The Global Climate Change Forum An Economic and Business Perspective Global Energy Services

The Global Climate Change ForumAn Economic and Business PerspectiveGlobal Energy Services

Copyright 2005 Global Insight, Inc.

Can You Weather the Storm? Global climate change is one of the major issues of our timeAn Economics and Business Perspective*Copyright 2005 Global Insight, Inc.Understand the Impact on your Supply ChainUnderstand the Impact on your CustomersInfluence the Public Policy Debate and Anticipate Regulatory ChangesPosition Your Company or EnterpriseIdentify Opportunities and Avoid Risks


The Global Climate Change ForumInteractive Workshops & MeetingsIn-depth Sector StudiesCovering Autos, Metals, Utilities, etc.*Copyright 2005 Global Insight, Inc.Quarterly Reports and Issue SummariesA new service designed to provide the most complete view of the economic and political factors shaping the Global Climate Change debate


Global Climate Change Will Affect Everyone


The Automobile IndustryCopyright 2005, Global Insight*Future design of vehicle drive trainsRole and potential for hybridsRole and potential for hydrogen and fuel cellsImpacts of C02 and other GHG emission controlsImpacts on OEMs and component providersEconomic impacts on other industries and the overall economy*Copyright 2005 Global Insight, Inc.


The Metals Sector*Copyright 2005 Global Insight, Inc.Mitigation options and costs on metals extraction and productionMitigation options and costs on electricity and energy supplyLong-term technology changes in metals productionSubstitution of other materials (e.g. plastics, etc.)Economic impacts on other industries and the economy


The Electric Utility SectorCopyright 2005, Global Insight*Implications for fuel choice (oil, natural gas, coal, nuclear, renewables)Role of new technologies for reducing GHG emissionApplication, costs, and effectiveness of clean coal technologiesApplication, costs, and effectiveness of carbon captures and sequestrationEconomic impacts on other industries and the economy*Copyright 2005 Global Insight, Inc.


The Correlation Between Emissions and Concentrations is Clear 290300310320330340350360370380188018861892189819041910191619221928193419401946195219581964197019761982198819942000ppm01000200030004000500060007000mtonnesHawaiiAntarctic Ice CoresCarbon Emissions


But Causation Remains ControversialThe link between atmospheric concentrations and climate change is still controversialMann et al


CO2 Is Not the Only ProblemSource: Dr. James Hansen, NASA Goddard Institute for Space StudiesMethane and Soot Are Major Forcing Pollutants As Well


The Problem is Not IntractableViable Options for Reducing Carbon EmissionsBased on: S. Pacala and R. Socolow, Stabilization Wedges: Solving the Climate Problem, with Technologies Available Today, Science, 305, August, 2004, pp 968-972


Examples of Mitigation Options by Sector


Transition Targets Must be EstablishedA declining schedule of carbon dioxide emissionsAn increasing Carbon Dioxide taxAn increasing schedule of auto efficiency standardsAn increasing schedule of appliance and building efficiency standards

Initial inaction will prevent the attainment of longer term goals at reasonable costs*Copyright 2005 Global Insight, Inc.


Cost Effectiveness Curves Over TimeSignificant reductions can be achieved in the long run at reasonable costs, but not in the short run. Steps must be taken now to achieve these long-term reductions.

Chart1

00000

12.17.814885.04384043.2530526082.0965226288

25.4116.254950410.3903112246.63622732034.2349757103

40.05125.37022643216.057570297410.15472902116.4161978533

56.156135.214724546622.064864915313.813970798.6410444392

73.8717145.846782510328.432597210217.619582229610.9103879568

93.35888157.329405111135.182393442821.577418126813.2251183448

114.794769169.7306375242.337177449425.693567459815.5861433405

138.3742460183.123968521649.921248496329.974362766217.9943888362

393.8509446288174.847863680882.471100959341.386262421721.9453708325

1000803.0166845793222.170859676871.808519134428.4273755797

10001000821.7441636719152.909276365239.061791424

100010001000369.11062150256.5086778059

100010001000945.468022284385.1321441887

1000100010001000132.0919747188

1000100010001000209.1345541854

1000100010001000335.5310718874

1000100010001000542.8979565087

1000100010001000883.1053104719

10001000100010001000

10001000100010001000

10 years

20 years

30 Years

40 Years

50 Years

Percent Reduction

$/ton

Sheet1

2

11234567891011121314151617181920212223242526272829303132333435363738394041424344454647484950

10.2%0.4%0.8%1.2%1.6%2.0%2.4%2.8%3.2%3.7%4.1%4.5%4.9%5.3%5.8%6.2%6.6%7.0%7.5%7.9%8.3%8.8%9.2%9.6%10.1%10.5%10.9%11.4%11.8%12.3%12.7%13.2%13.6%14.1%14.6%15.0%15.5%15.9%16.4%16.9%17.3%17.8%18.3%18.7%19.2%19.7%20.2%20.7%21.1%21.6%22.1%

20.4%0.8%1.6%2.4%3.2%4.1%4.9%5.7%6.6%7.5%8.3%9.2%10.1%10.9%11.8%12.7%13.6%14.5%15.5%16.4%17.3%18.3%19.2%20.2%21.1%22.1%23.1%24.1%25.1%26.1%27.1%28.1%29.1%30.1%31.2%32.2%33.3%34.4%35.4%36.5%37.6%38.7%39.8%41.0%42.1%43.2%44.4%45.5%46.7%47.9%49.1%

30.6%1.2%2.4%3.7%4.9%6.2%7.4%8.7%10.0%11.4%12.7%14.1%15.4%16.8%18.2%19.7%21.1%22.6%24.0%25.5%27.0%28.6%30.1%31.7%33.3%34.9%36.5%38.1%39.8%41.5%43.2%44.9%46.6%48.4%50.2%52.0%53.8%55.7%57.6%59.5%61.4%63.3%65.3%67.3%69.3%71.3%73.4%75.5%77.6%79.7%81.9%

40.8%1.6%3.2%4.9%6.6%8.3%10.0%11.8%13.6%15.4%17.3%19.2%21.1%23.0%25.0%27.0%29.0%31.1%33.2%35.4%37.5%39.7%42.0%44.3%46.6%48.9%51.3%53.8%56.2%58.7%61.3%63.9%66.5%69.2%71.9%74.7%77.5%80.3%83.2%86.2%89.2%92.2%95.3%98.4%101.6%104.9%108.1%111.5%114.9%118.3%121.8%

51.0%2.0%4.1%6.2%8.3%10.5%12.7%14.9%17.3%19.6%22.0%24.5%27.0%29.5%32.1%34.8%37.5%40.3%43.1%46.0%48.9%51.9%54.9%58.0%61.2%64.5%67.8%71.1%74.6%78.1%81.7%85.3%89.0%92.8%96.7%100.7%104.7%108.8%113.0%117.3%121.7%126.1%130.7%135.3%140.0%144.9%149.8%154.8%159.9%165.2%170.5%

0.4%0.8%1.2%1.6%2.0%2.4%2.8%3.2%3.7%4.1%4.5%4.9%5.3%5.8%6.2%6.6%7.0%7.5%7.9%8.3%8.8%9.2%9.6%10.1%10.5%10.9%11.4%11.8%12.3%12.7%13.2%13.6%14.1%14.6%15.0%15.5%15.9%16.4%16.9%17.3%17.8%18.3%18.7%19.2%19.7%20.2%20.7%21.1%21.6%22.1%

0.8%1.6%2.4%3.2%4.1%4.9%5.7%6.6%7.5%8.3%9.2%10.1%10.9%11.8%12.7%13.6%14.5%15.5%16.4%17.3%18.3%19.2%20.2%21.1%22.1%23.1%24.1%25.1%26.1%27.1%28.1%29.1%30.1%31.2%32.2%33.3%34.4%35.4%36.5%37.6%38.7%39.8%41.0%42.1%43.2%44.4%45.5%46.7%47.9%49.1%

1.2%2.4%3.7%4.9%6.2%7.4%8.7%10.0%11.4%12.7%14.1%15.4%16.8%18.2%19.7%21.1%22.6%24.0%25.5%27.0%28.6%30.1%31.7%33.3%34.9%36.5%38.1%39.8%41.5%43.2%44.9%46.6%48.4%50.2%52.0%53.8%55.7%57.6%59.5%61.4%63.3%65.3%67.3%69.3%71.3%73.4%75.5%77.6%79.7%81.9%

1.6%3.2%4.9%6.6%8.3%10.0%11.8%13.6%15.4%17.3%19.2%21.1%23.0%25.0%27.0%29.0%31.1%33.2%35.4%37.5%39.7%42.0%44.3%46.6%48.9%51.3%53.8%56.2%58.7%61.3%63.9%66.5%69.2%71.9%74.7%77.5%80.3%83.2%86.2%89.2%92.2%95.3%98.4%101.6%104.9%108.1%111.5%114.9%118.3%121.8%

2.0%4.1%6.2%8.3%10.5%12.7%14.9%17.3%19.6%22.0%24.5%27.0%29.5%32.1%34.8%37.5%40.3%43.1%46.0%48.9%51.9%54.9%58.0%61.2%64.5%67.8%71.1%74.6%78.1%81.7%85.3%89.0%92.8%96.7%100.7%104.7%108.8%113.0%117.3%121.7%126.1%130.7%135.3%140.0%144.9%149.8%154.8%159.9%165.2%170.5%

199.6%99.2%98.8%98.4%98.0%97.6%97.2%96.8%96.3%95.9%95.5%95.1%94.7%94.2%93.8%93.4%93.0%92.5%92.1%91.7%91.2%90.8%90.4%89.9%89.5%89.1%88.6%88.2%87.7%87.3%86.8%86.4%85.9%85.4%85.0%84.5%84.1%83.6%83.1%82.7%82.2%81.7%81.3%80.8%80.3%79.8%79.3%78.9%78.4%77.9%

299.2%98.4%97.6%96.8%95.9%95.1%94.3%93.4%92.5%91.7%90.8%89.9%89.1%88.2%87.3%86.4%85.5%84.5%83.6%82.7%81.7%80.8%79.8%78.9%77.9%76.9%75.9%74.9%73.9%72.9%71.9%70.9%69.9%68.8%67.8%66.7%65.6%64.6%63.5%62.4%61.3%60.2%59.0%57.9%56.8%55.6%54.5%53.3%52.1%50.9%

398.8%97.6%96.3%95.1%93.8%92.6%91.3%90.0%88.6%87.3%85.9%84.6%83.2%81.8%80.3%78.9%77.4%76.0%74.5%73.0%71.4%69.9%68.3%66.7%65.1%63.5%61.9%60.2%58.5%56.8%55.1%53.4%51.6%49.8%48.0%46.2%44.3%42.4%40.5%38.6%36.7%34.7%32.7%30.7%28.7%26.6%24.5%22.4%20.3%18.1%

498.4%96.8%95.1%93.4%91.7%90.0%88.2%86.4%84.6%82.7%80.8%78.9%77.0%75.0%73.0%71.0%68.9%66.8%64.6%62.5%60.3%58.0%55.7%53.4%51.1%48.7%46.2%43.8%41.3%38.7%36.1%33.5%30.8%28.1%25.3%22.5%19.7%16.8%13.8%10.8%7.8%4.7%1.6%-1.6%-4.9%-8.1%-11.5%-14.9%-18.3%-21.8%

598.0%95.9%93.8%91.7%89.5%87.3%85.1%82.7%80.4%78.0%75.5%73.0%70.5%67.9%65.2%62.5%59.7%56.9%54.0%51.1%48.1%45.1%42.0%38.8%35.5%32.2%28.9%25.4%21.9%18.3%14.7%11.0%7.2%3.3%-0.7%-4.7%-8.8%-13.0%-17.3%-21.7%-26.1%-30.7%-35.3%-40.0%-44.9%-49.8%-54.8%-59.9%-65.2%-70.5%

0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%55.0%60.0%65.0%70.0%75.0%80.0%85.0%90.0%95.0%100.0%

0.05195.0%90.0%85.0%80.0%75.0%70.0%65.0%60.0%55.0%50.0%45.0%40.0%35.0%30.0%25.0%20.0%15.0%10.0%5.0%

0.01$0$5$10$15$20$25$30$35$40$45$50$55$60$65$70$75$80$85$90$95$100

15%5%10%15%19%24%28%31%35%38%41%44%46%49%51%52%54%55%56%57%57%58%

26%5%11%17%22%27%32%37%41%45%48%52%55%57%60%62%64%65%66%67%68%68%

37%5%12%19%25%31%37%42%47%51%55%59%63%66%69%71%73%75%76%77%78%79%

48%5%13%21%28%35%41%47%53%58%63%67%71%75%78%81%83%85%87%88%89%89%

59%5%14%23%31%38%46%52%59%64%70%75%79%83%87%90%93%95%97%98%99%99%

1000251123456789345984109134159184209234259284309

0.020.670.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%55.0%60.0%65.0%70.0%75.0%80.0%85.0%90.0%95.0%100.0%

10$1010%$0$12$25$40$56$74$93$115$138$394$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000

20$78%$0$8$16$25$35$46$57$70$83$175$803$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000

30$46%$0$5$10$16$22$28$35$42$50$82$222$822$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000

40$34%$0$3$7$10$14$18$22$26$30$41$72$153$369$945$1,000$1,000$1,000$1,000$1,000$1,000$1,000

50$22%$0$2$4$6$9$11$13$16$18$22$28$39$57$85$132$209$336$543$883$1,000$1,000

0.01

1400145015001550160016501700175018001850190019502000

M-0.1-0.4-0.2-0.1-0.20-0.100-0.1-0.20.10.2

MM0.2-0.200.10.2-0.1-0.200-0.1-0.20.10.2

M-0.11-0.41-0.21-0.11-0.21-0.01-0.11-0.01-0.01-0.11-0.210.090.19

MM0.21-0.190.010.110.21-0.09-0.190.010.01-0.09-0.190.110.21

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Time

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Emission Reductions

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Cost Effectiveness Curves over Time

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Mann et al

McI & McK

Time

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Global Temperature


The Global Climate Change Forum*Copyright 2005 Global Insight, Inc.Executive Summaries and AssessmentsQuarterly Executive-Style ReportsSignpost Updates and Issue AlertsAnnual Forum Meeting with Special Guest SpeakersWeb-based DiscussionsEconomic, Policy, and Political FocusIn-depth Sector AnalysesTopics Prioritized by GroupTechnical and Economic AnalysisCost-Effectiveness CurvesIndustry and Macroeconomic AnalysisInteractive WorkshopsFour Sectors per Year


In-Depth Special Sector Coverage*Automobile & Truck TransportationAirline IndustryMetals and MiningElectricity UtilitiesEnergy: Oil and GasEnergy: Nuclear PowerAgricultureAbatement OptionsForecast Products and PaperConsumer GoodsGlobal Construction *Topics will be prioritized by Forum participantsCopyright 2005 Global Insight, Inc.


The Project Team


Drawing from Years of Experience

2004-2005 Multiple studies on the Impact of the EU Emissions Trading Scheme on Participating Industries2003 The Economic Impact on Italy of Implementing the Kyoto Protocol2002 The Economic Impact of Greenhouse Gas Reductions on Selected EU Countries2000 Global Warming: Capital Stock Constraints on Meeting Near-term Targets1999 The Kyoto Protocol: Can Annex B Countries Meet Their Commitments?1998 The Impact of Meeting the Kyoto Protocol on Energy Marketing and the Economy1998 Global Warming: The High Cost of the Kyoto Protocol National and State Impacts1997 - Global Warming: The Economic Cost of Early Action


Global Insights Distinctive CompetenceMuch excellent work has already been done.

HOWEVER Collectively this work has not focused adequately on the economics.

THE ADVANTAGEThe microeconomic costs and effects of each mitigation optionThe macroeconomic effects of policy alternativesIndustry expertise in:

*Copyright 2005 Global Insight, Inc.

EnergyConstructionChemicalsAutosManufacturing ITSteelTransportation and others


We Practically Invented the IndustryConsistently Named Among the Top Economic Forecasters in the World


Expertise Built Upon a Solid Foundation


For Additional Information Gil Rodgers, Senior Director Global Insight, Lexington, [email protected]

Peter Seager, Principal Global Insight, London+44 20 8544 [email protected]

Documents

The Global Climate Change Forum An Economic and Business Perspective Global Energy Services