Update on the Implementation of Climate Change Plan for Canada Brian O’Donnell September 2003

2 Outline Background –Challenge –Investments Climate Change Plan for Canada –3 step Approach –Instruments Federal Budget 2003 / Investment in Climate Change Emission Reduction Partnering Package Way Forward

3 Kyoto Target 571 Mt 2010 Emissions 809 Mt 1990 Emissions 607 Mt BAU Gap 240 Mt Projection Mt CO2 equivalent Actions underway: 80 Mt Business as Usual* * Business-as-usual scenario factors in an estimated 60 MT of reductions from current voluntary measures 2001 Emissions 720 Mt Step 2: 100 Mt Step 3: 60 Mt The Challenge – Canada’s GHG Emissions and the Kyoto Protocol

4 Climate Change Plan for Canada: Meeting our Kyoto Target Step 1: Actions Underway Step 2: New Actions Step 3: The Remainder Actions by Canadians & Governments: Transportation & Buildings 13 MT15-20 MT 60 MT Large Industrial Emitters 25 MT 55 MT Other Industrial Emissions: Technology, Infrastructure and efficiency gains 16MT Agriculture, Forestry and Landfills38 MTOffsets (est MT) International Market2 MTMin. 10 MT TOTALAbout 80 MTAbout 100 MT

5 Investment in Climate Change: Over GoC invested $1.7 billion, including: –$300m for the Climate Change Action Fund –$120m for energy efficiency and renewable energy –$500m for Action Plan 2000 –$250m to Federation of Canadian Municipalities –$60m to Canadian Foundation for Climate and Atmospheric Sciences –$100m to Sustainable Development Technology Canada –$260m to wind power production –$100m for Canada Climate Change Development Fund (developing countries) –$15m for World Bank’s Prototype Carbon Fund Funding to date has covered a broad spectrum of initiatives, touching all sectors

6 Climate Change Plan for Canada: Instruments The Plan sets out a mixed approach using 5 specific instruments: –Innovation & Technology Investments –Infrastructure Investments –Partnerships: Opportunities Envelope –Covenants and Emissions Trading by Industry –Targeted Measures

7 Federal Budget 2003: Overview Budget 2003 announced $2 billion over 5 years to further implement Plan through: –additional $250 million to Sustainable Development Technology Canada (SDTC); –additional $50 million to Canada Foundation for Climate and Atmospheric Science (CFCAS); –$1 billion to support technology innovation, cost effective emission reduction measures and other foundation building initiatives; and –~$700 million remains unallocated

8 Federal Budget 2003: Overview (con’t) Budget 2003 also proposed new tax treatments: –removal of federal excise tax on ethanol/methanol portion of blended diesel & bio-diesel produced from biomass or renewable feedstocks –expand the class of renewable energy and energy efficient equipment eligible for accelerated capital cost allowances to encourage the use of renewable fuels $3 billion new funding for strategic and municipal infrastructure with particular consideration for climate change Government programs, including Technology Partnerships Canada, the granting councils and regional development agencies to report on contribution to climate change objectives

9 Federal Budget 2003: Allocated Resources for Climate Change ($1,305 M)

10 Federal Budget 2003: Emission Reduction Partnering Package ($580 M)

11 Federal Budget 2003: Technology & Innovation Initiative ($500 M) SDTC— Cleaner Fossil Fuels $50M SDTC— Hydrogen Economy $50M SDTC— TBD $150M

Emission Reduction Partnering Package

13 Emission Reduction Partnering Package: Buildings and Transportation Strategic Area Potential program area Buildings $208M Extension of Energuide for Houses, $6M Retrofits of Existing Houses, $73.4M Extension of Commercial Buildings Incentive Program, $47.2M Extension of Energy Innovators Plus, $56.6M Renewable Energy Deployment Initiative, $25M Transportation $161M Marketing of Efficient Vehicles, $5.5M Labelling of Off-Road Vehicles, $1.5M Commercial Transportation and Freight Efficiency, $32.3M Natural Gas Vehicle Market Transformation, $9.9M Ethanol Expansion, $100M Expanded Use of Biodiesel, $11.9M

14 Emission Reduction Partnering Package (cont.): Strategic Area Potential program area Opportunities Envelope $160M "non targeted" envelope that focuses on supporting innovative and cost-effective emission reduction approaches under provincial/territorial jurisdiction leverage of federal funds to achieve early provincial/territorial GHG reductions in their priority areas One-Tonne Challenge $45M National marketing campaign including mass media, information, tools and products Partnership strategy engaging the private sector municipalities, youth and related organisations to support GHG reduction actions and to remove barriers

15 Emission Reduction Partnering Package (cont.): Strategic Area Potential program area Aboriginal & Northern Communities Program $30.7M community energy planning and management renewable energy and improved technology applications (e.g., small hydro, wind, solar, variable generators) enhanced energy efficiency of existing and new Aboriginal facilities capacity building, training and tools Forestry $20M establish a series of fast-growing tree plantation demonstrations across Canada

16 Technology and Innovation Initiative: Cleaner Fossil Fuels & Hydrogen Economy Strategic AreaPotential program areas Cleaner Fossil Fuels $115M Development & Demonstration projects for energy efficiency and low emission technology, e.g.: Bitumen, heavy oil Unconventional low carbon resources Clean coal, CO2 capture and storage Hydrogen Economy $130M Early introduction in Canadian marketplace of technologies such as fuel cells and other H2 technologies, e.g.: Strategy R&D and proof-of-concept demo projects “H2 Villages”, “H2 Highways” and other similar partnerships

17 Technology and Innovation Initiative: Biotechnology, Energy Production and Use Strategic AreaPotential program area Biofuels $30M Development & Demonstration Projects on: Biomass and wastes conversion cellulostic ethanol from biomass and other biofuels Biomass production, harvesting and transportation Decentralized Energy Production $30M Development & Demonstration projects on: Renewable energy use (biomass, photovoltaics, wind) Integration of technologies into grid Advanced End-Use Efficiency Technology $40M Development & Demonstration projects on: Intelligent buildings and community systems management Low-emission vehicles and more efficient transportation systems Advanced industrial process technologies Eco-efficient industrial systems

18 One-Tonne Challenge National social marketing campaign aimed at individual Canadians On average, each Canadian produces 5 tonnes GHG/year; the challenge encourages citizens to reduce by one tonne (20%) Two components: –National marketing campaign: Advertizing campaign, website, GHG calculator, etc. –Partnership strategy: to expand/regionalize/localize the message, to offer point of decision/purchase prompts, to remove barriers to action Link to targeted measures aimed at individual Canadians Anticipated launch in fall 2003

19 Opportunities Envelope (NRCan/EC co-lead) Target: New projects or programs that –are identified as provincial and territorial (P/T) priorities –achieve cost-effective GHG emission reductions –are not addressed by other federal initiatives Projects/programs: Identified through various F/P/T consultation/communication channels Funding allocation: Projects/programs to be selected for funding on the basis of cost-effectiveness, in conjunction with other criteria Funding available: $160 million Timeline: Initial funding allocations expected in 2004

20 Way Forward Rollout of announced programs Continue discussions with interested P/Ts on MOUs –Expect to complete some MOUs in early fall Federal/Provincial/Territorial Working Groups on key areas