March 8, 2004

PERRL program seeks carbon sink proposals for agricultural, forest lands

The federal government has launched a new call for proposals for greenhouse gas (GHG) emission reduction projects under the Pilot Emission Removals, Reductions and Learnings (PERRL) initiative.

Building on previous successes in the area of landfill gas emission reductions, PERRL is now seeking proposals to enhance carbon sinks on agricultural and forest land. Forests and agricultural soils absorb and store CO2 from the atmosphere, and thus can play a key role in Canada's efforts to address climate change.

The first round of proposals in 2002 secured commitments to achieve close to 900,000 tonnes of greenhouse gas emissions reductions from Canadian landfills by the end of 2007, at an average cost of just over $3.30 per tonne. In the second round, PERRL called for proposals for renewable energy projects. These proposals are currently being reviewed and results will be announced soon.

The latest auction round will provide $2.5 million to new carbon sink enhancement projects, split equally between agriculture and forestry. A final round of bids will be called later in 2004, inviting proposals for projects in all areas covered under previous rounds, i.e., landfill gas capture and combustion, CO2 capture and geological storage, renewable energy and carbon sinks.

PERRL is designed to provide an economic incentive for Canadian companies and organizations to take immediate action to reduce GHG emissions through projects in specific sectors such as landfill gas capture, renewable energy and carbon sinks. The program's other objectives are to:

* develop Canadian capacity and expertise in conceiving, planning, implementing and administering greenhouse gas emission reductions; and

* use the information gained to aid the analysis and development of future policies.

Through PERRL, the federal government purchases GHG emission reductions and removals from qualified projects on a fixed price-per-tonne basis. Projects are selected and reductions are purchased through a competitive auction process. 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 five-year period.

As a pilot project, it is also meant to help both Canadian governments and private sector organizations learn about and better understand a number of important elements of emissions trading, a key policy measure which may be instrumental in helping Canada meet its climate change objectives.

The federal government has allocated the program $15 million from Action Plan 2000, including $13.2 million for the purchase of emission reductions and $1.8 million to cover the administration of PERRL to the end of 2007.

The successful first auction round of greenhouse gas reduction purchases focused on two strategic areas: landfill gas capture and combustion, and CO2 capture and geological storage. Approximately $3 million has been committed through emission reduction purchase agreements established with bidders who participated in the first auction round. The successful bidders are:

* AndrÈ Simard & associÈs LtÈe for a landfill gas (LFG) capture and combustion project creating 151,810 tonnes of GHG reductions from 2004 to 2007;

* City of Guelph for an LFG capture and combustion project creating 282,000 tonnes of GHG reductions from 2003 to 2007;

* City of London for an LFG capture and combustion project creating 350,000 tonnes of GHG reductions from 2003 to 2007; and

* City of Peterborough for an LFG capture and combustion project creating 115,796 tonnes of GHG reductions from 2003 to 2007.

Taken together, these reductions add up to nearly 900,000 tonnes of CO2 for this funding period, bringing Canada closer to meeting its GHG emission reduction target.

The provincial and territorial governments and other organizations have been active partners in developing the program; Alberta's Climate Change Central, for example, has contributed $50,000 to sponsor the purchase and retirement of emission reductions from Alberta-based projects. The federal government intends to ensure further opportunities for these and other potential partners to participate in the program.

The program has enabled municipalities, industry and other partners have demonstrated Canadian excellence in developing innovative climate change solutions which benefit the environment, the economy and society, while contributing to the achievement of Canada's international commitments.

PERRL project submissions for the current round are being accepted until April 6, 2004 via the MERX electronic tendering service at www.merx.com. More information on the program is available on the PERRL Web site, www.ec.gc.ca/PERRL.

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