Saskatchewan's Carbon Market
The Government of Saskatchewan is working hard to introduce new Climate Change legislation, most likely resulting in real benefits for growers as the opportunity for the generation of carbon offsets presents itself.
If you practice zero till farming in your operation, you will likely qualify to sell your valuable carbon offsets, creating a new source of revenue for your farm operation. See our Frequently Asked Questions below for more information:
Frequently Asked Questions: Other Offset Agreements
Agri-Trend is cooperating with Chad Eggerman, a renewable energy lawyer at WMCZ Lawyers-Mediators in Saskatoon to help producers address the challenges posed by other Offset Agreements. Every agreement and situation is different, but some of the most frequently asked questions by producers are addressed below:
1. I signed an Offset Agreement with a different aggregation company – can I terminate this agreement?
It may be possible to terminate an Offset Agreement, although this will depend on the particular contract and circumstances. Many well-drafted Offset Agreements include a clause detailing how to terminate the agreement – while others do not include this termination clause.
In the situation where an Offset Agreement does not have a termination clause which outlines how the parties can terminate the contract, it may be possible to terminate the contract by providing reasonable notice of termination in writing to the other aggregation company.
Other Offset Agreements which do have a well-drafted termination clause will clearly outline the procedure for the producer or the aggregation company to terminate the Offset Agreement. A lawyer can review the Offset Agreement and follow this procedure to terminate the Offset Agreement on behalf of the producer or company.
In either case, it is advisable to contact a lawyer to discuss your specific situation and to assist in preparing and delivering any documentation.
2. I previously sold my offsets to a different aggregation company who traded them on the Chicago Climate Exchange (CCX). I have signed a new Offset Agreement with the same company. Can I terminate this Offset Agreement and sell my offsets elsewhere?
Saskatchewan is in the process of implementing legislation similar to Alberta, which will effectively create a new market in the province for offsets (see #6 below). However, before you can sell your offsets to any other aggregator, you will need to terminate the Offset Agreement (see #1 above).
In certain circumstances, producers may be able to terminate Offset Agreements based on misrepresentation, if the producer was promised by the aggregation company that the trading price of carbon on the CCX will result in significant profit and that the price on the CCX will continue to go higher.
Contact a lawyer to discuss your particular situation.
3. I previously sold my offsets to a different aggregation company, and now they will not return my calls. What do I do now?
If you signed an Offset Agreement with a different company and they will not return your calls, it may be that they do not have the resources to honour their Offset Agreement. If it is impossible for the company to sell the offsets, you may be able to terminate your contract for this reason. Contact a lawyer to discuss the particular agreement and your situation.
4. Are there risks with terminating previous Offset Agreements?
Yes. Assuming it is established that there is good cause to deliver a notice of termination letter to the aggregation company, there is the risk that the aggregation company will not agree to termination and will insist that you continue to be bound to the Offset Agreement for the full term.
5. Are there risks with entering into another Offset Agreement without terminating previous agreements?
Yes. You may be sued for breach of contract if the previous Offset Agreement is not properly terminated. It is very important to ensure the Offset Agreement is terminated properly and there is a legal basis to do so – a lawyer can assist with this.
6. Are you encouraging me to breach my contract with other aggregation companies?
No - certainly not.
Producers have come directly to us to ask about their existing Offset Agreements with other aggregation companies. Producers told us about their frustration with some of these agreements such as the lack of a clear contract termination process, statements regarding expected profit and the inability to contact these other aggregation companies.
We are not suggesting to producers that they breach any of their existing valid and binding contracts. We are just responding to producers to provide information on how they may terminate contracts which were formed based on a misrepresentation, are frustrated or are otherwise impossible to perform.
7. I have heard that Saskatchewan is getting a carbon trading system similar to the Alberta Offset System – is this right?
The Management and Reduction of Greenhouse Gases Act (Bill 126) is in the Saskatchewan legislature now and is expected to come into effect in summer 2010. The proposed Bill 126, like current Alberta legislation, prescribes targets for emitters and a carbon compliance payment if that target is missed. Instead of the compliance payment, emitters can purchase carbon offsets. Bill 126 proposes to reduce emissions by 20% by 2020 based on a 2006 baseline.
8. Who do I contact for further assistance?
For additional information or to discuss your situation contact Chad directly:
Chad Eggerman
WMCZ Lawyers-Mediators
901, 119 - 4th Avenue South
Saskatoon, SK, Canada S7K 5X2
Email: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
Main phone: (306) 933-0004
Direct phone: (306) 659-1220
Cell phone: (306) 380-7664
Fax: (306) 933-2006
9. How much will I have to pay a lawyer to assist in terminating previous Offset Agreements?
The fees will vary between lawyers depending on the extent of work required. However, in applicable situations, Chad Eggerman will charge a very reasonable fixed flat-fee to draft and deliver a notice of termination letter on behalf of the producer. Additional work will be billed on an hourly basis. Chad is interested in talking with anyone involved in the carbon offset marketplace, especially producers, and as such the initial consultation is free.
Additional Information
Press Release from the Government of Saskatchewan - May 19th, 2009, SASKATCHEWAN TAKES REAL ACTION TO REDUCE GREENHOUSE GAS EMISSIONS
The Government of Saskatchewan today introduced The Management and Reduction of Greenhouse Gases Act in the provincial legislature. The new legislation will establish a made-in-Saskatchewan plan for reducing greenhouse gas emissions to meet provincial targets and promote investments in low-carbon technologies.
Read the entire article here: http://www.gov.sk.ca/news?newsId=387f7573-1e28-4155-b0ca-06fd17b0d38e
Click here to read a letter from Deputy Minister, Elizabeth Quarshie, regarding the summary of Stakeholder Consultations on the Saskatchewan Climate Change Regulations.
