1 1

Our Common Future?Pathways to 2050

Focus Area Energy and Climate

Stefanie HeldDirectorWorld Business Councilfor Sustainable Development

2 2

Roadmap of Today’s Presentation

The WBCSD and its members

The Focus Area Energy and Climate work programFacts and TrendsPathways to 2050Policy Directions to 2050

Additional recent activities in the Policy Arena

Government and BusinessWhat business would like from government

Conclusions

3 3

WBCSD Members, Scale – Statistics

Coalition of 190 leading companiesTotal turnover: close to USD 6 billionMarket capitalization = USD 5,400 billionTotal member company employees = 12 millionGlobal outreach• 3 billion consumers per day buy a product or service

from a WBCSD member company

Regional network: 55 partner organizations

4 4

The Energy and Climate Work Program

Policy:

Dialogues & Engagement

G8 / Gleneagles process

EU High Level Group

Asia Pacific Partnership

Glion II Dialogues

BAE (Business Action for Energy) for UNCSD 14 and 15

Research & Analysis

Facts and Trends

Pathways to 2050

Policy Directions to 2050

Issue Briefs

Links with other WBCSD projects

Tools & Practices

GHG Protocols

GHG Forums

GHG Pilot Projects (Mexico, Philippines…) with WRI

Dialogues&

Engagement

Research&

Analysis

Tools&

Practices

Advocacy

5 5

The Energy and Climate Work Program

Policy:

Dialogues & Engagement

G8 / Gleneagles process

EU High Level Group

Asia Pacific Partnership

Glion II Dialogues

BAE (Business Action for Energy) for UNCSD 14 and 15

Research & Analysis

Facts and Trends

Pathways to 2050

Policy Directions to 2050

Issue Briefs

Links with other WBCSD projects

Tools & Practices

GHG Protocols

GHG Forums

GHG Pilot Projects (Mexico, Philippines…) with WRI

Dialogues&

Engagement

Research&

Analysis

Tools&

Practices

Advocacy

6 6

The Energy and Climate Work Program

Policy:

Dialogues & Engagement

G8 / Gleneagles process

EU High Level Group

Asia Pacific Partnership

Glion II Dialogues

BAE (Business Action for Energy) for UNCSD 14 and 15

Research & Analysis

Facts and Trends

Pathways to 2050

Policy Directions to 2050

Issue Briefs

Links with other WBCSD projects

Tools & Practices

GHG Protocols

GHG Forums

GHG Pilot Projects (Mexico, Philippines…) with WRI

Dialogues&

Engagement

Research&

Analysis

Tools&

Practices

Advocacy

7 7

Oil Biomass Gas Coal Nuclear Renewables

Primary Energy

LiquidsDirect combustion

Industry and Manufacturing

Mobility

Final Energy

Consumer Choices

Energy

Ener

gy

Ener

gy

Buildings

Power Generation

Pathways to 2050: Our Energy System

8 8

Oil Biomass Gas Coal Nuclear Renewables

Primary Energy

LiquidsDirect combustion

Industry and Manufacturing

Mobility

Final Energy

Consumer Choices

Energy

Ener

gy

Ener

gy

Buildings

Power Generation

Five “Megatrends” or Key Contributors

9 9

High and Low Carbon Pathways

0

2

4

6

8

10

12

14

16

2000 2010 2020 2040 2050

Glo

bal C

arbo

n E

mis

sion

s, G

T

2030

WRE 450 (IPCC)

WRE 550 (IPCC)

WRE 1000 (IPCC)

Theoretical carbon emissions profiles published in IPCC 3rd

Assessment Report

Theoretical carbon emissions profiles published in IPCC 3rd

Assessment Report

2002 IEA reported fossil emissions plus correction for unsustainable biomass & deforestation.

2002 IEA reported fossil emissions plus correction for unsustainable biomass & deforestation.

10 10

Heading to a 550 ppm World

A range of existing technologies, further developed and deployedthrough a global carbon market can deliver a 550 ppm trajectory,

. . . . . . . but the scale of change is immense,. . . . . . . . .and we need to start now!

Possible pathways (illustrative) from a strong response to climate change:Short to medium term (2010 – 2025):• Carbon markets grow, potentially covering all developed countries and offering tangible

opportunity value in developing countries• Managing CO2 becomes a prerequisite for new industrial projects• Renewable power generation and bio-fuels grow to 15% of the global energy mix• Strong emphasis on energy efficiency• Oil demand begins to flatten

Long term (2030 - 2050):• Primary energy use nearly doubles - gas could become the single largest source of energy• Final energy use could shift strongly to electricity, away from liquids today• Personal mobility doubles, but oil demand declines – bio-fuels and hydrogen become

important energy carriers for transport• Coal remains a key power generation fuel – but CO2 is captured and stored

11 11

All Change Tomorrow?

Many advocate that a much more rapid change in our energy infrastructure is the only solution to the threat of climate change. However:

Major transitions at the global level will take time to implement

The speed with which new technologies diffuse depends on many factors

12 12

Size and Lifetime Matter

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 ++

The rate of technological change is closely related to the lifetime of the relevant capital stock and equipment

Nuclear 30 – 60 years

Motor vehicles 12 – 20 years

Coal power 45+ years

Hydro 75+ years

Gas turbines 25+ years

Buildings 45+++ years

13 13

Even Very Rapid Change Can Appear Slow

0

500

1000

1500

2000

2500

2000 2010 2020 2030 2040 2050

Total vehicles,millions

Total alternative vehiclesTotal traditional vehicles

Annual total vehicle growth of 2% p.a.Annual vehicle production growth of 2% p.a.Large scale "alternative" vehicle manufacture starts in 2010 with 200,000 units per annum and grows at 20% p.a. thereafter.

14 14

Policy Directions to 2050 – the Trilogy

Energy policy is set at the national level:It is one of the principal responsibilities of government.The development of energy policy is responsive to:

Financial considerationsAvailable natural resourcesSecurity of supplyEnvironmental signals

A future framework must recognise the sovereign A future framework must recognise the sovereign nature of energy policy decisions, but at the same time nature of energy policy decisions, but at the same time provide clarity, context and drive for such decisions.provide clarity, context and drive for such decisions.

15 15

A Future Framework – What is Needed?

1.1. A longA long--term goalterm goalEstablished by 2010Described in terms of CO2 emissions*

2.2. Technology development and deployment frameworkTechnology development and deployment frameworkExpanded support for R&DGlobal standardsTechnology transfer driven by standardsRisk management

3.3. Emissions management at national and sectoral levelEmissions management at national and sectoral levelBottom-up approach aligned with energy policySector by sectorExpanded project mechanismProgressive inclusion of all countries

4.4. Linkage framework to encourage international tradingLinkage framework to encourage international trading

*All GHGs but as CO2 equivalent

16 16

Establishing a Long-term Goal by 2010

0

2

4

6

8

10

12

14

16

2000 2010 2020 2040 2050

Glo

bal C

arbo

n E

mis

sion

s, G

T

2030

WRE 450 (IPCC)

WRE 550 (IPCC)

WRE 1000 (IPCC)

Describes a global emissions pathway (trajectory) to 2050.Describes a global emissions pathway (trajectory) to 2050.Why do this and why by 2010?

• It provides context for national and sectoral efforts• Action to address climate change must start now

Why emissions?• We cannot control global temperature• We probably can’t control atmospheric ppm• We can control emissions!

Target only what we can controlWhy a pathway and why to 2050?

• It needs to encourage long-term investments• It needs to clearly show the task starts now and continues

How is it set?• Derived from a longer term objective using the latest climate change science and

an understanding of impacts, both social and economicWe probably know enough to do this now

Is that it?• No – it should be reviewed periodically, but no later than 2020-2025

17 17

Technology Development and Deployment

Purchase incentives / CO2 price

Number of installations / Products

Tech

nolo

gy c

ost

Competing technology

Early development phase may need direct assistance

Early development phase may need direct assistance

The framework must focus on both the development of new technology and the rapid deployment of the both new and existing technology

Earlier deployment

0

20

40

60

80

100

1 10 100 1000

Purchase incentives and/or the CO2 market drive(s) early deployment

Purchase incentives and/or the CO2 market drive(s) early deployment

More cost competitive

18 18

0

200

400

600

800

1000

2005 2050

Target Mobility - FuelsVehicle Efficiency Mobility ChoiceRenewable Power CCSBuildings IndustryDomestic Other Actions

Opportunity Starts at the National / Sectoral Level

A. Opportunity Wedges (National)(Developed Country Example)

B. National/Sectoral Goals & Targets

Efficiency BuildingsIndustry xx % p.a. Domestic through to 20xx

Power Renewables xx MW p.a. by 20xxGeneration CCS xx tonnes CO2 p.a.

Mobility Bio-fuels xx litres p.a. by 20xxEfficiency xx mpg by 20xxChoice Hybrid / Diesel uptake

Mass transit

C. National Policies

Buildings – adopt new country building standards, design awareness

Industry – Sectoral agreements, emissions trading, technology standards

Domestic – carbon labeling, increased product standards (e.g. standby energy)

Renewable Energy – renewables targets.

CCS – funding for infrastructure, tax cuts on capital investments, price signals for carbon via emissions trading

Biofuels – targets, support for manufacturing, CO2 labeling

Vehicle Efficiency - support technology, incentives, sectoral agreements

Mobility Choice - consumer incentives, promote public/private partnerships for transport networks

National CO2trajectoryC

O2

Em

issi

ons,

MT

per a

nnum

19 19

Clean development partnerships & programs

Clean development partnerships and technology programs based on standards and benchmarking can drive new technology development

20 20

Progressive Build-Up from National Programs

12

10

8

6

4

2

Em

issi

ons,

tonn

es C

O2

Economy wide emissions

Business as usual profile

Net emissions

Economy wide ETS

2010 2020 2030 2040 2050

Em

issi

ons,

tonn

es C

O2

pe

r ton

ne o

f cem

ent

Cement industry

Business as usual profile

Energy efficiency

Structured multi-national cement sectoral initiative.

Best available technology

Em

issi

ons,

tonn

es C

O2

Power generation emissions

Business as usual profile

Renewables / CCS wedge

Net emissions

Em

issi

ons,

tonn

es C

O2

Transport emissions

Business as usual profile

Bio-fuel wedge

Net emissions

Car

bon

Emis

sion

s, G

T pe

r ann

um

Progressive build-up from national programs

A global GHG market remains an important goal of the revised international framework. But it is constructed bottom-up through a linkage framework, rather than a “big-bang” creation from the top

21 21

The Energy and Climate Work Program

Policy:

Dialogues & Engagement

G8 / Gleneagles process

EU High Level Group

Asia Pacific Partnership

Glion II Dialogues

BAE (Business Action for Energy) for UNCSD 14 and 15

Research & Analysis

Facts and Trends

Pathways to 2050

Policy Directions to 2050

Issue Briefs

Links with other WBCSD projects

Tools & Practices

GHG Protocols

GHG Forums

GHG Pilot Projects (Mexico, Philippines…) with WRI

Dialogues&

Engagement

Research&

Analysis

Tools&

Practices

Advocacy

22 22

WBCSD International Policy Involvement

Gleneagles and G8Business voice into ministerial meetings: MonterreyPotential collaboration with World Economic Forum

EU High Level Group On competitiveness, energy and the environmentNext two topics: competitiveness of European energy-intensive industries and environmentally harmful subsidies

Asia Pacific PartnershipMember company involvementCement Sustainability Initiative

Glion II Dialogues in the Power SectorOngoing multistakeholder roundtables on policy requirements

Business Action for Energy and UNCSD 14 and 15ICC, WEC, WBCSD

Nairobi COP12Bjorn Stigson at Ministerial luncheon and plenary

Selected PartnershipsVROM, Mexican Government (GHG Program)

23 23

So What Would Business Like?

1.1. A longA long--term goalterm goalEstablished by 2010

2.2. Technology development and deployment frameworkTechnology development and deployment frameworkExpanded support for R&DGlobal standardsTechnology transfer driven by standardsRisk management

3.3. Emissions management at national and sectoral levelEmissions management at national and sectoral levelBottom-up approach aligned with energy policySector by sectorExpanded project mechanismProgressive inclusion of all countries

4.4. Linkage framework to encourage international tradingLinkage framework to encourage international trading

*All GHGs but as CO2 equivalent

24 24

Business Wish List

Government and Business work together in a true partnership with a genuine exchange of views• Multistakeholder roundtables / dialogues

Seat at the table when public private partnerships are mentioned• Many forthcoming policy events in 2007 and 2008

Some kind of certainty• A signal• A negotiating mandate by COP 13• No gap post 2012

Business is ready to engage, but it needs the possibility