Climate Change & Corporate

8/8/2019 Climate Change & Corporate

1/21


2/21

Climate Change,Carbon Market and

the Corporate SectorInternational Conference on S&T Capacity Building for Climate Change

October 21 2002

2001 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the individual member firms of the world-wide PricewaterhouseCoopers organisation. All rights reserved.


3/21

In the next few minutes

Climate change challenge and global action

Monetising carbon market, buyers, price drivers

Corporate Sector opportunity, preparedness, implications

PricewaterhouseCoopers


4/21


The Challenge

Economic slowdown, crisis of trust and cross-border terrorism

overshadowed a big challenge facing the world :

Climate Change

Climate change is as much a business issue as it is an issue for

the Government and civil society

Corporations world-wide control more than half of the means of

anthropogenic GHG emissions

Twin challenge of

Decoupling GHG emissions from growth

Mitigation of impact of climate change


5/21


Global action

The Kyoto Protocol sets binding

targets for GHG reductions in a

majority of developed countries

(Annex B)

The Protocol provides opportunities

to reduce global emissions by

utilising cheapest abatement

options

Three flexibility mechanisms

Emission Trading

Joint Implementation

Clean Development

Mechanism


6/21


Abatement options

Abatement curves significantly different for different

Corporations

Corporations with commitments (or obligation) to reduce GHG

emissions can

implement GHG emission abatement in its own operations

buy credits from other Corporations

sell surplus credits to other Corporations

For Corporations, this provides an opportunity to participate in

the carbon market


7/21


The Opportunity

The opportunity is for corporations in developing countries as well as

developed countries

Developing countries can move rapidly to clean development

technology with financial assistance from developed countries

Developed countries can meet their obligations by the cheapest

route

PwCs review of CDM projects in India indicates that carbon finance

can provide up to 15% of new project costs at current valuation

expectations

Make marginal projects investment grade

Leverage carbon financing for better project financing terms

Carbon transactions provide possibilities of strategic alliances, access

to new markets and financing sources


8/21


Carbon transactions so far

Internationally since 1996

A total of over 100 trades reported corresponding to 200

MtCO2e have been executed

Deals have been VERs approved by third-party accountants

ER deal reported by an Indian steel major

Dutch government

Selected 6 projects from India under first CERUPT Prototype Carbon Fund investments in CDM projects

Investment in a waste-to-energy project


9/21


The buyers

EU-countries led CDM initiatives:

ERUPT/ CERUPT by HOLLAND already underway

AUSTRIA to dedicate $36 million, starting Jan 03

DENMARK has committed $17 million

SWEDEN has budgeted $22 million

The NORDIC COUNTRIES are setting up a $10 million fund

JAPAN recently bought an annual flow of 62,000 tonnes of CO2e from

Kazakhstan

Active participation by Annex B countries is likely to

Increase companies sense of security of investing in CDM

Increase transparency in all stages of project development


10/21


Buyers requirements: CDM

Clear CDM rules

Host country endorsement rules

Investment rules Robust and large CDM projects

robust carbon, robust project

Developed by large Corporations

Ability to stand by performance obligations

Portfolio of credits

Projects having high sustainability criteria

Stakeholders perspective


11/21


PREMIUM

COMPLIANCE

PRE - COMPLIANCE

RETAIL

Price Volume

Price vis-a-vis quality of credit

In our view it is likely that there

will be a strong demand for

various types of credits leading

to a segregation of the carbonmarkets according to credit type


12/21


13/21


Harnessing the opportunity

In order to harness this opportunity, we need

Corporate commitment and preparedness

Policy and regulatory framework Capacity building in systems


14/21


Level of preparedness

Based on 60 contacts with the largest Indian Corporations in

energy and emission intensive industries

Climate change is not perceived as a strategic value driver

and as such is wholly absent from Board Agendas.

Carbon is not an identified factor in investment criteria

There is general awareness of CDM

However, CDM is seen as opportunity in future and prefer

to adopt wait-and-watch attitude

Environment departments not yet fully focussed on carbon


15/21


Level of preparedness

Based on 60 contacts with the largest Indian Corporations in energy

and emission intensive industries

Energy efficiency is largely a plant/unit level initiative. Energy

efficiency initiatives as a Corporate priority is present in about 25%of the Corporations contacted

Less than 10% of the Corporations contacted have conducted

exercises to create an inventory of all direct GHG emissions in

their operations

Less than 5% of the Corporations have initiated an exercise to

identify all possible emission reduction opportunities, cost-benefit

analysis

No instances of capturing indirect emissions

No instances of GHG emission abatement curves


16/21


Capacity building in Corporations

Human, organizational and information assessment capacity

Include carbon as a strategic value driver

Incorporate carbon as a key investment criteria Provide incentives to employees to think carbon: incorporate

carbon as a key employee performance evaluation criteria

Set up internal systems across organization to promote

carbon investments, disseminate best practices information,

monitor performance


17/21


Capacity building through policy and

regulatory framework Clear policy framework integrating

Environmental: clear approval criteria for CDM projects including

criteria for measuring non-carbon environmental/ social benefits

Energy: promotion of clean energy generation and efficient energy

usage

Investment: approval criteria for FDI in CDM projects

Taxation and reporting: clarity in taxation structure of carbon

revenues/financing; fiscal incentives to promote cleandevelopment; valuing and reporting carbon assets

Property rights: clarity in ownership of carbon credits, facilitation of

aggregation


18/21


Capacity building in systems

Information assessment and dissemination

Financing for clean technology development

Systems to ualify, register, review, monitor, verify and reportemission reductions

National level emission inventory program

National emission registry and associated systems


19/21


Implications for Corporations

Carbon market is inevitable with or without Kyoto through

various national and international initiatives

Window of opportunity for Kyoto is short next 3-4 years

Corporate India currently not prepared to harness the potential

First, carbon should be viewed as a strategic opportunity

Second, capacity building should be initiated to facilitate

monetising of carbon

Third, lobby for the right policy and regulatory framework


20/21


Benefits for Corporations

Early mover benefits and greater scope to influence policy

Additional benefit from and support for core business strategy

Improve market perception Financial benefits from implementing CDM projects

Cost savings from efficiency gains

Expansion into new businesses

Public relations gain


21/21

Date post:	29-May-2018
Category:	Documents
Upload:	mayankforged
View:	220 times
Download:	0 times

Climate Change & Corporate

Documents