1. Corbin Devlin McLennan Ross LLP October 19, 2007 ALBERTA’S CLIMATE: A Comparison to Canada’s Approach to Managing Greenhouse Gas Emissions

2. McLennan Ross LLP ALBERTA’S NEW CLIMATE 2 Taking Initiative Alberta is the largest overall emitter of GHGs in Canada. First province to introduce legislation aimed at reducing greenhouse gas emissions intensity (Climate Change and Emissions Management Act).

3. McLennan Ross LLP ALBERTA’S NEW CLIMATE 3 Alberta’s Regulatory Framework for Emission Reductions Specified Gas Emitters Regulation  passed by Alberta Legislature in April 2007. Companies that emit more than 100,000 tonnes of GHGs a year must reduce their emissions intensity by 12 per cent starting July 1, 2007.

4. McLennan Ross LLP ALBERTA’S NEW CLIMATE 4 Alberta’s Regulatory Framework for Emission Reductions (cont’d) Applies to approx. 100 facilities, representing approx. 70% of Alberta’s industrial emissions. 3 compliance options: –(i) make operating improvements, –(ii) buy Alberta-based offsets, or –(iii) contribute to technology fund ($15/t)

5. McLennan Ross LLP ALBERTA’S NEW CLIMATE 5 Developing a Baseline Application Deadlines –Existing facility (pre-2000 and less than 4 years in operation) – Dec. 31, 2007. –New facility – June 1 of 4th year of operation Information Required –Supporting Data –Verification by a third party auditor Calculation –3 year average emissions or as otherwise specified

6. McLennan Ross LLP ALBERTA’S NEW CLIMATE 6 Compliance Annual compliance reports Third party verification Audits $200/t fine Compliance Orders

7. McLennan Ross LLP ALBERTA’S NEW CLIMATE 7 Alberta vs. Federal GHG Plan ALBERTAFEDERAL NAME OF PLAN “Albertans and Climate Change: Moving Forward” “Turning the Corner: An Action Plan to Reduce Greenhouse Gases and Air Pollution” LEGISLATION Climate Change and Emissions Management Act Specified Gas Emitters Regulation Clean Air Act and Regulations EFFECTIVE DATE July 1, 20072010 TYPE OF REDUCTION Intensity-based

8. McLennan Ross LLP ALBERTA’S NEW CLIMATE 8 Alberta vs. Federal GHG Plan (cont’d) ALBERTAFEDERAL AFFECTED INDUSTRIES Large emitters (> 100,000 tonnes of GHG emissions per year). Industrial sectors (Thermal electricity generation; oil and gas; forestry; smelting and refining; iron and steel; cement, lime and chemicals production; and selected mining sectors (iron-ore, pelletizing and potash). TARGETSFacility-based 12% reduction by July 1, 2007 2003 baseline New facilities (post-2000) – 3-year grace period No air pollutants; just GHGs. Sector-based 18% reduction by 2010 2006 baseline New facilities (post-2004) – 3-year grace period For air pollutants, fixed emission caps will come into effect between 2012 and 2015.

9. McLennan Ross LLP ALBERTA’S NEW CLIMATE 9 ALBERTAFEDERAL COMPLIANCE MECHANISMS 1. Improvements in operational efficiency. 2. Purchasing Alberta-based offsets (from projects occurring after Jan. 1/2002). 3. Contributing to Alberta Climate Change and Emissions Management Fund ($15/tonne). 1. Abatement actions. 2. Contributing to technology fund ($15/tonne) within limits. 3. Emissions trading. 4. Purchasing offsets from non- regulated activities. 5. Purchasing credits generated by Clean Development Mechanism. Alberta vs. Federal GHG Plan (cont’d)

10. McLennan Ross LLP ALBERTA’S NEW CLIMATE 10 Alberta vs. Federal GHG Plan (cont’d) ALBERTAFEDERAL PRICE OF CARBON (PER TONNE) $15From 2010 – 2017: $15, $15, $15, $20, $20 and then escalating with GDP; rate structure to be reviewed every five years. CREDIT FOR EARLY ACTION None.One-time allocation of credits to firms that took verified action to reduce their greenhouse gas emissions between 1992 and 2006. A maximum of 15 Mt would be allocated, with no more than 5 Mt to be used in any one year.

11. McLennan Ross LLP ALBERTA’S NEW CLIMATE 11 Alberta Perspective on Harmonization GOA intends to be the regulator in Alberta Out in front to influence direction Philosophical difference - transformational change through technology investment Easy stuff: Outcomes (long term) Hard stuff: Compliance Mechanisms (e.g. technology fund)

12. McLennan Ross LLP ALBERTA’S NEW CLIMATE 12 Corbin Devlin cdevlin@mross.com