Manitoba Hydro’s

Emission Management Perspectives

Bill Hamlin

Emission Management Perspectives

Period

• Voluntary Commitment - VCR 1990’s to ?

• Chicago Climate Exchange - CCX 2003 to 2006

• Canadian Domestic Emission Trading ?

Manitoba Hydro Actions- Voluntary Commitment to keep emissions 6%lower

than 1990 from 1990 to 2012

– 1330 MW Limestone hydro plant – Retired four 33 MW coal units– Conversion of 132 MW coal to natural gas– Connect diesel to grid – Demand Side Management– Environmental Dispatch Premium

Current Voluntary Credit Market

• Low price for CO2 emission reductions

($0.5 to $2 per tonne).• Unclear which emission reductions will

have long term value.

Potential Canadian Domestic Actions

• Electricity– Highest profile target

– CO2 capture and storage

– Hydro developments– Other renewables especially wind

• Agricultural practices and sinks• Forestry sinks• Transportation efficiency, biomass fuels,

and fuel cells

Greenhouse Gas Emissions

0200400600800

100012001400

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eq

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2/T

Wh

Source: IEA Technical Report, May 2000. Hydropower and the Environment: Present Context and Guidelines for Future Action. Vol. II: Main Report, Ch.3: “Comparative Environmental Analysis of Power Generation Options”

- Electricity Options

Aspects of Canadian Domestic Emission Trading System (DET)

• will target large industrial emitters• considerable efforts to shield emitters from

full price signal– Target reductions from BAU not 1990 levels– cap maximum price at $15 / tonne CO2– output based allocation rather than auction.

• emission reductions from sectors not covered by DET may be available for credit creation (e.g. agriculture, landfill gas, forestry etc)

What potential credit purchasers don’t want:

– to create credits (unless reductions are related to core part of their business)

– liability, complications and costs associated with credit creation, validation etc.

What potential credit purchasers do want:

– Clear rules. – What are our emission reduction

obligations?– No concerns or liability with respect to

offsets (no liability for purchaser). – Simple, low cost transactions.– Liquid market for emission reductions so

that they can buy and sell.

What Agriculture Needs to Do• Understand the range of potential credit prices

available in different time periods. • Understand the costs of different emission

reduction actions.• Develop a strategy emphasizing the lowest cost

actions first with a long term strategy for higher cost emission reductions later.

• Demonstrate emission reductions that are real and verifiable.

• Participate to ensure DET system recognizes and values these projects.

THANK - YOUTHANK - YOU

Considerations for MHRe: Brady Landfill Project

– Reductions available offer a good fit with our current offset requirements.

– Economy of scale - big project– Landfill gas project is close to our core business– Landfill gas is an energy product similar to natural

gas.– Potential for electrical generation.– Close to our core business.– Reasonable chance recognition in the longer term.