Written By Mike Barrett, Hugo Alves, Tom McInerney, Duncan McPherson and Jesslyn Maurier

After many marathon negotiation sessions, Canada, along with 195 other countries, signed a new climate agreement this past weekend called the Paris Agreement. The Paris Agreement was adopted under the United Nations Framework Convention on Climate Change.

Key Features of the Paris Agreement include:

1. Binding?

The Paris Agreement takes a two-track approach to its legally binding status. Countries are legally bound to report and monitor their greenhouse gas (GHG) emissions; however, the details to achieve this have yet to be determined. The Paris Agreement calls for a "transparency framework" to achieve uniformity among reporting countries. Countries are also required to meet every five (5) years to review their individual GHG emissions reductions progress and be prepared to amend country-specific GHG emissions reductions targets. Not surprisingly, individual country targets are not legally binding.

2. Aggregate Temperature Increase

The Paris Agreement includes the aspirational goal of "holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C." The GHG emissions reductions required to achieve this goal will require individual countries to set aggressive reductions targets.

3. Cost Sharing Among Developed Countries

The Paris Agreement preamble (which is not binding) includes a goal of developed countries funding a $100 billion transitional fund to help developing countries become developed without a heavy reliance on cheap fossil fuels. Many developing countries have stated that even if such an amount were made available, it would not be enough to help them develop economies heavily reliant on renewable energy sources.

4. The Role of Forests

There has been a significant amount of work done over the past number of years on integrating deforestation and forest degradation into a global climate change solution. The Paris Agreement is the first international GHG emissions reductions document to explicitly include this topic. The inclusion appears to serve as a political signal to countries to enact policies they have already domestically developed.

5. New Era of International Carbon Trading

The Paris Agreement contemplates a new market-based mechanism that is expected to go beyond traditional offsetting and aims to deliver overall mitigation in global emissions. The mechanism rules for the use of internationally transferred mitigation outcomes (ITMOs), which can be used as part of a country's actions to address climate change, need to be developed for a 2020 launch. The mechanism is widely expected to copy best practises of the Kyoto Protocol's Clean Development Mechanism (CDM) and Joint Implementation (JI) trading regimes while avoiding prior mistakes.

Next Steps for Canada

Canada's current GHG emissions reductions goal is 30 percent below 2005 levels by 2030. It is a goal introduced by the Conservative government earlier this year. The current Liberal government has described this goal as a "floor" of what Canada's domestic plan will aim to achieve. The Liberal government has stated that it will develop and announce its Canada-wide approach within 90 days of signing the Paris Agreement. We note that the current provincial GHG emissions reductions regimes fall well short, in aggregate, of Canada's current international commitment.