October 28, 2002

PERRL program provides incentives for reducing GHG emissions

A new federal program called Pilot Emission Removals, Reductions and Learnings (PERRL) is designed to provide Canadian companies and organizations an economic incentive to make immediate greenhouse gas (GHG) emissions reductions through projects in strategically important sectors.

Through PERRL, the federal government will buy verified GHG emission reductions from qualified eligible projects on a fixed price-per-tonne basis. For example, a potential bidder submits a project to reduce greenhouse gas emissions by 100,000 tonnes between 2003 and 2007, and asks PERRL to pay $1.00 per tonne. If this bid is successful, PERRL will pay the seller $100,000 over the 5-year period.

The $15-million initiative was jointly announced by Environment Minister David Anderson and National Resources Minister Herb Dhaliwal. Support for the program is coming from the government's climate change Action Plan 2000, with $13.2 million allocated for operations and $1.8 million for administration between now and the end of 2007.

Anderson told this month's Environmental Services Association of Alberta (ESAA) Remediation Technologies Symposium, "Canadians have developed a reputation for world-leading technology. Encouraging provinces, territories and Canadian business to tackle climate change is a winning scenario--greenhouse gases are reduced, air quality is improved and Canadians invest money at home in the process. We're creating benefits for the environment, the economy and society."

Developed as a pilot project through consultations with the provinces, territories, industry and other stakeholders, PERRL is also designed to help both Canadian governments and private sector organizations learn about and better understand a number of important elements of emissions trading. This is a key policy measure which may be instrumental in helping Canada meet its climate change objectives.

PERRL's specific goals are:

-to provide a financial incentive to encourage action to achieve GHG emission reductions in key strategic areas;

-to develop Canadian capacity and expertise in conceiving, planning, implementing and administering GHG emission reductions; and

-to assist in the analysis and development of future policies, based on lessons learned through this initiative.

Effective immediately, PERRL is accepting submissions for GHG removal/reduction in two sectors: landfill gas capture and combustion, and carbon dioxide capture and geological storage. Approximately $5 million will be allocated for the first round to purchase qualified emission reductions through a reverse auction process, i.e. in which the government calls for and reviews bids, then purchases qualified reductions beginning with the lowest bid price. The first purchase agreements could be signed as early as this coming winter.

In order to ensure that the provinces, territories and other potential partners have the opportunity to participate in PERRL, the federal government will give these parties the option to purchase collectively up to half of the reductions from projects selected in the first purchase round.

Subsequent purchase rounds over the next 12 to 18 months will focus on renewable (or "clean") energy and biological sinks. Further applications in the areas of landfill gas combustion and CO2 capture and geological storage may also be accepted, time and budgets permitting. Future purchase rounds may also be redesigned to elicit earlier involvement by interested partners.

Project submissions are being accepted through the MERX electronic tendering service at www.merx.bmo.com. Full details on the new initiative are available on the PERRL Web site, www.ec.gc.ca/PERRL.

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