1. 1 Canada’s Climate Fund John Drexhage, Director Climate Change and Energy International Institute for Sustainable Development An Offsets Approach for Canada

2. GHG Emissions By Province + 23% + 7% + 16% + 24% + 38% + 43% Appendix 2.1

3. GHG Emissions By Sector - 2% + 31% + 8% + 34% + 66%+ 24% + 16% + 55% Appendix 2.2

4. Canada’s Projected GHG Emissions: All talk and voluntary actions Kyoto Target 571 Mt 6% below 1990 2010 Emissions 850 Mt 1990 Emissions 607 Mt BAU Gap 280 Mt, Mt CO2 equivalent Business as Usual (1999) 699 Mt Projections

5. 5 Domestic Progress Overall plan is incentives based: Regs or taxes not seen as feasible, particularly with US out Relatively moderate allocation to LFEs – 45Mt Some good fiscal measures – RPPI, WPPI, Co-Gen Accelerated Capital allowances Project Green becomes an important part of the Cdn plan Majority of gap to be reached through gov’t purchases: Climate Fund Partnership’s Fund Technology Fund Offsets to cover both domestic and international activities A long way to go without much time (gap revised to at least 280 Mt) and latest report indicates our ghg intensity is increasing! From 1990 – 2000, emissions grew by 14% in the US and 21% in Canada.

6. 6 Canada’s Climate Fund Established in October 2005. Likely to become the key element in implementing Canada’s Climate Change Plan Unique in the world – rely on domestic offsets to meet the Kyoto target A political calculation: 140 Mt at the most delivered through LFE and other Policies and Measures in the Plan That leaves at least 140 Mt through offsets: Partenerships: 40 Mt? Domestic purchases 70 Mt? International Purchases: 30 Mt? Initial capitalization of $1billion over 5 years to purchase emission reductions and removal credits Current capitalization of $4 - $5 Billion. Will this be enough? A focus on market-based innovation to reduce emissions

7. 7 Canada’s Climate Fund The Climate Fund has the potential to: Stimulate innovation Engage Canadians in taking action on emission reductions Encourage energy efficiency Drive the adoption of best-available technologies Stimulate domestic emissions trading Driving Canada towards a low emissions future

8. 8 Canada’s Climate Fund The portfolio of potential purchasing approaches includes: Competitive purchase of credits generated by Canada’s Domestic Offsets System Investments in large strategic projects Participation in international carbon fund initiatives Bi-lateral international agreements in support of sustainable development initiatives Partnering with key Canadian and International stakeholders will be vital

9. 9 Canada’s Climate Fund Internationally, the Fund will invest in recognized Kyoto emission reductions through: The Clean Development Mechanism Joint Implementation “Greening” of Assigned Amount Units Investments will be undertaken that advance Canada’s domestic and international sustainability objectives

10. 10 Canada’s Climate Fund Domestically, opportunities for Canadians to innovate are numerous: State-of-the-art farming and forestry practices Energy-efficient housing developments Alternative forms of transportation Bio-fuel projects Renewable energy projects Hydrocarbon emission reduction/sequestration projects The Fund will promote the development of the carbon market and stimulate innovation

11. 11 Canada’s Climate Fund The Climate Fund is intended to lay the groundwork for: Long-term transformational change A less carbon intensive and more competitive Canadian economy A healthy population and a sustainable environment. The Fund will provide short term, verifiable, emission reductions and longer-term, systemic, societal change

12. 12 Canada’s Climate Fund The Climate Fund is open for business and will be moving forward with a variety of emission reduction purchasing strategies in 2006. We are interested in discussing potential partnering opportunities for emission reduction projects. The first challenge will be to develop the ‘sellers’ side of the market. A strong, initial marketing and outreach campaign is critical.

13. 13 Canada’s Climate Fund For more information: Website:www.climatechange.gc.ca Email: ClimateFund@ec.gc.ca Fondspourleclimat@ec.gc.ca