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How Big Is Your Carbon Footprint?
September 9, 2008FMI Energy & Technical Services
Conference
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Today’s Discussion
Background
What is a Carbon Footprint?
Why should my business do it?
What does it mean to me?
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Current US energy picture
Significant investment is needed to provide availability and reliability of generation, transmission, and distribution.
• Electric demand projected to grow 19% over next 10 yrs• Electric capacity expected to increase 6%• Cost of building new capacity risen substantially• Aging grid - beyond capacity, inefficient• Required investment over $10 trillion in G-T-D over next
25 years to meet demand
Source: International Energy Agency
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Current US energy picture
Other cost drivers:
• Fuel costs (Oil, Coal, NG)• Renewable energy standards• Price of carbon
The 2005 Energy Act moves the market to real time pricingwhich will increase end-user rates.
Energy costs are projected to increase significantly year over year while investments are made.
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Challenge for Food Retail
Managing energy and CO2 across:
• Highly distributed sites
• Multiple energy consuming assets
• Highly variable energy use
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It starts with a carbon footprint
“You cannot manage what you cannot measure”
- Rear Admiral Grace Murray Hopper, USN
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What’s in a carbon footprint?
• Direct Emissions• Furnaces, generators, etc.• Refrigerant leaks• Vehicles (your own, 3rd party)• Industrial processes
• Indirect Emissions• Grid electricity use
• Optional tracking• Business travel
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Carbon Footprint – Grocery Retail
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HFCs- High GWP Gases
•One 100 pound cylinder of R-404A leaked to atmosphere equals:
• 27 Chevy Suburban's Diving 12,000 miles Each• Or 38 Acres of Forest
(Carbonfund.Org ) *2006 Chevy Suburban's 4WD
US EPA has required tracking of refrigerants since 1994. Potential fines of $32,500 per day.
Roadmap for the futureFrom footprint to $$
MeasureData gatheringCalculatingReporting
MonitorFrom "one-time" to "over time“From "consulting exercise" to "business process“
ManageData, Information, Knowledge, InsightMake decisions that support goals
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Why should my business do it?
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Risk
Legislation
Cost drivers
GAAP / SEC
Competition
Public Interest
Opportunity
Monetization of Carbon
First mover advantage
Common Sense
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Risk - Legislation
• International Efforts – Kyoto
• National legislation – Warner / Lieberman
• Regional Initiatives – RGGI, WCI, Midwest Accord
• State Legislation – AB32!
• Local initiatives – Mayor’s conference14
Risk – Financial reporting
• Significant efforts underway to better understand “environmental liability” from an accounting point of view
• GAAP• SEC• Shareholder Resolutions• Climate Disclosure Project
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Risk – Competition & Public Interest
• Your competitors are doing it right now
• Your customers are interested in what you’re doing…
…and not doing
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Opportunity!
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Monetizaton of Carbon
• It’s already happening• European Emissions Trading Scheme (EU ETS)• Voluntary markets globally
• Chicago Climate Exchange (CCX)• NYMEX Green Exchange• OTC
• Financial value created from reduction against baseline
• Project based reductions (Credits)• Allowances from reductions from baseline
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A footprint is not a credit
• A credit cannot exist without a footprint• A credit is created from a reduction• A credit cannot exist without verification
• Additionality• Permanence• Tracking • Documentation
• Cannot create financial value without a baseline and on-going tracking
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How do we pay for this?
New sources of capital
• Efficiency reduces costs
• With additionality, can create CO2 credits
• Additionality + Verification= 21 year credit
• Monetize credits on voluntary market
• Efficiency gains + captured credits supports funding of projects
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How do we pay for this?Promote Energy Efficiency
Source: McKinsey & Co.
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Bad News / Good News
• Bad News– It’s coming quickly– It’s complicated– It means more work for you and your team
• Good News– You have most of what you need to do a footprint– You can save money and make money at the same
time– You and your team are more important than they
thought!23
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