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Natural Gas Industry and Climate Change Partnership

This report provides an overview of the natural gas industry in Canada and its role in climate change. It emphasizes the industry's commitment to reducing greenhouse gas emissions and highlights the need for a collaborative partnership between industry and government to accelerate efforts in reducing emissions.

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Natural Gas Industry and Climate Change Partnership

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

  2. Overview • Natural gas in perspective • Natural gas and climate change • Developing an industry/government partnership

  3. Natural Gas Industry at a Glance Points of Measurement or Custody Transfer Distribution LDC • Approx. 5 million metering points of exchange • Downstream sector: • Transmission • Distribution • Utilization • Meets 1/3 of Canada’s total energy demand • 50,000 employed (565 BCF) (389 BCF) (812 BCF) Residential Consumers Exploration & Production Food Mart Small Business commercial customers Industrial & Institutional Consumers Transmission Export Markets (3,603 BCF) Gas Plant Midstream Processing Contracts Contracts Gas Marketers

  4. 3 3 28 billion m 989 BCF 3 9 billion m 318 BCF 3 7 billion m 247 BCF 7 billion m 247 BCF 3 3 billion m 106 BCF 26 billion m 918 BCF 3 3 1,201 BCF 3 3 1,377 BCF 1,024 BCF 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 ATCO Pipelines Duke TRANSGAS GAZODUC TQM TransCanada Pipelines

  5. Pacific Northern Gas Alta Gas Utilities Manitoba Hydro Terasen Gas ATCO Gas Gaz Métropolitain Union Gas SaskEnergy Terasen Gas V.I Gazifère Enbridge Gas New Brunswick Enbridge Gas Distribution Natural Gas Distributionin Canada • 345,000 km of distribution pipeline • Serves over 5 million customers in most regions Albt Co-ops

  6. 9% 6% 13% 56% 16% Demand for Canadian Natural Gas • 56% export • 16% industrial & power generation • 13% institutional • 6% commercial • 9% residential

  7. 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

  8. 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

  9. 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

  10. 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

  11. Example: Enbridge Demand Side Management Success Total Spent - $65 million Total CO2 Saved - 2.5 million tonnes Enbridge 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 540,000homes for 1 year”

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

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