a corporate perspective: the significance of the kyoto mechanisms tom jacob dupont...

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

Perceived Environmental RiskVery High

PerceivedEconomic Risk

VeryHigh

Climate Change & Industry

Low

Low

Perceived Environmental RiskVery High

PerceivedEconomic Risk

VeryHigh

Climate Change & Industry

Low

Non-Issue

Low

Perceived Environmental RiskVery High

PerceivedEconomic Risk

VeryHigh

Climate Change & Industry

Low

Non-Issue

Environmental Issue

Low

Perceived Environmental RiskVery High

PerceivedEconomic Risk

VeryHigh

Climate Change & Industry

Low

Non-IssueEconomic Issue

Environmental Issue

Low

Perceived Environmental RiskVery High

PerceivedEconomic Risk

VeryHigh

Climate Change & Industry

Low

Non-IssueEconomic Issue

Environmental Issue

Low

DUPONT

Perceived Environmental RiskVery High

PerceivedEconomic Risk

VeryHigh

Climate Change & Industry

Low

Non-IssueEconomic Issue

Environmental Issue

Significant ComplexChallenge

Low

A LONG TERM ISSUEConcentration

( ppmv)1000

800

600

400

Stabilization at:1000

650

450

2X Pre- Industrial

Potential Concentration Targets

2000 2100 2200

A LONG TERM ISSUEConcentration

( ppmv)1000

800

600

400

Stabilization at:1000

650

450

2X Pre- Industrial

Potential Concentration Targets

2000 2100 2200

2000

Total Emissions

( CtC/yr)

2100 22000

5

10

15

20

Toward Stabilization at:

1000

650450

“Business as usual”

Related Emission Pathways

Total current emissions

A LONG TERM ISSUEConcentration

( ppmv)1000

800

600

400

Stabilization at:1000

650

450

2X Pre- Industrial

Potential Concentration Targets

2000 2100 2200

2000

Total Emissions

( CtC/yr)

2100 22000

5

10

15

20

Toward Stabilization at:

1000

650450

Developing country

emissions

“Business as usual”

Related Emission Pathways

Total current emissions

A LONG TERM ISSUEConcentration

( ppmv)1000

800

600

400

Stabilization at:1000

650

450

2X Pre- Industrial

Potential Concentration Targets

2000 2100 2200

2000

Total Emissions

( CtC/yr)

2100 22000

5

10

15

20

Toward Stabilization at:

1000

650450

Developing country

emissions

“Business as usual”

Related Emission Pathways

Total current emissions

Kyoto Protocol

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

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

Cost

Marginal Cost of Greenhouse Gas Reduction Projects

****

++++

++++++

********

Priority For Investment

100%

20% 40% 60% 80% 100%

80%

60%

40%

20%

Environmental Benefit

Cost

The “80-20” Rule

You accomplish 80%of the environmental benefit with the first 20% of costs.

100%

20% 40% 60% 80% 100%

80%

60%

40%

20%

Environmental Benefit

Cost

The “80-20” Rule

High Cost/Low Return

100%

20% 40% 60% 80% 100%

80%

60%

40%

20%

Environmental Benefit

Cost

The “80-20” Rule

High Cost/Low Return

Low Cost/High Return

100%

20% 40% 60% 80% 100%

80%

60%

40%

20%

Environmental Benefit

Cost

The “80-20” Rule

100%

20% 40% 60% 80% 100%

80%

60%

40%

20%

Environmental Benefit

Cost

The “80-20” Rule

Trading is the key!

Bye, Now...