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NEES COMPANIES ANNOUNCE MALAYSIAN FOREST MANAGEMENT PROJECT TO REDUCE AIR EMISSIONS

 NEES COMPANIES ANNOUNCE MALAYSIAN FOREST MANAGEMENT PROJECT
 TO REDUCE AIR EMISSIONS
 WESTBOROUGH, Mass., Aug. 4 /PRNewswire/ -- New England Electric System (NYSE: NES)(NEES) companies and Innoprise, a leading forest products corporation in Sabah, Malaysia, today announced a joint effort to offset carbon dioxide (CO2) emissions from the utility's operations through an innovative forest management project in Sabah. It is estimated that the pilot project will offset between 300,000 to 600,000 tons of CO2 at less than two dollars per ton, while also preserving the rain forest. This is the first in a series of experiments planned by NEES to demonstrate the cost and feasibility of reducing greenhouse gas emissions such as CO2, which have been associated with gl ?warming. The offset strategies are one component of the utility's long-term resource plan, NEESPLAN 3, which seeks to reduce the utility's net air emissions by 45 percent by the year 2000.
 "Late in 1991, we announced NEESPLAN 3. We are making great progress in areas such as conservation and load management, converting Brayton Point Unit 4 to natural gas and beginning work at Manchester Street Station. Today, we begin the work needed to accomplish the offset portion of our goals in a cost-effective manner," said John W. Rowe, NEES president and chief executive officer. "Our efforts in Malaysia are the first of several pilot-scale initiatives over the next several years to test the offset concept."
 According to Rowe, this project was selected by NEES and was reviewed by the utility's Environmental Collaborative that was formed to help NEES develop its new environmental initiatives. The collaborative includes representatives from the consumer, environmental, business, academic and government communities.
 "Innoprise has an excellent record of working with English, Dutch, Swedish, French and Australian organizations on sound forestry practices. They have wanted to do more than replanting trees for some time. At the same time, we wanted to find a way to make a significant impact in the most cost-effective manner. NEES and Innoprise were brought together through COPEC, a company based in Los Angeles, that specializes in putting together joint environmental efforts," Rowe said.
 In the pilot program, Innoprise will implement forestry techniques on 3,500 acres to accomplish the following improvements:
 - Preserving non-harvested trees through:
 - better-planned logging trails,
 - directional felling of trees,
 - and removing vines before cutting trees;
 - Improving water quality while maintaining biodiversity and
 reducing soil erosion, and;
 - Preventing release of an estimated 300,000 to 600,000 tons of CO2.
 Sabah, a Malaysian state on the island of Borneo, has been acknowledged by biodiversity experts to have the largest remaining contiguous lowland Asian rain forest. Innoprise's concession is approximately 2.5 million acres or about four times the size of Rhode Island. Approximately 420 bird species, 90 bat species, and 120 other land-mammal species have been identified in Sabah. A third of these species are not found elsewhere in the world. Additionally, new species are still being identified by experts located in Innoprise field research centers.
 Innoprise's net proceeds are channelled into a foundation whose main interest is to improve the quality of life of the people of Sabah. Currently, Innoprise employs harvesting techniques on about 50,000 acres annually. Even with the current selective cutting techniques, about 50 percent of other less commercially valuable trees in the area are lost.
 "At Innoprise, we have taken pride in our ability to preserve Malaysia's rain forest. Over the years, we have taken continual initiatives to improve our harvesting techniques and now working with NEES, we will be able to improve our record even further. Together, we see the emergence of a new era for corporate good citizens to equally cooperate on shared ecologic issues and improve the global ecologic environment. Our goal through this program is to improve our forest management practices so that more existing trees remain," said Cyril Pinso, general manager of forestry at Innoprise.
 The project involves three phases:
 -- 1992-3: Innoprise will receive specialized training, map areas to
 be harvested and acquire necessary equipment;
 -- 1993-4: Innoprise will implement the new harvesting practices on
 3,500 acres, and;
 -- 1994-5: NEES, Innoprise and others will evaluate the project.
 NEES companies will spend $450,000 on the three-year effort. Additionally, NEES is retaining the services of the Rainforest Alliance, a New York-based environmental and conservation group, to serve as part of an independent auditing team for the project.
 "This kind of pilot project will generate useful information about the costs of reducing greenhouse gas emissions in the developing world -- a critical step," said Douglas Foy, executive director of the Conservation Law Foundation. "Carbon dioxide reduction projects cannot substitute for cost-effective environmental controls in utilities' domestic operations, such as conservation, but they could potentially help the world guard against the risk of severe climate change."
 In addition to the Malaysian forest management project, NEES companies also plan to explore a variety of air emission reduction pilot programs including methane recovery at coal mines, chlorofluorocarbon (CFC) recycling from refrigerators and air conditioners, and recycling of coal ash as a raw material to produce cement. NEESPLAN 3 also calls for pilot projects in advanced renewable generation technologies such as advance biomass, waste-to-energy, landfill gas, wind and solar generation.
 NEES companies also have been leaders in the pursuit of non-utility generation and in the development and implementation of conservation and load management programs.
 New England Electric System is a public utility holding company headquartered in Westborough. Retail subsidiaries serve more than 1.2 million customers in Massachusetts, Rhode Island and New Hampshire.
 OFFSETS FACT SHEET


What is an Offset?
 An offset is a method of reducing pollution other than the direct control of emissions at their source. Offsets involve taking actions away from the source, or power plants in the case of a utility, to counterbalance emissions. For example, carbon dioxide (CO2) emissions can be offset by planting or preserving trees, which absorb the gas. Other examples of strategies to offset greenhouse gases may include methane recovery at coal mines, recycling coal ash as raw material to produce cement, chorofluorocarbon (CFC) recycling and recovery from refrigerators and air conditioners, and the enhancement of marine algae growth. How Does Each of These Processes Work?
 -- Tree preserving/planting -- Trees absorb CO2 through the photosynthesis process. Stopping the destruction of the rain forest, turning more land into forests, planting more trees, or establishing efficiencies for the current use of forest products can enhance this natural CO2 absorption cycle.
 -- Methane recovery -- Methane, a natural by-product of coal creation, is released into the atmosphere during the mining process. Methane released during mining can be captured for use as a fuel.
 -- CFC recycling -- CFCs, the active gas in refrigeration and air- conditioning equipment, can be removed from aging equipment and recycled or destroyed.
 -- Coal ash to cement -- Coal ash has physical properties compatible with cement products and can be used as a raw material. When recycled in this manner, coal ash reduces carbon dioxide emissions by replacing other materials and reducing fuel consumption -- each of which emits CO2.
 -- Marine algae farming -- Marine algae consume vast amounts of CO2 annually. Algae growth stimulation could thereby accelerate CO2 annually. Algae growth stimulation could thereby accelerate CO2 absorption. Can An Offset Strategy Be Successful?
 We believe so. Our greenhouse gas offsets pilot programs are intended to test and demonstrate the cost, technical potential, market availability, and public acceptance of the strategy. How Much Do Offsets Cost?
 Dr. William D. Nordhaus of Yale University, an international expert on global warming, believes that greenhouse gas offsets are available at a cost of approximately $2 per ton of CO2 equivalent. How Will NEES Recover the Cost for its Offset Strategies?
 NEES companies would see to recover the cost of its offset strategies through rates. We believe our offset program is a prudent and cost-effective strategy of environmental improvements. Why is NEES Pursuing Offset?
 NEES wants to explore and foster cost-effective strategies to reduce the effects of greenhouse gases.
 INNOPRISE CORPORATION
 In 1966, the Malaysian government established the Sabah Foundation (Yayasan Sabah). The purpose of Yayasan Sabah was to promote the social development of Sabah, a state of Malaysia, primarily through management of its timber resources.
 The asset the Yayasan Sabah was given to fund its activities was a timber concession of 972,800 hectares (4,000 square miles or four times the size of Rhode Island). This concession was, at the time, covered by ancient forest which is exceptionally valuable because trees of the Dipterocarp family are dominant. Unlike most tropical hardwoods, almost all of the species of the Dipterocarp family have acceptance in the international hardwood markets. So a Dipterocarp forest yields exceptionally large quantities of merchantable timber in relation to harvesting costs.
 The structure of the Yayasan Sabah is deliberately established to use the proceeds from the harvest of the Dipterocarp forests to fund a variety of social programs.
 Innoprise Corporation, via its subsidiary Rakyat Berjaya, is the entity which manages the commercial activities of Yayasan Sabah. Since the creation of Yayasan Sabah, the commercial activities have shifted into downstream forest products activities such as plywood and veneer processing and other enterprises, but the fundamental sources of revenue remains the Dipterocarp forest.
 Innoprise is a large corporation. Its 1991 revenues were $378 million (US dollars), with a $30 million profit (excluding royalties) transferred to the State of Sabah. Its accounts are audited by Ernst and Young.
 -0- 8/4/92
 /CONTACT: Mary-Ellen Harn of New England Electric System, 508-366-9011 (days), 617-498-9880(evening)/
 (NES) CO: New England Electric System ST: Massachusetts IN: OIL SU:


CH-CN -- NE005 -- 6550 08/04/92 10:16 EDT
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