January 10, 2005

PERRL last call seeks GHG projects in multiple sectors

The federal government has launched the final round of its Pilot Emission Removals, Reductions and Learnings (PERRL) initiative, which has successfully encouraged cost-effective greenhouse gas (GHG) emission reduction and removal projects in forestry, renewable energy, and landfill gas. Its just-issued call for proposals is offering $5 million for new projects in these areas, as well as in CO2 capture and geological storage, and carbon sequestration in agricultural soils.

The first call for proposals, launched in 2002, secured commitments to achieve close to 900,000 tonnes of GHG emission reductions from Canadian landfills by the end of 2007, at an average cost of just over $3.30 per tonne. Subsequent auctions have received proposals for emission reductions and removals from renewable energy and forest carbon sinks, and contracts have been offered for an additional 600,000 tonnes.

Unlike previous rounds, each of which was focused on a specific project area, the current auction will accept bids from all areas. Price competition between different economic sectors will be promoted by ranking all bids on a price-per-tonne basis and selecting proposals from a single auction budget. In order to ensure the pilot gains experience in quantifying emission removals from all eligible project areas, $1 million of the auction budget will be allocated first to agricultural soil sinks, an area not currently represented under PERRL.

"Creating a market for emission-reduction projects is a key way to stimulate the development of the environmentally friendly technologies of the 21st century," said Natural Resources Canada Minister John Efford. "PERRL is making an important contribution to understanding how we can use the marketplace to help achieve our climate change objectives. "

PERRL provides an economic incentive to Canadian companies and organizations to reduce GHG through projects in specific areas such as methane emissions from landfills, renewable energy and carbon sinks. Through PERRL, the federal government purchases GHG emission reductions and removals from qualified projects on a lowest-cost-per-tonne basis. Projects are selected and reductions are purchased through a competitive bidding process.

Alberta's Climate Change Central is also a PERRL sponsor, having contributed $50,000 for the purchase and retirement of emission reductions from Alberta-based projects.

PERRL project submissions for the current round are being accepted until February 3, 2005 through the government's MERX electronic tendering service at www.merx.com. More information on PERRL is available on the PERRL Web site, www.ec.gc.ca/PERRL.

Round 2 for ethanol program

The federal government is also inviting proposals from industry under the second round of the Ethanol Expansion program for contributions toward the construction of new fuel ethanol plants or the expansion of existing plants. A total of $27.5 million is available in this round.

The $100-million program was launched in October 2003 under Canada's climate change plan to reduce greenhouse gas (GHG) emissions. It is part of a larger renewable fuels strategy which also includes support for research and development, exemptions from federal fuel excise taxes and consumer awareness activities.

Under Round 1, six new ethanol plants across Canada are eligible for up to $72 million in contributions toward construction costs. These plants, for which investments will total over $450 million, are expected to produce a total of 650 million litres of fuel ethanol per year, more than quadrupling Canadian supply. Projects funded under Round 2 of the program will build on these amounts.

The increase in Canadian fuel ethanol production capacity facilitated by the Ethanol Expansion Program is supporting current and proposed programs for ethanol content in gasoline. It is intended to help achieve the federal government's target of having at least 35% of Canada's gasoline contain 10% ethanol by 2010.

The selection process for the Ethanol Expansion program is competitive and is based on factors relating to how effectively contributed funds will expand fuel ethanol production and reduce GHG emissions. Full details on Round 2 of the program, including proposal submission requirements and eligibility and evaluation criteria are available on the program Web site, www.vehiclefuels.gc.ca.

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