Embed Size (px)
Citation preview
Page 1
AEM Board Meeting August 2007
Climate Change Calculations And Implications
John T. Disharoon
Sustainable Development Manager
Caterpillar Inc.
Page 2
AEM Board Meeting August 2007
• Caterpillar has a credible reputation as a global company concerned about the environment … but good environmental stewardship calls on business to do all it can to protect the environment.
• Shape the debate… look out not only for our interests but the interests of our customers (like Clean Coal Technologies).
• Global perspective - Caterpillar is positioned to work for consistent climate change policies across the board.
Climate Change
Page 3
AEM Board Meeting August 2007
Not a linear activity
Must take into account all aspects of:
• Energy Security (available when you need it, where you need it, in the quantity you need it)
• Energy Competitiveness ($ per KwH)
• Environmental effects
Climate Change3- Dimensional Chess?
Page 4
AEM Board Meeting August 2007
International Response
Sources: World Resources Institute and Pew Centre on Global Climate Change
CO2 trading USD $26-35/metric ton since March ‘07
CO2 trading USD $26-35/metric ton since March ‘07
What Is Known > International Responses To Climate Change• EU – GHG allowance allocations
tightening 2008 - 2012 (Kyoto)
– EU ETS “warm-up” phase: 05-07
– ~12,000 installations covering 46% of CO2 emissions
• Australia – mandatory GHG reporting in 2008
– ETS by 2011
• China - speed up implementation of laws/regulations to cut GHGs
• India - drafting national strategy on measures to cut GHGs by YE2007
33
Cumulative CO2 emissions reductions from IGSM model: 550 ppmv CO2 stabilization
Non-Annex 1
Annex 1
0
100
200
300
400
500
600
700
800
2010 2020 2030 2040 2050
Year
Gig
ato
nn
es o
f C
O2
Page 5
AEM Board Meeting August 2007
US Response – 11 Bills On The Floors Of Congress
Sources: World Resources Institute and Pew Centre on Global Climate Change
Federal Level – 11 Bills On The Floors Of Congress
GHG Emissions Targets
GHG Reporting Initiatives
What Is Known > US Responses
Regional Climate Initiatives
Page 6
AEM Board Meeting August 2007
Current Climate Bill Discussions
• House:– Speaker Pelosi promising
climate debate in fall session
• Senate:– Bingaman-Specter release
bipartisan bill
– Warner-Lieberman seeking to build on other bills
Page 7
AEM Board Meeting August 2007
CDM
CDM
CDM
CDM
market in operation under caps
market with caps proposed/forthcoming
JI
2011
2012?CDM
What Is Known > Proliferation Of Cap & Trade
market participation through CDM/JI projects
Page 8
AEM Board Meeting August 2007
• Three choices if you operate under a cap:
– Hold emissions below your cap
– Purchase allowances (credits) to emit more
– Pay “carbon tax” to emit above your cap
What Is Known > Implications Of Cap & Trade
51
M IT A llow ance Prices through 2030
0
10
20
30
40
50
60
70
80
90
100
2005 2010 2015 2020 2025 2030
2005$/ton CO 2
6 .7 G TCO25.9 G TCO25.5 G TCO2
14
USD $20-50/mt CO2
Page 9
AEM Board Meeting August 2007
CDM
CDM
CDM
CDM
CDM
What Is Known > Market Opportunities
Project example:•Sihe Coal Mine, Shanxi Province, China
•90 MW total installed capacity
•Project produces ~ 648GWh of electricity/yr worth USD $21.4M
•15M emissions reductions credits (~2.1M/yr) worth USD $39.7M
Value of emissions reductions credits:
• 738 CDM projects registered to date
• Average annual reduction ~ 157M mtCO2e
• Credits worth USD $3B/yr
• Total credits (968M) through 2012 worth USD $18B
Project registrations increasing
Page 10
AEM Board Meeting August 2007
What Is Not Known
• Specific form that federal, regional and/or state regulations (incl. cap & trade) will take in US
– Regulate the manufacturer?
– Regulate the customer/industry sector?
• Specific timeframes when regulations will enter force
– RGGI to enter force in 2009; 9 states; min 25% auction; 5 states plan 100% auction
• How US carbon market will interface with non-US markets (EU, Australia, etc.)
• How major non-Annex I emitters (e.g. China, India) will be dealt with post-2012 (post Kyoto)
• Specific price of carbon in a “global” market
Page 11
AEM Board Meeting August 2007
What Is Known > Caterpillar Response
1. Mandatory approaches to reduce GHG emissions from the major emitting sectors
2. Flexible approaches to establish a price signal for carbon
3. Incentives to encourage actions by other countries, including large emitting economies in the developing world, to implement GHG emission reduction strategies
Page 12
AEM Board Meeting August 2007
US-CAP Engagement and Expansion
18 NewMembers
• Several members have testified
• Warner-Lieberman soliciting input
• Membership expanded to more than 30 companies (market cap: $1.9 trillion)
Page 13
AEM Board Meeting August 2007
Six Principles:
1. Account for the global dimensions of climate change; 2. Create incentives for technology innovation; 3. Be environmentally effective; 4. Create economic opportunity and advantage; 5. Be fair to sectors disproportionately impacted; and 6. Reward early action.
Page 14
AEM Board Meeting August 2007
Thank You
Page 15
AEM Board Meeting August 2007
9
Kyoto Protocol• Specifies legally binding emission
limits for industrialized countries, relative to 1990 levels, over 2008-2012.
• Countries are free to trade their requirements, as well as bank them for future use.
• Can generate credits through projects in developing countries (Clean Development Mechanism or CDM) that can be applied to industrialized country commitments.
• Came into force on February 16, 2005, without the U.S. or Australia.
• Compliance with current commitments, as well as possibility of future targets, unclear
10
Kyoto Protocol
11
European Union
• Emissions Trading Scheme (ETS) for energy activities (including electric power), iron & steel, minerals, pulp and paper. “warm-up” phase: 05-07, Kyoto: 08-12
• ~12,000 installations covering 46% of CO2 emissions
• 25 Member States (MS) propose allocation and cap in National Allocation Plans (NAP)
13
California
• AB 1493 – regulating CO2 from cars
• AB 32 – regulating statewide emissions
• Efforts also underway to form regional compact to limit emissions
• EO S-01-07 – low carbon fuel standard
14
Regional GHG Initiative (RGGI)
• Regional cap and trade program proposed by former Governor Pataki
• To begin in 2009
• Nine states in New England and Mid-Atlantic have joined (2007: MA back in; RI will likely follow; MD to join)
• Minimum 25% auction required; Five states plan 100% auction.
