September 13, 2002

Ms. Pamela Foster

Coordinator

Halifax Initiative

153 Chapel Street, Suite 104

Ottawa. Ontario

KIN 1H5

Dear Ms. Foster:

I am writing in response to the May 31, 2002 letter (received July 15) from Melanie Quevillon, the former Coordinator of the Halifax Initiative NGO Working Group on Export Development Canada (EDC), regarding EDC support for renewable energy technologies. I have addressed my response to you as I understand that Melanie is no longer with the Halifax Initiative.

Through past discussions with EDC officials, you know that support for environmental technologies is an issue of importance to EDC. We have been actively examining this industry and exploring ways to increase our environmental business activity.

EDC supports approximately one-fifth (1/5th) of the industry's annual exports and assisted some 125 environmental companies in 2001. While this indicates a useful role, there is room to do more - both in enhancing EDC's offering and in helping the Canadian industry grow. We believe that we have the right `toolkit' to support this industry. Accordingly, we will be more aggressive in seeking out and championing opportunities to assist environmental exporters, particularly in support of renewable energy exports.

There is also potential for greater use of EDC's equity program in the clean energy area. EDC has already supported environmental firms with equity, and is at present in discussion with other firms. The environmental sector is one of three priority areas for the equity program.

In examining these and related areas, EDC recently hosted a roundtable discussion with a selection of large and small Canadian environmental exporters that generated a range of interesting views. Flowing from this roundtable, and in the context of the government's Africa Agenda, EDC has suggested that the program should include a focus on the renewable energy and water supply sectors as a base on which to build sustainable infrastructure development and growth.

We have recently reorganized our energy team to more effectively serve the energy industry, including formally tasking people with responsibility for monitoring the renewable energy sector. The team has already integrated renewable energy into its business development objectives as a promising area of future growth. The team is currently accelerating its activities in terms of market intelligence and industry co-operation.

We believe that partnership with industry is key to a successful strategy to support Canadian exporters in addressing the challenges of climate change.

To more effectively serve the industry, EDC is strengthening its working relationship with Clean Development Mechanism and the Joint Implementation Office (CDM/JI) of the Department of Foreign Affairs and International Trade. This office is tasked with helping to prepare Canada in the area of greenhouse gas reduction and flexibility mechanisms. During the coming months, EDC will be working closely with the CDM/JI Office and others to determine how it could assist Canadian firms that may be involved in such environmental projects.

I would like to extend your analysis on renewable energy by introducing the concept of energy efficiency as a means of reducing consumption of traditional fossil fuels. At EDC, we recognize the importance of encouraging exporters of technologies that bring greater efficiency to areas such as electricity distribution and production processes.

Finally, vour letter encourages EDC to adopt a quantitative target for support for renewable energy technologies. For a variety of reasons, I am not convinced that the US EXIM Bank model referred to is the best option for Canada. The environmental industry is structured quite differently in each country. In Canada, the renewable energy sector is still in its infancy and there are fewer, commercially-viable technologies on the Canadian market. Furthermore, the supply of venture capital available for the development of this sector is very limited in Canada.

I believe that this is an exciting area, not only for business development for EDC and Canada, but also for environmental protection. I look forward to your continued input on these issues.

Yours sincerely,

A. Ian Gillespie

President and Chief Executive Officer

Export Development Canada