CHAPTER 3 GREENHOUSE GAS EMISSIONS RISK, IMPACTS AND OPPORTUNITIES

• Jurisdiction: United States

Air Quality Regulation For The Natural Resources Industry
(2000)
CHAPTER 3
GREENHOUSE GAS EMISSIONS RISK, IMPACTS AND OPPORTUNITIES
Aldyen Donnelly
The Greenhouse Emissions Management Consortium Vancouver, British Columbia
Denver, Colorado

Who Is GEMCo?

• BC Gas Ltd.

• BC Hydro

• Canadian Utilities Ltd.

• Enbridge/Consumers Gas Ltd.

• EPCOR

• Trans Canada Pipelines Limited

• Nova Scotia Power Inc.

• Ontario Power Generation Inc.

• SaskPower

• TransAlta Corporation

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The Kyoto Commitment: a New US National "Balance Sheet in Development"?

...consider how things looked as at December 31, 1997

GHGs, million metric tonnes, CO2e
One Year	Kyoto Period
Assets
Kyoto Allocation*	4,647	23,234
Allocation Adjustments arising from Inventory Adjustments
Allocation Adjustments
Firm Contracts to Reduce Emissions (RE) with Existing US Sources
Firm Contracts to Enhance (SC) US Sinks
Firm, Securitized Contracts to RE or SC in Nations with Commitments
Firm, Securitized Contracts to RE or SC in CDM Nations
Total Assets	4,647	23,234
Liabilities
Actual US GHG Emissions @ Dec 31, 1997	5,504	27,518
US Credits Issued for Actions taken prior to Dec., 1997 retirements) & provision for new sources Jan/1998 to Dec/2012**
Set-aside for Growth Jan/1998 to Dec/2012**	1,162	5,809
Set-aside for sink depletion Jan/1998 to Dec/2012**	110	550
Credits for Actions taken after Dec., 1997, for reductions that occur prior to 2008 — 2012
Value of CDM Contracts Underwritten by the US Government
Total Liabilities	6,775	33,876
Original National Carbon Equity	(2,128)	(10,642)
Net Change in National Carbon Equity Due to Early Action

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What is the Potential Shareholder Value Impact of the Future Risk of Select US GHG Emission Limit Scenarios?

Scenario	Probability	Description of Emission Reduction Goal	Discount Rate (current opportunity cost of capital)	Marginal Cost of Reductions (nominal US$/tonne CO2e)	Current Market Value of Risk (million constant yr 2000 US$)	Current Value of Risk in constant yr 2000 US$/tonne CO2e
1	10%	stabilize to 1990 levels over 2008 to 2012 period	8.0%	$10.00	-$2,893	-$0.34
2	10%	reduce to 1990 levels — 7% over 2008 to 2012 period	8.0%	$10.00	-$3,328	-$0.34
3	20%	reduce to 1990 levels — 7% over 2008 to 2012 period	8.0%	$10.00	-$6,657	-$0.68
4	20%	reduce to 1990 levels — 7% over 2008 to 2012 period	12.0%	$10.00	-$4,114	-$0.42
5	32%	reduce to 1990 levels — 7% over 2008 to 2012 period	12.0%	$15.00	-$9,874	-$1.01
6	32%	reduce to 1990 levels — 10.5% over 2008 to 2012 period	12.0%	$20.00	-$14,042	-$1.35

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To Any Individual Entity, What is the Current Market Value of the Future Risk of Regulation of or Other Barriers to Carbon Trade?

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How Does This Risk Affect an Entity's Critical...