Transcript archive.wewear.org

Industrial/Business Carbon Footprint
AAFA Environmental Committee Meeting
Geir Vollsæter - Special Advisor
Climate Change and Carbon Management Group
Alston & Bird LLP
©Alston & Bird LLP 2008
Alston & Bird
• A&B has a strong carbon management practice that specializes in
CO2 management from source to final product within oil, gas,
electricity and consumer products
• A&B initiated the North American Carbon Capture and Storage
Association (NACCSA)
• A&B is retained by Edison Electrical Institute for CCS work
• A&B has major global firms as clients for CO2 mitigation,
renewables, clean technologies, advocacy and strategy
©Alston & Bird LLP 2008
Energy = Growth = Prosperity
400
Global Trend
350
EU-15
Energy Use, GJ per capita
North America
300
Korea 1970-2000
Malaysia 1970-2000
250
China 1970-2000
200
150
100
50
0
$0
WBCSD
Source – WBSCD
©Alston & Bird LLP 2008
$5 000
$10 000
$15 000
$20 000
$25 000
GDP per capita, US$ 1995 ppp
$30 000
$35 000
$40 000
Growth, development and energy demand
Global population divided into income groups;
• Poorest (GDP < $1,500)
• Developing (GDP < $5,000)
• Emerging (GDP < $12,000)
• Developed (GDP > $12,000)
Primary energy
Developed (GDP>$12,000)
Emerging (GDP<$12,000)
Developing (GDP<$5,000)
Poorest (GDP<$1,500)
10000
Shifting the development profile to a “low
poverty” world means energy needs
double by 2050
Shifting the development profile further to a
“developed” world means energy needs
triple by 2050
Source – WBSCD
©Alston & Bird LLP 2008
8000
Population, millions
Population expected to rise to 9 billion by
2050, mainly in poorest and developing
countries.
6000
4000
2000
0
2000
2050 (Base)
2050
Low Poverty
2050
Developed
World
Increased upstream CO2 intensity
• CO2 emission per bbl o.e
produced on the rise
• “Low hanging fruit” light
oil in decline
• Heavy oil on the rise
• CO2 intensive
unconventional oil in
rapid development
• Some say easy oil is over,
more likely, easy oil is
over for some, mostly
international oil
companies, driving some
oil and gas companies to
pursue unconventionals
©Alston & Bird LLP 2008
Growth, Environment and Globalization
• Globalization drives growth, employment, revenues,
cheaper goods but,
• Has lead to significant environmental dumping
• Has made assurance of product quality and
environmental impact difficult due to long value
chains
• But increasingly, emissions = liability
• CO2 intensity in industrial sectors and products is
under evaluation by investors and governments
©Alston & Bird LLP 2008
CO2 Intensity Benchmarks
• CO2 intensity standards – benchmarks
• CO2 intensity standard = 1 Gallon fuel, 1 ton steel, cement,
fertilizer = X kg CO2
• CO2 measured from well and mine to tank (WTT), Kwh’s etc
• California adopted, through AB 32 and LCFS, a WTT regime
as a foundation for its CO2 reduction regime that governs both
fuel and power.
• New categories of consumer products will see similar
regulations, benchmarks and liabilities.
©Alston & Bird LLP 2008
Carbon Disclosure
• Voluntary/mandatory reporting for facilities and
products
• Third party verification, voluntary and mandatory
• Many pension funds, institutional investors and banks
now demand/strongly advice their potential prospects to
disclose the CO2 intensity of the portfolio
• $ 57 trillion (before the credit crisis) stand behind the
Carbon Disclosure Project that yearly benchmarks
global industries on CO2 intensity and strategies to
reduce the carbon footprint for their products
©Alston & Bird LLP 2008
Shoes
• “Timberland Co. shoe company with an outdoorsy image, has
assessed the carbon footprint of about 40 of the shoe models it
currently sells. The results range from about 22 pounds to 220
pounds per pair.” (WSJ)
• For shoes, transportation account for about 5 % of the total
emissions
CO2 intensity in shoes and costs given 50 $ / ton CO2
200
150
100
50
0
lb CO2
$ additional cost
Source: WSJ Oct 6th
©Alston & Bird LLP 2008
Flip flops
Regular shoes
Hiking boots
30
90
175
0.75
2.25
4.375
Consumer products - Benchmarked
• Increasingly,
companies now
undertake studies
of the CO2
intensity of their
products, for good
reasons.
©Alston & Bird LLP 2008
Summary
• Global energy consumption and CO2 intensity is
increasing
• Global benchmarking of industrial production ongoing
• Investor community treats CO2 as a risk to portfolio
• Lower unit CO2 intensity = increased global
competitiveness when CO2 has a price
• CO2 intensity will increasingly impact consumer
preference and increasingly impact the bottom line
©Alston & Bird LLP 2008
Thanks
Geir Vollsæter
[email protected]
Special Advisor
Climate Change and Carbon
Management Group
Alston & Bird LLP
The Atlantic Building
950 F Street, NW
Washington, DC 20004-1404
USA
Phone: 202-756-3300
Fax: 202-756-3333
©Alston & Bird LLP 2008