Change. Adaptation. Invest. Conserve. Improve. Climate. Create. Partnerships. Adaptation. Net Zero. Transform. Inspire. Educate. Plan. Lighting. Science. Wind. Hybrids. Rebates. Programs. Save. Steward. Ideas. Plan. Incentives. Individuals. Offsets. Invest. Future. Collaboration. Adjustments. Strategies. Water. Plan. Ideas. Save. Sunlight. Environment. Vision. Inspiration. Adaptation. Create. Innovation. Improve. Sustainable. Solar. Improve. Climate. Create. Beauty. Change. Ideas. Sunlight. Environment. Vision. Rebates. Save. Adaptation. Offsets. Progress. Energy. Facilitate. Safeguard. Conserve. Water. Ideas. Improve. Sustainable. Solar. Benefit. Hybrids. Vehicles. Homes. Inspiration. Steward. Incentives. Individuals. Transform. Future. Plan. Action. Adjustments. Strategies. Change. Plan. Ideas. Save. Sunlight. 2011 ANNUAL REport Environment. Vision. Inspiration. C3 - Energy. Ideas. Change. Adaptation. Create. Innovation. Improve. Sustainable. Solar. Benefit. Hybrids. Transform. Rebates. Transportation. Climate. Create.
Contents Mandate Timeline Strategic Focus Areas Research and Analysis Carbon Offset Solutions Programs Interview with Simon Knight All One Sky Foundation Management’s Discussion and Analysis Financial Statements and Notes Governance
1 2 4 6 9 10 16 18 20 22 41
Note: For the purpose of this report, the names C3 and Climate Change Central refer to the same organization and are used interchangeably. The legal entitity Climate Change Central was rebranded as C3 in 2010.
MAndate C3 is an Alberta-based nonprofit that encourages energy efficiency and the smallscale use of alternative energy sources. We engage decision makers—individuals, businesses and other organizations—to encourage better choices about energy use. We also do long-term research to help quantify energy-efficiency opportunities in Alberta and assess ways to develop, fund, and administer initiatives that seize those opportunities.
1
}
Since we were created in 1999, C3 has worked with government, industry, and Albertans to develop and deliver initiatives to increase energy efficiency and reduce greenhouse gas emissions. As a direct result of these initiatives, Alberta has reduced energy costs by $200 million and emissions by 1.6 megatonnes.
hERE ARE soME oF thE highLights oF oUR FiRst doZEN yEARs:
2005
-Coordinated the One-Tonne Challenge, encouraging Albertans to reduce their greenhouse gas emissions -Coordinated Alberta Fleet Challenge, cutting fuel bills and emissions for fleet operators
2001
-Hosted western Canada’s first GHG emission trading simulation
1999
Climate Change Central established as a unique public-private partnership to pursue greenhouse gas reduction initiatives
-Partnered in Integrated Manure Management System (IMUS), converting manure to energy
-Sponsored Mow Down Pollution, a rebate program to replace old, polluting lawn mowers with cleaner alternatives -Operated Soak Up The Savings, providing 8,700 rebates for energy-efficient clothes washers -Partnered in Exit to Savings, a rebate program in which more than 7,300 Alberta exit signs were switched to LED models
2003
-Partnered in Car Heaven, an incentive program that recycled 7,000 old, polluting vehicles in four years -Administered ME ďŹ rst!, a four-year, $4-million provincial program to encourage municipalities to increase energy efficiency -Received a federal Energy Efficiency Recognition Award for the Alberta Plus Initiative -Helped establish the Alberta chapter of the Canada Green Building Council -Founding member of the Net-Zero Energy Home Coalition
2
2009
-Launched My Rebates, a $50-million, threeyear provincial program that provided rebates to Albertans who invested in energy efficient home upgrades -Coordinated Retire Your Ride, which took 12,000 older, polluting vehicles off Alberta roads in three years
2010
-Created All One Sky Foundation, C3’s charitable arm
2007
-Launched Trucks of Tomorrow, helping fleet owners adopt fuelefficiency technologies
-Helped develop and coordinate the Alberta Emissions Offsets Registry, North America’s first regulation-based offset system
-Administered Light it Right, a provincial incentive program encouraging commercial building owners to install energy efficient lighting
-Managed BioFleet, which for three years helped develop and support the emerging biodiesel market
-Changed our name from Climate Change Central to C3, reflecting our new focus on energy efficiency and renewable energy
-Demonstrated the viability of trucks running on partial renewable diesel in Alberta’s cold climate through the Alberta Renewable Diesel Demonstration Project
2011 2006
-Launched Hail a Hybrid -Helped 20 Alberta municipalities install solar photovoltaic systems on public buildings through the Alberta Solar Showcase
-Received a provincial Emerald Award for excellence in environmental initiatives by a nonprofit organization -Conducted a Conservation Potential Review, identifying potential savings from cost-efficient investments in Alberta homes and buildings -Conducted a province-wide Energy Use Survey that indicated Albertans strongly support taking action to make their homes more energy efficient
3
Strategic Focus Areas A C3 variation of the Kaya Identity for calculating greenhouse gas emissions is depicted below. It is a holistic approach that sets out a hierarchy to identify and measure strategies and actions to reduce society’s carbon footprint (emissions of GHGs). The step-by-step approach to carbon management provided by the framework helps C3 to prioritize mitigating actions and recommendations. To maximize environmental, economic, and social outcomes, the idea is to consider first the category furthest to the left (Avoid) for GHG-reducing actions and recommendations, and then to consider similarly intended actions and recommendations in the categories moving sequentially to the right (Reduce, then Switch, then Offset).
Improve energy intensity
Curtail demand
GHG Emissions =
Activity
Avoid
x
activities that produce emissions – many opportunities will not require capital outlays, and often will be about changing behaviour
Final energy
Unit activity
x
Reduce
GHG emissions by (a) imp (b) improving conversion recovering energy from (cogeneration, waste to
Decreasing e econom
My Rebates, Trucks of T 4
In this way the framework suggests: 1. first curtailing demand for GHG-producing activities; then 2. reducing the energy intensity of those activities we can’t avoid; then 3. improving the efficiency of converting raw energy to usable energy; then 4. improving the GHG intensity of the energy we continue to use and; beyond this 5. offsetting any residual emissions. This decision framework now guides C3’s strategic approach to carbon management. It is helping C3 to drive the best environmental outcomes and deliver increasing business value for funders, clients, and partners.
Improve conversion efficiency Primary energy Final energy
roving energy efficiency, n efficiency or (c) m existing processes o energy)
Improve GHG intensity
x
GHG
Primary energy
Switch
to (a) less GHGintensive fossil fuel sources, (b) renewable energy sources or (c) capture GHG emissions
KAYA Identity
Offset
carbon emissions by increasing carbon uptake from the atmosphere
environmental and mic outcomes
Tomorrow, Light it Right
Hail a Hybrid
Carbon Offset Solutions
5
REsEARCh ANd ANALysis C3’s research and analysis team appraises potential future iniatives aimed at meeting evolving energy-efficiency and sustainability goals in Alberta, with the aim of developing a portfolio of actions that optimizes economic, environmental, and societal outcomes. The team also evaluates the performance of C3-managed programs and looks for ways to inform choices and improve program design and delivery. In 2011, the research and analysis team prepared an economic guidance document for the federal government to be used for the appraisal and priority ranking of climate change adaptation actions to enhance our climate resilience. Two of the team’s most significant initiatives in 2011 were a Conservation Potential Review for Alberta buildings and a residential Energy Use Survey.
6
Conservation Potential Review Although the energy used by Alberta homes and buildings is generally declining, its level remains significantly higher than in other provinces. Alberta has abundant, untapped opportunities to use energy more wisely; save residents, businesses, and institutions money and, in the process; help reach the province’s greenhouse gas reduction targets. In 2011, C3’s research and analysis team studied cost-effective measures to reduce energy use in Alberta’s residential, commercial, and industrial buildings to 2015 and beyond. The Conservation Potential Review identified a range of opportunities — from a $21-million-a-year investment that could reduce annual energy costs by $128 million by 2015 to a $326-million investment that could lead to $662 million in annual savings. (The vast majority of the investment would come from the private sector.)
7
Energy Use Survey According to a survey conducted by C3 in 2011, a strong majority of Albertans want to be more energy efficient at home and are willing to pay more for help to be so. The online survey collected the views of 3,000 people across the province and indicated the following:
8
-81 per cent of households say saving energy at home is a high priority; -62 per cent cite a lack of money to purchase energy-saving measures as a significant barrier; -81 per cent would be willing to make their homes more energy efficient if there were rebates or discounts to help offset upfront costs.
CARboN oFFsEt soLUtioNs Since 2007, C3 has worked with government and industry to develop innovative responses to global climate change impacts by supporting Canada’s only regulatory offset system. To meet government compliance, large-emitting Alberta companies can purchase offset credits from provincial projects that reduce emissions. C3 administers the Alberta Emissions Offset Registry which, in 2011, added 32 new offset projects and registered more than 7 megatonnes tonnes of emission reductions. C3 also is facilitating the development of 7 new or replacement government-approved protocols. These include carbon capture and storage in deep saline aquifers, conservation cropping, solution gas conservation, and forest harvesting practices. Some of the 31 existing protocols are also under review.
9
Consumer Rebates C3 has played a major role in helping Albertans make their homes more energy efficient by delivering incentive programs through an easy-to-use online web portal. Over the past three years, we managed a $60-million provincial government program that provided more than 160,000 rebates, ranging from $100 to $10,000. The resulting upgrades will prevent more than 1.5 megatonnes in GHG emissions over the lifetime of the products, the equivalent of taking more than 290,000 cars off the road for one year. C3 also administers consumer rebates for municipal programs in Edmonton, Medicine Hat, Spruce Grove, Stony Plain, Leduc, Lac La Biche, Red Deer County, and Strathcona County. In cases where both municipal and provincial incentives were available, we made the online application process seamless, delivering rebates in one cheque. In 2011, C3 issued close to 48,300 provincial cheques, worth $16.3 million, under the My Rebates program, which ended March 31, 2012. The rebates were for home energy evaluations and the purchase of energy-efficient new homes, clothes washers, hot water heaters, furnaces, and insulation. These upgrades will prevent about 645,000 tonnes of GHGs from being emitted over the lifetime of the products. At the same time, 2,161 municipal rebates, worth $295,000 were issued in 2011. Several of these municipal rebate programs are ongoing.
Taken together, these incentives led to reductions of
8,425 megawatt hours of electricity, 9.3 million gigajoules of natural gas, 519,000 cubic metres of water and 648,000 tonnes of GHG emissions over the lifetime of the products. 10
R
R20
11
14.5 million litres of fuel saved per year
12
tRUCKs oF toMoRRow In Alberta, heavy-truck transportation produces about seven per cent of the province’s GHG emissions, most of it from diesel fuel use. To encourage the trucking industry to adopt fuel-efficient and aerodynamic technologies, C3 and the Alberta government in 2010 launched Trucks of Tomorrow, a $2-million program to provide education and rebates. When the fully-subscribed program ended December 31, 2011, more than 3,000 technologies had been installed. Technologies included aerodynamic trailer skirts, auxiliary power units, cab heaters, and hybrid electric drivetrains. To help trucking companies make better fuelmanagement decisions, C3 delivered fuel-efficiency workshops and offered subsidized fleet analyses. The program also set up a well-used website, which included case studies of ten participating companies. In a follow-up survey, half the participants said the rebates directly influenced their purchases of fuel-efficient equipment.
156,000 to
nnes reduced o ver the life of GHGs ti technolog me of the ies.
13
These replacements are expected to produce
$1.2 million
Light it Right
in cost savings and reduce
Commercial lighting in Alberta accounts for about 21 per cent of the province’s internal electrical load and produces some 3.7 megatonnes of annual GHG emissions. In August 2010, C3 and the Alberta government launched the Light it Right program to encourage the adoption of energy-efficient commercial lighting.
of GHG emissions over the lifetime of the lights.
Through lighting assessments and $800,000 in rebates for subsequent lighting retrofits, the program resulted in the installation of close to 66,000 energy-efficient fixtures and bulbs in 44 buildings across Alberta by the program’s end in early 2012. 14
62,000 tonnes
The program’s website featured case studies of nine participating building owners. In a follow-up survey, 80 per cent of respondents said the program encouraged them to install new lighting six months to four years earlier than otherwise. Capital cost was identified as the biggest barrier to adopting energy-efficient lighting.
gREEN spENdiNg ACCoUNt C3’s Green Spending Account is one of the first programs of its kind in the world, providing incentives for corporate employees to make energy-efficient purchases for their homes. Participating companies—Encana, Cenovus, and ENMAX to date—deposit funds in the accounts of employees, who can buy a wide range of energy-and water-saving products online and have them delivered to their homes or made available for convenient pick-up. This workplace benefit is somewhat like a health spending account and reflects a desire among employees to embrace environmentally beneficial behaviours.
It also contributes to social responsibility goals. In 2011, C3’s user-friendly intranet platform and comprehensive menu of incentives helped more than 1,000 employees claim some 2,300 rebates worth $420,000. The resulting energy savings in 2011 are estimated to be
2,835 gigajoules of natural gas,
210 megawatt hours of electricity and 11,324 cubic metres of water. Associated GHG emissions are estimated to have been reduced by about 35 tonnes.
15
Interview with Simon Knight
President and CEO What did C3 achieve in 2011? One of our biggest accomplishments was successfully managing the Alberta government’s multi-million-dollar energy efficiency programs. These resulted in substantial emissions reductions and energy savings for Alberta homeowners. We also administered government initiatives to retrofit commercial lighting and reduce trucking fuel bills.
peoples’ attention and helping them make better decisions. Incentives can play a part. But, for example, when our washing machine incentive program helped energy efficient washers reach a certain level of market penetration, we didn’t see any value continuing that rebate. We turned our attention to incenting other behaviours.
How does C3’s research expertise help the organization become better?
In addition, in 2011 we focused on pursuing non-government revenues. We do applied economic research and analysis that provides us with a foundation Does future energy efficiency in terms of assumptions, options analysis, and performance metrics. require more rebate programs? Incentive programs aren’t designed to run forever, just until they’ve reached the desired goal. Part of that goal is getting 16
For example, in 2011, our research and analysis team conducted a Conservation Potential Review for buildings in the province. This review is very thorough. It
identifies and ranks cost-effective methods to reduce energy use, energy costs and related GHG emissions in residential, commercial and institutional buildings — over decades.
for them in the past. If there is to be a greater emphasis on energy efficiency, and we believe there is, we aspire to be a key part of that.
What is C3’s biggest challenge
This type of research and analysis capability going forward? helps us determine where to best focus our efforts and help our partners in government Securing long-term, sustainable funding and industry make better-informed is always a challenge, as it is for nearly all decisions and investments. nonprofit organizations.
Where is C3 focusing its efforts now? We continue some of our legacy work with climate change, such as helping administer the carbon offset system for Alberta and looking at ways municipalities can adapt to climate change impacts. We’re trying not to be everything to everybody about climate change; other organizations are involved. For example, we’re not directly involved in carbon capture and storage. Our focus is energy efficiency and smallscale renewable energy.
Sustainable funding — with clear accountabilities on our part — enables us to undertake multi-year initiatives to address long-term challenges. It also helps us attract and retain talented people, who work here because they are doing important things that take time to bear fruit.
How does your focus on energy efficiency tie to the provincial government’s goals? The premier has identified energy efficiency as a government priority, and that is positive. The government knows what our capabilities are and what we’ve delivered
17
ALL oNE sKy FoUNdAtioN C3 takes action on climate change through its charity, the All One Sky Foundation. The foundation seeks innovative, action-based solutions in three areas: adaptation, energy poverty, and behavioural change. Under energy poverty, for example, the foundation is looking at how energy efficiency programs can reach households that spend more than 10 per cent of their income on electricity and home heating. In 2011, the foundation promoted its Pump It Up program, which encourages Albertans to improve their vehicle fuel 18
mileage through proper maintenance of tire pressure. Canadians voted online to award the program $25,000 through a Shell Canada Fuelling Change grant. Also in 2011, ConocoPhillips Canada provided the foundation with a $10,000 grant, through C3’s Hail A Hybrid program, to help promote the economic viability of hybrid taxis. The All One Sky Foundation is creating a community energy fund to offer leadership, expertise, and seed funding to Alberta organizations wishing to take action on energy use in their communities. It is also preparing risk assessment tools for municipalities adapting to the impacts of
19
C3 Management’s discussion and analysis
This Management’s Discussion and Analysis (MD&A) includes information about C3’s expectations for the future. When strategy, plans, and future operating performance, or other things that have not yet taken place are mentioned, C3 is making statements considered to be forward-looking information. A. Environment Alberta has significant opportunities to avoid, reduce, and offset GHG emissions from energy use. C3 is a nonprofit organization that was formed in 2000. Although it is funded mainly by the Government of Alberta, it is moving towards becoming a social enterprise. C3 helps quantify provincial GHG-reduction opportunities, recommend cost-effective measures to address these opportunities, and administer initiatives and programs to capture them. C3 collaborates with several ministries of the Government of Alberta and other organizations and stakeholders in the areas of energy efficiency, the small-scale use of clean renewables, and general sustainability. B. Long-term strategy and 2011 goals C3 has published a five-year strategic plan, which sets out long-term goals and strategies to influence improvement in carbon energy use and energy efficiency of Alberta homes, buildings and vehicles. This plan may be accessed at http://climatechangecentral.com/ about-us/business-plans-/-progress-reports/our-vision. Within the strategic plan, C3 has targeted eight sectors for improvements in energy efficiency and the adoption of clean energy. Our 2011 work focused on excellence in program delivery, new market transformation, a sustainable funding strategy, and the formation of a charitable foundation.
20
C. Risk management The following risks have been identified as potentially having the highest likelihood and impact on C3.
Loss of major funder C3 relies on funding from the Government of Alberta. A change in government policy with respect to energy efficiency and sustainability and/or with respect to the utilization of nonprofit agencies such as C3 to conduct related research and administrative functions could result in the loss of, or reduction in, this funding. To mitigate this risk, C3 maintains active engagement with several government departments at both the political and civil service levels, and is also working to increase our revenue stream by pursuing additional business opportunities.
Use of public funds In the course of conducting C3’s affairs it is possible that public funds could be misused by an employee or employees, which would damage the reputation of C3 and of the Government of Alberta. To mitigate this risk, C3 is committed to the highest standards of governance, financial management and reporting. C3’s management reports to an independent Board of Directors and, for certain initiatives, to government funders directly. C3 also maintains a Code of Ethics, and ensures that all employees agree in writing to abide by it. C3 has an annual final audit, and programs are also inidividually audited.
Protection of private information In the course of conducting C3’s affairs, such as consumer-rebate program administration, C3 may collect and store for a period of time private information from individuals. There is a risk that this information will not be kept secure or will be used for purposes other than what individuals intended. To mitigate this risk, C3 has Privacy of Information Guidelines and an Information Protection Policy.
Failure to meet strategic plan goals C3’s strategic plan has a number of transformational objectives set out to 2020. Achieving these objectives could be impacted by many variables outside the control and/or influence of C3. The plan relies on decisions made and behaviours over several years of individual homeowners, vehicle owners and operators, commercial and institutional building owners and operators, government departments and others. To address this risk, C3 recognizes a range of approaches to encouraging change and adoption — from education and outreach, through capacity building, to incentives and government regulation.
21
Climate Change Central Financial Statements December 31, 2011
Independent Auditor’s Report Statements of Financial Position Statement of Operations Statement of Change in Fund Balances Statement of Cash Flows Notes to the Financial Statements
22
23
STATEMENT OF FINANCIAL POSITION
As at December 31, 2011
Climate Change Central Foundation
Operating Fund
Program Fund
2011
2010
ASSETS
Current Cash and cash equivalents Short term investments (Note 5) Accounts receivable
$ 37,672 1,847
$ 558,885
$ 2,613,400
$ 3,209,957
1,038,249
14,949,892
15,988,141
$
15,615,275
3,007,375
37,649
462,710
502,206
290,965
Intrafund accounts receivable (Note 6)
-
-
70,527
-
-
Intercompany account receivable (Note 6)
-
-
1,837
-
-
Prepaid expenses
39,519
PROPERTY AND EQUIPMENT (Note 7)
-
217,050
4,538
221,588
64,260
1,851,833
18,102,904
19,921,892
18,977,875
259,090
30,018
289,108
456,322
$ 39,519
$2,110,923
$ 18,132,922
$ 20,211,000
$
24
The accompanying notes form an integral part of the financial statements.
19,434,197
STATEMENT OF FINANCIAL POSITION (Continued) LIABILITIES
Current Accounts payable and accrued liabilities Intrafund accounts payable (Note 6) Intercompany account payable (Note 6)
$
79 -
$ 172,330 70,527
$
795,945
$
968,354
$
280,728
-
-
-
1,837
-
-
-
-
Contributions refundable
-
-
-
-
219,108
Current portion of deferred leasehold inducements (Note 8)
-
-
-
-
57,794
Deferred leasehold inducements (Note 8)
1,916
242,857
-
391,758
1,916
634,615
-
259,090
795,945
968,354
557,630
391,758
125,026
795,945
1,360,112
682,656
30,018
289,108
456,322
-
FUND BALANCES Invested in property and equipment Internally restricted assets (Note 6) Restricted funds
-
550,000
550,000
550,000
37,603
667,218
17,306,959
-
18,011,780
17,745,219
37,603
1,476,308
17,336,977
18,850,888
18,751,541
$ 39,519
$2,110,923
$ 18,132,922
$ 20,211,000
The accompanying notes form an integral part of the financial statements.
$
19,434,197
25
STATEMENT OF OPERATIONS For the year ended December 31, 2011 Climate Change Central Foundation
Â
Operating Fund
Program Fund
2011
2010
REVENUE Provincial government support
$
-
$ 22,335,000
$ 22,341,517
$ 6,045,945
-
41,958
41,958
45,365
-
976,785
976,785
861,846
26,653
-
968,338
994,991
3,400,408
121,875
-
75,310
-
-
-
-
Federal government support
-
Municipal government support
-
Support from other sources Intercompany revenue (Note 6) Conference fees and sponsorships
-
Other income
-
6,517
4,075
47,527
4,159
51,686
116,535
7
19,977
225,075
245,059
208,883
148,535
74,021
24,626,625
24,651,996
10,683,057
400
19,292,043
19,292,443
19,658,049
Interest income TOTAL REVENUE
$
EXPENSES
Rebates, support and incentives (Note 14)
-
Human resources Management
-
483,254
1,229,967
1,713,221
1,458,861
Marketing
-
39,727
269,404
309,131
316,398
Research
-
7,191
118,709
125,900
113,490
Administration
-
438,412
816,478
1,254,890
1,482,641
Intercompany contract expenses
75,310 75,310
26
968,584
2,434,558
3,403,142
The accompanying notes form an integral part of the financial statements.
3,371,390
STATEMENT OF OPERATIONS (Continued) Professional fees
-
205,625
239,532
445,157
502,423
Honoraria and meeting attendance (Note 10)
-
27,108
60,036
87,144
143,761
Meeting expenses
-
2,424
7,272
9,696
11,482
-
29,532
67,308
96,840
155,243
-
99,725
319,717
419,442
395,597
Public education and marketing
-
45,305
124,664
169,969
370,745
Technical support
-
30,983
186,824
217,807
312,433
Travel expenses
-
48,562
37,844
86,406
122,243
Amortization
-
238,452
15,791
254,243
165,499
Telecommunications
-
12,742
34,269
47,011
54,124
Sponsorships
-
1,600
1,600
7,626
Board governance
Premises operations and maintenance Rent, utilities and taxes General
Intercompany sponsorship (Note 6)
-
Office administration
519
-
121,875
-
-
8,187
40,642
49,348
65,769
Insurance
-
6,526
16,249
22,775
24,838
Leasing
-
3,454
11,377
14,831
22,760
Bad debt write-off
-
Journals, subscriptions and memberships
-
Professional development
TOTAL EXPENSES EXCESS (DEFICIENCY) OF REVENUE OVER EXPENSES
$
9,214
-
-
1,468
2,500
10,682
13,166
-
18,994
1,959
20,953
22,287
519
424,019
592,962
895,625
1,183,990
75,829
1,727,885
22,946,120
24,552,649
25,266,692
72,706
$ (1,653,864)
$ 1,680,505
$
99,347
The accompanying notes form an integral part of the financial statements.
$
(14,583,635)
27
STATEMENT OF CHANGES IN FUND BALANCES For the year ended December 31, 2011
Â
BALANCE, BEGINNING
Climate Change Central Foundation
$
Excess (deficiency) of revenue over expenses
28
$
72,706
Purchase of equipment BALANCE, ENDING
(35,103)
Invested in Property and Equipment
-
$
37,603
$
456,322
Internally Restricted
$
550,000
Operating Fund
$
Program Fund
2011
2,141,047
$ 15,639,275
$ 18,751,541
2010
$
33,335,176
(254,243)
-
(1,415,412)
1,696,296
99,347
(14,583,635)
87,029
-
(58,417)
(28,612)
-
-
667,218
$ 17,306,959
$ 18,850,888
289,108
$
550,000
$
The accompanying notes form an integral part of the financial statements.
$
18,751,541
STATEMENT OF CASH FLOWS For the year ended December 31, 2011
Operating Fund
Program Fund
Climate Change Central Foundation
2011
2010
CASH FLOWS FROM OPERATING ACTIVITIES
Sources of cash: Provincial support
$
Federal support
-
Support from other sources
27,178
Interest income received
-
$
-
$ 22,369,962
$ 22,369,962
-
32,953
32,953
$
6,000,000 48,164
64,782
2,015,897
2,107,857
5,129,475
19,219
261,816
281,035
246,968
Use of cash: Cash paid to suppliers and employees
(969)
Rebates paid out
-
Transfers between accounts
-
Net cash provided by (used in) operating activities
(4,266,544) -
26,209
(1,242,777)
(5,510,290)
(5,641,355)
(18,648,580)
(18,648,580)
(19,844,853)
2,926,607
(2,926,607)
-
-
(1,255,936)
1,862,664
632,937
(14,061,601)
(28,877)
(28,612)
(57,489)
(302,803)
CASH FLOWS FROM INVESTING ACTIVITIES
Sale (purchase) of property and equipment
-
Deposit for lease on new office
-
Net cash used through investing activities
-
-
-
-
(52,500)
(28,877)
(28,612)
(57,489)
(355,303)
INCREASE IN CASH FOR THE YEAR
26,209
(1,284,813)
1,834,052
575,448
(14,416,904)
CASH AND SHORT TERM INVESTMENTS, BEGINNING OF YEAR
11,463
2,881,947
15,729,240
18,622,650
33,039,554
37,672
$ 1,597,134
$ 17,563,292
$ 19,198,098
$ 18,622,650
CASH AND SHORT TERM INVESTMENTS, END OF YEAR
$
The accompanying notes form an integral part of the financial statements.
29
NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2011
1. OPERATIONS Climate Change Central (the ‘Organization’) was incorporated on March 31, 2000 under Part 9 of the Companies Act, (Alberta), as a not-for-profit organization. The Organization is an Alberta based non-profit that encourages energy efficiency and the small-scale use of alternative energy sources by Albertans. Decision makers - individuals, businesses and other organizations - are engaged to encourage new choices about energy use. The Organization partners with government, municipalities, and corporations to design and administer tailored programs to help people use less energy, save money and reduce green house gas emissions. As a not-for-profit, according to section 149(1) of the Income Tax Act, the Organization is exempt from paying income taxes. The Organization’s current operating agreement with the Alberta Environment expires on December 31, 2013. The continued operations of the Organization are dependent on continuous funding generation. The financial statements do not include any adjustments relating to the realization of assets and liquidation of liabilities that might be necessary should the Organization not continue to operate. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Organization have been prepared by management in accordance with generally accepted accounting principles in Canada. The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements have, in management’s opinion, been properly prepared using careful judgment with reasonable limits of materiality and within the framework of the significant accounting policies summarized below. (a) Fund Accounting The Organization follows the restricted fund method of accounting for contributions. The General Fund accounts for funds received without restrictions. There was no activity in this fund and the balance remained at zero throughout 2011. The Operating Fund accounts for the Organization’s operations (see Note 9(a)).
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2. SIGNIFICANT ACCOUNTING POLICIES (continued) The Program Fund accounts for funds received for specific projects and related expenses (see Note 9(a)). Included in the Program Fund is the wind down activity of C3 EnviroTech Solutions. A fund was established for Climate Change Central Foundation “C3F” , a controlled not for profit (see Note 4(b)). (b) Revenue Recognition Restricted contributions are recognized in the period in which they are received or receivable if the amount to be received can be reasonably estimated and collection reasonably assured. Amounts pledged as future contributions are not recognized in the accounts as ultimate collection is not reasonably assured. Unrestricted contributions are recognized as revenue of the General Fund in the year received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. The Organization did not receive unrestricted contributions in 2011. Donations to Climate Change Central Foundation “C3F” are recognized in the period in which they are received (see Note 4(b)). (c) Cash Cash includes cash and cash equivalents. Cash and cash equivalents consist primarily of commercial paper and deposits with an original maturity date of purchase of three months or less. Because of the short term maturity of these investments, their carrying amount approximates fair value. GIC investment has a short maturity of, three months or less from the date of acquisition, that qualifies as a cash equivalent. (d) Amortization of Property and Equipment Purchased property and equipment are recorded at cost. The Organization charges amortization on property and equipment on a straight-line basis over their estimated useful lives commencing in the quarter in which any asset is purchased or becomes available for use. The following estimated useful lives are used: Furniture and fixtures 5 years Office equipment 5 years Leasehold improvements over the life of the lease Computer hardware 3 years Computer software 3 years
31
2. SIGNIFICANT ACCOUNTING POLICIES (continued) (e) Deferred Leasehold Inducements Historically, deferred leasehold inducements from office leases have been cash payments to the Organization. These payments have been recorded as leasehold inducements in the Statement of Financial Position and have been amortized against rent expense monthly over the term of the leases. When rent inducements include a period of free rent, monthly rent expense is accrued during the rent free period based on the average rent over the term of the lease. The accrual is reported as a long term liability and is amortized to reduce the actual rent payments over the remaining lease term. (f) Contributed Services Because of the difficulty in determining their fair value, contributed services are not recognized in the financial statements in the normal course of business. (g) Financial Instruments The Organization principally carries financial instruments such as cash, guaranteed investment certificates, accounts receivable, accounts payable and accrued liabilities. These instruments are classified as held for trading and are measured at fair value with unrealized gains and losses recognized in the Statement of Operations. (see Note 16) (h) Bad Debt Write-offs The Organization’s accounts receivable are normally 100% collectible. Payments on programs are protected by contract and all receivables are reviewed monthly and vigorously collected. Therefore, the Organization practices the direct write-off method of accounting for bad debts. (i) Allocated Expenses Climate Change Central has three restricted funds, within each the cost of human resources and contractor fees are separated by fund, by project and then by function into management, marketing, research and administration. Total human resources costs are attributed to each fund on the basis of time spent in each functional area. Professional fees are attributed to each fund based on the invoice details. Allocations of premises, operations and maintenance, of unattributable salaries, and of general expenses (including technical support, telecommunications, insurance, leasing, and office administration) are based on estimated time spent by staff and contractors. Certain board governance costs are attributed directly to funds with the balance allocated on the same basis as other allocated expenses.
32
2. SIGNIFICANT ACCOUNTING POLICIES (continued) (j) Internally restricted assets The Board of Directors have directed that the Organization internally restrict assets to be held to reduce risk associated with the Calgary office lease (see Note 6). These assets are reported in the Statement of Financial Position and the Statement of Changes in Fund Balances. (k) Fund Raising Expenses Expenses for fund raising are to be identified separately from program and operating expenses. Fund raising for the new charity was not significant in 2011. All activity relating to the charity is reported as a separate entity and as a separate fund. (see Note 4(c)). 3. ACCOUNTING STANDARDS CHANGES In 2010, the Accounting Standards Board issued new accounting standards for Not for Profit organizations which must be adopted for years beginning on or after January 1, 2012. Management is currently reviewing the standards to determine the potential effect of their adoption on the financial statements of the Organization, but it currently appears that the changes will not be significant. 4. CONTROLLED COMPANIES (a) In 2006, the Organization incorporated C3 EnviroTech Solutions, a not-for-profit company designed to market new environmental technologies. This company was being funded by Western Economic Diversification, Alberta Environment and industry partners. The company was dissolved on December 16, 2011. (b) In 2008, the Organization incorporated a society called Climate Change Central Foundation “C3F” in Alberta to realize sustainable environmental benefits by advancing individual and community leadership on climate change. In 2010, the Canada Revenue Agency granted charitable status for the newly incorporated company. In 2011, the activity increased as significant donations were received and public awareness increased. Such activity is reported within the Program Fund and the Foundation Fund and is eliminated in the consolidated statements. In the latter part of 2011, the Organization decided to change the name of Climate Change Central Foundation “C3F” to C3 Foundation. This name was rejected by Alberta Corporate Registry because this name did not fully describe the Foundation. The new name of All One Sky was accepted.
33
4. CONTROLLED COMPANIES (continued) (c) Climate Change Central Foundation (C3F) - financial statements 2011 Assets - cash and term deposits
$
Liabilities Net assets
Fund balance - beginning
2010
39,519
$
(1,916) $
$
11,463 (46,566)
37,603
$
(35,103)
(35,103)
$
(18,530)
Revenue - donations and corporate sponsorship
148,535
11,470
Expenses - intercompany expenses for management and website design
(75,829)
(28,043)
Fund balance - ending
$
Financing and investing activities
$
37,603 -
$ $
(35,103) -
5. SHORT TERM INVESTMENTS The Organization received $6.5 million in 2008, $29.5 million in 2009, $6 million in 2010 and $22.2 million in 2011 from the Alberta government to manage the Consumer and Commercial Rebate programs and to pay rebates to Albertans. The Organization has also received $6.5 million for operating funding for 2009 to 2011 and $2.5 million for 2012 and 2013. As part of the Organization’s due diligence, a request was made to the five chartered banks and to Alberta Treasury Branch for proposals to invest these funds. Due to criteria of no risk and flexibility, it was determined that guaranteed investment certificates would be the best fit for the Organization. These investments are held at a chartered bank, their investment corporation and at the Alberta Treasury Branch. The composition is as follows: Operating Fund: 2011 2010 GIC, Maturing November 22, 2016, bearing interest of 2.77% p.a. (2010 - 1.6% p.a.) GIC, Maturing August 19, 2013, bearing interest of 1.15% year one, 1.4% year 2
$
57,283
$
50,347
57,436 -
GIC, 30 day cashable, bearing blended interest of 1.26% p.a.
500,000
501,923
GIC, 30 day cashable, bearing blended interest of 1.29% p.a.
430,619
1,518,585
$ 1,038,249
$
2,077,944
$ 5,123,244
$
5,091,023
Program Fund: GIC, Maturing February 22, 2012, bearing interest of 1.82% p.a. GIC, 30 day cashable, bearing interest of 1.22% p.a.
34
9,826,648
8,446,308
$ 14,949,892
$ 13,537,331
6. INTRAFUND, INTERCOMPANY AMOUNTS AND INTERNALLY RESTRICTED ASSETS Reported in the Statement of Financial Position is an account receivable for the Program Fund and an account payable for the Operating Fund each with a balance of $70,527. This balance reports the amount owing to the Program fund by the Operating Fund. The common expenses subject to allocation are human resources and overhead. In 2011, the amounts allocated was less than expected and excess program funds to settle the receivable and payables were transferred. These intrafund balances have been eliminated in the 2011 total column consolidation. For transactions between the Organization and the Foundation, the Board requested that the Organization record the costs associated with incorporation and management of the related charity in the quarterly and annual financial statements. The Board determined that the start up costs for the charity would require sponsorship from the Organization and, therefore, in 2011, the Board directed the Organization to provide an intercompany sponsorship to offset the accumulating costs. In order to identify this sponsorship, an extra line item has been added to the Statement of Operations titled “Intercompany sponsorship”. All intercompany transactions are eliminated in the 2011 total column consolidation of the statements. In 2010, the Board requested that $550,000 of operating funding be internally restricted and not be available for other purposes without the approval of the Board of Directors. These funds have been set aside in order to reduce risk in the event that Climate Change Central needs to terminate the Calgary office lease at five years from the lease commencement date of July 12, 2010. This is the penalty amount required by the landlords at that time.
7. PROPERTY AND EQUIPMENT Cost 2011 Furniture and fixtures
Accumulated Amortization 2010
2011
Net Book Value
2010
$ 450,684
$ 328,520
16,316
29,165
13,166
17,529
3,150
11,636
Leasehold improvements
122,980
571,574
34,347
335,319
88,633
236,255
Computer hardware
232,956
194,646
163,272
105,897
69,684
88,749
Computer software
51,064
45,541
43,265
37,771
7,799
7,770
$871,678
$ 1,291,610
$ 582,570
$
338,772
835,288
$
$
119,842
2010
$448,362
Office equipment
$
2011
289,108
$
$
111,912
456,322
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8. DEFERRED LEASEHOLD INDUCEMENTS Deferred leasehold inducements, beginning
2011 $
Additions: Calgary office leasehold inducements
2010 125,026
$
266,732
Amortization
125,026
-
(68,982)
391,758 Less: Current portion Long term deferred leasehold inducements
182,820
$
391,758
126,776
(57,794) $
125,026
On July 1, 2010, the Organization moved the Calgary office to Suite 600 - 110 - 9th Avenue SW. The landlord for the new location offered the Organization a free rent inducement beginning on July 12, 2010. The long term leasehold inducement account is increased monthly in an amount equivalent to the rent expense recognized but not paid out. This liability will be reduced monthly over the remaining life of the lease after the leasehold inducement period has expired and when rent becomes payable. 9. FUNDING AGREEMENTS (a) Provincial government support Pursuant to the provisions of the “Funding Agreement” dated July 13, 2000, between the Organization and Her Majesty the Queen in Right of Alberta as represented by the Minister of the Environment and Water (the “Minister”), the Minister provided an initial contribution to establish an Operating Fund for the reasonable start up and administration costs of the Organization in accordance with the terms of the Funding Agreement. Annually, the Minister has provided $2 million to further the objectives that are consistent with the business and strategic plans of the Organization as may be in effect from time to time and meet the obligations contained within the Funding Agreement. In 2009, the Minister granted the Organization $6.5 million. This funding provided the Organization with three years of operational funding. Early in 2012, the Minister provided the Organization with $2.5 million operational funding to December 2013. Unless terminated sooner, in accordance with the Provincial Funding Agreement or by mutual agreement of the Minister and the Organization, the Funding Agreement shall end on December 31, 2013. At this time, the Minister may require the Organization to pay to the Minister all or any portion of the Operating Fund that has not been expended or committed to be expended. The Organization has granted to the Minister a security interest in its present and after acquired personal property.
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9. FUNDING AGREEMENTS (continued) Since 2008, the Minister has provided $64.2 million for program funding to the Organization. These funds were advanced to the Organization to manage the Energy Efficiency Rebate programs and to pay energy efficiency incentives to Albertans. Other provincial government funding partners contributed to the Organization in 2011 for specific programs. (b) Federal government support The Organization negotiates contribution agreements for each program receiving federal funds. The Organization incurs program expenses and submits invoices to the federal government for reimbursement in accordance with each contribution agreement. (c) Funding from other sources In 2011, the Organization’s funding agreement with Summerhill Impact ended. The program was wound up and final reconciliation of results was completed in early 2012. Throughout 2011, automobile recycling companies who partnered with the Organization, continued to pay an administration charge for each car recycled. Under new initiatives, the Organization has attracted partners by offering tailored rebate programs and/or Green Spending accounts with municipalities and corporations. The partners contract with the Organization to provide participants with rebates and the Organization is compensated on a per application basis and, in some cases, for software licence purchases. In addition, the Organization entered into a cost sharing arrangement with Canadian Standards Association (CSA) for the administration of the Alberta Offsets Registry. 10. SALARIES, HONORARIA AND BENEFITS - DIRECTORS AND PRESIDENT Directors, other than Members of the Legislative Assembly of Alberta, are entitled by the Articles of Association to receive remuneration for serving as a Director of the Organization. Board Governance Honoraria Remuneration 2011 Co-Chairs/Committee Leads Directors
President and CEO
$ 44,000
Benefits
2010
$
65,250
2011
$
Total 2010
1,164
$
730
1,040
2011
$
2,221
45,164
2010
$
41,980
66,290
41,250
75,250
77,471
$ 85,250
$ 140,500
$
1,894
$
3,261
$
87,144
$
143,761
$241,750
$ 210,453
$
4,406
$
6,738
$
246,156
$
217,191
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10. SALARIES, HONORARIA AND BENEFITS - DIRECTORS AND PRESIDENT (continued) (a) Co-Chairs’ and Directors’ remuneration include retainer and chair fees, meeting attendance and conference call meeting participation. (b) Co-Chairs’ and Directors’ benefits are employer contributions to CPP. Some directors are exempt from paying CPP premiums. In 2012, directors who are exempt may contribute to CPP. The Organization is required to match their CPP premiums. (c) Benefits for the President and CEO include health insurance, CPP, and EI employer matching. RRSP matching and bonus is included in remuneration. 11. COMMITMENTS The Organization has entered into operating lease agreements with terms extending beyond the current fiscal year. These commitments are as follows: (a) Premises The Organization’s commitments on operating leases for office premises are as follows: Calgary: On July 1, 2010, the Calgary office was moved to Suite 600 at 110 - 9th Avenue SW. A new lease agreement for the term of 10 years was entered into. A leasehold inducement included in the contract was a two year deferral of lease payments. Attributed operating expenses as additional rent were payable through out this term. Starting in July, 2012, monthly lease payments of $26,460 and additional rent of $11,609 plus GST will be payable. The cash value of the future lease payments is $2.7 million over the next 8 years and estimated additional rent will be $1.1 million. The Organization has been granted property tax exemption from the City of Calgary. The Board requested that the Organization internally restrict $550,000 to reduce the risk associated with early termination of the lease at 5 years. Edmonton: The Edmonton office lease expired on November 30, 2011. The Organization relocated the Edmonton office to Suite 400, 10123 - 99th Street. The lease term is two years beginning December 1, 2011 and ending November 30, 2013. The Organization has committed to paying basic rent of $15,660 per year and estimated additional rent of $12,744 per year for operating expenses. The Organization has been granted property tax exemption from the City of Edmonton. (b) Equipment The values below include lease costs for photocopiers at both offices, and a mail machine at Calgary office. The copier at the Edmonton office was moved to the new office. The Calgary mail machine lease will continue until December, 2014. The copier leases expire in 2013.
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1COMMITMENTS (continued) 2012 $ 7,921 Copiers and mail machine 2013 6,445 Copiers and mail machine 2014 5,707 Copiers and mail machine 2015 3,680 Copier 12. SHARE CAPITAL Share capital is not disclosed on the Statement of Financial Position to comply with disclosure requirements for not-for-profit organizations. Share capital structure was changed in 2011 to one common share for each current director of the Organization in accordance with the articles of the Organization. Authorized: 100,000 common voting shares with nominal or par value of $1.00 each Issued and outstanding: 9 common voting shares with nominal or par value of $1.00 each 13. RESTRICTED FUNDS As disclosed in Note 9, the Operating Fund expenditures must be consistent with the business plan and strategic plan of the Organization and the Operating Fund Agreement with the Minister. The Program Fund expenditures must be consistent with the terms of each program grant. 14. PROGRAM EXPENSES AND INCENTIVES The Organization continued in 2011 to manage and administer several incentive programs to effect changes in behavior and technology in order to help reduce greenhouse gas emissions. The Statement of Operations reports the incentives paid under rebates, support and incentives. The contributions and reimbursements from municipal, provincial, federal and industry partners to support these programs are also reported in the Statement of Operations. 15. ALLOCATED EXPENSES The Organization uses an estimate of time spent by staff on operations versus programs as its allocation base. This estimate results in 75% of allocated costs being charged to the Program Fund, and 25% to the Operating Fund. As described in note 2(i), allocated expenses include premises operations and maintenance, unattributable salaries, and general expenses (including technical support, telecommunications, insurance, leasing, and office administration) as shown in the Statement of Operations. 39
16. FINANCIAL INSTRUMENTS The Organization’s financial instruments consist of cash, guaranteed investment certificates, accounts receivable, accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Organization is not exposed to significant interest, currency or credit risks arising from these financial instruments. These instruments are classified as held for trading and are reported at fair value. 17. COMPARATIVE AMOUNTS Certain comparative amounts have been reclassified to conform to the current year’s presentation.
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governance Members of C3’s Board of Directors are stewards of the organization, ultimately responsible for the governance and performance of it. Directors bring diverse knowledge, experience, and influence to their roles; to be effective, they are expected to maintain an understanding of the legislative, business, societal, and political environments within which C3 operates. The main areas of board responsibility are: selection of the President and CEO, monitoring (including the monitoring of principal risks), strategy direction, policies and procedures, compliance reporting, and advocacy and support. C3’s Board of Directors has three standing committees, each of which has the authority to recommend matters to the full board for approval. The Audit and Risk Committee provides financial oversight and its understanding of the key risks facing C3. The Governance and Nominations Committee works to ensure that the board fulfills its legal, ethical, and functional responsibilities through adequate governance and internal operations oversight. The Human Resources and Compensation Committee provides advice and recommendations about the appointment, succession, performance management, and compensation of senior management, and also about oversight and review of human resource policies and overall organizational structure. The Board of Directors meets quarterly, and individual committees meet at least twice a year. Directors are remunerated for their service. Director attendance at board and committee meetings is tracked. Directors carry out an annual review of their collective and individual effectiveness.
Board of Directors1
Senior Leadership Team2
Vince Smith, Board Co-chair Retired, past CEO of Dow Chemical Canada Ltd.
Simon Knight President & CEO
Honourable Diana McQueen Minister of Environment and Sustainable Resource Development
Lynn Sveinson Chief Operating Officer
Richard Adamson Managing Director, Carbon Management Canada, Inc.
Helen Corbett Director, All One Sky Foundation
Bruce Beattie West Hawk Farms Ltd.
Patrick Inglis Senior Manager, Operations, Energy Efficiency & Enterprise Development
Bruce Edgelow Vice President, Energy Group, ATB Corporate Financial Services Paul Griss President, Boldon Group Inc. Chris Jepson Practice Leader, Williams Engineering Canada Inc. Honourable Elaine McCoy Q.C. Senator
Ken Kleiner Director, Strategy & Technology Scott Ranson Director, Communications & Engagement Jeff Reading Director, Operations & Enterprise Development
Cathy Olesen MLA Sherwood Park Ross Risvold Hinton, AB Wayne Rousch Cambria Energy Inc.
41 1,2
At time of printing, June 2012.
Contact@C-3.ca - 403.517.2700 Suite 600, 110 - 9th Avenue SW Calgary, AB T2P 0T1 www.C-3.ca