Senate Standing Committee on Energy, the Environment and Natural Resources

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
Distribution LDC
Points of Measurement or Custody Transfer

• Approx. 5 million metering points of exchange
• Downstream sector
• Transmission
• Distribution
• Utilization
• Meets 1/3 of Canadas 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
Natural Gas Transmissionin Canada
ATCO Pipelines

• 180 billion m3 natural gas shipped annually for
• Export
• Domestic use
• Production is90 / 10Western / Eastern
  off-shore
• 80,000 km of transmission pipeline

Duke
TRANSGAS
GAZODUC TQM
TransCanada Pipelines
5
Natural Gas Distributionin Canada

• 345,000 km of distribution pipeline
• Serves over 5 million customers in most regions

Albt Co-ops
6
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 Canadas 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 Canadas 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
• Canadas 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 gt 200 million
• Enough gas saved to heat over 540,000 homes 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