1. Landfill Gas Offsets The Untapped Potential Michael Gerbis, P.Eng. President, The Delphi Group

2. The Delphi Group 15 th Anniversary (around since 1987) 15 th Anniversary (around since 1987) First climate change project in 1989 First climate change project in 1989 Business Focus Business Focus Climate Change & Clean Energy Climate Change & Clean Energy Health & Environment Health & Environment Technologies & Markets Technologies & Markets Corporate Strategy - EXCEL Corporate Strategy - EXCEL EECO & Globe Series of Conferences EECO & Globe Series of Conferences

3. Overview LFG Potential Across Canada LFG Potential Across Canada LFG within Canada’s Action Plan LFG within Canada’s Action Plan Business Case Business Case Offsets Offsets Other Benefits Other Benefits Key Steps, Players & Challenges Key Steps, Players & Challenges Examples Examples

4. 2000 Canadian Emissions Canada’s Total GHG Emissions 726,000 kt eCO 2 Manitoba’s ~ 21,400 kt eCO 2 Canadian CH 4 Emissions 91,000 kt eCO 2 (12.5% of Total) Manitoba Total CH4 Emissions 3,400 Kt eCO 2 Canadian LFG (CH 4 ) Emissions 23,000 kt eCO 2 (25% total CH 4 ) Manitoba LFG ~ 550 Kt eCO 2

5. LFG Management - 1999/2001 Total Methane Generated In Canadian Landfills 1,321Kt CH4 Landfill Methane Capture 342 Kt Flaring 25 Sites 147Kt ~ 3MT eCO2 Utilization 16 Sites Produced 84 MW of Power 8 Facilities 182 KT ` 3.8MT eCO2 Direct Utilization 8 Facilities 13Kt ~ 270Kt eCO2 Landfill Methane Released to Atmosphere 979Kt TOTAL REDUCTIONS > 7 MT

6. Additional Opportunities 6.5 Mt eCO 2 reductions 6.5 Mt eCO 2 reductions Approx. 70 sites identified Approx. 70 sites identified Ranked Ranked Brady Rd. – Ranked #1 overall Brady Rd. – Ranked #1 overall Kilkona – Ranked #32 Kilkona – Ranked #32 Summit Rd. – Ranked #36 Summit Rd. – Ranked #36 85 MW of additional power 85 MW of additional power Estimates Ranged from $5 / eCO 2 Estimates Ranged from $5 / eCO 2 Source: Identification of Potential Landfill Sites for Additional Gas Recovery & Utilization in Canada Prepared for Env. Canada by CRA & Delphi

7. Climate Change Plan for Canada Three Step Approach to Achieve Target => 240 Mt / year * Offsets are estimated at 20 to 28 MT - because they may be sold to industry through domestic emissions trading, they are not added to the total.

8. Climate Change Plan for Canada Ongoing Activities LFG Projects Moving Forward (e.g. Vancouver) Green Municipal Funds for Landfill Gas capture (2.2 MT) Government purchasing offsets Pilot Emission Removals, Reductions & Learnings (PERRL) Air Pollution Prevention Directorate, Environment Canada www.ec.gc.ca/PERRLwww.ec.gc.ca/PERRL NRCan Green Power Initiative TEAM projects CIDA $15 mil Investment in Prototype Carbon Fund (PCF) $100 mil Canada Climate Change Development Fund

9. Climate Change Plan for Canada Proposed Next Steps Consultations on whether to regulate emissions reductions from new capture and flaring of landfill gas or allow them to be sold as offsets Renewable Energy 10% new generating capacity from green sources Future community action Domestic Emissions Trading System being developed Landfills provide possibility to reduce emissions and represent potential offset credits Purchase a Minimum of 10 MT International Credits

10. Benefits of LFG Capture Reducing the potential for adverse health impacts Reducing the potential for adverse health impacts Source of revenue/profit (energy + offsets) Source of revenue/profit (energy + offsets) Reduction of Potent GHG Emissions Reduction of Potent GHG Emissions Reducing Potential Safety Hazards Reducing Potential Safety Hazards Lessen Landfill owner's liability Lessen Landfill owner's liability Source of Green Power Source of Green Power Improved Air Quality Improved Air Quality

11. COMPANY A (w/ GHG Emissions Reduction Target) Technology Capacity Building Credit Purchase Contract Emissions Baseline Benefit Quantification M&V Landfill GHG Offsets LFG Offset Project Tradable GHG Offsets Finance ($$)

12. Establishing High Quality LFG Offsets Establish baseline Establish baseline What would have happened in absence of project What would have happened in absence of project Does flaring count as a reduction, or required BAU? Does flaring count as a reduction, or required BAU? Would the methane truly have been released? Would the methane truly have been released? Quantify potential emission reductions Quantify potential emission reductions Develop transparent monitoring & measurement plan Develop transparent monitoring & measurement plan Maintain records that provide clear audit trail Maintain records that provide clear audit trail

13. Establishing High Quality LFG Offsets Estimate Value of Emissions Estimate Value of Emissions Can be a challenge Can be a challenge No official DET or IET in place No official DET or IET in place Not yet homogenous commodity Not yet homogenous commodity Buyers have different levels of willingness to pay Buyers have different levels of willingness to pay CO 2 values could change substantially….or not CO 2 values could change substantially….or not Preserve/secure rights in contracting Preserve/secure rights in contracting Seek external validation of results Seek external validation of results

14. Establishing High Quality LFG Offsets Conduct Feasibility Study Conduct Feasibility Study With and Without Offsets With and Without Offsets Ranges of Prices, Ownership & Selling Strategies Ranges of Prices, Ownership & Selling Strategies e.g. 1/3 – 1/3 – 1/3 e.g. 1/3 – 1/3 – 1/3 Engage Key Players Engage Key Players Federal, Provincial, Municipal Governments Federal, Provincial, Municipal Governments Project Developers, Technology Company, Engineering Firms, Utility, etc. Project Developers, Technology Company, Engineering Firms, Utility, etc. Investors & Potential GHG Offset Buyers Investors & Potential GHG Offset Buyers Strategic Advisors Strategic Advisors Brokers Brokers

15. LFG Challenges Quantification Quantification Direct (flaring) vs. Indirect (electrical & thermal) Direct (flaring) vs. Indirect (electrical & thermal) Timing of Offsets Timing of Offsets Valuation / Cash Flow / ROR Valuation / Cash Flow / ROR Price of Offsets & Selling Strategies Price of Offsets & Selling Strategies Establishing Offset Ownership Establishing Offset Ownership Multiple Stakeholders Multiple Stakeholders Unknowns Unknowns Project performs as predicted Project performs as predicted Future Market & Price Future Market & Price Government Approval / Future Policy Government Approval / Future Policy

16. Vancouver Landfill Owned & operated by the City of Vancouver Serves 40% of Greater Vancouver Region 400,000 tonnes per year of MSW Existing LFG collection and flare system 1991 installed => expanded in 2000 142 Hectares Over 300 vertical collection wells 3000 cubic foot per minute (cfm) blower/flare system Extracts and flares over 2000 cfm of 55% CH 4 LFG

17. Vancouver Landfill Gas Collection and Utilization Project Proposed Initiative Expand LFG collection & flare system over 58 hectares of the landfill (completed 2000) Utilization LFG in cogeneration system Electricity sold to BC Hydro as “green” power Heat in the form of hot water to be used by CanAgro’s greenhouses Full operation by fall 2003 Lifetime > 20 years

18. Vancouver LFG Project Key Players & Benefits Projected Overall Results Reduce GHG emissions by > 200,000 tonnes/year equivalent to 40,000 automobiles Capture 500,000 GJ/year of energy equivalent to 3,000 to 4,000 homes’ energy requirements The City of Vancouver receive ~ $250,000 to $300,000 annually for LFG % revenue from thermal offsets Capture offsets Corporation of Delta receive ~ $80,000 to $110,000 in new tax

19. Vancouver LFG Project Key Players & Benefits CanAgro receive a secure low-cost heating source for greenhouses Offset non-renewable power requirements by ~ 20% BC Hydro Electricity under its Green Energy Program & elect. offsets Maxim Power Corp provide $8.5 mil financing for 2.5-km pipeline & co-gen plant $ from BC Hydro for Green Power & Offsets % of thermal offsets CH2M Hill Canada Limited Design & built 2000 collection system

20. Mangrove Green Energy Project Barbados Potential CDM Project – Unique Concept Potential CDM Project – Unique Concept LFG Collection & Flaring System LFG Collection & Flaring System 14 – 15 million m3 per year (60% CH 4 ) 14 – 15 million m3 per year (60% CH 4 ) 1.4 million tonnes eCO 2 reductions over 10 years 1.4 million tonnes eCO 2 reductions over 10 years Landfill Utilization with Storage Landfill Utilization with Storage ~ 5 MW => 190,000 tonnes eCO 2 reductions over 10 years ~ 5 MW => 190,000 tonnes eCO 2 reductions over 10 years Wind farm to be constructed Wind farm to be constructed 1 – 2 MW of power => ~ 43,000 tonnes of eCO2 reductions over 10 years 1 – 2 MW of power => ~ 43,000 tonnes of eCO2 reductions over 10 years

21. Mangrove Green Energy Project GHG Credits

22. The Delphi Group Catalyzing Environment and Clean Energy Opportunities International Transactions (CDM & Tech Transfer) GHG Reduction Strategies Business Planning & Project Structuring Market Valuation Pricing & Positioning

23. Wrap Up LFG Represents an Untapped and Potentially Lucrative Opportunity to Reduce GHG LFG Represents an Untapped and Potentially Lucrative Opportunity to Reduce GHG Canadian Government is Supportive Canadian Government is Supportive Corporate Buyers Will be Looking for Quality Investments & Offsets Corporate Buyers Will be Looking for Quality Investments & Offsets Business Case Can be Made Business Case Can be Made Understand, Measure & Monitor (diff. scenarios) Understand, Measure & Monitor (diff. scenarios) Lots of Players – engage experts Lots of Players – engage experts Be Prepared - Watch Potential Stumbling Blocks Be Prepared - Watch Potential Stumbling Blocks Stay In-Tune – Int’l / Nat’l Policy; GHG Market Stay In-Tune – Int’l / Nat’l Policy; GHG Market

24. The Delphi Group For More Information Contact: Mike Gerbis, P.Eng. President The Delphi Group (www.delphi.ca) www.delphi.ca 428 Gilmour St. Ottawa, Ontario K2P 0R8 Tel: (613) 562-2005 Fax: (613) 562-2008 email: mgerbis@delphi.ca mgerbis@delphi.ca

25. CO 2 Value for 1% ROR Impact

26. Impact of Carbon Finance on Project Technology  IRR Energy Eff.-District Heating 2- 4 Wind0.9-1.3 Hydro1.2-2.6 Bagasse0.5-3.5 Biomass with methane kick Up to 5.0 Municipal Solid Waste with methane kick >5.0 Project, Not Equity, IRR. Source: PCF….Assuming a revenue stream based on emission Reduction (at US$ 3/TCO2e) the change in internal rate of return (IRR) of projects: