Nearly 90 percent of Enbridge Inc.'s direct GHG emissions (from our Canadian business units) come from our Enbridge Gas Distribution system in Ontario, with most being fugitive emissions (unintended leaks) of methane from our distribution system. About half of these fugitive emissions come from our pipeline system in Southern Ontario.

We've managed our business exposure to these fugitive emissions through negotiations with the Canadian government. Working with the Canadian Gas Association, we've obtained written assurances from Natural Resources Canada that fugitive emissions will be excluded as covered emissions under the Large Final Emitter sector (large companies contributing GHG emissions over 100,000 tonnes each year). This agreement was reached primarily because of the complexity of measuring and reporting fugitive emissions.

Still, we plan to take aggressive action in our Enbridge Gas Distribution system to manage these fugitive emissions by replacing our remaining cast iron assets with plastic and steel mains by no later than 2008, subject to regulatory approval. This will cut our fugitive emissions from pipeline leaks by 15%. And as technology improves, we will further reduce fugitive emissions in other areas of the system.

Taking this action will be good for the environment and will avoid the loss of valuable product.

And this is not all we're doing to control our GHG emissions. Enbridge is also investing in wind power in Saskatchewan and Alberta. Our two wind farms produce 41 MW of renewable energy, in effect offsetting about 115,000 tonnes of CO₂ emissions each year. The Sustainable Energy Group here in Toronto is working with our Calgary counterparts to assess the mechanics, costs and benefits

associated with registering these offsets as Certified Emission Reductions (CERs). And we're exploring emerging alternative energy technologies that use natural gas, with a focus on stationary fuel cells.

Wherever possible, we're improving our operational performance in ways that support our business and climate change goals. We're improving the way we track and report GHG emissions. We're also exploring how market-based solutions, such as emission trading systems, might be applied to our business - for example, to recognize the GHG benefits of our demand-side management programs in Ontario.

In taking these actions, we're being driven by both our CSR commitments and business interests. Increasingly our company views GHG emissions not just as a potential risk but also as a potential business opportunity.