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A Corporate Perspective: the Significance of the Kyoto Mechanisms. Tom Jacob DuPont tom.jacob@usa.dupont.com October 29, 2002 UN Framework Convention on Climate Change. Science-based solutions... Food & Nutrition Health Care Apparel Home & Construction Electronics Transportation
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A Corporate Perspective: the Significance of the Kyoto Mechanisms Tom Jacob DuPont tom.jacob@usa.dupont.com October 29, 2002 UN Framework Convention on Climate Change
Science-based solutions... • Food & Nutrition • Health Care • Apparel • Home & Construction • Electronics • Transportation • From a global company • Operations in 70 countries
A company concerned about climate change • Committed in ‘91 to reducing GHG’s • Reduced our global emissions by over 50% during decade of ‘90’s • New goals for coming decade • Attain 65% reduction from ‘90 • Maintain flat energy consumption • Source 10% of energy from renewables
Climate Change & Industry Perceived Environmental Risk Very High Perceived Economic Risk Very High Low Low
Climate Change & Industry Perceived Environmental Risk Very High Perceived Economic Risk Very High Low Non-Issue Low
Climate Change & Industry Perceived Environmental Risk Very High Environmental Issue Perceived Economic Risk Very High Low Non-Issue Low
Climate Change & Industry Perceived Environmental Risk Very High Environmental Issue Perceived Economic Risk Very High Low Economic Issue Non-Issue Low
Climate Change & Industry Perceived Environmental Risk Very High Environmental Issue DUPONT Perceived Economic Risk Very High Low Economic Issue Non-Issue Low
Climate Change & Industry Perceived Environmental Risk Very High Significant Complex Challenge Environmental Issue Perceived Economic Risk Very High Low Economic Issue Non-Issue Low
A LONG TERM ISSUE Concentration Potential Concentration Targets ppmv ( ) Stabilization at: 1000 1000 800 650 600 2X Pre- Industrial 450 400 2000 2100 2200
A LONG TERM ISSUE Concentration Potential Concentration Targets ppmv ( ) Stabilization at: 1000 1000 800 650 600 2X Pre- Industrial 450 400 2000 2100 2200 Related Emission Pathways Total Emissions ( CtC / yr ) “Business as usual” 20 15 10 Toward Total Stabilization current at: emissions 5 1000 650 450 0 2000 2100 2200
A LONG TERM ISSUE Concentration Potential Concentration Targets ppmv ( ) Stabilization at: 1000 1000 800 650 600 2X Pre- Industrial 450 400 2000 2100 2200 Related Emission Pathways Total Emissions ( CtC / yr ) “Business as usual” 20 15 10 Toward Total Stabilization current at: emissions 5 1000 Developing 650 450 country 0 emissions 2000 2100 2200
A LONG TERM ISSUE Concentration Potential Concentration Targets ppmv ( ) Stabilization at: 1000 Kyoto Protocol 1000 800 650 600 2X Pre- Industrial 450 400 2000 2100 2200 Related Emission Pathways Total Emissions ( CtC / yr ) “Business as usual” 20 15 10 Toward Total Stabilization current at: emissions 5 1000 Developing 650 450 country 0 emissions 2000 2100 2200
The Longer-Term Challenge • Continued emissions in developed nations • Growing Population --> Growing Emissions • Long-term Need • Reduce global emissions, while strengthening global economy • Increasing pressure on emissions!!
Longer-Term Solution • Technology evolution/revolution • Accelerate technological advancement • Encourage technological innovation • Mobilize globally • Global economic vitality --> diffusion of technology • Economic growth in more climate-friendly way • Key Notion: Cost-Effective Use of Capital
Markets & Flexibility • Market-stimulated investment ---> Global emissions growth • Must have global system encouraging innovation and cost-effective climate action • Workable, integrated market mechanisms • Incentive for FDI as well as climate- specific investment • Must develop, identify and act on least-cost opportunities to minimize impact of that growth
Marginal Cost of Greenhouse Gas Reduction Projects Greenhouse Gas Reduction Cost
Marginal Cost of Greenhouse Gas Reduction Projects Greenhouse Gas Reduction + + + + + * * * Cost
Marginal Cost of Greenhouse Gas Reduction Projects Greenhouse Gas Reduction + + + + + * * Priority For Investment * Cost
The “80-20” Rule Environmental Benefit 100% 80% You accomplish 80% of the environmental benefit with the first 20% of costs. 60% 40% 20% 20% 40% 60% 80% 100% Cost
The “80-20” Rule Environmental Benefit 100% 80% High Cost/Low Return 60% 40% 20% 20% 40% 60% 80% 100% Cost
The “80-20” Rule Environmental Benefit 100% 80% High Cost/Low Return 60% 40% Low Cost/High Return 20% 20% 40% 60% 80% 100% Cost
The “80-20” Rule Environmental Benefit 100% 80% 60% 40% 20% 20% 40% 60% 80% 100% Cost
The “80-20” Rule Environmental Benefit 100% 80% 60% Trading is the key! 40% 20% 20% 40% 60% 80% 100% Cost