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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.

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.

Government of Australia to accept long-term CO2 sequestration risk on $37B Gorgon LNG Project

A recent Bloomberg article highlights a basic yet key legal consideration related to CO2 capture and sequestration that major corporations are looking into when deciding on what projects to invest in: long-term liability related to CO2 sequestration.

The article relates how following the Australian government's acceptance of long term liability linked to the potential escape from sequestration of carbon dioxide captured from the project, partners Chevron Corp., Exxon Mobil Corp. and Royal Dutch Shell Plc gave the green light to a joint $37 billion investment in the Gorgon liquefied natural gas development project off the northwest coast of Australia.

The Gorgon project, which calls for the development of Australia's largest natural gas discoveries to date, represents the continent's single most important resources project and investment. The project includes the construction of a liquefied natural gas facility with an annual capacity of around 15 million tonnes per year on Barrow Island and incorporates stringent environmental standards designed to protect the island's natural heritage. Plans also call for development facilities installed directly on the ocean floor, in water close to 1.5 km deep. Two subsea pipelines with a combined length of 240 kilometres will carry the gas to facilities on Barrow Island.

Inclusion of CO2 capture and sequestration facilities in the project design stem from Australia's planned introduction of a carbon trading and pollution reduction system in 2011. The planned facilities will capture the naturally occurring carbon dioxide extracted during the liquefaction process and inject it into porous rock more than 2 km beneath Barrow Island. The CO2 capture and sequestration component will cut the project's emissions by an estimated 40 percent.

The project will start exporting gas in 2014 and have a lifespan of at least 40 years. The project partners have entered into LNG supply agreements with companies in China, India, Japan and South Korea.

Other than the state and federal government's confidence in the existing sequestration technology associated with the project, it's importance in creating wealth, jobs and investment justified government acceptance of liability. It is believed that Gorgon may generate A$300 billion in sales in its first 20 years of operations.

The Australian government's decision to cover long-term-liability will certainly set a precedent in the resource-rich nation and most likely beyond its borders as well. Although the specifics of the agreement have not all been made public, the project partners are said to retain liability for carbon storage during the project's construction and operation phases and for at least 15 years after its closure. The government's liability, triggered in 2069, would then be assumed in an 80-20 percent proportion between the Commonwealth and state governments.

This recent development highlights the crucial importance that climate change, carbon regulation and the resulting development and implementation of carbon capture and sequestration technologies are playing in major fossil energy project investment decisions. Likewise, when attracting such investment and negotiating with project sponsors, governments in jurisdictions around the world will now need to carefully consider the serious legal implications of long-term liability related to such technologies.

U.S. - Canada Clean Energy Dialogue - First Report

Yesterday Canadian Environment Minister Jim Prentice and U.S. Energy Secretary Steven Chu delivered an update on the two nations' clean energy dialogue (CED), which was first announced when President Obama met with Prime Minister Stephen Harper in Ottawa this past February. The release of the report coincided with Prime Minister Harper's meeting in Washington D.C. with President Obama at which energy was on the agenda and after which Harper reminded the U.S. at a press briefing that: "[...] Canada is by far the largest supplier of energy to the United States. And [it is] determined to be a continental partner in dealing with the [...] linked problems of climate change and energy security [...]".

The three key areas on which Harper and Obama had asked their respective delegates to work together on under the auspices of the CED were: (1) The development and deployment of clean energy technology; (2) the building of a more efficient energy grid, based on clean and renewable generation; and (3) expanding R&D into clean energy.

As part of the countries' collaboration on carbon capture and sequestration (CCS), the report states that the countries will expand on existing collaboration in CO2 injection and storage testing, share information from large-scale CCS demonstration projects such as the Weyburn-Midale project in Saskatchewan, in which carbon dioxide is piped from the Great Plains Synfuels plant in North Dakota to an oilfield operated by EnCana and injected for use in enhanced oil recovery. The report goes on to insist on working towards a consistent regulatory framework between the countries, which would include compatible CCS project rules, standards, and monitoring, as well as verification and accounting principles. Bilateral meetings between Canadian and American CCS experts are planned in mid-2010 and 2011 to share best practices and provide updates on joint activities. The two nations intend to form the "Canada-U.S. CCS Collaboration" under the existing Trilateral Energy Science and Technology Agreement, which also includes Mexico and hope to formalize the arrangement through an implementation agreement by the end of 2009.

As a result of the continued growth in electricity demand, collaboration between the two nations regarding the North American power grid will focus on the open exchange of information and electricity research, development and deployment (RD&D), reliability standards, cyber security and interoperability guidelines. Upgrades to the electric power grid will aim to increase its efficiency and promote connection to clean energy sources, as well as the use of clean energy technologies.

Joint commitments regarding Clean Energy RD&D are meant to boost economic opportunities for the CED partners and the two are to develop a "Clean Energy RD&D Collaboration Framework" and a technology roadmap which would allow both nations to meet their respective 2050 greenhouse gas reduction targets. The Framework and Roadmap would notably foster a unique North American market through common codes, standards and incentives, along with collaborative research and development, sharing of information , facilities and scientific infrastructure.

The Canadian Environment Minister and U.S. Energy Secretary are expected to release the next CED report in the spring of 2010, ahead of the next bilateral meetings.

Western Premiers Sign MOU on CCS Technology and Policy

The Premiers of Alberta, Saskatchewan and Manitoba held a joint cabinet meeting in Calgary on September 11, 2009. During the meetings, the provinces signed two key agreements, including a Memorandum of Understanding on Carbon Capture and Storage Technology and Policy, which "focuses on advancing co-operation on energy research and technology". Also highlighted were the concepts of "strengthening internal trade, innovation and international marketing, further developing Canada-U.S. relations and committing to improvin pension coverage for workers".

Of the MOU, Premier Stelmach remarked "collaboration in the West has best positioned our provinces to lead Canada both economically and in the development of clean energy technologies such as carbon capture and storage. By joining forces with B.C. and Saskatchewan, we can better develop and deploy this innovative technology, helping to meet climate change objectives and making us international leaders in this technology".

The second key agreement, the "Western Economic Partnership" is an interprovincial trade agreement designed to be the largest barrier-free trade and investement market in Canada.

The CCS MOU is the next in a series of steps Alberta has taken to advance CCS technology and deployment. Alberta announced its $2 billion CCS fund in 2008. The monies in the CCS fund are in addition to monies in the province's Climate Change and Emissions Management Fund, which is administered by the CCEMC. For the 2009 Call for Proposals, 30% of available funds may be used to advance CCS technologies and innovation.

When Canada goes to Copenhagen in a few months, this newest announcement by the Western provinces will be another point of climate change achievement.

We will continue to keep you posted about the Memorandum of Understanding among the three provinces. Stay tuned!

U.S. DOE to fund 19 Geologic CO2 Storage Projects

On Monday, August 24 2009, the U.S. Department of Energy announced the selection of 19 projects to enhance the capability to simulate, track, and evaluate the potential risks of carbon dioxide (CO2) storage in geologic formations.

Valued at approximately $35.8 million USD over 4 years, the results of the selected projects will be vital to the fossil energy industry and most notably to the coal industry, which is the United States' most abundant domestic energy resource, supplying nearly 50 percent of the country's electricity requirements. In order to ensure that low-cost electricity from coal-fired power plants remains available, it is necessary to develop economical methods for capturing and storing the greenhouse gas emissions which such plants emit. It is thought that CO2 storage in deep geologic formations is one of the most economical ways to achieve this goal.

The outcome of these projects will serve to further develop technologies and protocols intended to monitor the movement of CO2 in geologic storage areas, verify its location, account for the amount sequestered and assess the risks associated with the placement of the CO2 in geologic formations and its potential release following sequestration.

The projects will be carried out by leading U.S. universities and industrial and technology groups, with overall work to be managed by the Office of Fossil Energy's National Energy Technology Laboratory.

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."

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.

Canada announces details of $1 billion clean energy fund

The government of Canada announced the details of the $1 billion clean energy fund it announced in February. A statement issued by the Minister of Natural Resources Lisa Raitt revealed that the fund will be allocated as follows:

• $650 million to support large scale carbon capture and storage ("CCS") demonstration projects;
• $200 million to support smaller-scale demonstration projects of renewable and alternative energy technologies; and
• $150 million to support research and pre-demonstration pilot projects "ranging from next generation renewable and cleaner energy systems to new technologies to address environmental challenges in the oil sands such as water use and tailings"

Additional details are available on the Ministry of Natural Resources website. The government has already issued a request for proposals for smaller-scale demonstration projects.

That the majority of the money is allocated to CCS is not surprising given the quantity of emissions from coal-fired generation and oil sands projects, particularly in the province of Alberta. The US has recently hinted that it may ban or impose large tariffs on oil imports from carbon-intensive sources like the oil sands. CCS could effectively clean up the emissions profile of upgraded and refined bitumen and preserve the export market.

The fund is also consistent with Canada's Clean Energy Dialogue with the US (discussed here, here, and here).

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.

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.

Clean Energy Dialogue Finds a Friend in Steven Chu

The Clean Energy Dialogue between Canada and the United States was begun in February after President Obama visited Ottawa. Shortly after the historic meeting, our Environment Minister, Jim Prentice, met with his U.S. counterparts and others in Washington, D.C. to discuss how to move the Clean Energy Dialogue forward.

In interviews this week, Steven Chu, the U.S. Secretary of Energy was asked whether there should be international collaboration on energy research.

Dr. Chu's responded that "there is no reason why [energy research] should be compartmentalized" and said that it was particularly true for carbon capture and storage technology. Dr. Chu also commented:

"If countries actively helped each other, they would also reap the home benefits of using less energy. So any area like that I think is where we should work very hard in a collaborative way - by very collaborative I mean share all intellectual property as much as possible. And in my meetings with counterparts in other countries, when we talk about this they say, yes, we should really do this".

The focus of the Clean Energy Dialogue is the expansion of clean energy research and the deployment of clean energy technology. Both Canada and the United States realize that in order to address climate change new energy technologies must be created. It is not the responsibility of one country to go about this alone. It seems Steven Chu would agree.

Canadian Climate Change Themes

The Clean Energy Dialogue between Canada and the United States was sparked in February after the Prime Minister met with President Obama. The President's Climate Change advisor, Carole Browner, met with the Minister of Environment to discuss Canada's approach to climate change during those meetings. A couple of weeks later, Canadian Ministers, including the Minister of Environment, traveled to Washington to meet with their American Counterparts. Since then, Jim Prentice has been busy speaking about Canada's response to climate change. A number of themes are emerging from the Minister's remarks:

1. Environment Policies are Instruments of Economic Renewal and Security : The Minister confirmed in a speech to the Institute of Corporate Directors on March 6, that Canada's environmental approach is to "make our national environmental policies positive instruments of economic renew and of national development". Environment policy and energy policy are inexorably linked. Canada has a history of environmental stewardship and has a responsibility to maintain that what at the same time creating wealth and building industry. Maintaining environmental integrity while enhancing our North American energy security is going to be a priority for the Federal government. We will start to see more overlap between Energy policy and Environmental policy.

2. Canada/U.S. Co-operation on Climate Change: This is no surprise. Since the President's visit in February, both the Prime Minister and the Environment Minister have said that Canada and the U.S. need to work together closely to address climate change. Minister Prentice has confirmed that Canada and the U.S. must work closely to build a new carbon economy and to ensure that "our policy and regulatory frameworks are coherent and supportive" and has called the relationship with the United States crucial in the context of the transformation to clean energy. There are a number of subthemes:

(a) Cap and trade: In a speech on February 27, Minister Prentice confirmed that Canada has committed to pursue a North-America-wide cap and trade system and that we will "work closely with the new U.S. administration to build the North American low-carbon economy". He is optimistic that Canada and the United States will arrive at a workable solution that defines "common or similar carbon reduction targets, that creates similar mechanisms to allocation emissions and...provides for the trading of credits on a North American basis".

(b) Fuel efficiency: Minister Prentice told the CBC on March 1 that Canada is prepared to go in the same direction as the United States and that he supports one fuel efficiency standard for the two countries.

(c) New technologies: The Minister remarked that Canada and the United States have a strong and shared interest in promoting the development and deployment of clean energy technologies. The Clean Energy Dialogue will include discussions about Carbon Capture and Storage, an interconnected electricity grid, nuclear energy, wind, solar, hydro and other "more remote renewable sources of energy". Canada's action plan has Canada "on course to reduce domestic greenhouse gas emissions by 20% by 2020 and by 60 to 70% by 2050". In order to achieve these goals, Canada must invest in new technologies.

3. Canada Must be a Leader : Canada is one of the top ten energy consumers in the world. Our challenge is to "stand among the world's elite as a clean energy superpower" and to demonstrate that Canada is a user of clean energy. The Minister told his March 6 audience that the government is "committed to ensure that Canada is actively and constructively engaged in the [Clean Energy Dialogue]" and that it "intends to be a leader and a responsible partner in defining the way forward".

4. International Agreement : both the United States and Canada seem to be setting their sights on Copenhagen in December and both countries believe that in order for climate change policies to be effective domestically, international co-operation is required. Canada's climate change policy is "based on a clear desire to include all of the major emitters in the world". Major emitters would include China and India and other developing nations.

5. Climate Change is Everyone's Responsibility : Although the impetus for climate change has to come from government with active participation and engagement of industry, the responsibility extends to all citizens "from all walks of life". Canada's climate change strategy will involve "how we consume and conserve energy in our homes and in our offices". In his February 27 speech, Minister Prentice remarked:

Thirty years ago, drunk driving was tolerable. It's not anymore. Twenty years ago, it was acceptable to drive without a seatbelt. It's not anymore. Up until a few years ago, Canadians could smoke anywhere in public. They can't anymore. Attitudes shifted. Behaviours changed. The same needs to happen with the environment.

Watch for these themes to start emerging in other departments of the federal government. Climate change is one of the most important issues facing governments today. We'll keep you posted on new developments in Canada. Stay tuned.

President Obama in Canada: What Just Happened and What Does it Mean

Wow! What is must have been like to have been in Ottawa today when Prime Minister Stephen Harper and President Obama had their much anticipated meeting. How lucky those people happened to be in the Market when the President stopped by for a Beavertail or who cheered on as the he waved to the crowds gathered on Parliament Hill and Wellington Street. What a cool day to be in the capital.

Although the leaders' agenda touched many matters, economy, climate change & the environment and national security (I see a theme here...) were at the centre of comments made by both the President and the Prime Minister after their meeting.

Prime Minister Harper said that the two countries have begun a "Clean-Energy Dialogue", which will see senior officials from both sides of the border working together on the development of clean energy, science and technologies. If you've been paying attention to the comments from our Environment Minister, this will come as no surprise. Although the President confirmed that the U.S. must firm up its own environmental policies before entering into binding agreements with Canada, he said that the "dialogue will move us in the right direction".

Why? Because Economy = Environment/Climate Change = National Security and both the U.S. and Canada recognize that. The goal of the Clean-Energy Dialogue will be to position the U.S. and Canada at the forefront of global leadership on "clean energy" and climate change.

How? By focusing on:

1. Technology
2. Innovation
3. Energy research
4. Carbon capture and storage
5. Renewable Energy

The governments of both countries will have to collaborate to pursue technology and innovation to fight climate change, stimulate the economy and preserve national security. The Clean-Energy Dialogue will bring private enterprise and science together with government funds to develop new technologies to combat global warming and lead the world from economic crisis.

Seems to me that huge dollars will be involved and government intervention on both sides of the border will be required in order to put the Clean-Energy Dialogue partners on the road to the Green Economy. Right now, that road is leading to Copenhagen.

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.

Canada's Commitment to Climate Change

On January 20, 2009 the Honourable Jim Prentice, Minister of the Environment for Canada, gave a speech in Toronto to the Canadian Council of Chief Executives. The speech focussed on Canada's climate change objectives and policy in 2009 and beyond. The Minister confirmed what many climate change insiders already suspected - that Canada would be evolving from an intensity based performance standard to a cap and trade regulatory regime.

The speech was timely. As Minister Prentice stood before his audience, President Obama's inauguration was taking place in Washington. Cap and Trade, the favoured method for regulating emissions by the new American President, places hard caps on emitters to keep their emissions below specified levels. Minister Prentice clearly recognizes that under the Obama administration, the US is "re-engaging on multilateral climate change negotiations, creating the opportunity for…a North American regulatory regime and a level playing field that will alleviate past concerns about Canadian competiveness”.

How will the Canadian government proceed? Minister Prentice outlined 3 ideas which are at the forefront of the Government's strategy to deal with climate change: (1) endeavour to "do no harm” and avoid measures which would cause Canadian firms to be "not just down by also out”; (2) seek to ensure that federal policies are co-ordinated - climate change regulation would work in tandem with, for example tax policy, tariff policy and technology policy; (3) seek coordination and harmonization between federal and provincial governments and policies.

Minister Prentice also stressed that it is developed nations, like Canada and the United States working together with other developed nations, who will lead the world to cut emissions, with developing nations following suit. Without securing meaningful participation from the Big Five of China, India, Brazil, South Africa and Mexico, efforts of the developed world will be "well-intentioned folly” in the realm of climate change.

To achieve leadership in this area and central to Minister Prentice's speech was his desire to see one shared target between Canada and the United States akin to the collective commitment of the European Union. When President Obama makes his first official state visit to Canada in the upcoming weeks, Minister Prentice hopes that "one of the many points of agreement for action will be commencing a co-operative, bilateral approach to the environment and to energy in ways that spur economic recovery and renewal”.

All roads will lead to the Copenhagen Climate Conference in December, 2009. It's an exciting time. With its natural resources and new technology initiatives in the realm of carbon capture and storage, energy conservation and efficiency and greening energy production, and with Minister Prentice's bright and forward thinking leadership, Canada is poised to be a force to be reckoned with on the world stage.

The full text of the speech is available here: Environment Canada - Media Room

Ottawa's GHG offset system to include a "fast track" project approval system for first 6 months

submitted by Grant Boyle

On August 9 the federal government published a draft Guide for Protocol Developers for Canada’s Offset System for Greenhouse Gases. The draft Guide will undergo a 60 day consultation period before a final Guide is published. The Guide is intended to provide details on the requirements to complete an Offset System Quantification Protocol and the steps that must be followed to create offset credits under the federal GHG emissions framework.

Projects must take place in Canada, must have started on or after January 1, 2000, must be surplus to all legal requirements (federal, provincial/territorial and regional) and go beyond what is expected from the receipt of other climate change incentives (federal, provincial/territorial). Credits may be issued for reductions achieved after January 1, 2008.

The quantification requirements in the Guide are based on the ISO 14064 standard. The Guide does not provide or recommend an approach to quantify GHG reductions from specific project types and will rely on project proponents to develop and submit their own protocols to Environment Canada for approval, unless the protocol type has already been approved by the Ministry. The approvals process is expected to take 5-8 months.

During the first six months of the operation of the Offset System, Environment Canada will implement a modified and accelerated process to review and approve Offset System Quantification Protocols that are derived from a list of 40 “external protocols” from other systems, including: the Clean Development Mechanism, Alberta’s Specified Gas Emitters Regulation, the California Climate Action Registry, the Greenhouse Gas Abatement Scheme in New South Wales, France’s Offset System, and the Regional Greenhouse Gas Initiative. The Guide includes a proposed list of external protocols for “fast track” approval:

Agriculture
*Including Edible Oils in Cattle Feeding Regimes (Alberta)
*Reducing Days on Feed of Cattle (Alberta)
*Reducing the Slaughter Age of Cattle (Alberta)
*Anaerobic Decomposition of Agricultural Materials (Alberta)
*Livestock Project Reporting Protocol Capturing And Combusting Methane From *Manure Management Systems (California)
*GHG Emission Reductions From Manure Management Systems (CDM)
*Innovative Feeding Of Swine and Storing and Spreading of Swine Manure (Alberta)
*Tillage System Management (Alberta)

Energy Efficiency
*Waste Gas Or Waste Heat Or Waste Pressure Based Energy Systems (CDM)
*Residential Buildings (Alberta)
*Commercial Buildings(Alberta)
*Waste Heat Recovery Projects (Alberta)
*Waste Heat Recovery Project - Streamlined(Alberta)
*Energy Efficiency Projects (Alberta)

Forestry
*Afforestation Projects (Alberta)
*Forest Management (California)

Fossil Fuels
*Industrial Fuel Switching From Coal Or Petroleum Fuels To Natural Gas (CDM)
*Switching From Coal And/Or Petroleum Fuels To Natural Gas In Existing Power Plants For Electricity Generation (CDM)

Geological Sequestration
*Acid Gas Injection (Alberta)
*Enhanced Oil Recovery (Alberta)

Methane
*Landfill Gas Capture And Combustion (Alberta)
*Landfill Project Reporting Protocol Collecting And Combusting Methane From Landfills (California)
*Landfill Gas Project Activities (CDM)
*Coal Bed Methane, Coal Mine Methane And Ventilation Air Methane Capture And Use For Power (Electrical Or Motive) And Heat And/Or Destruction By Flaring Or Catalytic Oxidation (CDM)
*Aerobic Composting (Alberta)
*Aerobic Landfill Bioreactor Projects (Alberta)
*Coalmine Methane and Abandoned Mine Methane Capture and Destruction Projects (General Electric AES)
*Waste Water Treatment Methane Capture and Destruction Projects (General Electric AES)

Renewable Energy
*Biomass to Energy from Biomass Combustion Facilities (Alberta)
*Electricity Generation From Biomass Residues (CDM)
*Run Of River Power Generation (Alberta)
*Solar Power Generation (Alberta)
*Wind Power Generation (Alberta)
*Introduction Of A New Primary District Heating System (CDM)
*Grid Connected Electricity Generation From Renewable Sources (CDM)

Transportation
*For Gravel And Lightly Surfaced Road Re-Surfacing Projects (Alberta)
*For Freight Modal Shifting (Alberta)

Waste
*Recovery & Utilization Of Gas From Oil Wells That Would Otherwise Be Flared (CDM)
*Non-Incineration Thermal Waste Management (Alberta)

Other
*Biofuels Productions And Usage (Alberta)
*Catalytic Reductions Ofn2o Inside The Ammonia Burner Of Nitric Acid Plants (CDM)