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Building a Climate Resilient Business: Managing Risks & Exploit Opportunities in a Climate
Changing World
Christian Petrangelo, Senior EHS Regulatory Consultant at Enhesa
Giel Linthorst, Programme Leader Science-based Targets at Ecofys
Sarah Hendel-Blackford, Senior Consultant at Ecofys
Compliance is our Business. Enhesa is the
market leader in global environmental, health and
safety assurance providing support to businesses
worldwide.
GLOBAL COVERAGE.
EXPERT ANALYSIS.
4
Enhesa Webinar Series:
An Overview
Held on a bi-
monthly basis
Enhesa’s website houses a
library of past webinars
available for download.
• Slide Deck
• Recording
Share your
feedback on
the post
webinar
survey!
Complimentary webinars on topics
covering:
• Environmental, Health & Safety
• Product Stewardship
• EHS Auditing
Not on our mailing list?
• Send an email to [email protected]
to have your name added to our
distribution list.
Do you have suggestions
on topics we should cover
on future webinars?
• Note them on the post-
webinar survey
• Email us
©2015 Enhesa. All rights reserved.
Building a Climate
Resilient Business:
Risks & Exploit
Opportunities in a
Changing Climate
Webinar Agenda
• Regulatory landscape of climate change policy
& initiatives
• Mitigation measures
– Aligning your GHG reduction targets with a 2°C climate
goal
– What internal and external carbon prices are driving
mitigation actions of companies
• Adapting to Climate Change
– Physical, legal, financial and transitional risks
5
6
Today’s Presenters
©2015 Enhesa. All rights reserved.
Christian Petrangelo
Sr. EHS Consultant
Enhesa
Giel Linthorst
Programme Leader
Science-based
Targets
Ecofys
Sarah Hendel-Blackford
Senior Consultant
Ecofys
Building a Climate
Resilient Business:
Risks & Exploit
Opportunities in a
Changing Climate
Webinar Agenda
Regulatory landscape of
climate change policy &
initiatives
7
8
Regulatory Landscape of Climate Change Policy & Initiatives
©2015 Enhesa. All rights reserved.
Goal: Emissions Reduction Targets
Carbon Tax
Emission Trading Schemes
GHG InventoriesRenewable Energy
Incentives
Energy Efficiency
Incentives
Mandatory Measures Voluntary Measures
9
Mandatory GHG Inventories
©2015 Enhesa. All rights reserved.
What?
Reporting of GHG emissions from broad
sectors of the economy
Why?
Provides necessary data to set economy-
wide emission reduction targets
How Many?
40 countries
(as of Oct. 2015)
Government parties to the UN Framework
Convention on Climate Change (UNFCCC)
must submit annual inventories of GHG
emissions
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Mandatory GHG Inventories
©2015 Enhesa. All rights reserved.
USA: Tracks facility-level
emissions from the
largest sources of
GHGs
European Union: Compiles annual GHG inventory
impacting 6 sectors across member
countries: energy, industrial
processes, solvent and other product
use, agriculture, land use, and waste
Australia: Tracks GHG emissions according
to facility and corporate group
thresholds
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Emissions Trading Schemes
©2015 Enhesa. All rights reserved.
United States: Regional programs
include:
• California Cap-and-
Trade Program
• Regional Greenhouse
Gas Initiative (RGGI)
encompassing 9
Northeastern states
European Union: • The first and biggest
international system for
trading GHG emission
allowances.
• It regulates over 11,000
industrial manufacturing
facilities and power
stations in 31 countries.
China: • National-level ETS
launching in 2017 will
cover “key industry sectors
such as iron and steel,
power generation,
chemicals, building
materials, paper-making,
and nonferrous metals”
• Existing pilot program
covers 7 provinces
12
Carbon Taxes
©2015 Enhesa. All rights reserved.
Governments put a price
on carbon dioxide and
other GHG’s
GHG price is tax
intended to reduce
emissions
15 countries
Differs from ETS
in that there is no
defined cap on the
amount of GHG’s
that may enter
into the
atmosphere
Often used on the
national level to
supplement regional
ETS plans
13
Mandatory Carbon Taxes
©2015 Enhesa. All rights reserved.
Mexico:
Covers import,
sales, and use of
fossil fuels
France:
Applies to the use
of gas, heavy fuel
oil, and coal,
transport fuels, and
heating oil not
covered by EU
ETS.
Japan:
Tax on fossil
fuel use
14
Renewable Energy Incentives (Voluntary)
©2015 Enhesa. All rights reserved.
USA:
President Obama’s Clean Energy Incentive Program:
A voluntary “matching fund” program for states to incentivize
solar or wind projects that generate carbon-free mWh
India:
Regional governments (Delhi, Gujarat, Tamil Nadu) provide tax
breaks and other financial incentives to companies that manufacture or install solar
infrastructure
Netherlands:
Private sector companies may deduct 36-41.5% of their
renewable energy investment from their taxable profit
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Energy Efficiency Incentives (Voluntary)
©2015 Enhesa. All rights reserved.
Australia:Emissions Reduction Plan
provides financial assistance for
projects to reduce GHG
emissions, including energy
efficiency in buildings and
industrial energy efficiency.
South Africa: Allows any entity with a
taxable income to claim a
deduction based on the
amount of energy saved
through energy efficiency
standards
United States/
Italy/Netherlands: Tax incentives to retrofit existing
buildings with energy efficiency
technology
Germany: Preferential loan and grant
program to retrofit existing
buildings with energy efficiency
technology
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Regulatory Landscape of Climate Change Policy & Initiatives
©2015 Enhesa. All rights reserved.
Goal: Emissions Reduction Targets
Carbon Tax
Emission Trading Schemes
GHG InventoriesRenewable Energy
Incentives
Energy Efficiency
Incentives
Mandatory Measures Voluntary Measures
Building a Climate Resilient Business
Giel Linthorst, Sarah Hendel-Blackford
November 2015
© ECOFYS | | Building a climate resilient business05/11/2015
Mitigating climate change
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© ECOFYS | |
GHG emissions accelerate despite reduction efforts. Most emission
growth result from fossil fuel combustion and industrial processes
05/11/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
Building a climate resilient business19
© ECOFYS | |
Companies are responsible for large share of the global emissions
05/11/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
Building a climate resilient business20
© ECOFYS | |
Without more mitigation, global mean surface temperature might
increase by 3.7° to 4.8°C over the 21st century
05/11/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
> To prevent the most severe impacts of climate change, parties to the United Nations Framework Convention on Climate Change (UNFCCC) agreed in 2010 to commit to a maximum temperature rise of 2 °C above pre-industrial levels.
> Limiting global temperature rise to 2 °C corresponds according to the scientific
community with a carbon budget of about 1,000 Gtonnes CO2 from 2011 onwards.
Building a climate resilient business21
© ECOFYS | |
0
10
20
30
40
50
60
2010 2015 2020 2025 2030 2035 2040 2045 2050
GtC
O2eq
Global 2 oC scenario
From global carbon budget to company targets: two
methodologies already existed
05/11/2015 Building a climate resilient business
ABSOLUTE REDUCTION1
ECONOMIC ALLOCATION2
> Apply global or OECD/non-OECD
absolute emissions reduction
pathway to each company, or
> Apply linear absolute reduction
per year towards 2050 (1.5% p.y.)
> Apply global or OECD/non-OECD
intensity reduction pathway to
each company (2.2% p.y.)
0%
50%
100%
150%
200%
250%
300%
350%
400%
0
10
20
30
40
50
60
2010 2015 2020 2025 2030 2035 2040 2045 2050
GD
P g
row
th
GtC
O2eq
Global 2 oC scenario
GHG (GtCO2eq)
GHG intensity (GtCO2eq / GDP contribution)
GDP index
22
© ECOFYS | |
New methodology was developed to translate global carbon
budget to company targets based on sectoral approach
05/11/2015 Building a climate resilient business
> For the Science Based Targets initiative, Ecofys
developed with CDP, WRI and WWF a new
methodology, called the Sectoral
Decarbonization Approach (SDA)
> The SDA methodology is based on the least-cost
modelled 2oC scenario (2DS) developed by the
International Energy Agency (IEA) as part of
its publication, Energy Technology Perspectives
2014
> Development of the SDA methodology involved
intensive stakeholder consultation
> The SDA methodology is freely available
> Scientific backing published in Nature Climate
ChangeSource: www.sciencebasedtargets.org, 2014/2015
23
© ECOFYS | |
Current sectoral coverage of the SDA methodology
05/11/2015 Building a climate resilient business
Currently, over 60% of the global GHG
emissions are covered by the methodology.
However, not covered and related to corporate
emissions are:
> Other Energy, e.g. fossil fuel extraction and
production
> Agriculture, forestry and Land Use
(AFOLU). However a methodology for 10
major agriculture and forestry commodities is
being developed by Ecofys, University of
Aberdeen and PBL Netherlands
Environmental Assessment Agency
AFOLU
Transport
24
© ECOFYS | | Building a climate resilient business05/11/2015
Key benefits of setting science-based targets and signing up for Science Based
Targets initiative:
1. Demonstrate leadership and
influence policy
2. Build credibility and reputation
and get potential recognition by NGOs
3. Drive innovation and transform
business practices
4. Save money and increase
competitiveness
Key benefits of setting Science-based Targets
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Source: We Mean Business, The climate has changed, 2014
© ECOFYS | | Building a climate resilient business05/11/2015
More and more measures to mitigate emissions are becoming
feasible and mitigation provides many business opportunities
26
Management and behavior change Energy efficiency
Renewable energy Low carbon innovations
Photographs: krysztof-baranski/Freeimages, scanrail/Fotolia, rudy-tiben/Freeimages
© ECOFYS | | Building a climate resilient business05/11/2015
However carbon pricing is crucial to drive emissions mitigation
action of companies on large scale
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Source: The World Bank, State and Trends Carbon Pricing 2015
© ECOFYS | | Building a climate resilient business05/11/2015
Next to mandatory schemes for heavy emitting sectors, more
and more companies are using internal carbon pricing
28
Source: The World Bank, State and Trends Carbon Pricing 2015
© ECOFYS | | Building a climate resilient business05/11/2015
Towards COP21 in Paris bold commitments from companies and
investors on climate action is growing rapidly
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Source: CDP, Road to Paris map 26 10 2015
© ECOFYS | | Building a climate resilient business05/11/2015
Adapting to climate change
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© ECOFYS | |
Adapt to what?
• Average temperature changes of 0.8°C/1.4°F have occurred since 1880s
• We are locked into 1.5°C temperature change
• Is your business resilient to today’s weather…and tomorrow’s climate?
05/11/201531
Infographic: the World Bank 2014
Building a climate resilient business
© ECOFYS | |
Risks to business: Electronics and automotive industries
Case study: Flooding in Thailand 2011 has a global impact on electronics and
automotive industries
05/11/201532
Satellite photographs showing flooding in Thai provinces: Left Before flooding July 2011, right, after flooding October 2011. ©Wikimedia Commons
Impacts: Global supply shortages and prices increases
• Honda: moved to a three day week at its UK plant in November 2011
• Toyota: the floods in Thailand contributed to their drop in one year from first to third in the ranking of the world's biggest car manufacturers.
• Sony: delayed launch of a new camera was due to the floods.
Building a climate resilient business
© ECOFYS | |
Risks to business: chemicals industry
Operations:
> Greater risks of fire
> Increased risks of floods,
accelerated corrosion
> Water scarcity, increase
in commodities prices:
water efficiency,
recycling and re-use
becomes a priority
> Temporary work
suspension
Supply chain /product
delivery disruption
05/11/201533
Photograph: ©Ecofys
Building a climate resilient business
© ECOFYS | |
Potential legal liabilities of not adapting?
> Private Sector: Fiduciary
duty on companies to
take into account
environment
> Public sector: statutory
duties on local
authorities to extend
their civil protection duty
beyond emergency
planning to address risks
to local businesses
> Examples of international
case law
05/11/201534
Photograph: ©Africa/Fotolia
Building a climate resilient business
© ECOFYS | |
Being prepared to realize market opportunities
• Diversify networks of suppliers:
2011 Thailand floods Nissan diversified
its suppliers: so whilst it was also hit by
the floods it was able to respond more
quickly and recover more quickly.
05/11/201535
• Build resilience to safeguard raw
materials:
GSK teamed up with research sector to
develop a blackcurrant crop for the
drinks brand Ribena, which is resilient
to erratic weather patterns faced over
the next 70 years to secure its supply.
Building a climate resilient business
Photograph: ©bgoode/Fotolia
© ECOFYS | |
Solutions to build in resilience: an integrated approach
> Understand your current vulnerabilities
and risks –and how these change over
time.
> Identify critical points of intervention to
build in adaptation measures and
resilience: within your company and
between your key stakeholders.
> Diversified supply chains, logistics and
markets can build in flexibility and
resilience for faster recovery to realise
new market opportunities.
> Have an integrated strategy: low carbon,
and climate resilient!
05/11/201536
Photograph: ©Simonlaprida/Fotolia
Building a climate resilient business
© ECOFYS | |
A selection of organisations that we served
12/11/201537
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