Energy and the Environmental Challenge Annual General Meeting & Symposium Vancouver, June 2011 Eddy Isaacs, FCAE CEO, Energy & Environment Solutions

Outline Trends in global CO2 emissions Introduce Alberta Innovates - Energy and Environment Solutions (EES) Climate Change & Emissions Management Corporation (CCEMC) Oil Sands – GHG reduction strategy Potential for renewable energy (Alberta case) Waste biomass conversion Energy Modelling Final Comment

IEA Sounding the Alarm on Global GHG Emissions IEA Estimates* (May 29th 2011, Guardian Article) 2008: 29.3 gigatonnes of CO2 2009: 29.0 “ 2010: 30.6 “ (highest ever) Small effect of the recession on emissions 80% of current power stations will still be in use in 2020 locking in 11.2 Gt Gap in scaling back on nuclear cannot be filled by renewables  increase reliance on fossil fuels Continued shift to unconventional resources *Upcoming World Energy Outlook (2011)

The Unconventional Reality Conventional 0il & Gas Heavy Oil Tight Gas Costs Energy Intensity GHG Emissions Bitumen CBM Biofuels Deep Gas Tight Oil Shale Gas Gas-to-liquids Gas Hydrate Oil Shale

The Global Energy Intensity of Producing and Refining Crude Oil will Continue to Increase

Significant Tight Oil Resources Resource between 10 to 20 BB 2010 Prod. ~ 400 kBbl/d Resource estimates likely low Prospective plays could add more resource Tuscaloosa - central Louisiana and southern Mississippi may hold resource of 7 BB Unconventional Oil Sub-Group, National Petroleum Council –Dec. 2010 Draft

Outline Trends in global CO2 emissions Introduce Alberta Innovates - Energy and Environment Solutions (EES) Climate Change & Emissions Management Corporation (CCEMC) Oil Sands – GHG reduction strategy Potential for renewable energy (Alberta case) Waste biomass conversion Energy Modelling Final Comment

Energy & Environment Solutions (EES) 8 Energy & Environment Solutions (EES) Who we are? Technology arm of the Alberta Government in energy and environment One of four new corporations launched in January 2010 under the Alberta Innovates banner What we do? Position Alberta for the future in energy and environment Identify, evaluate, select technologies and partners Invest in research & technology with industry & international collaborators From To

EES Strategic Priorities – Expanded Mandate and More Balanced Programs

EES Technical Arm of CCEMC* A new approach for advancing transformative technology 16 projects approved in Round #1 and #2 Energy Efficiency : 12 projects - $33 M Renewables: 5 projects - $38 M Cleaner Energy Production and CCS: 5 projects - $28 M Round 3 – announcement shortly Round 4 - underway *Climate Change & Emissions Management Corporation

Outline Trends in global CO2 emissions Introduce Alberta Innovates - Energy and Environment Solutions (EES) Climate Change & Emissions Management Corporation (CCEMC) Oil Sands – GHG reduction strategy Potential for renewable energy (Alberta case) Waste biomass conversion Energy Modelling Final Comment

EES’ Oil Sands Technology Framework - Room to Improve LCA* Emissions Research & technology adaptation costs Large scale deployment Time horizon Capacity – human, infrastructure Efficiency improvements – thermal recovery, mining, upgrading Energy intensity of water treatment for steam New wave - efficient oil sands production technologies Next generation upgrading technologies - integration with gasification and CCS Partial upgrading Integration of renewables and nuclear *Life Cycle Analysis

Impact of Increased Water Recycle on GHG Emissions *zero liquid discharge EES Study: Assess Impact of ZLD* on energy use Capital & operating costs New technology opportunities 9 Companies , ADOE, AENV, ERCB

Our Focus - Advanced Technologies to Decrease GHG Emissions and Water Use Decrease Fresh water Use Decreasing GHG Emissions SAGD, CSS Best-in-class SAGD Energy Efficiency Steam-solvent Electrical heating Combustion Non-aqueous Extraction Surface Minning refining, mining Current 5 - 10 years 10 - 20 years CCS In situ and Mining

range of conventional oil Potential for Oil Sands to be as GHG Clean as Conventional? #3 in 2018 4 3 2 range of conventional oil

Outline Trends in global CO2 emissions Introduce Alberta Innovates - Energy and Environment Solutions (EES) Climate Change & Emissions Management Corporation (CCEMC) Oil Sands – GHG reduction strategy Potential for renewable energy (Alberta case) Waste biomass conversion Energy Modelling Final Comment

Alberta’s Renewable Energy Resources Bioenergy: In 2009, Alberta produced 40+ million tonnes of grain and biomass from crops. The forest industry harvested 24 million cubic meters of wood. Geothermal: Solar: Alberta sunny enough? Wind: Harvest heat from 400,000+ oil & gas wells 600 MW + current 10,000 MW proposed

Bioenergy Drivers and Challenges Large resource for decentralized power and heat generation C-Neutral Fuel status Incentives for a wide variety of bioenergy products Renewable Fuel Standards Biofuels Credit Program Greening Energy production CCEMC* Challenges Sustainable supply Low energy density Energy efficiency Cost Life Cycle Analysis challenges C-Neutral designation * Climate Change and Emission Management Corporation

Edmonton Waste Management Centre with MSW Biofuels Facility Advanced Energy Research Facility Biofuels Facility Courtesy: City of Edmonton

Advantages of Biofuel Plant MSW 100 million t/yr 90% reduction of landfill GHG reduction of more than 3 t of CO2 per tonne of waste Eliminates methane emissions from land sites Replacement of fossil fuel/coal CO2 removal and recovery Meets renewable fuel mandates Biofuel Plant Ethanol 35 million litres/year

Advanced Energy Research Facility (AERF) December, 2010 Pilot Plant Research Building AERF Management Structure Joint EES/City Steering Comm. Technical Committee Schedule Commissioning July 2011 Issue prospectus Invite expressions of interest from process developers and R&D organizations Courtesy: City of Edmonton

Advanced Gasification & Syngas Plug-and-Play Pilot & Bench Scale R&D Facility Gasifier Syngas Cleanup Acid gas removal CO2 Recovery Syngas Reformer Methanol Synthesis Feed System Bench-scale Research Facility R&D for Biofuels Industry, universities & other initiatives Test biofuels, coal, coke and fossil-biomass blends Evaluate advanced membrane processes- O2, CO2, H2 R&D on advanced syngas conversion processes Unique facilities can attract global players

Outline Trends in global CO2 emissions Introduce Alberta Innovates - Energy and Environment Solutions (EES) Climate Change & Emissions Management Corporation (CCEMC) Oil Sands – GHG reduction strategy Potential for renewable energy (Alberta case) Waste biomass conversion Energy Modelling Final Comment

Models to Develop and Evaluate Energy and GHG Emission 24 Models to Develop and Evaluate Energy and GHG Emission The model was the “Long-Range Energy Alternatives Planning (LEAP) System” LEAP MODULES The objective is to critically understand the energy, GHG emission and water flows To assess the impacts of potential policy measures or targets related to GHG mitigation, water management and energy demand and supply Forecasting tool Overall aim is to develop a substantive modeling capacity Dr. Amit Kumar – University of Alberta

Long-Range Energy Alternatives Planning (LEAP) System 25 Long-Range Energy Alternatives Planning (LEAP) System Evaluation tool for integrated resource planning and assessing GHG mitigation impact based on set assessments/scenarios

Example – Household Sector

Final Comment Canada has the resources and the capacity to become a “Sustainable Energy Superpower” Persistent visionary leadership is vital Innovation and technology development - a key part of the strategy Cost barriers remain a major challenge  technology is key Balanced portfolio to focus on the key technical, environmental and economic challenges Significant technology advances are being made through Industry-Government partnerships