GENERAL INTEREST / Suncor Energy & Niagara Mohawk
Deal Gives Suncor Energy Option to Purchase 10 Million Metric Tonnes
of Emission Reductions From Niagara Mohawk over 10 Years
Suncor Energy Inc. and Niagara Mohawk Power Corporation, of Syracuse,
N.Y., today announced a ground-breaking greenhouse gas emissions trade. The
two companies hope the agreement, which has a potential value of $10 million
CDN, will be a first step towards the creation of a global market and an
international trading system for reductions in emissions of greenhouse gases,
such as carbon dioxide CO(2).
The agreement has won praise from both the Canadian and U.S. governments
as a demonstration of a market-based approach to reducing greenhouse gas
emissions.
Suncor Energy has agreed to make an initial purchase of 100,000 metric
tonnes of greenhouse gas emission reductions from Niagara Mohawk with an
option to buy up to an additional 10 million tonnes of reductions over a
10-year period.
The agreement is designed to help Suncor Energy achieve its voluntary
emission reduction targets, while providing Niagara Mohawk with additional
funding for new projects that will further reduce global concentrations of
greenhouse gases in the atmosphere. Under the terms of the agreement, a
minimum of 70% of the net proceeds from the sale will be re-invested in such
new projects, creating additional environmental benefits from the trade.
''Our agreement with Niagara Mohawk is part of Suncor Energy's
broad-based action plan to address the risk of global climate change,'' says
Rick George, Suncor Energy's president and chief executive officer. ''Our
first priority is to manage our own greenhouse gas emissions, and we have a
solid track record in this area. But to meet the Kyoto targets we need the
flexibility to pursue actions outside of our operations in Canada and
internationally that reduce greenhouse gases in the atmosphere.'' Suncor
Energy's agreement with Niagara Mohawk follows close on the heels of Suncor
Energy's participation in a forest conservation program in Belize and its
investment in the generation of wind power in Alberta.
''This is a pioneering agreement,'' said Niagara Mohawk's chairman and
chief executive officer William E. Davis. ''In the wake of the Kyoto
conference, many have questioned whether economically efficient approaches
such as this will work to address the risk of global climate change. By
making this international trade, Niagara Mohawk and Suncor Energy are helping
to forge a new market place that will help make those options viable.''
Niagara Mohawk has reduced its own greenhouse gas emissions significantly
below 1990 levels through a variety of measures, including power plant
performance and energy efficiency improvements, use of less polluting fuels,
and development of renewable energy resources. The Company has also been a
leader in entering into emissions reduction trades with other companies and
re-investing the proceeds in projects that result in further emission
reductions. These trades include an earlier agreement with Arizona Public
Service, of Phoenix, which resulted in reductions of both CO(2) and sulphur
dioxide SO(2) emissions. In order to implement the agreement, Niagara
Mohawk's emission reductions will be documented and deposited into an account
administered by the Environmental Resources Trust, a non-profit environmental
organization founded by the Environmental Defense Fund (EDF).
''Coming just after the historic Kyoto climate agreement to limit
greenhouse gas emissions, these companies are offering an actual example of
international greenhouse gas emissions reduction trading -- one of the most
critical elements of the climate agreement, yet one that is not widely
understood in many quarters,'' said ERT board member Daniel J. Dudek, who is
also a senior economist at EDF. ''Thanks to this trade, Niagara Mohawk and
Suncor Energy are offering the world an opportunity for learning by doing.''
Niagara Mohawk's Davis says now that the agreement has been reached, the
two companies are ready to support further positive action. ''We look forward
to working with Suncor Energy, the United States and Canadian governments, and
other companies to make this agreement a case study for an international
trading system for greenhouse gas emission reduction credits.''
George says he is optimistic that Suncor Energy's participation in a
cross-border emission reduction trade will encourage international policy
development. ''Suncor Energy intends to be a leader in encouraging greenhouse
gas reduction efforts in Canada, the United States and around the world,'' said
George. ''Our emission reduction purchase is just one part of a multi-faceted
strategy to reduce our own emissions, develop alternative energy
opportunities, and invest in authenticated greenhouse gas emission
reductions.''
Niagara Mohawk is an investor-owned energy services company based in
Syracuse, N.Y. It provides electricity to more than 1.5 million customers in
upstate New York, and natural gas to more than 530,000 customers in eastern,
central and northern New York.
Suncor Energy is a Canadian integrated energy company operating an oil
sands plant in Fort McMurray, Alberta; a conventional exploration and
production business in Western Canada; a refining and marketing operation in
Ontario and Quebec; and an oil shale development project in Queensland,
Australia. Suncor Energy common shares are listed for trading on the Toronto,
Montreal and New York stock exchanges.
Note: This news release contains forward-looking information. Actual
future results may differ materially. The risks, uncertainties and other
factors that could influence actual results are described in Suncor Energy's
annual report to shareholders and other documents filed with regulatory
authorities.
For more information about Niagara Mohawk or Suncor Energy, please see
the attached backgrounders, visit our websites at www.nimo.com and
www.suncor.com.
SUNCOR BACKGROUNDER
SUNCOR ENERGY AND INTERNATIONAL EMISSION REDUCTION TRADING
''If we are committed to investing money to reduce overall emissions in
the atmosphere, we want to get the biggest environmental and economic bang for
our buck. And because this is truly a global issue, in some cases we might be
better to spend our money somewhere else - even in another part of the world.
So, at the same time as Suncor Energy is working to improve our own
environmental performance, we are looking at other solutions....One idea that
will be discussed at Kyoto, and that we fully support, is creating a system of
domestic and international credits to encourage greenhouse gas reduction
efforts around the globe. These credits could be exchanged or traded in the
open market. In fact, in the United States they are already using a credit
system to manage various emissions with very good effect, and they are well
down the road in developing a similar approach to greenhouse gas reductions.''
- Rick George to the Vancouver Board of Trade, December 1, 1997
SUNCOR ENERGY'S FRAMEWORK FOR ACTION ON GLOBAL CLIMATE CHANGE
Suncor Energy is committed to leadership and action in seven areas that
address the risk of climate change. These include:
1. Managing our own GHG emissions and their impact: Suncor Energy has
produced a progressive greenhouse gas management plan as part of our
participation in Canada's Voluntary Challenge and Registry program.
Suncor Energy's plan was rated fifth among nearly 600 plans by the
Pembina Institute for Appropriate Development, and Suncor Energy has
been recognized by the federal government for leadership in this
area.
2. Developing alternative and renewable sources of energy: Suncor Energy
has formed an alternate energy team to pursue alternative sources of
energy as part of our portfolio of business opportunities. We will
be examining energy sources such as wind energy, biomass energy and
solar power. The Company has recently introduced ethanol-enhanced
gasolines at all of its Sunoco retail stations in Ontario, and is
pursuing more greenhouse-gas-efficient ways to produce ethanol.
Suncor Energy also recently announced its participation in a wind
power generation project with Vision Quest Windelectric Inc. of
Calgary.
3. Supporting environmental and economic research: Suncor Energy is
working with research institutions to develop more advanced
production and processing technology for conventional, synthetic and
heavy crude oil production that will reduce GHG emissions. This
includes technologies such as downhole water/oil separation and flare
gas recovery. Suncor Energy is also working with industry
associations and governments on selected research projects to address
the environmental and economic policy aspects of climate change.
4. Pursuing domestic and international offsets: Offsets are GHG emission
reductions that are achieved through actions that either reduce,
prevent or absorb the emission of GHGs to offset a company's own
emissions. This can include investment in forest conservation
projects, technology transfer to developing countries, energy
efficiency investments, cogeneration, alternate energy and improving
energy infrastructure. Suncor Energy's activities in this area
include the Company's emission reduction trade with Niagara Mohawk
Power Corp. and its participation in the Rio Bravo forest
conservation project in Belize.
5. Providing constructive public policy input in support of sustainable
solutions: Suncor Energy is engaged with its communities and various
stakeholder organizations to address climate change policy at
provincial, national and international levels. This includes
participation in the World Business Council on Sustainable
Development's efforts related to climate change. We also work closely
with the Business Council on National Issues, the Canadian
Association of Petroleum Producers and the Canadian Petroleum
Products Institute.
6. Educating and engaging our employees, customers and communities on
the issue of global climate change: Suncor Energy supports education
on climate change at a community level through sponsorship of the
Friends of Environmental Education Society of Alberta's education
program on air quality. We also support the Pembina Institute's Eco-
efficient Communities initiative in Alberta and Pollution Probe's
Clean Air Campaign in Ontario, and plan to further fund global
climate change education initiatives.
7. Measuring and reporting on our progress: Suncor Energy takes a
thorough and open approach to measuring its Environment, Health and
Safety performance, and this includes measurement of its progress in
reducing GHG emission. Formal public reports include the Company's
annual progress report to the Voluntary Challenge and Registry, and
our corporate environment, health and safety report, both of which
are available in hard copy format and on Suncor Energy's website at
www.suncor.com.
NIAGARA MOHAWK BACKGROUNDER
Niagara Mohawk Position on Global Warming
Niagara Mohawk Power Corporation agrees with the conclusions of the US
National Academy of Sciences and Intergovernmental Panel on Climate Change
regarding global warming; namely, that despite the many remaining scientific
uncertainties surrounding the issues, it is better to take reasonable,
cost-effective mitigation actions now rather than waiting. Actions which help
mitigate potential global warming, such as improving energy efficiency,
expanding renewable energy resources, and reducing pollution of all kinds, can
create environmental and economic benefits in their own right. Niagara Mohawk
also believes voluntary early actions in response to possible global warming
will be important in meeting any national or international goals ultimately
instituted to deal with this issue.
Corporate Actions in Response to Global Warming
Niagara Mohawk Power Corporation's activities and initiatives in response
to the threat of global climate change were first announced in the Company's
Greenhouse Warming Action Plan, which was issued in October 1992,
approximately four months after the signing of the Framework Convention on
Climate Change in Rio de Janeiro, and about a year before the release of the
President's Climate Change Action Plan in 1993. At that time, William E.
Davis, Niagara Mohawk's chairman and chief executive officer, committed the
Company to limiting its emissions of carbon dioxide CO(2) to 1990 levels or
below by the year 2000. Subsequently, the Company also signed a Climate
Challenge Participation Accord with the US Department of Energy confirming
this commitment.
Niagara Mohawk has already undertaken and plans to undertake a variety of
cost-effective actions and programs to reduce CO(2) and other greenhouse gas
emissions. Examples include:
- Energy supply measures such as power plant performance improvements;
increased use of wind, solar and hydropower; and, increased
utilization of natural gas;
- Efficiency measures such as Demand Side Management, materials
recycling, and geothermal heat pump program;
- Other programs such as alternative fuel vehicles, recovery of
ozone-depleting greenhouse gases, and biomass energy development; and,
- Cooperative, joint implementation actions with other companies, such
as emissions trading and joint industry initiatives sponsored by the
Edison Electric Institute.
The efforts undertaken by Niagara Mohawk to date have met with
significant success. Company emissions of CO(2) in 1997 were approximately
eight million tons below 1990 emission levels, a reduction of almost fifty
percent. Total emissions, including indirect emissions from external energy
sources, were reduced in 1997 by almost twenty-five percent below 1990 levels.
The variety of energy supply measures, energy demand measures, and other
reduction activities have resulted in an estimated cumulative reduction of
approximately twenty million tons of CO(2) emissions since 1990.
Prior Greenhouse Gas Emissions Trade
In December of 1996, Niagara Mohawk finalized an interpollutant trade
agreement with the Arizona Public Service Company (APS) under which 2.5
million tons of CO(2) reductions achieved by Niagara Mohawk through its emission
reduction activities were transferred to APS. The CO(2) reductions traded to
APS will be recognized by the Department of Energy (DOE) as applicable toward
commitments made by APS in its Participation Accord with DOE. Niagara Mohawk
has agreed to limit any such exchange transaction to CO(2) reductions that are
''surplus,'' that is, reductions beyond those needed to achieve a 1990
emissions level, including both Niagara Mohawk direct and indirect emissions.
Also under the agreement, any financial benefit that accrues to Niagara Mohawk
due to the trade will be used to fund additional projects that will further
reduce CO(2), creating a net benefit to the environment. |
