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Future International Climate Policy Workshop The Business Case for Action

Future International Climate Policy Workshop The Business Case for Action . Ildo Luis Sauer Petrobras Gas and Energy Director. STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005. G24 Climate change poses one of the most significant challenges of the 21st century

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Future International Climate Policy Workshop The Business Case for Action

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  1. Future International Climate Policy Workshop The Business Case for Action Ildo Luis Sauer Petrobras Gas and Energy Director

  2. STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005 • G24 • Climate change poses one of the most significant challenges of the 21st century • Responsibility to act on climate change • The companies have assets or investiments that would be affected by changes in climate • Prospect of increased regulation • Small costs today can become material costs in the future • Companies have begun to act in a variety of ways • Need for further, substantial efforts to reduce greenhouse gas emissions STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005

  3. KEY PRINCIPLES • Policies based firmly on good science and rational economics • Policy frameworks that use market-based mechanisms offer the best hope for unleashing needed innovation and competition • Solutions must be global • Integrated approach to the problem and its solutions is critically important – Business, Government and Consumers • Climate change mitigation must not be viewed in isolation from other highly important challenges STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005

  4. SCIENCE • More resources and attention on assessing the magnitude of adverse effects on human health, natural ecosystems, and regional and global economies - need of near-term adaptation measures • Strengthen the global observation systems that are now underway or may evolve in the future (e.g. sea level rise, sea/ice cover) • Move expeditiously to adopt climate stabilization targets that will define the scope and scale of mitigation needed in the years ahead STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005

  5. POLICY FRAMEWORK • Create long term value • Establish a long term, market-based policy framework extending to 2030 that will give investors in climate change mitigation confidence in the long term value of their investments. Establishing indicative signals extending to 2050 would also be beneficial • Ensure that the policy framework is global in scope • Define greenhouse gas emissions rights through a cap-and-trade system or other market-based mechanisms • Address climate change as part of an overall sustainable development agenda, putting in place mechanisms which address the challenges of poverty, energy, and economic growth in emerging markets while mitigating greenhouse gas emissions. STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005

  6. POLICY FRAMEWORK • Unleash technological innovation through performance-based incentive programs • G8 governments must emphasize performance-based standards in new initiatives aimed at rapid commercialization of low carbon technology • Ensuring compatibility with other societal objectives is equally important, together with the ability to optimize greenhouse gas reductions across product life cycles • Establish common metrics • Work toward convergence of existing greenhouse gas reporting processes and systems. • Utilize the power of procurement and supply chain drivers • Business and the G8 governments should work together to establish a practical toolkit for integrating climate change into their global supply chain requirements • Business and government should commit to use such a common framework and encourage its use in stages of supply chains STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005

  7. POLICY FRAMEWORK • Facilitate greater investment in low carbon economic growth in emerging markets • The G8 governments should step up collaborative efforts with emerging market nations to streamline and encourage low carbon investment • The G8 nations should engage in a major new partnership with China, India, Brazil, South Africa and Mexico to establish appropriate frameworks • G8 governments that have ratified the Kyoto Protocol should launch immediately a consultative process with the UNFCCC to engage experienced global businesses in an assessment of the CDM, with the goal of implementing measures to streamline the process substantially STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005

  8. CONCLUSION Business and governments can – and must – work together on climate change mitigation. Working together, we can identify and implement policy measures that will create meaningful and effective solutions, while at the same time ensuring long term value for shareholders. With properly designed programs and incentives, we can unleash the power of the market to accelerate the deployment of low carbon technologies, engaging both producers and consumers alike. And with the right kind of focus on both the needs and aspirations of emerging markets, we can ensure that a truly global solution to the problem is achieved. We are firmly committed to do our part on climate change. A coordinated and vigorous response from the G8 governments along the lines suggested above will allows us to do even more. STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005

  9. BRAZIL IN ACTION • DEVELOPED COUNTRIES HISTORIC RESPONSABILITY ON CLIMATE CHANGE COMMON BUT DIFFERENTIATEDRESPONSIBILITIES • AND BRAZIL ASSUMES ITS RESPONSIBILITIES • MAIN GOVERNMENTAL PROGRAMMES: • KYOTO PROTOCOL COMPLIANCE • NATIONAL BIODIESEL PROGRAMME • PROINFA • HISTORIC PROGRAMMES IN ACTION: • PROALCOOL, CONPET AND PROCEL

  10. PETROBRAS IN ACTION • PETROBRAS STRATEGY DECLARES ITS SOCIAL AND ENVIRONMENTAL RESPONSIBILITY • AND PETROBRAS ASSUMES ITS RESPONSIBILITIES • MAIN PROGRAMMES AND ACTIONS: • DEDICATED AREA ON SUSTAINABLE DEVELOPMENT AND GHG EMISSIONS AVOIDANCE PROJECTS • PETROBRAS ENERGY EFFICIENCY PROGRAMME • TECHNICAL AND FINANCIAL SUPPORT TO CONPET • BIOFUELS AND OTHER RENEWABLE ENERGY SOURCES

  11. Petrobras Energy Efficiency Programme • Efficiency actions will save 3,919 bbl oil equivalent / day in 2006 and 7,080 bbl oil equivalent / day in 2011 • It is expected that these actions will avoid about 615 103 tCO2e in 2006 and 1,111 103 tCO2e in 2011

  12. CONPET actions reduced the burning of 272 106 liters of diesel in 2005 These actions avoided about 974 103 tCO2 Brazilian Programme for Rational Petroleum Use - CONPET

  13. Biodiesel Source: Petrobras Business Plan 2007-2011 • There are no approved baseline and monitoring methodologies of biofuel project activities in the context of Kyoto CDM • All proposed methodologies include complex life cycle analysis of either the biodiesel and the diesel production chain • There is no definition about CER (Certified Emission Reductions) “titularity”

  14. Operation scheduled for 2008 Pipeline will supply natural gas for Manaus area Diesel and fuel oil will be substituted by natural gas at the power plants that supply Manaus system It is expected that the fuel substitution at these power plants will avoid about 9.5 106 tCO2e in the period 2008-2012 Coari-Manaus Gas Pipeline

  15. Renewable Electricity Generation Wind Power Source: Based on Petrobras Business Plan 2007-2011 • Until 2011 488 103 MWh will be generated from wind power plants • It is expected that the renewable energy will avoid about 98 103 tCO2 in 2011

  16. Renewable Electricity Generation Small Hydropower Plant (SHP) Source: Based on Petrobras Business Plan 2007-2011 • Until 2011 975 103 MWh will be generated from SHP • It is expected that the renewable energy will avoid about 195 103 tCO2 in 2011

  17. Petrobras is making efforts to reduce natural gas losses 4.2 106 m3/day of natural gas flaring reduction avoided about 21 106 tCO2 in six years Natural Gas Flaring Reduction

  18. Conversion from single cycle to combined cycle power generation in Petrobras power plants will avoid GHG emissions Três Lagoas Power Plant (MS) will have an increase of 110 MW in generation capacity, avoiding 400 103 tCO2/year Canoas Power Plant (RS) will have an increase of 90 MW in generation capacity, avoiding 250 103 tCO2/year There are also other similar projects in Petrobras thermal power system that are being evaluated. For example, Eletrobolt Power Plant could avoid about 120 103 tCO2/year Conversion from single cycle to combined cycle power generation

  19. The instalation of turboexpanders in Petrobras’ Refineries can be considered elegible for CDM For example, a 22.4 MW turboexpander can avoid the emission of 86,600 tCO2/year Turboexpander Electricity Generation

  20. N2O technology abatement in fertilizer plants can contribute to reduce GHG’s Petrobras’ fertilizer plant could reduce 57 103 tCO2e/year N2O Abatement in Fertilizer Production

  21. Petrobras is developing a project to produce agrofertilizers from oil shale, which can substitute conventional fertilizers It is expected that the use of these agrofertilizers will avoid about 500 103 tCO2e/year Agrofertilizer Production

  22. Brazil is pioneer and leader in ethanol large scale production and use in vehicles New technologies (e.g. flex-fuel) are improving the use of ethanol in vehicles It is estimated that ethanol will avoid about 93 106 t CO2e in the period 2006-2012 These emission reductions are not eligible under current United Nations Framework Convention on Climate Change CDM rules (due to additionality issues) Ethanol

  23. http://www.petrobras.com.br

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