Toronto, July 2, 2002 – CO2e.com, LLC, a Cantor Fitzgerald company, announced recently two transactions totalling 9 million tonnes of carbon dioxide equivalent (tCO2eq).
One of the transactions of 6 million tCO2eq is the largest publicly announced firm purchase of CO2eq in the history of the global greenhouse gas market.
The transactions consisted of two trades of CO2eq between BlueSource and Ontario Power Generation (OPG), two innovative companies in the field of emissions trading. OPG purchased the emission reductions to satisfy their voluntary commitment to reduce greenhouse gas emissions. The two deals were facilitated by CO2e.com’s Canadian office; the first a forward firm purchase by OPG of 6 million tCO2eq and the second an option for 3 million tCO2eq.
The total amount of CO2eq purchased by OPG is equivalent to the direct CO2 emissions produced by 15,000 airplanes flying from Toronto, Canada to Sydney, Australia. Companies like OPG who aim at reducing greenhouse gas emissions act in accordance with the objectives of the Kyoto Protocol, an international treaty in which developed nations agreed to limit their greenhouse gas emissions.
Steve Drummond, CEO of CO2e.com stated that, “CO2e.com is delighted to have facilitated this transaction which dramatically demonstrates the power of emissions trading. A huge environmental benefit has been funded in a single, financially efficient transaction, rewarding innovation and enabling OPG to meet its environmental targets cost-effectively. It shows that cross border trading is a viable reality and supports the sort of innovation the world needs to make real reductions in our impact on global climate change.”
The purchased emission reductions stem from geological sequestration projects in Texas, Wyoming and Mississippi. In 2000 and 2001, Blue Source’s clients expanded the construction of a CO2 pipeline which gathers locally produced CO2 and transports it to crude oil producers for injection into mature oil fields to enhance oil recovery. The CO2 used for this process would otherwise be vented into the atmosphere by natural gas processing plants.
Additionally, Blue Source’s clients expanded their enhanced oil recovery (EOR) operations allowing for additional injections of CO2. The CO2 is sequestered in underlying bedrock that formerly held the oil. “Greenhouse gas emissions are a global concern. Emission reduction credits are an effective tool for reducing emissions and OPG has been a leader in this area,” said Ron Osborne, President and CEO of OPG.
“We have successfully lowered OPG’s Greenhouse Gas (GHG) emissions using a range of approaches and we will continue initiating opportunities to improve emission reduction.”
Mr Bill Townsend, CEO, Blue Source, LLC said, “Geologic sequestration of CO2 during EOR operations is an attractive source of greenhouse gas emission reductions in the United States due to its underlying economics and environmental assurance”. Townsend further commented that, “combining Blue Source’s considerable inventory of greenhouse gas emission reductions with OPG’s greenhouse gas offset needs allowed for a transaction of this magnitude to be completed.”
About CO2e.com: CO2e.com (www.CO2e.com) delivers market-based solutions to help companies manage the opportunities and risks of climate change: environmental brokerage, emissions neutral solutions, trading and risk management tools, advice and market information.
CO2e.com, LLC, launched in November 2000, is part of the Cantor Fitzgerald group created in association with PricewaterhouseCoopers and powered by eSpeedsm. In Europe CO2e.com operates as a division of Cantor Fitzgerald International and globally, it has offices in London, New York, Toronto and Sydney.
About Blue Source: Blue Source LLC, is a US-based firm that identifies, secures and markets greenhouse gas emission reductions in US-based logistic, transportation, manufacturing and enhanced oil recovery industries.
About Ontario Power Generation Inc.: Ontario Power Generation (OPG – www.opg.com) is an Ontario-based company whose principal business is the generation and sale of electricity to customers in Ontario and in interconnected markets. The company’s goal is to be a premier North American energy company, focused on low-cost power generation and wholesale energy sales, while operating in a safe, open and environmentally responsible manner. Its focus is on producing reliable electricity from competitive generation assets, power trading, and commercial energy sales.
Notes to the Editor: Greenhouse gases such as carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) trap heat in the lower part of the earth’s atmosphere. This is called the greenhouse effect and is said to cause the continual gradual rise of the earth’s surface temperature, also referred to as global warming. The global warming potential for each of the six greenhouse gases is expressed in a global unit of measurement CO2 equivalent (CO2eq).
The Kyoto Protocol is an international treaty that originated at the 3rd Conference of the Parties (COP) to the United Nations Convention on Climate Change held in Kyoto, Japan in December 1997. In this meeting, the developed nations agreed to limit their greenhouse gas emissions, relative to the levels emitted in 1990. The Kyoto Protocol and associated national legislation will have serious implications for all businesses, not only direct emitters of greenhouse gases. Emissions Trading is a market-based system that allows firms the flexibility to select cost-effective solutions to achieve established environmental goals. In the case of the transaction between BlueSource and OPG this environmental goal is a reduction in greenhouse gas emissions. Emissions Trading encourages compliance and financial managers to pursue cost-effective emission reduction strategies and provides incentives to emitters to develop the means by which emissions can inexpensively be reduced.
In the projects associated with the transaction, CO2 is an industrial by-product that is normally vented into the atmosphere during the process of gas and oil extraction and processing. This waste CO2 is instead captured and is then compressed and transported by pipeline to a producing oil field. The captured CO2 is injected under pressure into oil wells to enhance oil recovery and is ultimately stored in the bedrock, where it displaces oil.
Since the waste CO2 would normally be vented, the initial greenhouse gas reduction can be quantified on a 1-for-1-basis i.e. 1 metric tonne of CO2 captured and injected results in 1 metric tonne of CO2 emission reduction. However, approximately 1-3% of the injected CO2 may be re-released into the atmosphere, depending upon the design of the field operations. The total CO2 emission reductions are based on CO2 injected minus the amount of the re-released CO2.