Climate Change - Role of Industry

Dr. P. Ram Babu CEO RSM GC Email ID: ram.babu@general-carbon.com

Sustainability
Limits to Growth 1977 Our Common Future 1987 Rio Declaration 1992 Rio +10 2002 Rio +20 2012
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What is the limiting Factor ?

Finite Resources- Supportive Capacity of resources?? OR Finite Assimilative Capacity ??

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Climate Change is REALbeing 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

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Emission Reduction Commitments

Canada ETS (2013) 17% of 2005 by 2020 Dependent on US legislation Domestic voluntary markets covering power and industry EU ETS (2005) 20% or 30% (conditional) of 1990 by 2020 Power & Industries Sustained volumes till 2012 Russian Fed 15-25% of 1990 by 2020 China * 40-45% GDP emission intensity of 2005 by 2020 Emissions intensity based system

US (2012) 17% of 2005 by 2020 Federal or state initiatives like RGGI/ WCI/ AB 32 Sectors covered Power, Industry, upstream oil and gaslater Transport- 2015

Japan ETS (2011) 25% (conditional) of 1990 by 2020 EU ETS like scheme by 2011. Regional system for office buildings S. Korea (2010) 4% of 2005 by 2020 Power, Industry Indonesia* 26% BAU by 2020

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

Brazil* 36-39% BAU by 2020

Level of ambition against Business as Usual (BAU) Low Medium High

South Africa* 34% BAU by 2020

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

NZ ETS (2010) 10-20% (conditional) of 1990 by 2020 Transport, Energy, Industry Agriculture (intensity based)- 2015
* Voluntary in nature Source of Commitments: UNFCCC

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Climate Regulations

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Country Climate Legislations

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Financial Markets Exceed Carbon Budgets Several Times

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Spectrum of Possibilities
Increased efforts in GHG emission mitigation. International funding for GHG mitigation. International Agreement with binding commitments and GHG emission reduction is a commodity and is globally fungible.

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

Domestic Regulations and Markets Bilateral and Multilateral fungibility

Certain
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Uncertain
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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.

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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.

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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.

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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.

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Corporate Climate Steward- A Case

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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

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Carbon offsets
FY 12 FY 13 FY 14 92149 FY 15 96757 9261 20000 4000 FY 16 FY 17 FY 18 112008 16003 40000 5500 FY 19 117608 19204 40000 6600 FY 20 123489 23044 40000 7920 Net Emissions 104926 87761 tCO2 Micro irrigation Watershed

101594 106674 11113 25000 4000 13336 35000 4400

Land managem ent Total offsets available Balance emissions to offset

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33261

40113

52736

61503

65804

70964

-63496

-61481

-53938

-50505

-51804

-52525

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

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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
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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

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Green Power Sourcing

Plant F12 F13 FY14 % switch Replacement Green power Emission to green through green (Mwh) Reductions power power (kwh) (tCO2e)

Kandivali Nagpur Rudrapur Jaipur Swaraj 1 Swaraj2 Total

3,91,33,140 1,39,40,446 69,02,175 10,43,778 1,66,05,000 1,37,93,700 9,14,18,239

2,94,07,080 1,80,60,317 63,97,790 10,14,259 1,28,91,100 1,45,61,800 8,23,32,346

3,14,65,576 1,93,24,539 68,45,635 10,85,257 1,37,93,477 1,55,81,126 8,80,95,610

74% 74% 50% 30% 50% 50%

2,32,49,062 1,42,94,086 34,22,818 3,25,577 68,96,739 77,90,563 5,59,78,845

23,249 14,294 3,423 326 6,897 7,791 55,979

21,157 13,008 3,115 296 6,276 7,089 50,941

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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

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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

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Community Development GHG ER opportunities

Cost /unit Opp INR

Zero/low energy Water Purifiers

Offsets

Cost of offsets INR

Community benefits

Ease of Implementation Complexity Time Units

Scale Offsets (CERs)

tCO2

2200

10

220

health, avoided deforestation

Easy

1 year

5000

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 health, EE Cook 2200 10 220 avoided Easy 1 year 5,000 10,000 per year. Stove
deforestation

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Suggested Roadmap ( with RE accounted for)

FY 12 FY 13
TCO2(RE purchase accounted - 104926 FY15 onwards)

FY 14

FY 15 69112
9261

FY 16 69112
11113

FY 17 65657
13336

FY 18 67212
16003

FY 19 66512
19204

FY 20 66827
23044

87761 92149

Micro irrigation Watershed Land mgmt Total offsets

RE purchase*( accounted in emissions cal.

20000 25000 35000 40000 40000 40000 4000 4000 4400 5500 6600 7920 52736 61503 65804 70964 33261 40113 27645 27645 31100 12000 20000 -15851 20000 3001 29545 12000 20000 19079 30245 12000 20000 26291 29930 12000 20000 31292 30072 12000 20000 36137

Value Chain Imp.

CSR Surplus Credits Neutrality

Achieved Achieved Achieved Achieved Achieved

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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

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Climate. Value. Delivered.

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