phase 1 of the Early Action Credits allocation program and is currently accepting Notices of Interest until July 28, 2008 only. Facility owners who invested in improvements that resulted in greenhouse gas (GHG) emissions reductions between 1992 and 2006 are eligible to apply.


The Government of Canada is expected to release draft regulations in late 2008 requiring mandatory GHG emissions reductions in regulated sectors. Generally speaking, commencing in 2010, existing facilities will be required to reduce GHG emissions intensity by 18% from 2006 emissions levels, and 2% annually thereafter, through a combination of: (i) abatement, (ii) Technology Fund contributions, (iii) credits from regulated facilities with surplus reductions, (iv) offset credits from removal or reduction projects, (v) international Clean Development Mechanism credits, and (vi) Early Action Credits.

This is a one-time opportunity for companies to obtain credits for early voluntary investments that resulted in incremental reductions (beyond business as usual and beyond legal requirements) after 1992 and prior to the end of 2006.

Although the Early Action Credits are not planned to be allocated until 2009, applicants must apply now. Generally speaking, facility owners in the electricity, oil and gas, oil sands, natural gas liquids, pulp and paper, refining, pipeline, chemicals, cement, lime, iron and steel, iron ore, base metal smelting, potash, and aluminum sectors are potentially eligible to receive Early Action Credits.

Fifteen million Early Action Credits will be available across Canada; five million are planned to be allocated in each of 2010, 2011, and 2012. Each Early Action Credit will represent one tonne of GHG emissions reductions, although due to the expected number of claims, Environment Canada has indicated that Early Action Credits may need to be allocated amongst successful applicants on a pro rata basis. The quantum of initial claims will be published in the fall of 2008 in order to allow each applicant to determine if it will proceed by providing verified information to support its application.

The current intention is that Early Action Credits may be tendered for federal compliance purposes, banked for compliance in a future year, or traded for use by another company.

The value of Early Action Credits will be market-driven, however the federal plan to restrict the amount of Technology Fund contributions for compliance purposes suggests that other compliance options, including Early Action Credits, may have significant value either directly for compliance purposes or indirectly for trading purposes.