Senate Standing Committee on Energy, the Environment and Natural Resources Michael Cleland, President, Canadian Gas Association June, 2003.

Senate Standing Committee on Energy, the Environment and

Natural Resources

Michael Cleland, President, Canadian Gas AssociationJune, 2003

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Overview Natural gas in perspective Natural gas and climate change Developing an

industry/government partnership

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Natural Gas Industry at a Glance

Approx. 5 million metering points of exchange

Downstream sector:

Transmission Distribution Utilization

Meets 1/3 of Canada’s total energy demand

50,000 employed

Transmission

Distribution LDC

Residential Consumers

Industrial & Institutional Consumers

Food Mart

Small Business commercial customers

Gas Plant

Points of Measurement or Custody Transfer

Midstream Processing

Gas Marketers

(565 BCF)

(389 BCF)

(812 BCF)

Contracts Contracts

Export Markets(3,603 BCF)

Exploration & Production

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Natural Gas Transmissionin Canada

180 billion m3 natural gas shipped annually for:

Export Domestic use

Production is:90% / 10%Western / Eastern off-shore

80,000 km of transmission pipeline

1,201 BCF3

1,377 BCF 3 1,024 BCF 3

9 bi

llion

m3

7 bi

llion

m3

3 bi

llion

m3

26 billion m 3

7 billion m 3

28 b

illio

n m

3

318

BC

F

247

BC

F

106

BC

F

918 BCF

247 BCF

989

BC

FGAZODUCGAZODUC

TQMTQMTransCanadaTransCanadaPipelinesPipelines

ATCOATCOPipelinesPipelines

TRANSGASTRANSGASDukeDuke

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Natural Gas Distributionin Canada

345,000 km of distribution pipeline

Serves over 5 million customers in most regions Terasen Gas Terasen Gas

V.IV.I

TerasenTerasen

GasGas

Enbridge GasEnbridge GasDistributionDistribution

Union Union GasGas

Gaz Gaz MétropolitainMétropolitain

ManitobaManitobaHydroHydro

SaskEnergySaskEnergy

ATCO ATCO GasGas

GazifèreGazifère

Alta GasAlta GasUtilitiesUtilities

PacificPacificNorthern Northern

GasGas

Enbridge GasEnbridge GasNewNew

BrunswickBrunswick

AlbtAlbtCo-opsCo-ops

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Demand for Canadian Natural Gas

56% export

16% industrial & power generation

13% institutional

6% commercial

9% residential

9%6%

13%

16%

56%

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Natural gas and climate change

Three key perspectives: Natural gas is part of the solution The natural gas industry is doing its

part Consumption is the key

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Natural gas is part of the solution Natural gas is the least carbon intensive fossil fuel – and

contribution to other air emissions is less than other fuels

In the near and the long run further use of natural gas in applications such as power generation, industrial use and transportation could bring important benefits

But needs to be looked at as part of an overall solution involving many fuels and technologies

And we need to ensure adequate supplies if we want to realize the full scope of the environmental and economic benefits

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The natural gas industry is doing its part The downstream (LDC) sector contributes a very small part to

Canada’s GHG emissions 2000 distribution emissions from all sources such as combustion

venting and fugitives total 1.1 MT CO2e or .28 % of the LIE (381 MT CO2e) and .15 % of the entire economy (726 MT CO2e)

Majority of emissions .89 MT are fugitive (unintentional leaks from piping and equipment) that are difficult to measure and have large uncertainty

But we have stepped up as one of the leaders in voluntary reductions:

More efficient use of electricity in operations Reduction in fugitive emissions through infrastructure replacement Utilize engineering and operational controls to minimize GHG

emissions And we are working with the federal government to find a cost-effective

approach to ensure that these efforts are enhanced

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Consumption is the key Natural gas provides about 3000 BCF/year (NEB,

2001) towards Canada’s annual energy consumption or represents about 31% of total annual primary energy consumption (Stats Canada, 2001)

Over 2/3 of emissions associated with natural gas use are at the burner tip

Consumers need to play a key role and government and the natural gas industry need to provide support

Canada’s natural gas distribution industry has extensive experience in demand side management (DSM) programs

We are the interface with over 5 million customers

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0

100

200

300

400

500

600

700

800

900

1995 1996 1997 1998 1999 2000 2001 2002 2003B

Mil

lio

ns

m3

000'

s T

on

nes

CO

2

0

2

4

6

8

10

12

14

$ S

pen

t (m

illi

on

s)

Gas Saved (mill m3) CO2 Saved (000's tonnes)Annual Spend ($ mill)

Example: Enbridge Demand Side Management Success

Total Spent - $65 million

Total CO2 Saved - 2.5 million tonnesEnbridge annual DSM emission reductions are more than double their own emissions.

Total Gas Saved - 46 BCF

Energy Cost Savings > $200 million

“Enough gas saved to heat over 540,000 homes for 1 year”

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Developing an industry/government partnership Objective:

To significantly accelerate efforts to reduce consumer GHG emissions

Framework: A joint industry/government partnership

Scope and approach: Start with focus on DSM and build toward longer

term investments

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Objectives

Achieve synergies from industry and government cooperation to deliver accelerated GHG reductions that go beyond current programs

Address regulatory barriers Assist consumers to make smart, efficient

decisions

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Framework

Joint Industry/government - NRCan and CGA - commitment and governance, effective coordination, sharing of best practices and higher profile communications to deliver CO2 reductions across different regions

Defined objectives and targets Auditable, flexible and transparent process

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Scope and Approach

Secure federal funding to extend scope of current industry DSM programs

Work with regulators to ensure appropriate incentives for DSM efforts

Consider extending joint industry/government efforts to encompass NGV, innovation and promotion of new market applications

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Benefits of CGA/NRCan Partnership

Government Of Canada Increased reach for government programs – aim to

reach all 5 million gas customers Improve effectiveness of programs by drawing on

industry experience Demonstration of leadership by creating programs

that assist Canadians to meet 1 tonne target Canadian Gas Industry

Flexibility in meeting environmental objectives Access to federal funding to enhance GHG objectives Improved customer service

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Concluding Remarks Government needs to take a comprehensive

approach in dealing with industries to reduce GHG emissions – need to maximize cost-effective opportunities

Treat natural gas as a key part of a clean future – both short and long term

Look to industry to reduce own emissions But biggest gains can be made by accelerating

energy efficiency efforts and by supporting longer term innovation and technology development