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Carbon Management and Sustainable Development Ashok B Chakraborty Oil & Natural Gas Corporation Limited(ONGC) New Delhi, India Society of Petroleum Engineers Distinguished Lecturer Program www.spe.org/dl
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Coverage Climate change & the issues Global requirements & initiatives Carbon management strategies Mitigation & adaptation Sustainable development & growth Question- Answer Session 5
Climate change & the issues 6
Climate change & the issues Global warming is now global warning Climate change - a global business risk factor Risk reduction & business implications Economic risks significant No sector is immune to effects of climate change 7
8 Source: Stern Report
IPCC on climate change CO 2 levels at their highest for 650,000 yrs Climate change unequivocally accepted Next 10-15 yrs critical, CO 2 reductions required Best guess-1.8 to 4 ºC by 2100 / worst case up to 6.4 ºC Policy response to hold increase to 2 ºC 550 ppm CO 2 seen inadequate,450 ppm emerging as new consensus figure * IPCC-Inter Governmental Panel on Climate Change 9
Temperature (degrees Celsius) relative to today -10-5 0 5 10 150 200 250 300 350 400 450 500 550 CO 2 concentrations, ppmv Paleo-climate & CO 2 record, Vostock ice cores, Antarctica -400-350 -300-250 -200-150 -100-50 0 Thousands of years relative to present Hoped for stabilization (CO 2 equivalent) Current CO 2 equivalent Current CO 2 Pre-industrial CO 2 10 Source: Antarctica Ice core studies
Projected impacts of climate change on agriculture, forestry and ecosystems Region Africa By 2020 Asia By 2050 Possible impacts on agriculture, forestry and ecosystems 50% reduction in rain fed agriculture, including access to food Many African countries are projected to be severely compromised Further adversely affect food security and exacerbate malnutrition. Rapid reduction in fresh water availability in Central, South, East & SEAsia Gradual replacement of tropical forest by savanna in eastern Amazonia Semi-arid vegetation will tend to be replaced by arid-land vegetation. Latin America By mid century Decrease in productivity of some important crops Decrease in live stock Adverse consequences for food security Overall, the number of people at risk of hunger is projected to increase Small Islands Sea-level rise is expected to exacerbate inundation, storm surge, erosion and other coastal hazards, thus threatening vital infrastructure, settlements and facilities that support the livelihood of island communities. 11 Source: World Bank Report 2010
Projections of future changes in climate Across all scenarios, average warming is 0.2 C per decade Committed warming averages 0.1 C per decade for next two decades 12 Source: IPCC AR4
Floods are increasing, even in drought-prone Africa 13 Source: World Bank Report (2010)
People affected by climate related disasters (in millions) 14 Source: World Bank Report (2010) Back
Global requirements & initiatives 15
Climate Change and Development Understanding Links between Climate Change and Development Ingenuity needed: Adaptation requires new tools and knowledge Natural capital - Physical capital- Human health Development without Compromising Climate change impacts and policies are not gender neutral since differences in responsibility, vulnerability and capacity for mitigation and adaptation. Fostering synergies between mitigation and adaptation Managing Land, Water to Feed 9 Billion People 16 Source: World Development Report (2010)
Climate Change and Development Contd Poverty reduction & sustainable development core priorities. Generating the funding Needed for Mitigation and Adaptation Economic growth alone is unlikely to be fast or equitable enough to counter threats from climate change, particularly if it remains carbon intensive and accelerates global warming. Looking ahead to 2050: Which world? A climate-smart world is within our reach if we act now, act together, and act differently Economic growth: Necessary, but not sufficient An equitable and effective global climate deal is needed. 17
Two pathways to consider 18 Direct recruitment to cadre of nations with targets No target under the Kyoto Protocol Opportunity to respond to the market through the Clean Development Mechanism 2008-2012 2013-2020 National emission target 2018-2030 2013-2020 Sectoral agreements National action agreements Funding via market mechanisms Use of clean-technology funds 18
Action by developed countries Action by developing countries Measurable,reportable verifiable mitigation action /commitments Implementation of action on adaptation Action to support action by developing countries Nationally appropriate mitigation actions supported and enabled by technology, financing and capacity building Reducing emissions from deforestation Implementation of action on adaptation National / international action Cooperative sectoral approaches and sector-specific actions on mitigation 19
Cancun Climate Change Conference (COP16): Key Outcomes Faith restored -multilateralism & UNFCCC process Operational details of Copenhagen Accord (CA) Pledge and review for setting GHG mitigation Uncertainty about future Kyoto Protocol targets. Equitable access to sustainable development. Equal access to global environmental /atmospheric resources 20
Temperature target translates into global emissions reduction target 21 Source: IPCC, AR4 WG1 SPM
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2 C Trajectory 23 Source: World Development Report (2010)
Carbon offsets & voluntary action programs Climate change now from environmental to financial realm Carbon challenges into opportunities Certified Emission Reduction (CER) & JI as financial commodity, tradable Voluntary markets established 24
Inevitable trade off? Economic development Environmental sustainability 25
Carbon management Imperatives before E & P industry: Activities include burning, processing, flaring and transporting of fossil fuels that emit CO 2 E & P - adopt initiatives in mitigating GHG (CO 2 ) emission, monitor/control same Future allocations, caps, long term framework / investment will focus on this 26
Perspectives & low-carbon development solutions Threats & opportunities with the projected impacts of climate change Can policy-makers create conditions for carbon-numerate capitalism? How can the company best value carbon? how good is my carbon credit? How can these issues best be understood in the board room? 27
E & P industry perspective 28
Heavily dependent on fossil fuels 29 Global energy consumption * 29 Source: BP Statistical Review of World Energy
Global fossil carbon emissions Consumption (2006) 3.1 * billion tonnes 3.9 * billion tonnes 2.6 * billion tonnes * oil equivalent p.a. 30 Source: World Resource Institute
Way forward How to integrate carbon management in the overall business practice? Exploration of organizational potential, business processes & GHG abatement options Energy efficiency, carbon efficiency and operational efficiency improvement Carbon management to address tomorrow s actions, today? 31
Energy Energy 32 The energy and CO 2 economy Liquids Oil Biomass Gas Coal Nuclear Renewables Direct combustion Industry and Manufacturing Primary Energy Energy Power Generation Final Energy Mobility Buildings Agriculture and Land Use 32 Back
Carbon management strategies 33
Carbon management strategies Carbon management - a key challenge to climate change Managing carbon as part of the business strategy GHG* - accounting and management Accounting based on specific standards Internalizing the externalities * GHG Green House Gases 34
Carbon disclosure Reduce it, trade it or offset it, first count it Corporate strategy - from unknown to carbon neutral or carbon positive Carbon counting, standards, boundary issues, reporting & targets Assess & value de-carbonising potential, both upstream and downstream Investing for climate solutions : potential, prediction & provision 35
Path to carbon neutral Know your carbon footprint Minimize carbon footprint Become zero carbon or carbon neutral Plan GHG inventory Manage GHG inventory Register with international organizations Develop GHG inventory 36
Carbon management program Company s carbon footprint Quantification & its effect on climate change Managing carbon as part of business strategy A mitigation plan with value generation Two ways to reduce carbon emissions: carbon tax and cap-and-trade system 37
Carbon Management Steps: Develop: - GHG inventory (& prediction) - GHG accounting system - GHG information system Develop climate protection policy Develop sustainability reporting Purported benefits (stakeholders) 38
ISO14064 standard for GHG s Specification & Guidance Part 1: Organization level for quantification & reporting of GHG emissions & removals Part 2 : Project level for quantification, monitoring & reporting of emission reductions or removal enhancements Part 3: Validation & verification of GHG s 39 Back
Mitigation & adaptation 40
Mitigation & adaptation Mitigation : emission reduction, relative to emission baselines, which is economically attractive at a given price of carbon Mitigation plan : projects contributing to considerable carbon impact along with mitigation plan with value generation Adaptation: measures & action program 41
Overcoming behavioural and institutional inertia Harnessing individual s behavioral change Misunderstandings about the dynamics of climate change encourage complacency Individual s willingness to respond to climate change Understanding not necessarily leads to action Green federalism and climate change policy 42 Source: World Development Report (2010) Back
Sustainable development and growth 43
Carbon projects development Key challenges: Project selection Collaboration / partnership Assessment & validation Risk management insights 44
Sustainable development & growth Quantification, monitoring, reporting & verification of GHG emissions / removals Environmental performance improvement Brand image & reputation enhancement Global recognition & credibility Disclosure in company balance sheet 45
Conclusion Consequences of global warming global Economic risks significant to effects of climate change Carbon management as a strategy includes the source, sink & offsets Carbon management improves energy, carbon & operational efficiency equitable access to sustainable development. 46
The way we produce and use energy today is not sustainable 47 A new direction is needed 47 Back
Question- Answer Session Ashok B Chakraborty Oil and Natural Gas Corporation(ONGC) Society of Petroleum Engineers Distinguished Lecturer Program www.spe.org/dl 48
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THANK YOU FOR YOUR ATTENTION! Email: chakraborty_ab@ongc.co.in / abcsafety@hotmail.com 50