Transcript Energy Sector (CLP

Business & Climate Change?
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Beyond The Science…
 Experts consensus (over 2000 scientists from around the
world who advise governments are on the IPCC)
 Governments may/will legislate in accordance with: scientific
opinion, “precautionary principle” and/or political agendas –
the ball is in the Governments’ courts now…
 Stern review establishes it is worth taking action as a form of
insurance
 Apart from slow recovery from crisis events, climate change
can impact food and energy supply and subsequently political
stability – possibly become a matter of national security
Climate is changing anyway & countries will act, so we need
to step up adaptation and position for new business
opportunities today, since it takes time to implement…
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Can Climate Change Affect Business?
Potential indirect impacts include:
 Loss of stakeholder confidence
 Customers directly impacted
 Demand growth limited
 Need for new management skills
 Opportunities for new products
and services
 New policies, regulations and
incentives
Sooner or later new climate-related policies, regulations and
incentives may appear everywhere & therefore affect business.
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Can Climate Change Affect Business?
Potential direct impacts include:
 Flooding
 Potential for brownout and
unplanned outages
 Increased wear and tear
 Loss of efficiency and
reduction of capacity
 Problems accessing water
 etc…
Climate change can have direct physical/operational impacts.
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Possible Business Opportunities?
 Direct impacts – opportunities for new equipment &
measures to protect against impacts?
 Emerging regulations – new business opportunities arising
from changing market conditions.
 Investment strategies – opportunities in monitoring and
mitigating climate risk for companies.
 New technologies – opportunities in the technologies
needed for a more sustainable future.
Businesses should monitor potential climate change impacts and
regulations, build in climate investment criteria and develop
business strategies to reduce risk and maximise opportunities.
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What Could A Low Carbon Future Look Like?
Look on the bright side….
 Being more efficient in production & operations?
 During this financial crisis it’s a good opportunity to “clean
house” and tighten operations with more efficient systems &
processes
 Transition away from sunset industries to new low
carbon ones?
 You don’t lose a job – you change it (although you will need to
be retrained)
 Less products but higher quality and price?
 Total revenue could be the same
We tend to change habits only in a crisis…so this is the time for
change!
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Energy & Climate Change
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Energy and Climate Change
Power sector has the largest potential for carbon emission
reductions – it contributes approximately 40% of total global carbon
dioxide emissions from the energy sector.
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Energy and Climate Change
Power sector has the largest potential for carbon emission
reductions – it contributes approximately 40% of total global carbon
dioxide emissions from energy sector.
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What Would It Cost?
Global Climate Impact Abatement Map, Vattenfall, McKinsey chart
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Need a carbon price – some
measures can pay for
themselves but many for the
larger reductions still not
commercially viable today
RD&D and the Commercialization Process
Policies and public funding decisions that
encourage private sector investment…
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Policy options for different
reduction “wedges”
December 2007
For each energy-related area:
December 2008
 Current status of technology
 Challenges
 Domestic policies & measures to promote
development and deployment
 International policies and measures to
support cooperation and transfer of lowcarbon technology in the electricity sector
Need new policies & funding to help
advance all technology wedges – to
encourage low carbon technologies
& discourage carbon intensive ones
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A roadmap for energy technology policy
options
“Governments
The two-fold purpose of a policies and measures
framework for the sector should be :
 Drive investments towards available efficient
power delivery and end-use equipment and
carbon-free/low-carbon power generation
technologies through the first two decades
following the renegotiation of an international
framework (2013-2025/2030) ;
 Ensure that the promising technologies
researched and developed today are brought
to market in the following decades (2025/20302050), with a long-term objective of substantial
decarbonization of the sector (e.g., halving
sectoral GHG emissions worldwide by 2050).
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should adopt
climate
policies and
measures that the
economy can
withstand not only
in times of
prosperity but
even
in times of
recession.”
Tokyo
international
roundtable, 2008
CLP Climate Vision 2050
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Who Should Reduce By How Much?
2007 Country CO2 Intensity
& Non-carbon
Fuel
CO2 intensity
and Generation
Mix Mix (excluding
imported energy)
1200
1000
800
600
400
200
0
20%
40%
60%
80%
100%
120%
India
Aust ralia
Hong Kong
China
Unit ed St at es
Japan
Germany
Spain
Denmark
Belgium
Canada
Aust ria
France
Brazil
Sweden
Swit zerland
Norway
0%
Renewables
Nuclear
CO2 Intensity (grammes CO2 per kWh)
Sources:
Electricity Information 2009, IEA (2007 Country Gross Generation Data)
CO2 Emissions from Fuel Combustion - 2009 Edition, IEA (2007 Data)
Country’s carbon intensity is influenced by the energy/fuel mix
portfolio of the country
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Who Should Reduce By How Much?
2007 Tons CO2 Per Capita (from fuel combustion)
25.0
20.0
15.0
10.0
5.0
i
ha a
ila
nd
C
H hi
U on na
ni g
te K
d on
K
in g
gd
G om
er
m
an
y
Ja
S pa
in n
ga
po
A re
U u st
ni ra
te
d lia
S
ta
te
s
In
d
T
V
ie
t
na
m
0.0
Sources:
Electricity Information 2009, IEA (2007 Country Gross Generation Data)
CO2 Emissions from Fuel Combustion - 2009 Edition, IEA (2007 Data)
The carbon footprints of people in our region and across the world
also differ widely because of economic and industrial activity
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Dilemmas of the East Versus West
 Historical emissions
from developed
economies.
 Not just emerging
and developing
economies growing,
but developed
countries continue
energy use.
Reference: (1) SGM Energy Modeling Forum EMF-21 Projections, Energy Journal
Special Issue, in press, reference case CO2 projections. (2) Non-CO2 emissions are
from EPA's Global Anthropogenic Emissions of Non-CO2 Greenhouse Gases 19902020.
West’s dilemma: Relatively energy intensive lifestyle with older
infrastructure not ready for demolition – what can they do?
East’s dilemma: How do the meet growth? Who will pay the
difference for low emission energy?
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Climate Change – A Regional Dilemma
There is no quick fix to reduce emissions from
the Asia-Pacific power sector


Asia-Pacific region is critically important to the
success of global efforts to combat climate
change
Our dilemma –



Many of the communities we serve are in
urgent need of more power for economic
growth & social development
We have the ability to provide it
Coal is the most affordable energy source
and the one with the highest GHG emissions
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CLP’s Climate Vision 2050
Towards The
Future
CO2 Emissions
Intensity
<1%
2004
0.84
(kg CO2/kWh)
~5%
2010
2035
2050
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Energy
Efficiency &
Conservation
(renewables)
2007
2020
Non-carbon
Emitting
2009 (year end):
• ~ 0.85kgCO2/kWh
• ~10% renewables
• ~15% non-carbon
~15
%
>45
%
0.8
5%
(kg CO2/kWh)
(renewables)
By
Natural Gas
0.7
20%
(kg CO2/kWh)
(non-carbon)
0.45
(kg CO2/kWh)
>75
%
Renewable
Energy
0.2
(kg CO2/kWh)
Ongoing
Review of
Target
Nuclear
Clean Coal
Changing For A New Era of Uncertainty
Power sector is generally
 Slow to change as
 assets take time to build AND last a long time
 skills associated with the operations don’t change much
 technology evolves slower than other industries
 More risk-adversed than other industrial sectors as
 investments are large
 Investments locked in over multiple decades
As changes in public awareness and expectations as well as
government policies and regulations gather speed, adapting
to sustain our business has become increasingly
challenging…
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Decision-making In A New Era of
Uncertainty
Mitigating and adapting to climate change requires
urgent and massive changes, so we need to…
 Start making decisions
 without all the information/certainty we are used to having
 at a speed that is much quicker than we are used to
 that perhaps require a higher risk appetite
Strong leadership from senior management at the top is required
to make many of these urgent and massive changes on direction
and strategy, coupled with buy-in from the bottom up to move
more quickly on implementation
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Decision-making In A New Era of
Uncertainty
Mitigating and adapting to climate change requires
urgent and massive changes, so we need to…
 Develop strategies that can take uncertainties into
stride – if emitting carbon is an inevitable liability,
need to start
 reducing carbon exposure in portfolio
 pricing carbon liabilities into investment decisions
 instigating the changes in our capabilities necessary for the
low carbon future
New requirements in existing systems and processes, as well as
new systems & processes and even new functions…
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Backup Slides
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Greenhouse Gases & Air Pollutants
Air Pollution
Major Emission Sources
Climate Change
fossil fuel combustion
Combustion Efficiency
increasing combustion efficiency reduces BOTH
air pollutants and greenhouse gases
Human Health Impacts
direct
indirect
Major Gases
air pollutants
(e.g. SO2, NOX,
particulates, etc.)
greenhouse gases
(e.g. CO2, CH4, N2O,
HFCs, PFCs, SF6, etc.)
Relevant Fuel Content
sulphur, ash, toxics
carbon, moisture
Emissions Control
mature
(e.g. electrostatic
precipitators, flue gas
desulphurisation, etc.)
not commercially viable
(e.g. carbon capture and
storage (CCS))
These issues are fundamentally different issues that are related
and that can impact each other
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