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Norseman Engineering Delivers First Emission Reduction Credits to GEMCo (Announced at Globe 2000 in Vancouver, BC)

Vancouver, BC – 2000 March 23 – The Greenhouse Emissions Management Consortium (GEMCo), a consortium of Canadian energy companies focusing on market-based ways of reducing greenhouse gas emissions, today announced the beginning of delivery of emission reduction credits (ERC’s) from a project in the Lower Mainland of British Columbia.

The announcement was made at Globe 2000, the biannual conference in Vancouver focusing on international environmental business opportunities.

Today, Norseman Engineering Ltd., of Delta, BC, is delivering evidence of the creation of the first methane emission reductions arising from burner modifications in a wallboard plant in Surrey, BC. Emission reductions are created when methane—a greenhouse gas—which would otherwise has been released to the atmosphere from the landfill, is converted to carbon dioxide—a much weaker greenhouse gas—in an industrial process. In an agreement with GEMCo, Norseman has agreed to deliver up to 301,000 Emission Reduction Credits (ERC’s) over a 14-year period.

Norseman has been collecting methane from the Port Mann landfill site in Surrey, BC, and delivering the gas to the nearby Georgia-Pacific wallboard plant, since 1994. At the wallboard plant the methane is mixed with the regular "pipeline" natural gas to heat the burners that cure the wallboard. Environment Canada estimates that the original installation of the gas blending system at Georgia Pacific has created annual emission reductions in the order of 40,000 tonnes. The ERCs traded today represent incremental reductions, and derive from new GEMCo-financed modifications to the wallboard plant burners. This investment should increase annual emission reductions, through increased plant utilization of methane recovered from the landfill, to between 62,000 and 85,000 tonnes annually.

"Emission reduction credit trading can play an important role in reducing Canada's greenhouse gas emissions," said BC Environment Minister Joan Sawicki. "We are pleased that GEMCo has subjected the privately-financed Norseman project to the Greenhouse Gas Emission Reduction Trading (GERT) review process, which contributes to the wider community's knowledge of the challenges and opportunities in emissions trading."

The Kyoto Protocol bound its signatories to a goal of reducing projected greenhouse gas emissions. The Canadian government, one of the first to sign the Kyoto Protocol, committed Canadians to capping emissions at 6% below 1990 levels over the period 2008-2012. This commitment is equivalent to retiring almost 20% of the stationary and mobile fossil fuel burning engines that are operating in Canada at this time and stipulating that no new fossil fuel burning engines can be added to the Canadian landscape. The Kyoto Protocol becomes legally binding if it is ratified by nations responsible for approximately 55% of emissions from industrialized countries. Canada's policy makers are analyzing the implications of ratification at this time.

"While this individual project is small, it could be replicated many more times across Canada, and by Canadian investors around the world. Early investments like this one are very risky, however. Repeated significant investments in emission reductions will only occur if Canadian policy makers provide formal assurance that the investors will be able to take credit for these early actions forward into any future Canadian government-mandated climate change program, " says Aldyen Donnelly, President of GEMCo. "This assurance is called 'Credit for Early Action'. In spite of indications of strong provincial government support for Credit for Early Action, recent signals from the federal government have increased¾not mitigated¾uncertainty for investors in Canadian projects, like this one. It is easier to take our first steps into the emission reduction credit market in places like British Columbia, where local decision-makers have always supported the concept of Credit for Early Action. But repeats of the Norseman story may be few and far between, even in BC, unless the Government of Canada moves quickly and more decisively to formally and meaningfully recognize private sector early actions."

The Government of Canada has led multi-stakeholder consultations on the issue of climate change since 1995, starting with a private sector partnership called the "Voluntary Challenge" and accelerating into the "National Consultation Process" in 1997. GEMCo first presented the case for Credit for Early Action to Canadian governments in March of 1995. Since then, with some notable exceptions, private sector stakeholders from virtually every corner of the economy have stressed the need for Credit for Early Action. Recently, Canada's Minister of Environment acknowledged declining confidence that the Kyoto target is within reach. "We anticipate," says Donnelly, "that the Canada's ministers of energy and environment will announce, in the next few weeks, general recognition of the merits of Credit for Early Action. However, we also anticipate that they will announce that the concept requires more years of study. This is one forecast we would really like to have wrong."

About Norseman Engineering and the Norseman Emission Reduction Credit Trade
Norseman Engineering is an independent British Columbia business that operates landfill gas recovery systems at a number of small and medium-sized landfills in Canada. Between 1992 and 1994 Norseman sank 80 wells at the Port Mann Landfill, which is owned by the Municipality of Surrey. At Port Mann, Norseman processes, compresses and delivers the recovered landfill gas to the Georgia Pacific wallboard plant on River Road, six kilometers away. At the wallboard plant the landfill gas is blended with higher heat content "pipeline" gas from the BC Gas distribution system. Blending is necessary because the average heat content of landfill gas is not high enough to operate the boilers on its own. Norseman and Georgia Pacific have already received wide recognition in Canada and the US as environmental leaders for the original decision to install the original landfill gas blending and utilization system.

Environment Canada estimates that the original installation of the landfill gas utilization system started to generate about 40,000 tonnes (in carbon dioxide equivalents) per year in greenhouse gas emission reductions in 1994. The emission reduction credits that are being transferred today arise from a new investment in boiler modifications in the Georgia Pacific plant, which has been financed by GEMCo through a contract to purchase the incremental emission reductions that will result. The GEMCo investment will increase emission reductions by at least as much as 20,000 tonnes per year, and perhaps as much as 45,000 tonnes per year, depending on the future strength of the North American wallboard market and other plant operating considerations. An additional benefit is that the project reduces Georgia Pacific's demand for pipeline gas.

The physical work of modifying the boilers was completed just over one month ago. Today, Norseman is delivering proof of generation of the first 900 tonnes in greenhouse emission reduction credits pursuant to the agreement with GEMCo. These reductions were created by operated the modified boilers for twelve days over a three week period. For this start up period, the system has been operated conservatively. Operating experience to date has been good, and it is anticipated that gas blending system adjustments will lead to higher daily consumption of landfill gas. Higher rates of landfill gas utilization will be tested deliberately, so we may not know the absolute emission reduction potential of the project for another year or so.

The emission reduction credit ("ERC") purchase agreement establishes GEMCo's claim to and terms of payment for up to 301,000 ERCs over a 14 year contract period. Norseman and Georgia Pacific are free to sell any surplus ERCs arising from the boiler modifications to other emission reduction credit buyers once Norseman's contractual obligations to GEMCo are full met. Demand for surplus ERCs would motivate the plant operators to continue to identify and implement new strategies to reduce emissions. However, there are few buyers beyond GEMCo in the market at this time, due to uncertainty in Canada's Credit for Early Action policy.

About GERT
The GERT Pilot Project is a collaborative effort that currently involves eight provincial and federal government agencies, one regional government, seven industry associations and four environmental and other non-governmental agencies. The Pilot was launched in June 1998 with a memorandum of understanding (MOU) between the government members in which they set out the objective of learning about emission reduction credit trading by experimenting with actual trades. It is currently scheduled to continue until December 31, 2001.

The GERT Pilot reviews both traded projects, where a buyer and a seller of emission reductions have been identified, and offers to sell, where a buyer has not yet been identified. The GERT Pilot operates under the direction of a Steering Committee, which oversees the work of a Technical Committee. The Technical Committee developed the documents and systems for the review and evaluation of GHG emission reduction projects that are the subject of trades. The Technical Committee reviews projects to evaluate whether :

	The project results in actual emission reductions from a baseline, taking into account effects on emissions elsewhere; and
	the emission reductions are measurable and verifiable; and
	the reductions are over and above what is required by law.

The federal and provincial governments are currently working through the National Air Issues Coordinating Committee on Climate Change to develop strategies and policies for meeting Canada's international climate change commitments. Emission reduction trading is currently being examined as a potential tool to help Canada meet its Kyoto commitment. It is widely believed that trading can help reduce the social cost of reducing GHG emissions by allowing the market system to direct capital towards the least costly methods of reducing GHG emissions. For more information please contact the GERT website at http://www.gert.org.

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