Climate Change - Role of Industry

Sustainability

• Limits to Growth 1977

• Our Common Future 1987

• Rio Declaration 1992

• Rio +10 2002

• Rio +20 2012

What is the limiting Factor ?

• Finite Resources- Supportive Capacity of resources??

OR • Finite Assimilative Capacity ??

Climate Change is REAL…being monitored to calibrate action

• Politically agreed to limit the rise to 2oC over pre-industrial levels .

• National climate mitigation commitments still fall short by a giga ton.

• In pre Durban (December 2011) meetings, the nations have agreed to monitor , analyse, review and calibrate action

Emission Reduction Commitments

Canada ETS (2013)17% of 2005 by 2020• Dependent on US

legislation• Domestic voluntary

markets covering power and industry

Brazil*36-39% BAU by 2020

US (2012)17% of 2005 by 2020• Federal or state initiatives

like RGGI/ WCI/ AB 32Sectors covered• Power, • Industry, • upstream oil and gas-

later• Transport- 2015

EU ETS (2005)20% or 30% (conditional) of 1990 by 2020• Power & Industries• Sustained volumes till

2012

India *20-25% GDP emission intensity of 2005 by 2020• Emissions

intensity based commitment

China *40-45% GDP emission intensity of 2005 by 2020• Emissions

intensity based system

NZ ETS (2010)10-20% (conditional) of 1990 by 2020• Transport,

Energy, Industry

• Agriculture (intensity based)- 2015Low

MediumHigh

Level of ambition against Business as Usual (BAU)

South Africa*34% BAU by 2020

Australia ETS (2011)5% or 15-25% of 2000 (conditional) by 2020• Power,

industry, transport

Japan ETS (2011)25% (conditional) of 1990 by 2020• EU ETS like scheme by

2011. • Regional system for

office buildingsS. Korea (2010)4% of 2005 by 2020• Power,

Industry

Indonesia*26% BAU by 2020

Russian Fed15-25% of 1990 by 2020

* Voluntary in natureSource of Commitments: UNFCCC

Climate Regulations

Country Climate Legislations

Financial Markets Exceed Carbon Budgets Several Times

Spectrum of Possibilities

Increased efforts in GHG emission mitigation.

Promotion of renewables, energy efficiency, green tech and green fuels.

Domestic Regulations and Markets

Bilateral and Multilateral fungibility

International funding for GHG mitigation.

International Agreement with binding commitments and GHG emission reduction is a commodity and is globally fungible.

CertainUncertain

Corporate Actions are still….

• Decisions driven by “short term return" on capital investment• Initiatives driven "bottom up" with line managers or divisions. • Wait till scenario is clear…..Not too soon• “Good to do" …. good corporate social behaviour• Not integrated or loosely integrated to short and long term

organizational planning.

Shortcomings of Classic Corporate Actions

• Opportunistic approach in response to developing regulations• For the time being BaU….too late to respond!• Assets, liabilities do not capture climate related valuation/

devaluation. • Lacks methodical approach to capture climate impact in return of

investment projections. • Lack of system to methodically and continually apportion value

erosion because of climate impact (climate impact is like a step curve).

• Lacks systematic approach to unearth carbon asset identification.

Good Corporate Response to Climate Change

• Embedding climate consciousness in investment planning• Development of an integrated systematic approach to treat

climate related assets. • Development of a corporate view on evolving climate

regulation. • Establishing a feasible, long-term, credible climate strategy.

Good Practice • Understand the impact of your value chain: Reduce, reuse and

recycle• You can choose metrics to manage resources better and enhance

toplines: Efficient systems and processes (power usage, transport, material usage, water, etc)

• Lead by example: set the benchmarks for sustainability, get ahead of the curve.

• Innovate, Innovate, Innovate: Use technology and existing policies to your best advantage.

• Create commitment levels across the board for long term action plans and continuous monitoring and measurement.

• Giving back to the society: CSR projects, forestry projects, CSR foundation, support a voluntary carbon project.

Corporate Climate Steward- A Case

Roadmap to carbon/water neutrality

Inclusion of carbon and water positive businesses in the portfolio

Generate carbon and water reduction in the value chain

Utilise available renewable energy in the operations

Chose Community intervention to generate carbon and water offsets

Offsetting emissions through external projects/purchases

Carbon offsets

FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20

Net Emissions

tCO2104926 87761 92149 96757 101594 106674 112008 117608 123489

Micro irrigation

9261 11113 13336 16003 19204 23044

Watershed 20000 25000 35000 40000 40000 40000

Land managem

ent4000 4000 4400 5500 6600 7920

Total offsets

available33261 40113 52736 61503 65804 70964

Balance emissions to offset

-63496 -61481 -53938 -50505 -51804 -52525

Value chain improvements

• M&M FES has 600 dealers and 600 suppliers in the value chain.• An energy audit of these would enable M&M FES and the value chain partner to

understand the opportunities to implement operations improvement and energy efficiency measures to reduce carbon footprint. Again if these measures are bundled and developed into a carbon Project - these measures would be verified and accounted for, and carbon credits would be received.

• Value chain improvements viz. EE lighting systems, optimizing contract demand, specific energy optimisation., logistics improvements etc…

Assumption: If 10% of the suppliers and dealers at the upper end were targeted and minimum improvements were considered then 120 * 100= 12000 t Co2 will be generated annually for 10 years. However detailed study will need to be undertaken for the same

Green Power Sourcing

Plant F12 F13 FY14 % switch to green power

Replacement through green power (kwh)

Green power (Mwh)

Emission Reductions (tCO2e)

Kandivali 3,91,33,140 2,94,07,080 3,14,65,576 74% 2,32,49,062 23,249 21,157

Nagpur 1,39,40,446 1,80,60,317 1,93,24,539 74% 1,42,94,086 14,294 13,008

Rudrapur 69,02,175 63,97,790 68,45,635 50% 34,22,818 3,423 3,115

Jaipur 10,43,778 10,14,259 10,85,257 30% 3,25,577 326 296

Swaraj 1 1,66,05,000 1,28,91,100 1,37,93,477 50% 68,96,739 6,897 6,276

Swaraj2 1,37,93,700 1,45,61,800 1,55,81,126 50% 77,90,563 7,791 7,089

Total 9,14,18,239 8,23,32,346 8,80,95,610 5,59,78,845 55,979 50,941

Other CSR -ESOP opportunities for generating GHG ERS

The Clean Energy Clean water Campaign for rural villages (UNFCCC- PoA• Deploying energy efficient cook-stoves, zero energy water purifiers and CFLs to

rural households to meet energy and water needs

Community Development GHG ER opportunities

Opp Cost /unit Offsets

Cost of offsets

Community benefits

Ease of Implementation Scale

INR tCO2 INR Complexity Time UnitsOffsets (CERs)

Zero/low energy Water

Purifiers 2200 10 220

health, avoided

deforestationEasy 1 year 5000 10,000

EE Cook Stove 2200 10 220

health, avoided

deforestationEasy 1 year 5,000 10,000

Investment of INR 2.5 crores(total) in the years 2014 and 15 , can generate 20,000CERs during the years 2017-21 . Annual operating costs will be 40.0 lacs per year.

FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 TCO2(RE purchase

accounted - FY15 onwards)

104926 87761 92149 69112 69112 65657 67212 66512 66827

Micro irrigation

9261 11113 13336 16003 19204 23044

Watershed 20000 25000 35000 40000 40000 40000

Land mgmt 4000 4000 4400 5500 6600 7920

Total offsets 33261 40113 52736 61503 65804 70964RE

purchase*( accounted in

emissions cal.

27645 27645 31100 29545 30245 29930 30072

Value Chain Imp.

12000 12000 12000 12000 12000

CSR 20000 20000 20000 20000 20000 20000

Surplus Credits

-15851 3001 19079 26291 31292 36137

Neutrality Achieved Achieved Achieved Achieved Achieved

Suggested Roadmap ( with RE accounted for)

Summary

The entity through climate neutral practice achieved the following:

Demonstrated Social Responsibility Prepared for emerging carbon constraints Improved Energy and Cost efficiencies in operations and

supply chain Improved relationship with the suppliers and community Future proofed its business portfolio

Climate.Value.

Delivered.

Climate Change - Role of Industry - Mr. Rambabu

Business

Transcript of Climate Change - Role of Industry - Mr. Rambabu