First Priority: New Canadian Federal Facility-level Emission Reporting Standard.

1. First Priority: New Canadian Federal Facility-level Emission Reporting Standard. • In all “cap and trade” precedents and under existing US Reformulated Gasoline and Renewable Fuel Standard regulations, the US discriminates against products that originate in nations that fail to have facility-level emission reporting regulations deemed “comparable” to US reporting regulations. • The US first formally (and legitimately, in my view) complained about the inadequacy of Canadian facility-level emission reporting regimes in 1984. • In 1991, in the Canada-US Air Quality Agreement, Canada agreed to address US concerns about our facility-level emission reporting regime by 1995. US officials believed that Canada has failed to keep that commitment. • In its 2006 US-Canada Air Quality AgreementProgress Report, the US EPA reported:“As laid out in the Canada–U.S. Emissions Cap and Trading Feasibility Study, if a cross-border emissions cap and trading system were established, 40 CFR Part 75 requirements would need to be implemented in Canada. One major difference between Canada’s [reporting] guidance and 40 CFR Part 75 is the emission data acquisition and reporting requirements in the United States.”(source: US EPA, http://www.epa.gov/airmarkt/progsregs/usca/docs/2006report.pdf) • “Waxman-Markey” stipulates that “transborder adjustments” will apply to energy imports from developed nation trading partners that fail to implement reporting rules deemed “comparable” to US requirements.

2. Strategy and Workplan: New Facility-level Emission Reporting Standard. • US federal emission reporting requirements are highly invasive and administratively costly. • Canada can promulgate new facility-level GHG emission reporting and disclosure standards upgrading our current regulation to “comparable” to US “emission data acquisition and reporting requirements”without necessarily building in all of the extremely invasive and costly system components embedded in the US 40 CFR Part 75regulations. • Putting this pillar in place is a potentially effective pre-emptive defense against the real risk of US trans-border adjustments based on the long-standing US complaint about deficiencies in Canadian facility-level emission reporting standards. • Ensuring that Canada’s new GHG reporting regulations are “comparable” in terms of environmental effectiveness but not as invasive or administratively complex as existing US reporting regulations establishes a potential new source of competitive advantage for investors in Canada. • Suggested Workplan: Download, then modify-to-simplify proposed US GHG reporting regulations which are, technically, amendments to 40 CFR Part 75. (US EPA, http://www.epa.gov/climatechange/emissions/ghgrulemaking.html)