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Alberta adjusts CCS spending timeline in 2010 Budget

The Government of Alberta unveiled its 2010 Budget on Tuesday. The budget continues to provide funding for carbon capture and storage ("CCS") projects, although at a slower pace than previously planned.

In last year's budget, the government planned to spend the first $800 million of its $2 billion of CCS funding by the end of the 2011-2012 fiscal year. That figure has been scaled back to $300 million in the 2010 Budget ($500 million over the next 3 years), with $100 million allocated for the coming fiscal year.

The Edmonton Journal reports that Alberta Minister of Energy Ron Liepert emphasized that the government is still committed to providing the full $2 billion in funding. However, he explained that the spending timeline had been adjusted because the private sector has not been ready to push ahead with the four projects to be funded by the government.

Recall that Alberta announced in 2009 that four projects would received CCS funding. The winning private sector proponents propose to:

• retro-fit CCS onto a coal-fired generating plant under construction west of Edmonton;
• install CCS technology on an oil sands upgrader;
• turn deep coal deposits into clean burning synfuel; and
• transport carbon dioxide from a fertilizer plant and proposed upgrader east of Edmonton to oil fields in east-central Alberta to enhance recoveries.

According to 2010 Budget documents, the projects will remove more than five million tonnes of carbon dioxide per year once fully operational in 2015. The 2010 Budget notes that this is equivalent to taking approximately one million vehicles off the road.

However, Alberta's greenhouse gas emissions grew by more than 5 million tonnes in the period from 2004 to 2007 (according to the Alberta Environment Report on 2007 Greenhouse Gas Emissions). If CCS is to make a significant and timely contribution to the mitigation of emissions in Alberta, both the private sector and the government should remain committed to moving forward with the projects as quickly as possible.

Canadian government announces nineteen successful projects in response to a call for proposals under the Renewable and Clean Energy portion of the Clean Energy Fund

The Honourable Lisa Raitt, Canada's Minister of Natural Resources, today announced support for nineteen (19) projects selected in response to a call for proposals under the Renewable and Clean Energy portion of the Clean Energy Fund. Up to $146 million will be invested over five (5) years to support the demonstration of renewable and clean energy across the country, including integrated community energy solutions, smart grid technology, and renewable applications with solar, wind, tidal and geothermal energy.

Under the Clean Energy Fund, part of the Government of Canada's Economic Action Plan (Budget 2009), the government is to invest almost $1 billion over five (5) years in research, development and demonstration projects to advance Canadian leadership in clean energy technologies. This includes large-scale carbon capture and storage demonstration projects, three (3) of which have already been announced totaling $466 million from the fund, as well as smaller-scale demonstration projects of renewable and alternative energy technologies such as those announced today. Total investments under the Clean Energy Fund for large and small demonstration projects are to benefit Canada's economy by leveraging nearly $3.5 billion in further investments by industry and other levels of government.

The Government is now inviting the project proponents to begin negotiations toward formal contribution agreements to set the conditions under which funding will be delivered. The funding amounts are expected to range from $2.5 million to $20 million for each project. However, until a written contribution agreement is signed by both parties, no commitment or obligation exists on the part of the Government of Canada to make a financial contribution to these projects.

Successful Project Descriptions

A) Projects expected to receive $2.5-$5 million

1. Biomass-based Urban Central Heating Demonstration
Lead proponent: SSQ, Société immobilière Inc.
Strategic Area: Buildings/Community Energy Systems
Location: Québec, Québec
Purpose: La Cité Verte is an innovative real estate project, which combines various initiatives related to sustainable development such as renewable energy utilization, energy efficient design, the management of water consumption, energy and waste management. The funding will support the installation of a biomass and wood-based district heating system. This project combines a variety of technologies and partners.

2. Utility-scale Electricity Storage Demonstration using New and Re-purposed Lithium Ion Automotive Batteries
Lead proponent: CEATI International Inc.
Strategic Area: Electricity Storage
Location: Toronto and Cornwall, Ontario, and Manitoba
Purpose: This project will address electricity storage for renewable and high-density urban applications. The project will demonstrate utility-scale electricity storage systems using new and re-purposed automotive batteries. This concept will reduce cost for electric vehicle batteries providing a future market to meet urban electricity demand using automotive batteries.

3. Energy Management Business Intelligence Platform Development and Demonstration
Lead proponent: Power Measurement Ltd.
Strategic Area: Smart Grid
Location: Commercial buildings in Calgary, Alberta, Ontario and BCIT in Burnaby, British Columbia
Purpose: This project will develop and demonstrate smart grid technology, voluntary load curtailment and peak shaving in a commercial building setting. Most projects of this type to date have focused on residences. This technology will also enable tenants to voluntarily reduce their demand based on real-time price signals.

4. Wind and Storage Demonstration in a First Nations Community
Lead proponent: Cowessess First Nation
Strategic Area: Wind/Storage
Location: Cowessess, Saskatchewan
Purpose: This project aims to demonstrate a combined wind and storage energy system in a First Nation community. The successful demonstration would prove this system as a model for other First Nation's communities across Canada.

5. Bioenergy Optimization Program Demonstration
Lead proponent: Manitoba Hydro
Strategic Area: Bioenergy
Location: Five locations in Manitoba
Purpose: This project is comprised of five different bioenergy systems at five different project sites. The project demonstrates collaboration between utility companies and customers. It is anticipated that the project will help to remove the perceived barrier of technical and operational risk and will promote the wide-scale adoption of bioenergy systems in Canada.

6. Offshore Wave Energy Demonstration
Lead proponent: SyncWave Systems Inc.
Strategic Area: Marine/Hydro
Location: Offshore Central Vancouver Island near Tofino, British Columbia
Purpose: This project will demonstrate the performance, operations and life cycle of a pre-commercial 100-kW wave energy device in ocean conditions typical of British Columbia's open coast. Canada has potentially significant wave energy resources, and it is important for Canada to participate in demonstrations to further the technology, understanding of ocean conditions and the regulatory environment.

7. Demonstration of Waste-heat Recovery at Compressor Stations
Lead proponent: Great Northern Power Corp.
Strategic Area: Hybrid Systems/Northern
Location: Compressor Stations in Alberta and British Columbia
Purpose: This project plans to demonstrate waste-heat recovery systems on a variety of stationary, reciprocating engines greater than 1,000 hp. A successful demonstration has the opportunity to lead to commercialization and wide-scale adoption of this technology at compressor stations and other industrial applications across Canada.

8. Residential Implementation of Solar-thermal Heating Systems
Lead proponent: Enbridge Gas Distribution Inc.
Strategic Area: Buildings/Solar
Location: Greater Toronto Area, Ontario
Purpose: The project will use different types of solar collectors and storage technologies to verify and compare their costs, performance and technical qualities. The project has the ability to validate the technology and provide integrated systems at a lower cost to consumers, thereby allowing greater market penetration.

9. Food and Yard Waste Anaerobic Digestion to Electricity Demonstration
Lead proponent: Harvest Power Canada Ltd.
Strategic Area: Bioenergy
Location: Fraser Richmond Soil and Fibre, British Columbia
Purpose: This project would be Canada's first high-efficiency system for producing up to 1 MW of renewable energy from food and yard waste. If successful, this technology has the potential to be rapidly deployed across Canada as a mechanism to divert food wastes from landfills and produce renewable energy.

B) Projects expected to receive $5-$10 million

10. Demonstration of Heat and Power from Biomass Gasification
Lead proponent: Nexterra Systems Corp.
Strategic Area: Bioenergy
Location: UBC Point Grey Campus, Vancouver, British Columbia
Purpose: This project will showcase biomass gasification integrated with an internal combustion engine generator in a novel, small-scale combined heat and power demonstration suited for on-site applications at public institutions, industrial facilities, and northern and remote Canadian communities. The project has the potential to overcome the difficulty of gas clean up and opens up the possibility of significant replication in Canada and overseas.

11. Energy Storage and Demand Response for Near-capacity Substation
Lead proponent: BC Hydro
Strategic Area: Smart Grid/Electricity Storage
Location: Golden and Field, British Columbia
Purpose: This project demonstrates the integration of energy storage as a mechanism for reducing electricity demand at near-peak capacity substations. This type of solution has the ability to be used in other remote communities where the grid reliability is low and the cost of the transmission line upgrade is uneconomical.

12. Interactive Smart Zone Demonstration in Québec
Lead proponent: Hydro-Québec - Institut de recherche
Strategic Area: Smart Grid
Location: Boucherville, Québec
Purpose: This project will ensure the installation of an interactive network area in a neighbourhood of Boucherville. This will demonstrate different technologies and concepts related to modernization of electrical networks, in particular the deployment of infrastructure for charging electric and hybrid rechargeable vehicles.

13. Biomass and Coal Co-firing Demonstration in Coal Plants
Lead proponent: Nova Scotia Power
Strategic Area: Bioenergy
Location: Coal Plants in Nova Scotia
Purpose: This demonstration project aims to determine optimum fuel blends for the potential co-firing of wood-based biomass with coal as a mechanism to partially replace fossil fuels with sustainable energy sources in coal plants. If successful, there is potential for wide-scale implementation across Canada and the United States.

C) Projects expected to receive $10-$20 million

14. Tidal Energy Project in the Bay of Fundy
Lead proponent: Fundy Ocean Research Centre for Energy (FORCE)
Strategic Area: Marine/Hydro
Location: Minas Passage, Bay of Fundy, Nova Scotia
Purpose: The project plans to validate the performance and resilience of tidal current turbines in the Minas Passage of the Bay of Fundy. This will be the first Canadian deployment of commercial-scale tidal turbines. The project has the potential to advance tidal energy in Canada, provide economic impacts in the Atlantic region and place Canada as a world leader in marine renewable energy.

15. Northern Application of a Geothermal District Heating System
Lead proponent: City of Yellowknife
Strategic Area: Northern/Community Energy System
Location: Yellowknife, Northwest Territories
Purpose: The City of Yellowknife is in advanced stages of project engineering and plans to install a district heating system by extracting heat from the abandoned Con Mine. This project has the potential to provide a cost effective and a more environmentally friendly alternative to fossil fuel based heat. The information that will come out of this project on the effect of extracting ground-source heat from an existing aquifer and its associated long-term heat capacity will help determine if this technology could be replicated in other northern communities.

16. Electricity Load Control Demonstration
Lead proponent: New Brunswick Power Corporation
Strategic Area: Smart Grid
Location: Four maritime communities in New Brunswick, Nova Scotia and Prince Edward Island
Purpose: Traditionally, to accommodate the intermittent nature of wind power, other generation sources are required to follow the net effect of variation in load and wind power production. This project focuses on the integration between smart grid technologies, customer loads and intermittent renewables in a region with potentially significant renewable electricity capacity. It will allow utilities to better understand how customers will react to smart grid and which loads can be controlled by real-time demand balancing in up to 750 buildings, thereby assisting these utilities to capitalize on renewable resources in the region.

17. A 9-MW Wind Technology Research and Development Park
Lead proponent: Wind Energy Institute of Canada
Strategic Area: Wind/Storage
Location: Prince Edward Island
Purpose: The 9-MW wind park proposed will be the first wind/storage combination in Prince Edward Island. The project's research base has a strong focus on information dissemination and would be a good base for supporting additional wind research.

18. Demonstration of Fish-friendly and VLH Turbines in Existing Low-head Water-control Dams
Lead proponent: Eco Joule Inc.
Strategic Area: Marine/Hydro
Location: Mississippi River System, Ontario
Purpose: This project will demonstrate three in-stream hydro technologies including fish-friendly, low-head hydro turbines along an existing water-controlled river system in Ontario. It has the opportunity to prove the technology concept, demonstrate cooperation with a conservation organization, and reduce the barriers to commercialization.

19. Community-based Geothermal Demonstration in a Remote First Nations Community
Lead proponent: Borealis GeoPower Inc./Acho Dene Koe First Nation
Strategic Area: Hybrid Systems/Northern
Location: Fort Liard, Northwest Territories
Purpose: This project will demonstrate how a northern community can use a geothermal resource to generate electricity and heat, thereby reducing the entire community's fossil fuel demand and energy costs. A successful demonstration will provide a model for other northern and First Nations communities with available geothermal resources.

Alberta Environment Minister willing to consider raising price of emissions

According to the Montreal Gazette, Alberta's Environment Minister Rob Renner is willing to raise the $15 price of carbon emissions in Alberta in the wake of the negotiations in Copenhagen. But such an increase would be conditional on competing jurisdictions imposing a similar price on emissions.

Under Alberta's Specified Gas Emitters Regulation, regulated emitters can achieve emissions reduction targets in four ways: by reducing emissions, by purchasing Alberta offsets, by purchasing emissions performance credits (i.e., credits from those who reduce below their targets), or by paying $15 per tonne to the Climate Change and Emissions Management Fund ("CCEMF").

In 2008, the CCEMF received $82.3 million in compliance payments, which corresponds to about 5.5 million tonnes. By comparison, Alberta achieved real reductions in the same period of 6.5 million tonnes (figures from the CBC's story on an Alberta press release that is no longer available online). This suggests that in about 45% of cases, achieving real reductions would have cost more than $15 (on a risk-adjusted basis). The $15 price ceiling may therefore already be hindering Alberta from driving real immediate emissions reductions.

Minister Renner reportedly said, "we're not tied to $15, we believe it has to go up much beyond as long as our competition, Venezuela, California, Russia and the Middle East, faces the same. If there is a cost, all countries have to be in. The writing is on the wall and industry knows that." He mentioned that the $15 payment could double or treble after Copenhagen.

Many environmentalists will welcome the Minister's open-mindedness, but may doubt that he will be willing to increase the price high enough. In a report that was roundly attacked by both the Albertan and federal governments, M.K. Jaccard and Associates, on behalf of the Pembina Institute and the David Suzuki Foundation, concluded that the price on carbon must move to $50 in 2010 and continue rising to between $100-200 by 2020.

Whatever the number should be, Minister Renner's qualification about Alberta's competitors is likely critical. Consistent with the federal government's message in Copenhagen, it is clear that Alberta will do nothing to undermine the competitiveness of its oil and gas sector in the global energy markets.

However, the Minister acknowledges that the CCEMF is a key component of Alberta's strategy to remain competitive in the carbon-constrained future. The CCEMF is being used to fund innovative climate change adapation and mitigation projects. In setting a higher price on carbon, Minister Renner will likely try to balance the potential to raise more money to kick-start such innovation for the benefit of tomorrow with the risk of harming Alberta's most profitable industry today.

Government of Canada Funds Alberta Carbon Trunk Line Carbon Capture and Storage Project

Today, the Canadian government announced $63 million of project funding support for the Alberta Carbon Trunk Line (ACTL) Project, a fully integrated, large-scale carbon capture and storage (CCS) project in Alberta.

The Honourable Lisa Raitt, Federal Minister of Natural Resources declared that "This innovative project further demonstrates Canada's international leadership in carbon capture and storage technology."

The ACTL Project, led by Enhance Energy in partnership with North West Upgrading, will be capable of gathering CO2 from several sources in the Alberta's Industrial Heartland and transporting the CO2 to existing mature oil fields throughout South-Central Alberta. These oilfields will see significant increases in production as CO2 is permanently stored in the reservoir. The capture and permanent storage of CO2 will result in significant reductions in emissions of greenhouse gases in Alberta. The initial supply of CO2 will come from North West Upgrading Inc. and Agrium Inc. The ACTL Project has the potential to facilitate permanent storage of up to two billion tonnes of CO2 when operating at full capacity. The impact potential is equivalent to taking 2.6 million cars off the road annually.

"As industry looks for a way to effectively deal with their CO2 emissions by keeping them out of the atmosphere, we are offering a much needed solution - a safe and secure storage destination for CO2," said Susan Cole, President and CEO, Enhance Energy.

$30 million of the project is funded through the $1-billion Federal Clean Energy Fund, with the remaining $33 million coming from the ecoENERGY Technology Initiative. The Clean Energy Fund is advancing Canada's leadership on clean energy technologies and the reduction of greenhouse gas emissions from energy production. According to the Canada-Alberta ecoENERGY CCS Task Force report, CCS technology could allow Canada to cut its greenhouse gas emissions by almost three-quarters of Canada's current annual emissions.

CCEMC Announces Project Funding for 30 Clean and Green Projects

The Climate Change and Emissions Management (CCEMC) Corporation ("CCEMC") issued a press release this week that of the 223 projects submitted in its EOI process, thirty clean and green projects were being asked to submit Full Project Proposals under the CCEMC's 2009 Call for Proposals: Initial Full Project Proposal Stage.

The CCEMC has up to $120 million available for clean, green projects which address energy conservation and efficiency, greening energy production and carbon capture and sequestration. The CCEMC's Chair, Eric Newell, commented that "clean technologies will reduce emissions and enhance the economic and environmental value of energy resources - by supporting ideas and initiatives at the leading edge of the green economy, we will reduce emissions, and in the process, support green jobs".

The CCEMC's announcement demonstrates its commitment to technology, conservation and greening the energy mix. The projects and investments the CCEMC will be making, which are demonstrated in the projects being selected to move to the Full Project Proposal Stage, undoubtedly have collateral benefits associated with the establishment of green jobs and the development of the green economy.

Stay tuned - we'll keep you up to date on the CCEMC's process and the projects being selected to move forward.

Minister Prentice Talks Climate Change; PM Says He'll Go to Denmark

Minister Prentice believes that in order for the international community to reach a new framework to deal with climate change, the U.S. must "get on board".

Speaking to a packed room on November 13 in Edmonton, the Minister spoke about climate change on the global stage and about the road to the UNFCCC Climate Change Conference in Copenhagen, which begins in less than a month. The Minister's key message during the speech was that in order for Copenhagen, the "mother of all negotiations" to result in a meaningful frameworks to address the stabilizing of greenhouse gases in the atmosphere, the United States has to "make a substantial effort going forward".

The Minister's other key message hit a bit closer to home:

"If the US does not make a substantial effort going forward, there is nothing Canada can do. Our own mitigation efforts will be futile - as a practical matter, we should probably focus on adaptation.

If we do more than the US, we will suffer economic pain for no real environmental gain - economic pain that could impede our ability to invest in new clean technologies.

But if we do less, we will risk facing new border barriers into the American market.

In short, we need a substantial effort from the United States; and a comparable effort from Canada, so we can create an effective North American climate change regime with national policies that are harmonized, consistent and free from conflict. A continental system composed of national policies and regulations that are equal in value and of similar effect, so we foster fair competition and maintain free trade in the integrated North American market".

The crux of his comments? That a harmonized (although not identical) climate change framework is absolutely crucial for Canada and for the U.S.

Why?

1. We share a common environment;

2. Our economies are integrated. The Minister remarked, "many firms in such key sectors as aerospace and automotive do not so much compete with each other as cooperate, being suppliers to, and customers of each other, somewhere on complex supply chains"

3. Canada's energy supply = security of energy for the United States - "[w]e are not just the single largest supplier to the American market of oil, natural gas, hydroelectricity and uranium - we are an indispensable supplier to the land-locked northern tier states"

4. Our pipelines and power grids transcend the border.

The Minister also pointed to a number of cross border harmonization initiatives, such as identical tail pipe emissions standards, the fact that both countries are busy preparing national cap and trade systems, and commitments on both sides of the border to clean energy technology.

But ultimately, his remarks confirmed that both Canada and the United States, while committed to addressing the effects of climate change, will not do so at the expense of the economy. The Minister's philosophy and one that is shared by his U.S. counterparts is to "do no harm - to avoid measures, no matter how well-intentioned, that would cause Canadian firms to be not just down in 2009, but out by 2010". What does this mean in terms of reductions? The American Clean Energy and Security Act has passed the House, and the Kerry/Boxer legislation has now commenced its journey through the Senate. The former sets the target of 17% less than 2005 levels by 2020; the latter currently talks of 20%. The Minister confirmed "[t]hat Both are similar to our own 2020 target of 20% less than 2006 levels".

Those dectractors who assert that Canada should be reducing its emissions by 25-40% less than 1990 levels are not focused on the economic consequences to our country. Minister Prentice addressed these critics and said "to say the least, reducing 2020 emissions in Canada by 25-40% from 1990 levels is easier said than done. The impact on the overall economy would be dire. In economic context, reductions of that magnitude equal an amount far in excess of all the emissions generated from all transportation sources in Canada".

Are the critics prepared to put away not only their own cars, but the cars of their relatives and everyone else they know, for good? To stop flying anywhere? Stop taking the bus? Probably not. And if the solution is to purchase international offsets to meet our emissions targets, are they comfortable with billions and billions leaving the country every year? We have to have a reasonable response to climate change in Canada - and it is reasonable that our system be consistent with that of our largest trading partner and not cause economic hardship to a nation of 35 million people.

So what will happen in Copenhagen? Canada's position is pretty clear. The United States' position is also increasingly clear - everyone, not just the developed nations, has to be a party to an international convention. That includes China and India, whose positions have really not shifted in the months leading up to the conference. Small concessions have been made, but really, the message is still "we're going to do what we want".

But, as Copenhagen draws ever closer, it appears that the international community is taking it more and more seriously. This morning the Edmonton Journal reported that there is increasing pressure on world leaders, including the U.S. President, to attend the conference. Prime Minister Stephen Harper's aides confirmed that if others are there, he'll likely attend as well.

With all these variables, the conference is December is shaping up to be very interesting. Stay tuned for on the ground coverage from Denmark.

Canadian Ambassador to US: Oilsands Get Disproportionate Amount of Criticism

Canada's Ambassador to the United States, Gary Doer, who is a former NDP Premier of Manitoba, stated yesterday that the oilsands are facing a disproportionate amount of criticism in the climate change debate. Mr. Doer argues that North America is missing the big picture on global warming if Canada is singled out as the chief emissions culprit, the Montreal Gazette reported this morning.

"One of the concerns that I have is that it represents so little of the emissions in North America. It's getting a disproportionate amount of chatter," Gary Doer said in an interview yesterday with Canwest News Service. "The question is: How much do the oilsands represent as a percentage of emissions in North America? It's a very small amount. If we don't deal with all sources of emissions, we are not going to have a solution that's comprehensive."

Exactly.

The oilsands are much maligned. Greenpeace is up there trying to block production (and recently got sued by Suncor for its efforts), activists are tying themselves to machines, and natural gas lobbyist groups in the US are pointing their fingers at the oilsands. But do you know what the chief source of carbon emissions in North America is? It's not oilsands. It's not SUVs and trucks, tailpipes or dryer vents.

It's coal.

What are we doing about it? If you've been following our blogs, you'll see that Alberta and Canada have just made a $769 million pledge to a carbon capture and storage project for a coal thermal plant - the technology used at the plant will be the first of its kind in the world. The US is presently conducting a $14 million study to see if they should spend $1 billion on CCS for coal thermal plants in the US. It's a step in the right direction. Emissions from coal thermal plants in North America are about sixty times higher than the emisisons from the oilsands and coal is the fastest growing fossil fuel being produced (World Watch Institute, October 15, 2009). According to the Canadian Association of Petroleum Producers, the oilsands only account for about five per cent of Canada's overall greenhouse gas emissions - a much smaller number when all of North America is taken into account.

David Jacobsen, the new US Ambassador to Canada, met with Ambassador Doer in Winnipeg on Monday, after a trip through the oilsands last week. Ambassador Jacobsen, who called Canada "a pillar in the energy security of the United States" , acknowledges that the oilsands must be part of the equation. Canada's new US Ambassador seems to agree, stating "[y]ou've got to look at everything. How do you reduce emissions from coal? How do you increase the use of renewables? How do you have the increase in energy efficiency?" All of these items have to be on the agenda. The fact that one project (oilsands) is discussed means that we've missed the big picture".

Big picture indeed. The big picture actually includes China and India, particularly if Copenhagen is really going to amount to a meaningful climate change treaty. China is constructing coal plants at a frentic pace and has the world's third largest coal reserves, after the US and Russia. Because China now uses more coal than the United States, Europe and Japan combined, it the world's largest emitter of gases that are warming the planet. Why is everyone so concerned with the oilsands, when the real question is - what is China going to do about climate change?

China has a script they stick to which basically goes something like this - the rest of you got to do it, now it's our turn - too bad if you don't like it. China is setting its self up as the advocate of the developing world (intensity targets tied to GNP), but meanwhile as China points fingers and constructs power plants, the Maldives, the lowest country in the world, could wind up entirely underwater.

Shouldn't Greenpeace be more worried about that?

Another $769 Million in CCS Funding Announced

Like Alberta, Canada is putting its money where it's mouth is. On October 14, 2009 Prime Minister Stephen Harper traveled to Wabamun, Alberta, the site of the Keephills Power Plant, to announce $769 in funding for carbon capture and storage. The pledge will retrofit Keephills, a thermal coal power plant on the shores of one of the Edmonton areas largest lakes. Alberta will spend $436 million over the next 15 years on the project, with most of the money coming from its $2-billion Carbon Capture and Storage Fund. Ottawa is kicking in $343 million from its Clean Energy Fund.

"Our government is determined that Canada remain a world leader in in the use of this state-of-the-art technology," the Prime Minister said, adding "Carbon capture and storage could not only drastically reduce our emissions but by exporting it to other countries we could also make a major contribution to the reduction of global emissions".

The announcement comes on the heels of last week's Alberta/Canada announcment that the governments were spending $865 million on the Shell Quest project. The October 14 annoucement relates to a letter of intent the Alberta government has signed with Transalta Utitlities, who owns Keephills, to build a pioneer project, which Premier Ed Stelmach says will be the first of its kind in the world. The Premier remarked "[i]t'll be the first major CCS project to involve coal-fired power generation and the potential for such a project is enormous. Coal is the most abundant fossil fuel and the most commonly used source of electricity in the world". Alberta gets about 2/3 of its power from coal fired sources - about 6400 megawatts. The technology developed in the Keephills project has the potential to be used to retrofit other coal fired plants around the world.

Clearly both the Alberta and Canadian governments recognize that the time for action is now. With Copenhagen in a couple of very short months, Canada will have many good news stories to share with the world. With last week's major CCS announcement, the CCEMC and its administration of Alberta's Climate Change Emissions Management Fund and now this additional commitment, Canada and Alberta have demonstrated a huge financial and strategic commitment to addressing climate change (more so than the US?).

What will others be bringing to the table in December?

$865 MILLION in CCS Funding Announced Today

The Alberta and Federal Governments formally announced $865 of funding for a commercial carbon capture and storage project today. Shell Canada was "first out of the gate in the carbon capture effort [today], winning pledges of $865 million in provincial and federal aid for its Quest pilot project", the Edmonton Journal reports. The funding was announced by Alberta Energy Minister Mel Knight and federal Natural Resources Minister Lisa Raitt who said "the most viable emissions-reducing technology for fossil fuels is carbon capture and storage. The government of Canada is delivering results by supporting new, clean technology innovation, positioning Canada as a leader in this technology development and resulting in significant benefits for our environment".

We've blogged a number of times that Alberta, with its small population of 3.6 million, is leading the way, certainly within Canada, but perhaps in North America, in directing funds to address climate change. The announcment today is the first "spend" from Alberta's $2 billion CCS Fund. The federal government has a $1 billion Clean Energy Fund. $850 million of the Clean Energy Fund can be used to developing commercially viable technologies including CCS.

Alberta has signed a letter of intent with Shell to contribute $745 million in funding for the Quest CCS project over the next 15 years. Ottawa kicked in an additional $120 million through the Clean Energy Fund.

Shell Canada spokesman Graham Boje praised the province and federal government "for their leadership and vision on advancing the deployment of CCS...finding ways to reduce greenhouse gas emissions is one of the most important challenges facing society, and developing a substantial CCS capability with governments and key stakeholders is one of our greatest priorities".

Shell Quest aims to store up to 1.2 million tonnes of CO2 per year from its current upgrader in Fort Saskatchewan and that upgrader's expansion, which is under construction. The existing upgrader produces 155,000 barrells of synthetic oil per day and 1.5 million tonnes of CO2 per year. The expansion will produce an additional 100,000 barrells per day with proportionate CO2 emissions.

It's October. It can't be a coincidence that this annoucement comes a mere 59 days before the Conference of the Parties starts in Copenhagen, Denmark. Right now, CCS is one of Canada's good news climate change stories. But if you're thinking that CCS is the only thing in Alberta's bag of climate change tricks, think again.

Don't forget that Alberta has this unique creature called the Climate Change and Emissions Management Fund, which is administered by the CCEMC. The CCEMC closed its 2009 Call for Proposals: Initial Expression of Interest Stage on September 30. Stayed tuned in the next few days to learn more about the EOI process.

The Clean Energy Dialogue Continues...

Energy/Environment High on Priority List for New US Ambassador to Canada

We have blogged many times about the Clean Energy Dialogue between Canada and the United States, which was begun when the U.S. President made his first official vist to Canada back in February. Looks like the Clean Energy Dialogue continues. Barack Obama's new envoy to Canada, US Ambassador David Jacobson, who officially started his term on Friday, said energy and environment issues are high on the agenda in discussions between the two countries.

After a ceremony at Rideau Hall with Governor General Michaele Jean where his credentials were formally accepted, the US Ambassador said "I also believe that the issues that predominate in the relationship between the United States and Canada are the kind of issues that I have spent a lifetime dealing with".

Canada A Pillar of Energy Security

In his remarks, Mr. Jacobsen acknowledged that U.S. and Canadian energy security and environmental concerns would be closely linked and up for discussion in the near future.

While U.S. lawmakers released a cap and trade bill into the Senate last week which includes measures smacking of protectionism, Mr. Jacobsen indicated he would soon start to participate in ongoing discussions about these measures, although added that he believed the talks have so far been constructive and cordial.

"Canada is a pillar in the energy security of the United States," he said. "There are also environmental issues that we all know about that are getting more and more important every day, and I expect that I will spend a lot of time dealing with those."

Another Chicago Connection

Mr. Jacobson is a former lawyer, who, like John Podesta, an influential member of the President's transition team and advocate of cap and trade, is also from the President's hometown of Chicago. Mr. Jacobson had been serving in the White House as an advisor on diplomatic postings.

What Does It Mean?

With China on the hunt to buy into Alberta's oilsands, which, let's face it, are the key to energy security for both Canada and the United States in the decades to come, and with the appointment of David Jacobsen, who seems to realize this, it is certainly a very interesting time to be in Ottawa! Perhaps protectionism may have to take a back seat to ensuring Americans have a safe and secure supply of energy.

We'll see. It may all become more clear in December when the world convenes in Denmark.

Waste-to-biofuels plant to use residual heat and synthetic gas from its process as heating and cooling energy for residents and institutions on outskirts of Edmonton

Enerkem, a waste-to-biofuels and green chemicals technology company, today jointly announced a community energy initiative that will heat a Strathcona County neighbourhood, using the residual heat and synthetic gas from its process employed at its Edmonton waste-to-biofuels plant. On hand for the joint announcement were Alberta Environment Minister Rob Renner, City of Edmonton Mayor Stephen Mandel, and Strathcona County Mayor Cathy Olesen.
Enerkem's community energy project received $7.45 million grant funding from the Government of Alberta from the Clean Air and Climate Change-Technology and Innovation Program, under Alberta's share of the Canada ecoTrust. The project was selected because of its great potential in reducing greenhouse gas emissions for the Edmonton Region, by providing a clean alternative source of energy.
The Enerkem GreenField Alberta Biofuels plant will provide the residual heat and synthetic gas from its process as heating and cooling energy for residents and institutions in the Emerald Hills area. Strathcona County will use the innovative alternative to natural gas in a heating loop in Sherwood Park. Once operational in 2012, the Enerkem renewable energy project will reduce greenhouse gas (GHG) emissions by about 7,000 tonnes per year.

The CCEMC Issues 2009 Call for Proposals: Initial Expressions of Interest Stage

By Robert A. Seidel, Q. C. and Jennifer Cleall

On August 5, 2009 Alberta's Climate Change Emissions Management (CCEMC) Corporation ("CCEMC") announced the 2009 Call for Proposals: Initial Expressions of Interest Stage (" 2009 Call for Proposals"). The CCEMC is inviting Expressions of Interest from project proponents wishing to obtain funding for developing and demonstrating projects that reduce greenhouse gas emissions.

What Does This Mean

"The time for talking is done, it's time for action" - a typical conclusion when Industry and Policy Makers get together in Alberta. Industry has collaborated with policy makers to establish a sustainable funded model that is calling for real innovative projects and in return the CCEMC is committed to funding the projects that meet or exceed its standards.

The plan, based on real dollars in hand, is; before the end of November to notify the best projects to make their full project proposals. From there the project proponents of the best projects are to have their full project proposals in by January 30th of 2010. Meteoric speed in the talk filled world of Climate Change. The fact that the CCEMC has now begun the process of calling for projects is a first in Canada and is clearly the most significant event in the world of climate change innovation in Canada. The model for climate change funding in Alberta is working to create action. In answer to the critics who would rather wait because ________ (fill in which ever of the many reasons you have heard), these actions taken have very sound underpinnings including the conclusion of the consultations summarized in Alberta's Climate Change Strategy as "Albertans also said: Don't wait.". Industry and policy makers obviously listened. Stay tuned and we'll keep you posted on its progress!

The 2009 Call for Proposals

The CCEMC has up to $120 million for project funding for the 2009 Call for Proposals. Up to 50 percent of monies will be invested in green energy production, 20 percent in energy conservation and efficiency and 30 percent in carbon capture and storage.

According to the 2009 Call for Proposals, applications are open to all organizations, including out-of-province and out-of-country entities. Preference will be given to projects where the lead applicant is from industry and projects must take place in Alberta - although applied research and development and technology development may occur outside Alberta.

The CCEMC's investment will be limited to a maximum of $25 million over the life of the project. Projects will last for a term of up to five years. Project proponents must have a minimum of 1/2 of project funding for cost shared projects with the CCEMC. If government funds are available for the project, the project proponent must provide a minimum of 1/3 of the project funding, such that the total funds from government and the CCEMC are 2/3 or less. It is expected that the recipient's contribution to the project will be cash or cash equivalents.

Organizations can submit their proposals online beginning in mid-August up to September 30, 2009. The CCEMC will invite the proponents of the most promising projects to submit full project proposals following the Expressions of Interest stage.

Details of the funding requirements and for more are outlined in the 2009 Call for Proposals Guide: Initial Expression of Interest Stage available at www.ccemc.ca.

We have outlined the importance of the Fund before, but it bears repeating:

• Because of a link with the compliance mechanism, the Alberta solution is an industry based and funded model. Unlike the talk or promise of technology funds Alberta's action assures there is no question about whether money will actually find its way through governmental and political processes to the Fund.
• Money in the Fund is segregated and not subject to normal government budget allocation processes. Rather, monies are collected by Alberta Environment and segregated separately from general revenue to be used to address climate change. This concept is specifically incorporated in the Act, which requires that monies from the Fund "may be used only for purposes related to reducing emissions of specified gases or improving Alberta's ability to adapt to climate change".
• The Fund helps the government of Alberta achieve its policy objectives. By legislating that the Fund be used to specifically focus on emissions reductions and climate change adaptation, it allows Alberta to integrate greenhouse gas solutions with resource management and energy supply strategy and keeps money where it is most needed - to face the challenge of developing and deploying transformative technology.
• The model of the Fund accomplishes a significant goal - the engagement and commitment of industry. The Fund also acts as a sort of "safety valve" to enable a focus on things like greening energy production and consumption along with emissions reduction. All of these are points of engagement for industry rather than some solutions that have been suggested which result in having industry's attention focused only on the availability of offsets, the quality of those offsets, being out of compliance, the price of carbon and whether a market exists.

About the CCEMC

The CCEMC is a not-for-profit, arm's length organization, independent of government, whose mission is to achieve real reductions in greenhouse gas emissions by stimulating transformative change through investments in climate change knowledge, technology development and operational deployment. The Government of Alberta has granted monies to the CCEMC to be used for the purposes of the Climate Change and Emissions Management Fund, which are specified under Alberta's Climate Change and Emissions Management Act.

As we have previously mentioned, under Alberta's climate change regulatory framework, persons responsible for regulated facilities must comply with the Act and supporting Specified Gas Emitters Regulation ("Regulation"). Persons responsible have three choices for meeting their regulated facility's compliance requirements:

• A reduction in the release of greenhouse gases;
• The application of emissions offsets in the Alberta-based offset system; or
• Obtain credits by contributing $15 per tonne to the Fund

The Fund

The monies paid into the Fund do not go into general revenue and must be allocated toward the purposes set forth in the Act and Regulation. The structure of the Fund is unique in the world as a regulatory compliance and climate change financing mechanism and the 2009 Call for Proposals marks a significant step in driving low-carbon investments in Alberta and Canada.

With assistance from Grant Boyle, Articling Student

The CCEMC and the administration of the Climate Change and Emissions Management Fund

We introduced you to the Climate Change and Emissions Management (CCEMC) Corporation in May. Since then the CCEMC has announced its Board and has received $43,000,000.00 from the Climate Change and Emissions Management Fund.

As we reported in our bulletin, the CCEMC is an independent, arm's length, not for profit organization which is tasked with administering the Climate Change and Emissions Management Fund, to which industry contributes as a compliance option under the Climate Change and Emissions Management Act. Compliance monies have been received into the Fund for 2 periods - the "stub" period for 2007/2008 and the 2008/2009 year, ending March 31, 2009. Alberta Environment reports that the Fund now sits at $122.4 million.

We predicted back in May that the establishment of the CCEMC means that the monies the Fund will begin to be used for the purposes set forth in the Act - for reducing emissions of specified gases or improving Alberta's ability to adapt to climate change. The Fund is the first of its kind anywhere in the world - it is unique for a variety of reasons, not the least of which is that the monies have been specifically from general revenue of the Government of Alberta and segregated to address climate change. The CCEMC has been tasked with its administration - not a small feat.

What's the next step for the CCEMC? We should know very soon. The CCEMC will call for expressions of interest in the coming days - there will be more on the expressions of interest process to follow.

Whatever the next step looks like, one thing is clear. Because the Fund's purposes are set forth in legislation, the projects the CCEMC funds must provide for the reduction of emissions of specified gases or improve Alberta's ability to adapt to climate change. And what is particularly important is that it's not just the promise of reduction, but measurable change that is required of these projects - projects will require clear accountability on performance metrics in order that the monies from the Fund are meaningful.

Provinces, Canada, other countries - frankly the world - are watching the CCEMC and how the CCEMC works to measurably address climate change. They are watching now and they will be watching in December in Copenhagen. Stay tuned to our blog - we'll have much more information for you in the coming days.

Alberta selects 3 projects to receive $2 billion in carbon capture and storage funding

On June 30, the Alberta's Ministry of Energy took a major step forward in its $2 billion capbon capture and storage initiative. The Ministry announced that the following three projects had been selected for funding:

• Enhance/Northwest for The Alberta Carbon Trunk Line, to incorporate gasification, CO2 capture, transportation, enhanced oil recovery and storage from the Agrium fertilizer plant and the Northwest upgrader;
• EPCOR/Enbridge for an integrated gasification combined-cycle carbon capture power generation facility adjacent to EPCOR'S existing Genesee power plant, west of Edmonton; and
• Shell Canada Energy/Chevron Canada Ltd./Marathon Oil Sands L.P. for a fully integrated carbon capture and storage project at the Scotford Upgrader.

Details of the projects have not yet been made public.

The Ministry expects to negotiate letters of intent with each of the winning proponents by the end of this month.

The press release leaves open the possibility that other projects would be considered if negotiations with the winning proponents fail. A list of the 11 projects that were considered in the final round may be found here. Recall from our previous posting that 20 companies originally applied for funding, but 9 withdrew their applications because they believed the projects could never be economically viable.

In the RFP package, the Ministry had described the purpose of the funding as follows:

"The ultimate goal of the CCSF is to encourage the development of three to five large scale integrated CCS facilities that will capture and permanently store up to five million tonnes of carbon dioxide per year by 2015, for a period of at least 10 years. This initiative is an important first step in the broader adoption of CCS in the province and will create the momentum for private sector investment in CCS. By encouraging CCS in Alberta, the CCSF will contribute to the solution for climate change and GHG emission reductions while maintaining Albertans' quality of life and allowing continued economic growth. In reaching this goal, GHG emissions at facilities such as coal-fired electricity plants, oil sands extraction sites, upgraders, and other large scale industrial facilities will be reduced."

Clean Energy Dialogue Roundtable Meeting Concludes

The Clean Energy Dialogue between Canada and the United States continued this week as meetings between the two nations wrapped up in Washington.

The public-private meeting, held June 29-30 at the Department of Energy Headquarters in Washington, DC, brought together industry and government leaders to expand bilateral clean energy cooperation.

US Energy Secretary Steven Chu expressed optimism following the talks, stating that "by working together to develop clean energy technologies and combat climate change, the United States and Canada can spark an economic recovery that will benefit both of our nations."

The Clean Energy Dialogue was announced in February 2009 following the first meeting between Prime Minister Stephen Harper and President Barack Obama in Ottawa. Established with the intention of expanding clean energy research and development in the United States and Canada, the Clean Energy Dialogue strives to develop and deploy clean energy technology; and build a more efficient energy grid based on clean and renewable energy in an effort to reduce greenhouse gases and combat climate change.

The meeting marks a significant advancement in implementing Canada's Climate Change Plan and Economic Action Plan, both aimed at supporting a cleaner more sustainable environment. Through promised collaboration on specific areas such as biofuels, clean engines, and energy efficiency, the Clean Energy Dialogue will help Canada meet its greenhouse gas emissions reduction targets and aid its commitment to ensure that 90 percent of electricity be provided by non-emitting sources by 2020.

Discussions at the Roundtable meeting involved the initial development of an Action Plan to be presented to Minister Prentice and Secretary Chu in mid-July. The expected deadline to present a finalized joint Action Plan on Clean Energy to Prime Minister Harper and President Obama is August 2009. Consultation with the provinces and private sector leaders will continue over the next few months to achieve such goal. If all of these milestones are met, momentum towards Copenhagen in December will be at an all time high.

We will continue to monitor the Clean Energy Dialogue and will report back to you regarding the Action Plan and provincial consultations as information becomes available.

With assitance from Corie Flett, Summer Student.

The Harmonization of Climate Change

Since you've been waiting with bated breath to find out what we had to say next about the federal and provincial climate change policies, we didn't want to keep you in suspense. We blogged on Monday that the provinces are throwing together climate change legislation faster than you can say "greenhouse gases".

In related news, yesterday the Globe and Mail reported that the Alberta Conservatives are taking their federal counterparts to task over energy and environment, treatment of the oil sands and other federal government policies. The controversy arises after speaking notes prepared for Conservative MLAs to raise with federal MPs in their home ridings found their way into media hands.

A significant bone of contention for Alberta's governing party appears to be with respect to the federal government's climate change policies as they relate to coal-fired electricity. In a meeting with media on April 29, Minister Prentice was asked about what types of regulations Canada would be rolling out with respect to climate change, and specifically what its policy around thermal-coal would be. The Minister replied that any new coal-fired plants will have to be neutral in terms of emissions, (which means they must have the ability to inject the carbon dioxide at the source underground). He also indicated that once coal-fired electricity plants that have come to the end of their useful lives, and have been fully depreciated, they will be decommissioned and replaced with more environmentally friendly options.

Unfortunately, the announcement appears to have been the first time the information was relayed to Alberta. Why is this so significant for Alberta in particular? Alberta relies on coal for electricity. Virtually all of the country's 27 coal plants are here. We do not have hydro in Alberta and we rely only minimally on renewables, so thermal coal is rather important for keeping the lights on. A policy such as the one outlined by the Minister means that Alberta may "shoulder the biggest burden in complying with these regulations - and depending on how they are formulated, they could have a significant impact on the health of the provincial economy". Premier Stelmach may agree. He was quoted in the Globe article as saying "You cannot ask Albertans to carry the burden of equalization, and then also penalize them for producing the wealth that allows us to make such a massive contribution to the programs that Canadians enjoy".

While the Globe story points to the issue as being one of a frayed relationship between Alberta and Ottawa, really the problem is one of harmony of regulation, not relationship.

As Canadians, we are seeking solutions to climate change at the provincial level - this is good. But it's also challenging. Each province's emissions profile is different from the next and given its industry, Alberta's situation is particularly hard to address. Intraprovincial carbon trading, for example, is a desirable mechanism, but regulations in BC are so vastly different from those in Alberta or Ontario that they will be difficult to align. You could be trading apples for oranges. The longer the provinces have to grow and develop their own programs, the harder it's going to be to allow the various systems to operate in concert.

What will drive harmonization? Probably not climate change, but rather industry (national corporations are the same whether they are operating in PEI or Saskatchewan after all) and intra-provincial trade. Degrees of harmony have to be created.

We're just beginning to explore this topic here on the blog. Stay tuned to see our thoughts on how harmony will be achieved and how the constitutional issue will be addressed.

Dandelions are Springing Up Everywhere

We blogged the other day that Canada is pushing back its target start date for the regulation of emissions at the federal level to align more closely with the American schedule. In a discussion with media from London on May 28, Minister Prentice indicated that the GHG reduction targets would be in effect as late as 2012 in order to ensure they were aligned with the system south of the border. The Turning the Corner Plan called for targets to be developed in 2008 and come into force in 2010.

In a speech to the CD Howe Institute on June 4, the Minister remarked "[w]e will outline the full suite of policies that relate to all major sources of emissions this year, in 2009. I have said this, this will happen time and time again and it will happen by the time we reach the international table at Copenhagen. The process then of drafting the detailed regulations under CEPA will consume much of 2010, the following year. In some cases - the tailpipe emission standards being the obvious illustration - we have already started that process, but 2010 will be the year in which the regulations are drawn together. The regulations will be drafted with a view to an application date of January 1, 2011 and they will be brought into force thereafter on a sector by sector basis. We will make individual decisions on a sector by sector basis in terms of the application date for those".

The critics used to complain that Canada was moving forward without a plan and now they critics bitterly declare that Canada is lagging behind. Isn't that ironic given a year ago we were busily lambasting the U.S. for their lack of climate change initiatives. Canada lagging behind? I don't think so - we're moving forward, just not cohesively.

What is the consequence of Canada pulling back at the federal level (and what, exactly, is the meaning of the blog title), you ask? While the federal government waits for its biggest trading partner to define its domestic targets, regulatory frameworks addressing climate change are springing up all over the place like dandelions on a prairie field.

Alberta's emissions reduction targets were introduced in 2007. BC brought in a carbon tax last year. Ontario passed the Green Energy Act this year and has recently introduced a cap and trade bill (although the implementation date has been pushed back to 2012). So has Quebec. Saskatchewan introduced comprehensive climate change legislation in May. We're expecting that the Maritime provinces and Manitoba, which have established action plans already, will follow suit with regulatory frameworks soon.

All of these provincial frameworks have an opportunity to emerge because the federal framework is being delayed. But are the provinces going to bump into one another? What if you're a corporation operating in B.C., Quebec, Alberta and Ontario - what do you do? Are the provinces on a collision course with the federal government? Where's it all going?

We have some thoughts about that. Stay tuned the next couple of days and we'll explore it.

Minister Prentice Concludes International Climate Change Trip

Environment Minister, Jim Prentice, concluded a series of important international climate change discussions today in London. The Minister participated in the World Business Summit on Climate Change in Copenhagen, the Major Economies Forum in Paris, and a carbon capture and storage conference in Bergen. The Minister ended his trip in London, where he had extensive discussions his UK counterpart, the Rt Hon David Miliband.

All roads continue to lead to Copenhagen, as we've been saying for a number of months (see here, here and in particular here. In a May 24 speech at the World Business Summit, to which he was invited by the Danish Minister, Minister Prentice remarked:

"I think the fundamental question for business leaders here today is how do we build confidence and momentum towards Copenhagen, and in particular for the business leaders and the companies [those business leaders] represent, what responsibility do you have and what role do you play in that process".

The Minister also indicated to that he is optimistic about the prospect of achieving international agreement on climate change strategy in Copenhagen and cautioned leaders about "green protectionism".

The Minister confirmed to media this morning that Canada's climate change policy would be unveiled in advance of Copenhagen and reiterated Canada's commitment to 20% by 2020 relative to 2006 levels. He advised that the specific domestic approach would be tabled first in Canada and then at the international level.

One of the most important points to come out of the discussion this morning, is the continental approach to climate change, which Minister Prentice has previously indicated is so vital.

Canada's trading relationship with the United States is the biggest trading relationship in the world. Clearly any federal climate change strategy must work in concert with the U.S. approach to climate change. Any policies which Canada develops to address climate change must also reflect Canada's national interest. We have blogged many times about meaningfulness of co-operation on both a North American and global basis. In his remarks to the media today, Minister Prentice further reiterated these important points.

However, the Minister also stressed that while Canada's climate policy must be concordant with that of its neighbour to the south, it does not mean that the policies will be exactly the same all the time. Minister Prentice gave fuel economy standards as an example of where it is in Canada's best interest to mirror that of the United States - the auto industry is truly cross border and having identical fuel standards makes sense. But there are other areas, electricity generation, for example he said, where they are not the same. The Minister asserted that while Canada's policies would work on an equivalent basis with those of the U.S., they need not be identical. For the time being, the United States has not yet arrived at a domestic policy or target. As a result, it is difficult for "Canada to define continental solutions".

What Canada's policy will ultimately be is important. But what is truly and fundamentally important is making progress - how will we find real solutions for climate change? The answer: Technology. Transformative change will only be able to occur through investments in technology. In his Copenhagen speech, Minister Prentice emphasized this point:

"[T]he challenge before us is all about technology. That just cannot be overemphasized, because we're talking fundamentally about a transformation of the capital stock, the technological investments in our society. This will take time. It will take massive investments...".

"Massive" investments in technology and transformative change have already started. Canada, and Alberta in particular, has already demonstrated it is serious. The Canadian government has pledged $1 billion to carbon capture and storage technologies. The Alberta government another $2 billion.

Perhaps the most unique sources of funding is the Climate Change and Emissions Management Fund.. The $122.4 million from 2007 and 2008 compliance years will be specifically allocated for purposes related to the reduction of emissions or improving the ability to adapt to climate change. With all these investments in transformative technology, we are leading the way.

Canada Continues to Co-operate on Climate Change

We have blogged many times about Canada's commitment to address climate change both continentally and internationally. Today we explore how the co-operation continues.

May 24, 2009 represented the official commencement of the international energy efficiency framework. Energy leaders from around the world met in Rome for the G-8 Energy Ministers Meeting to launch the International Partnership for Energy Efficiency Cooperation (IPEEC), a high-level forum for facilitating improvements in global energy efficiency and encouraging market implementation of key energy efficiency technologies. The signatories included the entire Group of 8 (G8), which consists of Canada, France, Germany, Italy, Japan, the Russian Federation, the United Kingdom, and the United States, as well as key emerging economies, including Brazil, China, India, Mexico, and the Republic of Korea.

Discussions about IPEEC began in June 2008, when the G8 countries, China, India, South Korea and the European Community decided to establish the International Partnership for Energy Efficiency Cooperation, at the Energy Ministerial meeting hosted by Japan. The signing of the IPEEC terms of reference on May 24, 2009 put the discussions into action.

The purpose of the partnership is to facilitate those actions that yield high energy efficiency gains in recognition that improving energy saving and energy efficiency is one of the quickest, greenest, and most cost-effective ways to address energy security and climate change and ensure economic growth.

IPEEC will provide a forum for discussion, among developing, transitional and industrial nations to engage in consultation and exchange of information on a voluntary basis. It will not develop or adopt standards or efficiency goals for the partners.

It was decided at the May 24, 2009 meeting that the first order of business for IPEEC would be to establish a Sustainable Buildings Network, a compilation and summary of national energy efficiency action plans, an inventory and review of international energy efficiency initiatives and improved methods for measuring and verifying progress towards domestic energy efficiency goals.

The launch of IPEEC comes in response to conclusions at G8 Environment Minister's Meeting that countries begin processes with the ultimate goal of a global platform on low CO2 impact technology.

Canada's participation at the IPEEC meetings is further evidence of its commitment to co-operation on a global level to address climate change. Copenhagen is 6 months away - wonder what impact this co-operation will have by then? We'll keep you posted.

Jennifer Cleall and Corie Flett, Summer Student

Obama Sets a Shorter Timeline for Tailpipe Emissions

We have blogged a couple of times about proposed new standards for tailpipe emissions in Canada and the United States. Yesterday, President Obama's administration announced plans to put those standards into practice in 2016, four years earlier than originally expected. The program covers the 2012 model year through to the 2016 model year and, according to the White House website, "ultimately requires an average fuel economy standard of 35.5 mpg in 2016".

In his speech, the President asserted that the new standards would have a projected reduction in oil consumption of 1.8 billion barrels over the life of the program, "more oil than [the United States] imported last year from Saudi Arabia, Venezuela, Libya, and Nigeria combined". How much oil is this? In 2008 the U.S. imported 3,570,848 thousand barrels of crude oil. Of those barrels, the U.S. imported from a total of 42 different countries. The top 5 importing countries were: Canada (19.8%), Saudi Arabia (15.4%), Mexico (11.8%), Venezuela (10.6%), and Nigeria (9.4%) for a total of 67% of its imports. Of the countries mentioned by the President above, the United States imported about 0.7% of its oil from Libya in 2008. "[M]ore oil than the [United States] imported last year from Saudi Arabia, Venezuela, Libya and Nigeria combined" is equal to about 36.1% of U.S. yearly imports.

What does this mean for Canada? Environment Canada previously announced new emissions standards for Canada. Minister Prentice has said"what we're striving for is a North American standard because we know there's only one North American automobile industry". Today, the Minister confirmed that the Canadian government will match the new standards. According to the Globe and Mail, "Michael Martin, Canada's lead negotiator on international climate change talks, said the new auto standards will be one part of a 'suite of policies' that Canada will be adopting before" Copenhagen in December. This is further evidence of Canada's commitment to address climate change in North America.

We will be carefully monitoring what other policies are in that suite...

Introducing the Climate Change and Emissions Management (CCEMC) Corporation

Alberta Environment announced today that the Climate Change and Emissions Management (CCEMC) Corporation ("CCEMC") will manage and administer the Climate Change and Emissions Management Fund. The CCEMC is a not-for-profit corporation which is arm's length and independent from government.

Alberta is one of the few jurisdictions in North America with a functional climate change regulatory system. In enacting the Climate Change and Emissions Management Act (the "Act"), Alberta was first in North American to pass climate change legislation requiring industry to reduce emissions below a set threshold.

Large emitters have three compliance options under the Act:

1. Make facility improvements to reduce emissions below the required threshold

2. Purchase Alberta-based carbon offset credits; or

3. Pay $15 for every tonne over target into the Fund.

The Climate Change and Emissions Management Fund (the "Fund"), which is established under the Act, is a critical element of Alberta's long term Climate Change Strategy to achieve provincial and national greenhouse gas reductions targets. Its unique characteristic as a compliance mechanism under targeted climate change legislation makes it singular in the world. Monies flowing into the Fund are segregated and targeted specifically to addressing climate change.

Under the Alberta model, the Ministry of Environment collects monies paid into the Fund from specified emitters. These monies do not form part of the General Revenue of the Province of Alberta and cannot be diverted for other objects. Rather, these may only be used to satisfy the purposes of the Fund set out in the Act.

The Act provides that the Fund may only be used for purposes related to reducing emissions of specified gases or contributing to Alberta's ability to adapt to climate change. The CCEMC is aligned with the purposes of the Fund set forth in the Act. The Minister of Environment will maintain responsibility for receiving payments from industry and transferring the dollars to the CCEMC. The CCEMC will invest money collected from industry into initiatives and projects that support technologies to reduce greenhouse gas emissions and improve the ability to adapt to climate change.

It is expected that the CCEMC will begin accepting funding proposals in the second half of fiscal 2009/2010. Eric Newell has been named as the Chair of the CCEMC - Mr. Newell is the recipient of the Order of Canada and has extensive experience in industry.

Robert A. Seidel, Q.C., who is the National Managing Partner of Davis LLP and Jennifer Cleall are legal advisors to the Climate Change and Emissions Management (CCEMC) Corporation.

New Legislation Under Alberta's Climate Change Regulatory Framework

Further to yesterday's blog announcing that the Climate Change and Emissions Management (CCEMC) Corporation would be administering the Climate Change and Emissions Management Fund, the Alberta Government has also passed the Climate Change and Emissions Management Fund Administration Regulation, AR 120/2009.

The Regulation is passed pursuant to the Climate Change and Emissions Management Act , which permits the Lieutenant Governor in Council to make regulations "respecting the establishment or designation of delegated authorities (s. 60(1)(u) and "respecting the delegation to one or more delegated authorities of the performance of any of the Minister's duties or functions, or the exercise of any of the Minister's powers, under this Act or the regulations, other than a power to make regulations and a power to delegate" (s. 60(1)(v)(ii)).

Section 1 of the Regulation designates the CCEMC as a delegated authority. Section 3 of the Regulation delegates the "performance of the Minister's duties and functions and the exercise of the Minister's powers in respect of holding, administering and making payments of the money paid to the Corporation from the Fund under section 4(1) to the CCEMC. The Regulation also permits the Minister to pay all or some of the Fund to the CCEMC and states that the money paid to the CCEMC from the Fund "belongs to the Corporation" (s. 4(2)).

Other provisions of the Regulation address reporting requirements, compliance with FOIPP and the inspection and audit abilities of the crown.

Robert A. Seidel, Q.C., who is National Managing Partner of Davis LLP and Jennifer Cleall are legal advisors to the CCEMC.

Federal government may phase out coal-fired generation; impose cap-and-trade on existing plants

The federal government intends to enact regulations to phase out coal-fired generation in Canada. In an interview with the Globe and Mail, federal Environment Minister Jim Prentice indicated that government's "concept is that, as these facilities are fully amortized and their useful life fully expended, they would not be replaced with coal."

Any new coal-fired plants will have to include carbon capture and storage ("CCS") technology to make them emissions free. However, CCS technology is unproven and expected to be prohibitively expensive. The CCS requirement may therefore render coal uneconomical.

Mr. Prenctice also said that the federal government plans to impose absolute greenhouse gas emission limits on existing coal-fired power plants. Utilities would be able to purchase additional credits to cover emissions that exceeded the prescribed caps. It is unclear whether this cap-and-trade system will apply only to coal-fired generation, to electricity generation more generally, or to industry as a whole as part of a revised Turning the Corner plan.

As with many proposed climate change policies, the impacts of the above would not fall evenly on the provinces. Quebec and British Columbia are powered predominantly by hydro. Ontario relies on hydro and nuclear for its baseload and has already legislated the phase-out of its coal plants. Alberta and Saskatchewan are likely to be hit hardest, both because of their higher dependence on coal-fired power and because they sit atop huge coal deposits.

Nevertheless, the Globe and Mail quoted Brian Vaasjo, VP of Alberta-based Epcor Power LP as saying that they "are absolutely supportive" of the proposal. Epcor has already invested millions in new combustion technology and has applied with Enbridge Inc. for government funding of two proposed CCS projects (see our posting).

Mr. Prenctice did not specify exactly how the regulations would be implemented. However, the federal government has previously indicated that it would implement climate change regulations as amendments to the Canadian Environmental Protection Act ("CEPA"). If any of the provinces take a dim view of the regulations, they may seek to challenge the constitutionality of the federal government's plan. The Supreme Court ruled in R. v. Hydro-Québec that the federal government can regulate environmental matters under its criminal law power. Noted constitutional scholar Peter Hogg has opined that Hydro Quebec would apply to cap-and-trade regulations enacted under CEPA. However, the economic regulation of emissions (i.e., in part through market-based mechanisms) may not fit as neatly into the criminal law power as did the prohibition enforced by a penal sanction that was considered in Hydro Quebec.

Alberta's Climate Change Compliance

As we blogged yesterday, the Alberta Environment reported a reduction in greenhouse gas emissions in Alberta. The emissions reductions come as a result of facilities compliance under the Climate Change and Emissions Management Act (the "Act").

"Alberta is building a strong foundation of experience as we take action to balance the environment, energy and the economy," said Premier Ed Stelmach. "As the only jurisdiction taking this kind of concrete action, we have valuable insight into how we can work with our national and international partners to make real and lasting emission reductions without harming the economy or threatening energy security."

The Act and the associated Specified Gas Emitters Regulation, require that facilities which emit more than 100,000 tonnes of "specified gases" must improve their emissions performance by 12 percent relative to an established baseline rate. Facilities may achieve compliance by reducing their emissions, purchasing emissions offsets in the Alberta offset system or pay $15.00 per tonne over their target into the Climate Change and Emissions Management Fund ("Fund").

In its press release, Alberta Environment also announced that $82.3 million was collected into the Fund in the 2008 compliance year (which ended March 31, 2009), bringing the total paid to $122.4 million. A detailed report will be released later in the year when the industry audits are complete. We'll keep our eyes out for it and keep you updated.

Pembina and Ecojustice seek review of approval of two Shell oil sands projects

As reported by the Calgary Herald, Globe and Mail, and the Wall Street Journal, the Oil Sands Environmental Coalition (the "Coalition") wants the Alberta Energy Resources Conservation Board and Canadian Environmental Assessment Agency to revisit their joint decisions to approve Shell's Jackpine Mine and Muskeg River Mine Expansion oil sands projects. The Coalition, led by the Pembina Institute and represented by lawyers from Ecojustice, has filed an affidavit requesting a review of the 2004 and 2006 decisions of the EUB/CEAA Joint Review Panel. The Coalition alleges that Shell has declared that it will not follow through with written commitments made as part of its approval applications to reduce greenhouse gas emissions by a total of approximately 900,000 tons of carbon dioxide a year. The Coalition alleges that these commitments were prerequisites to the approvals of the projects.

Jackpine Decision

The ERCB's decision regarding the Jackpine project was released in 2004. In that decision, the Panel summarized Shell's view of the climate change issue as follows (at page 50):

"Shell stated that it shared the widespread concern that GHGs were leading to changes in the global climate. Shell advised that it supported the commitment by Royal Dutch/Shell Group to cut emissions from GHGs from its global operations by the amount that would meet or exceed Kyoto emissions reduction targets out to the year 2010. Shell noted that it had set voluntary targets for its oil sands unit, with a goal to be less carbon dioxide (CO2) intensive than the most likely alternative, which was imported crude on a full-cycle basis. It stated that this goal had led to a voluntary reduction target of 50 per cent by 2010 for the Muskeg River Mine. Shell stated that it was presently working with its stakeholders and the Shell Canada Climate Change Advisory Panel to assess voluntary targets for the project, and it further committed to put in place a GHG management plan to reduce emissions over time. Shell also committed to employ the best commercially available technology to minimize GHG emissions. Shell stated that it was committed to meeting the future requirements of Alberta and Canada with respect to GHGs."

The Panel largely accepted Shell's view of the issue, stating the following at page 53 of its decision:

"The Panel accepts Shell's commitment to use leading technologies to minimize GHG emissions and to develop a GHG management plan for the project. The Panel believes that the issue of GHGs can be dealt with through initiatives and policies developed at the federal and provincial levels. The Panel supports AENV in requiring appropriate GHG emissions and emissions intensity reporting. The Panel expects Shell to participate in the development of sectoral agreements that may be applicable to oil sands facilities and to abide by them."

Muskeg Expansion Decision

The ERCB's decision regarding the Muskeg expansion project was released in 2006. In that decision, the Panel summarized Shell's view of the climate change issue as follows (at page 39):

"It said that Shell and Albian believed that human activities could affect climate and that those companies were taking action to reduce GHGs. Albian stated that while GHGs were not yet regulated, it had the lowest GHG intensity of all oil sands operators. It indicated that Albian would be directed by Shell's climate change principles, which included proactive participation in addressing climate change issues, voluntary emission reduction targets, and voluntary progress reporting, among others."

Effect of Shell's voluntary commitments

The Panel noted the following in its Jackpine decision (at page 97), and made a similar statement in its Muskeg Expansion decision (at page 90):

"The Panel believes that when a company makes commitments of this nature, it has satisfied itself that these activities will benefit both the project, stakeholders, and the public, and the Panel takes these commitments into account when arriving at its decision. The Panel expects that Shell will adhere to all commitments it made during the consultation process, in the application, and at the hearing, to the extent that those commitments do not conflict with the terms of any approval or licence affecting the project or any law, regulation, or similar requirement Shell is bound to observe. The Panel expects Shell to advise the EUB if, for whatever reasons, it cannot fulfill a commitment. The EUB would then assess whether the circumstances regarding the failed commitment warrant a review of the original approval. The EUB also notes that the affected parties also have the right to request a review of the original approval if commitments made by the applicant remain unfulfilled."

To the extent that Shell actually made a commitment to set and meet voluntary GHG reduction targets for the projects as part of the above applications and has subsequently refused to follow through with that commitment, the Oil Sands Environmental Coalition is likely relying on this statement as the ground for its request for review. Exhibits filed by Shell in respect of such commitments are no longer available on ERCB's website.

Shell's Response

Shell Canada's John Abbott, Executive Vice President, Oil Sands provided the following statement in response to the allegations:

"We understand and share the concerns of stakeholders on greenhouse gas emissions from oil sands. At Shell we see our role as providing more energy and CO2 solutions, and in consultation with a wide range of Canadian and global organisations took early voluntary action, becoming the lowest GHG intensity operator of all mineable oil sands projects.

We're also adding our voice to the call for a concerted regulatory framework at the regional, national and global levels that drive down emissions across our industry on a level playing field. Alberta's current regulations and the emerging Canadian policies recognize that the need to reduce emissions is too important to rely on voluntary commitments, and along with the rest of the industry we are now focused on meeting these new regulatory targets.

Shell continues to work with stakeholders on ways to strengthen CO2 policies and welcome the thoughtful debate on this critical issue."

The Coalition has interpreted Shell's position to be that it will not meet voluntary targets, but will instead wait for the government to impose binding targets on the projects.

Stay tuned for developments, or track the progress of the Coalition's application regarding Jackpine and Muskeg River on the ERCB's website.

9 of 20 companies pull bids for Alberta CCS money

On April 2, CBC reported that 9 companies, including Suncor Energy, Syncrude Canada Ltd., and ConocoPhillips Canada, have withdrawn their requests for money from Alberta's $2 billion carbon capture and storage ("CCS") fund. CBC's sources attributed the companies' decisions to withdraw to a perception that CCS projects are too expensive, even with government assistance.

Twenty companies had submitted applications. Only 11 are still vying for funding, including Enbridge and EPCOR (as reported in an earlier posting). Funding decisions are expected in June.

Alberta Budgets for Climate Change

The Alberta Government announced its 2009 Budget yesterday. Reading through the many pages of the document, it is clear that climate change is a priority for both the Department of Energy and for Alberta Environment. It is no surprise that climate change initiatives are addressed in more than one Ministry - climate change isn't the responsibility of just one area of government - it touches matters for which many are accountable.

Energy

Of the eleven goals outlined in the Energy Business Plan, six of them are related directly to climate change initiatives in the areas of renewable and alternative sources of energy, conservation of energy and carbon capture and storage. In some cases, strategies for meeting these goals are a combination of the above initiatives.

Renewable and Alternative Sources of Energy

A strategy for meeting Goal 4, to encourage value added development in Alberta, includes facilitating the development and utilization of alternative energy resources such as biofuels and waste to energy opportunities.

Goal 5, to make Albertan's aware of and understand existing and emerging trends relating to energy development and use in Alberta relates to renewable and alternative sources of energy, contains strategies to proactively identify, communicate and address emerging issues that face energy and mineral development in Alberta and to enhance provincial, national and international understanding of Alberta's energy resources and work being done to develop these in an environmentally sustainable manner.

Goal 8 is to ensure effective innovation policies and programs to achieve technology and processing improvements in the development of energy and mineral resources. Realizing Alberta's energy vision will include the development of new technologies or the enhanced deployment of already proven technologies, including renewable energy sources. One of the strategies under this goal is to work with other ministries (Environment?), research organizations and industry to develop an integrated, coordinated approach to research that supports environmentally sustainable energy development.

Carbon Capture and Storage

The Department of Energy identifies Carbon Capture and Storage as a significant opportunity for Alberta in two ways:

Value Added - Alberta has a unique opportunity to develop leading industrial and petrochemical upgrading and refining clusters based on transforming raw feedstocks into synthetic gas and gas liquids for petrochemical development. At the same time we can capture and store carbon emissions and produce electricity for the provincial grid.

CCS - CCS in its ultimate role, is an enabler of clean gasification processes and is a key technology component to realizing the commercial viability of clean fossil fuels. The Western Canada Sedimentary Basin is also one of the world's most attractive sites for storing carbon emissions. Ultimately, Alberta's expertise in the science of solutions will be valued and an exportable resource unto itself.

A number of the goals outlined in the Energy Business Plan specifically relate to CCS.

Goal 3 is to ensure energy and mineral resource development occurs in a responsible, environmentally sustainable manner and achieves the Government of Alberta's outcomes. To do so, the Department of Energy will work with other ministries and stakeholders to implement the provincial action plan on climate change and the recommendations from the Carbon Capture and Storage Development Council, in particular the implementation of carbon capture and storage research and demonstration projects.

Goal 7, that Energy infrastructure is built and sustained to support the Government of Alberta's objectives, includes the need to build infrastructure to support CCS.

Goal 8, ensuring effective innovation policies and programs to achieve technology and processing improvements in the development of energy and mineral resources, specifically mentions the need to develop technologies to realize large scale capture and use of carbon.

Conserving Energy

Goal 6 in Energy's Business Plan is to ensure that industry, citizens, and communities conserve and use energy wisely. Do to so, Energy intends to promote smart metering, smart grids and better consumption measurement; facilitate the reduction of energy intensity through gains in energy effi ciency and demonstrated government leadership; and support the development of an energy effi ciency policy framework and provincial legislation.

Expenditures

The Department of Energy intends to spend wisely in the areas of renewables, conservation and carbon capture and storage. $100 million for CCS alone has been budgeted for 2009/2010. Next year's forcast is triple that number.

Environment

One of the opening statements in Alberta Environment's Business Plan confirms its commitment to addressing climate change:

Leadership is provided to transition Alberta to an outcomes focused environmental cumulative effects management system, implement the provincial Climate Change Strategy, implement the renewed Water for Life strategy, develop all Alberta's energy resources, including the oil sands, in an environmentally sustainable way, and to provide Albertans, stakeholders and industry with information on government's role in ensuring environmental excellence and sustainable development while providing tools to reduce their environmental footprint.

Climate change is specifically identified as a significant opportunity and challenge for Alberta. The Alberta Environment Business Plan summarizes this opportunity and challenge as follows:

Climate change has been described as "the most complex collective action problem in human history". In the United States, President Obama sees climate change as putting "the planet in peril". Global action on this issue continues to build not only from an environmental perspective but in the areas of economics and politics. Albertans and the Ministry are in a unique position of providing global leadership on this issue. The Alberta government's recent announcement of resources towards climate change initiatives including carbon capture and storage is the single largest global expenditure to date. The challenges of managing our global energy resources in an environmentally responsible and economically sound and efficient manner, is creating opportunities for this province to reduce carbon while supporting global energy security.

The budget shows that there is $132 million in the Climate Change and Emissions Management Fund and is projecting another $95 million will be collected next year. March 31 was the date for compliance under the Specified Gas Emitters Regulation and final figures indicating contributions to the Fund should be available from Alberta Environment shortly.

Goal 1, that the cumulative effects of development on land, air, water and climate be managed to achieve Government of Alberta desired environmental outcomes, is the main goal in Alberta Environment's Business Plan which focuses on climate change.

This goal will be addressed using a variety of strategies, including:

• assist in ensuring Alberta's energy resources are developed in an environmentally sustainable way by supporting the Ministry of Energy in the implementation of carbon capture and storage research and demonstration projects
• Continue to implement the Climate Change Strategy through policy, program and infrastructure initiatives and assure appropriate governance of the Climate Change and Emissions Management Fund. This strategy will include programs that promote wise energy use across the province, emissions management, vulnerability assessment and climate change adaptation strategies to reduce Alberta's exposure to climate change risks, development of legislation to drive energy effi ciency and conservation, and support for energy innovation and carbon management initiatives designed to lower greenhouse gas emissions over the long term.
• Complete work with the Clean Air Strategic Alliance (CASA) to update Alberta's Clean Air Strategy and begin implementation of the strategy by applying the revised management framework and renewing the major elements of the provincial air system.

Lessons Learned

This Budget confirms a number of things we have been blogging about:

1. Alberta is a global leader in climate change initatives such as CCS - our government's $2 billion commitment to CCS is the world's largest

2. Cooperation is required - to address climate change domestically, government departments will work together. Both Environment and Energy Business Plans indicate that they will be working with other ministries to address climate change initiatives

3. Addressing climate change is a challenge, but it is also an opportunity for governments

Given the commitments outlined in this budget, Alberta will have much to be proud of at the Copenhagen Climate Conference in December.

Enbridge and EPCOR move forward with CCS projects

Enbridge and EPCOR are planning two large scale carbon capture and storage ("CCS") projects in Alberta. According to the Globe and Mail, each of the projects could meet almost quarter of Alberta's goal of reducing emissions by 200 megatonnes by 2050. Both the federal and provincial governments are being asked to help fund the ambitious projects.

The first project is combines an Integrated Gasification Combined Cycle ("IGCC") commercial-scale near-zero-emission thermal power plant with CCS. The companies expect the Genesee IGCC CCS project to capture more than 3,300 tonnes per day or 1.2 million tonnes of carbon dioxide emissions a year. The second project would use an amine scrubbing process to remove CO2 emissions from the flue gas of a conventional power plant. The companies expect the the Genesee Amine CCS project to capture 3,000 tonnes of CO2 per day, or nearly one million tonnes a year.

Both projects would pipe the captured CO2 from the project sites for use in enhanced oil recovery or permanent storage in deep saline aquifers. The transportation and storage of CO2 would be the responsibility of the Alberta Saline Acquifer Project ("ASAP"), a joint initiative of 37 companies that is on track to build a demonstration pilot project by 2012.

Recent funding announcements suggest that the two Genesee projects are still on track. On March 26, the companies announced that the Genesee Amine CCS projects would receive funding under the federal ecoENERGY Technology Initiative. The exact amount of funding will be determined as the government and companies negotiate the contribution agreement. On April 2, they announced that they had applied for funding for both projects under the Alberta Government's $2 billion CCS program under the climate change action plan. Alberta is expected to process the application over the next 3 months.

And the Clean Energy Dialogue Begins

Our Environment Minister took a trip to Washington to meet with U.S. legislators and to promote the Clean Energy Dialogue this week.

On Monday Minister Prentice met with Senator John Kerry, who is the head of the Senate foreign relations committee. On Tuesday, the Minister met with Energy Secretary Steven Chu, Todd Stern, the special envoy on climate change and Lisa Jackson, the new head of the Environmental Protection Agency.

The Minister's discussions this week in Washington focused on the "expansion of clean energy research and the deployment of clean energy technology".

The Canadian press seemed to expect that the discussions would focus on Alberta's oilsands and not research and technology and the Clean Energy Dialogue. However, the Minister confirmed that the oilsands came up only "tangentially" in his discussions with the American legislators, including with Henry Waxman, the new chairman of the house energy and commerce committee and an ardent environmentalist.

Canada is the largest supplier of energy to the United States. Emissions from the oilsands, which are the subject of some "high minded hypocrisy" this month, are 50-70 times less than the aggregate of the emissions from coal plants in the United States.

America's challenge is clean coal; Canada's may be clean oil. But given that the oilsands were not, by the Minister's account, the focus of his discussions with legislators in Washington, perhaps both Canada and the U.S. recognize that neither country is going to gain any ground by pointing fingers. The right approach is to meet these challenges by looking forward and finding solutions in research and the development of new clean technologies. Isn't that what the Clean Energy Dialogue is for?

Alberta Charges Ahead

You'll recall the writer's update after the federal budget where I mentioned I would be closely watching the provinces' environmental and climate change initiatives. The new session of the Alberta Legislature kicked off today with the Speech from the Throne. As expected, climate change and the environment were addressed and once again, Alberta is leading the way in Canada to help advance new technologies to combat climate change.

Today's Speech from the Throne revealed the provincial government's intention to implement the Carbon Capture and Storage Implementation Act to solidify the government's $2 billion commitment (which is twice the federal commitment) to carbon capture and storage. Funding for between three and five CCS projects are expected to be announced in 2009 which could result in greenhouse gas emission reductions of up to five million tonnes annually in Alberta, the equivalent of taking a third of Alberta's vehicles off the road.

The CCS initiative is not just good for Alberta - the CCS technologies "will set the stage for technological developments that will make carbon capture and storage - real reductions in greenhouse gas emissions - possible in other jurisdictions, including those whose emissions are substantially larger than Alberta's".

Also announced was the government's intention to "develop an energy efficiency policy framework to help Albertans be wise energy consumers". The government will be introducing a consumer rebate program to encourage energy wise decisions.

Taking a cue from Minister Prentice's remarks in Toronto in January where he indicated that the provinces and the federal government will have to work together to address climate change, the Throne Speech stated that Alberta will "continue to work with the federal government to support a cohesive national framework to limit greenhouse gas emissions and do our part as a responsible, sustainable North American energy leader".

There will, of course, be critics who think that the Alberta government hasn't done enough. I remind them: Alberta pioneered North America's first regulatory system to reduce industrial greenhouse gas emissions. It is still the only jurisdiction in Canada regulating emissions. Alberta has set aside $2 billion for carbon caputre and storage - even the federal government hasn't put away that kind of money. And Alberta has the Climate Change and Emissions Management Fund, where regulated emitters can pay $15 per tonne of CO2 emissions over a permitted baseline. The money in the fund, expected to be up to $200 million per year, will be used for purposes related to reducing emissions of specified gases and improving Alberta's ability to adapt to climate change. Who is doing more in this country than Alberta?

Budget 2009 - Transformation to a Green Energy Economy

The Conservative Government's 2009 Budget promises billiions of dollars in government spending to help the country ride out the global economic downturn. With the recent U.S. announcements about climate change, did Canada give due consideration to climate change and the environment in the Budget?

The Budget allocates $1 billion dollars to support clean energy technologies. Spread over five years, this includes $150 for research and $850 million for the development and demonstration of promising technologies, including large scale carbon capture and storage (CCS) projects. According to the budget, this support is expected to generate a total investment in clean technologies of at least $2.5 billion over the next five years.

Federal allocations of money to carbon capture and storage are in addition to the Alberta government's $2 billion fund to kick start carbon capture and storage technologies. Between Federal and Alberta monies, funding for CCS could be nearly $3 billion.

In light of the potential of CCS as a means of reducing emissions, the Government has also announced plans to consult with stakeholders to identify specific assets used in CCS which may be eligble for accelerated capital cost allowance. This tax incentive will be used to actively promote investments in certain clean-energy generation techologies.

Another $1 billion dollars will go to the Green Infrastructure Fund over the next five years. This fund will be allocated based on merit to support green infrastructure projects on a cost-shared basis. The Budget states:

"Targeted investments in green infrastructure can improve the quality of the environment and will lead to a more sustainable economy over the longer term. Green infrastructure includes infrastructure that supports a focus on the creation of sustainable energy. Sustainable energy infrastructure, such as modern energy transmission lines, will contribute to improved air quality and lower carbon emissions."

Monies for CCS and the Green Infrastructure Fund are in addition to other funds in the Budget allocated in the area of climate change and Canada's environment, including:

• $1.3 billion over two years to support renovations and energy retrofits that will make Canada's social housing stock more energy efficient, to be split on a 50/50 cost-shared basis with the provinces;
• $300 million over two years to go to the ecoENERGY Retrofit program to support an additional 200,000 energy-saving home retrofits;
• $85 million over two years for key Arctic research stations, and $2 million over two years for a feasibility study for a world-class Arctic research station;
• $80.5 million over the next two years to manage and assess federal contaminated sites, which will facilitate remediation work totaling an estimated $165 million over the next two years and contribute to an improved environment as well as employment opportunities;
• $75 million for national parks; and
• $10 million in 2009-2010 to improve the government's annual reporting on key environmental indicators such as clean air, clean water and greenhouse gas emissions.

All of these initiatives demonstrate the Government's commitment to the environment - and these are Federal initiatives. Provincial budgets, including Alberta's, are coming soon and will include their own environmental and climate change initiatives. We will be keeping a close eye on them.

Alberta's Auditor General critical of province's climate change efforts

Alberta's response to climate change needs to be substantially improved. That is the overall message from the province's Auditor General in a report released on October 2.

The report acknowledges that Alberta has made significant progress in developing programs to deal with climate change. However, the Auditor General expressed concern that the programs are not being implemented in a way that will allow the government to measure the effectiveness of its efforts: "Alberta could spend a lot of money but not achieve emissions targets. Or it could achieve targets, but not cost-effectively."

The Auditor General concluded that the government's management systems should be improved. While the 2008 Strategy sets targets and establishes a vision, it provides an incomplete list of the actions that will be required to achieve the targets and realize the vision. The Auditor General way particularly concerned about the lack of detail regarding how improved conservation and efficiency and the use of alternative fuels would account for 30% of reductions. The government should improve its plan by specifying all the required actions and setting milestone dates for key decisions. However, before finalizing its plan, the government should agree on objective criteria for choosing effective actions. Once the plan is in place, the government should implement a system for tracking overall progress towards its climate change goals. It must improve reporting and ensure that reliable and relevant data is reported to the public. The Auditor General noted in particular that current reporting sometimes obfuscates the difference between reductions in absolute emissions and reductions in emissios intensity.

September 2008 Climate Change Law bulletin now available

Carbon offsets are no longer just a voluntary niche product in Canada. Rather carbon offsets are increasingly becoming a sought-after compliance tool for greenhouse gas emitters who are or will be regulated under provincial, federal and regional emission reduction initiatives. Many new offset projects will have to be implemented in Canada to meet this burgeoning demand. Companies with experience in a wide array of sectors including cattle farming, agriculture, forestry, bioenergy, waste management, methane capture, renewable energy, oil and gas, industrial processes, and transportation may be well poised to profit from this emerging market. Sophisticated regulated emitters may also be motivated to turn a compliance cost into a business opportunity by investing in offset projects. In a market whose scope will be determined by regulation, all market participants should consider taking advantage of immediate opportunities to influence the way that offsets will fit into provincial, federal, and regional emissions reduction initiatives. The September 2008 Climate Change Law bulletin discusses the opportunities to access and influence these emerging markets for carbon offsets.