Our Environmental Performance

CLIMATE CHANGE

As one of North America's major energy delivery companies, Enbridge has an extensive network of pipelines and facilities to transport oil and natural gas to petroleum refineries as well as industrial and individual customers. This network includes natural gas gathering and transmission pipelines that move the gas from production fields to distributors and then to customers. Crude oil and liquids pipelines transport oil and other liquid hydrocarbons across the continent. Each of these different types of pipelines and facilities has a unique mix of greenhouse gas (GHG) emission sources.

OUR IMPACTS

In 2004, total direct and indirect GHG emissions from our Canadian operations were 1,379 thousand tonnes of CO₂ equivalent. Our direct emissions were 14% less than in 1990, even though we delivered 34% more liquids and 26% more natural gas on our Canadian energy transportation and distribution systems.

During the year, we lowered direct GHG emissions from our Canadian operations to 14% below 1990, after adjustments for acquisitions and divestitures. This is in line with our 2005 corporate goal of 15% below this performance level.

We also continued to improve our emission intensity (our GHG emissions per unit of product transported). Last year, emission intensity from our Canadian operations was 2% higher than 2003 levels but 23% lower than our performance in 1990. We are committed to further improving our emission intensity as part of a long-term sustainable approach to energy delivery. Our new corporate target is to reduce our direct GHG emissions by 20% below 1990 levels by 2010.

OUR ACTION PLAN AND PERFORMANCE

In Canada and the United States, our Enbridge business units undertake varying initiatives to address GHG emissions, depending on legislative and regulatory requirements. In each case, our approach has involved the development of a carbon management strategy to help Enbridge to manage the risks from GHG emissions and take advantage of the opportunities.

Improving energy efficiency of our liquids pipelines

Pipelines use significant energy to transport oil over long distances. As a result, one of the major opportunities for managing GHG emissions in our liquids pipelines is to improve energy efficiencies. Improvements in our Liquids Pipelines system, including pumping efficiencies, saved 1,174 gigawatt hours of electricity in 2004, reducing the equivalent of 778 tonnes of CO₂.

Replacing cast iron pipe in our gas distribution system

Methane, which comprises most of processed natural gas, is a signifi- cant GHG. As a result, another important opportunity to minimize GHG emissions from our systems is to limit the release of natural gas into the atmosphere. In our Enbridge Gas Distribution system, the use of polyethylene to replace older cast iron pipe is a key factor in reducing fugitive methane emissions. Since the start of this program, 1,169 kilometres (726 miles) of polyethylene pipe have replaced cast iron mains in Ontario. In 2004, these activities avoided the loss of 5.2 million cubic metres of natural gas, the equivalent of avoiding 74.7 thousand tonnes of CO₂.

Encouraging the efficient use of natural gas by customers

We also reduce GHG emissions from our Enbridge Gas Distribution business by implementing demand-side management (DSM) programs. These use a combination of tools, including information, audits and financial incentives, to encourage and enable customers to use natural gas more efficiently. Over the past decade, these programs have delivered 1.8 billion cubic metres of natural gas savings. This has resulted in "avoided" CO₂ emissions of about 3.4 million tonnes - the equivalent of removing about 750,000 cars from Ontario's roads for a year.

Promoting renewable energy

Investing in emissions-free renewable energy is an important part of our contribution to mitigating the causes of climate change. Enbridge, along with our joint venture partners, has invested in 41 MW of wind power in Alberta and Saskatchewan. By displacing fossil fuel generating sources of electricity, these investments avoid 115,000 tonnes of CO₂ equivalent emissions each year.

Fixing gas leaks in gathering pipelines

Our U.S. Natural Gas Business is taking an active role in the U.S. Environmental Protection Agency's Natural Gas STAR program, which works to reduce methane emissions by encouraging costeffective technologies and practices. We have 27 gas processing plants and 12,400 kilometres (7,700 miles) of pipelines participating in the program. In 2004, we undertook several initiatives to reduce the loss of methane from these facilities. The most significant was the use of aerial infrared imaging technology to detect gas leaks from pipe. Combined with other actions, such as equipment upgrades and emissions monitoring, we avoided the loss of 844 million cubic feet of methane or 361,000 tonnes of CO₂ equivalent.

Detecting Leaks With Aerial Infrared Imaging

Shortly after Enbridge became a Natural Gas STAR partner in late 2003, conversations began with the U.S. Environmental Protection Agency regarding the use of aerial infrared imaging to identify pipeline methane leaks. Through the STAR program Brady Dodson, EH&S Specialist for our U.S. Natural Gas Business, learned about the project and then partnered with a contract company to test the technology on our natural gas system. The pilot project carried out four surveys, covering more than 960 kilometres (600 miles) of pipeline in our non-regulated gas gathering and processing system in Texas. These efforts resulted in a total of 53 leaks discovered and repaired.

While a helicopter observation team was in the air carrying out the survey, Enbridge's maintenance staff were waiting on the ground for leak notification from the helicopter team. Once a leak was detected, employees traveled to the site of the leak, estimated the volume of gas being emitted, and carried out repairs immediately. In addition to the environmental benefit of lower emissions of methane, a primary GHG, our Natural Gas STAR activities resulted in reduced loss of product and financial savings.

"Aerial infrared imaging proved to be extremely valuable for Enbridge, both in terms of our Gas STAR success and the cost savings generated from fixing the leaks," says Dodson.

MEASURING AND REPORTING EMISSIONS

We have been publicly reporting GHG emissions from our Canadian operations since 1994 and use internationally recognized reporting protocols developed by the World Resources Institute and the World Business Council for Sustainable Development.

In 2004, we undertook a detailed review of our methods for collecting data and calculating GHG emissions, focusing on Enbridge Gas Distribution, our largest source of direct emissions in Canada. Our goal was to develop an emission reporting system that is specific to our business needs and more accurately identifies our climate change risks and opportunities. This review was completed in early 2005.

Starting in 2005, the Canadian government will mandate large final emitters (large companies contributing GHG emissions over 100,000 tonnes each year) to report their direct GHG emissions each year. To prepare for these regulations, Enbridge Gas Distribution and the Canadian Gas Association worked closely with the government's Large Final Emitters Office to better understand direct GHG emissions from large final emitters in the gas distribution business. Based on this work, Enbridge and the other CGA companies are now recognized by the Canadian government as a source of very credible GHG emission data.

CONTRIBUTING TO CLIMATE CHANGE POLICY

Under the Kyoto Protocol, Canada has pledged to cut its GHG emissions by 6% from 1990 levels by 2010. As the timeline for meeting Canada's Kyoto commitments moves closer, Enbridge remains actively involved in discussions with federal and provincial governments, and committed to providing constructive input and balanced approaches as they develop major climate change policies.

Throughout 2004, Enbridge, together with other companies and industry associations, worked closely with the federal government to develop a GHG regime for large final emitters under the auspices of Natural Resources Canada. Through the Canadian Energy Pipeline Association and the Canadian Gas Association, our company contributed to government understanding of our business and our GHG impacts. Our collaboration, through these associations, was successful in reaching an agreement to remove fugitive methane emissions as a covered emission for large final emitters. But, we take our fugitive emissions seriously and plan to replace our remaining cast iron gas mains by no later than 2008, subject to regulatory approval.

In early 2005, with the coming into force of the Protocol, the Canadian government is renewing efforts to develop a plan to address Canada's GHG reduction targets. As this new framework evolves, Enbridge hopes to preserve GHG agreements that have already been reached by industry associations. Currently, however, it remains unclear how much and through what regulatory mechanisms industry will be expected to reduce GHG emissions.

Despite this uncertainty, our Canadian operations remain focused on exceeding our target for direct GHG emission reductions, as part of our contribution to helping Canada reach its Kyoto commitments. We also expect to virtually eliminate fugitive emissions from cast iron mains in our Enbridge Gas Distribution system before the first Kyoto commitment period by replacing these with plastic pipe.

In the United States, our company actively monitors and provides input to policy development, regulatory processes and legislative actions, which are driven by clean air standards, including lowering GHG emissions. There are a number of air quality mandates that are proceeding at federal and state levels. These affect different industrial facilities, including gas processing plants and compressor stations. We are collaborating with industry and regulatory authorities to develop enhanced approaches to regulatory requirements.

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