As Manager of Carbon Strategy and Integrated Resource Planning for Enbridge Gas Distribution, Fiona Oliver-Glasford has a unique perspective on compliance strategies and challenges under Ontario’s cap-and-trade program. In the run-up to the Ontario Cap-and-Trade Forum on April 26-27 in Toronto, Canadian Clean Energy Conferences spoke with Oliver-Glasford to gain insight on how Canada’s largest natural gas distribution company is navigating the new cap-and-trade landscape.
Canadian Clean Energy Conferences: As a natural gas distributor, your compliance obligations and role is unique in the Ontario cap-and-trade. What do you see as the main challenges of the program?
Fiona Oliver-Glasford: The complexity of the regulation and the timeframe within which we needed to get up to speed has been a challenge. The natural gas utilities are “point of regulation” which means they are responsible for buying allowances on behalf of all customers emitting below 10,000t CO2e, any customers emitting between 10,000t and 25,000tCO2e that have not ‘opted in’ to the program to buy allowances on their own behalf, and power producers. Given the size and complexity of this point of regulation role, the utility needed to do much research, planning and business system implementation.
Unlike other participants, natural gas utilities also have an additional layer of regulation and procedural process applied by the Ontario Energy Board. More broadly speaking, a key challenge with the program is market uncertainty. Market participants need a longer-term horizon for investments which in turn requires stable market rules. For instance, market rules around the maximum amount a portfolio might have (of carbon offsets) is important towards encouraging project development. Or the certainty that cap-and-trade will continue to exist in a changed political landscape.
CCEC: How many people and which departments are involved in your carbon strategy planning internally?
F O-G: All departments at Enbridge Gas Distribution are touched by cap-and-trade, or will be moving forward. Over the past year, we have had a small inter-disciplinary team focused on developing cap-and-trade compliance plans and becoming business ready. The main departments that have been involved include customer care, IT, regulatory affairs, communications, finance, legal, gas supply procurement, operations, government relations, environment, health and safety, energy efficiency and business development.
CCEC: What sort of feedback have you had from customers regarding the introduction of cap-and-trade rates?
F O-G: We weren’t sure what the response would be and proactively reached out to customers through research in 2016 to inform our communication and outreach planning. The call centre volumes on cap-and-trade have been lower than anticipated at this point, recognizing we bill in cycles and some customers who have received their bills to-date may have only had a limited number of days of cap-and-trade charges. Also, given that natural gas costs remain low and winter temperatures have not been extremely cold, customers’ overall bills may not look noticeably different. As of early February, we have received less than 200 calls about cap-and-trade.
CCEC: How are you supporting your customers to further drive down emissions?
F O-G: Since 1995, Enbridge has been offering demand-side management and energy efficiency programs for all customer types and continues to offer those programs which help reduce energy usage. Because cap-and-trade is applied volumetrically, by reducing the amount of energy you use, you reduce your cap-and-trade costs. We are also pursuing renewable natural gas which, at the highest level, involves capturing the methane produced by decomposing organics, waste-water treatment, landfill or agricultural waste then cleaning it up and making it pipeline grade. It is a very effective way to reduce greenhouse gas emissions and green the natural gas grid. We have also made great strides in reducing emissions from our own operations, for example by removing cast iron piping from our system. That has resulted in 2015 emissions being about 20% below 1990 levels. We are continuing to look at our operational emissions but that change was significant.
CCEC: What other technologies is Enbridge exploring to further reduce emissions?
F O-G: We are working with customers to explore natural gas vehicle and transportation options. For instance, converting garbage trucks to natural gas can reduce emissions by around 20%. We are also committed to working with our customers to explore combined heat and power technologies. We have a lot of energy efficiency programs where we work with customers to upgrade to high-efficiency equipment including high-end sensor and control systems. We are also involved in a power-to-gas pilot program which is a technology that has been heavily used in Germany. It essentially converts surplus off-peak electricity to hydrogen — electrolyzing water, storing hydrogen, and then converting the hydrogen back into electricity when there is demand. In a second phase of the pilot project we will inject the hydrogen into the pipelines.
CCEC: What information regarding the post-2020 program design in Ontario would assist with business planning?
F O-G: The more information we can receive about post-2020 program design in Ontario the better. We have spoken already about rules and consistency but it would also be helpful to have clarity on other jurisdictions that may link with the Western Climate Initiative, as well as clarity on the timelines associated with the pan-Canadian framework. When and what offsets projects might be available across Canada, for instance. Critical areas of knowledge moving forward include: clarity on how the ultimate GHG reduction cap will be set; the approach to allowance allocations for large final emitters; flexibility or elimination of allowance holding or purchase limits; clarity on design and interactions with things like low-carbon fuel-standards; and, assessing, accounting and recognition of international carbon reduction opportunities that may provide access to markets beyond the pan-Canadian framework. Enbridge is part of the low-carbon solution. In order to best leverage Enbridge’s interest and ability to drive carbon reductions, we need to continue to be at the table in a meaningful way, and like all private entities, receive clear and consistent market signals that enable long-term investment decisions.
The Ontario Cap-and-Trade Forum takes place Apr. 26-27 in Toronto.
