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Energy Efficiency: A Sustainability Journey

DuPont Sustainable Solutions

Juan Aguiriano Worldwide Managing Director – Sustainable Operations

September 7th 2012


• Sustainability Drivers for Energy Efficiency

• Energy Efficiency and Singapore

• Energy Efficiency is a Business Opportunity

• DuPont Sustainability Journey

• Managing Energy Efficiency

• Market Facing Goals

Energy Efficiency – A Sustainability Journey

7-Sep-12 DuPont Sustainability Journey

2


Energy efficiency is a component of the big sustainability picture…

Sustainability

People

SHE Knowledge and skills

Stakeholder engagement

Local content

Business ethical

practices & Society

Planet

Air emissions

(GHG, dust, etc.)

Water (consumption,

pollution)

Biodiversity (e.g., land

remediation)

Waste (generation,

toxicity, disposal)

Depletable resources

consumption (e.g., energy)

Profit

Asset productivity & Capital

effectiveness

Local requirements are of increasing importance to multiple industries to manage local stakeholders

and ensure a social license to operate

Energy management and energy efficiency must be part of a

corporate sustainability strategy

Consuming less energy to produce more goods…

Energy consumption in industry can represent up to 60% of GHG emissions


3

Environmental concerns linked to energy are an

element of sustainability


External drivers Volatility, magnitude and escalation of energy costs are increasing the urgency to drive improvements in energy efficiency.

Governments and global institutions are introducing new energy management regulations and policies, pressuring companies & societies to re-think energy consumption.

Companies are expected to publish energy improvement goals and are being held accountable for delivering results.

Energy efficiency is being used as a powerful strategy to lower the cost of goods and attract customers at every level.

1. Volatility of resource costs

2. Public policy

4. Public accountability

5. Competition

The Investment community is increasing the weight of a company’s energy efficiency commitments and capabilities when making investment choices.

3. Access to capital

Multiple Global Drivers are pressuring companies to improve Energy Efficiency


4


EE is high on the agenda in Singapore with targets in place, strong government support and abundant opportunities.

Energy Efficiency is Good for Singapore


5

Industrial Energy use represents 54% of total consumption in Singapore.

Source: EDB. Singapore Energy Efficiency Strategy, 2012.


Energy is finite, and yet energy demand is rapidly outpacing supply, driving prices higher as well as the cost to society.

Within the industrial sector – the largest consumer of energy – there is much opportunity to become more energy efficient through improved energy management.

In doing so, companies can not only generate business value, but also societal value.

Energy Efficiency is a Business Opportunity


6


Strategic Approaches to Energy – A Business Opportunity

Operational efficiency (inside out approach

prevailing)

Product innovation (outside in approach

prevailing)

Influence on Society and the competitive

landscape

Awareness and Compliance

Moving from discrete energy reduction initiatives to integrated energy management strategies that return significant cash and market advantage.

Risk Mitigation Cost Reduction Competitive advantage Revenue generation

Operational Excellence Sustainable Growth Licence to Operate

Energy Security Energy Consumption Sustainable Energy

Mega Trend Energy Efficiency Products


7


Companies are strategically focusing on its efficient use as a way to gain competitive advantage

Not sure

Not at all

Somewhat

Very

Extremely

0.00%

3.10%

16.30%

39.80%

40.80%

More than 80% of surveyed companies rated energy to be “extremely “ or “very” important to their business, making energy

an strategic factor to focus on to gain competitive advantage.

Energy has become one of the strategic factors driving business decision-making. Business and consumers are increasingly considering the energy efficiency of the products and services they buy and use. In an industrial context, companies are searching for the most energy-efficient process design solutions. (…) these development are the results of economic and political facts: the long-term depletion of fossil fuels and public policy decisions to curb greenhouse gas emissions (GHG). Thus, energy has become a key factor in gaining a competitive edge, and the relevant global markets are growing rapidly. Source: McKinsey & Company, Energy: A key competitive Advantage New sources of growth and productivity, April 2009.

Source: The Conference Board, Strategic Energy Management, 2004.


8


Bus

ines

s In

tegr

atio

n

1972 1989 1994 2000 2006

Renewable Energy, Energy

Use Flat

Corporate Environmental

Planning

Announced 2015 Market facing Goals

Announced 2010 footprint

reduction Goals

Compliance

Corporate Environmentalism

Sustainable Growth

Sustainable Growth Market Facing Goals

SHE Commitment

Employee Safety

Process Safety

Environment

Energy

Productivity

Sustainability

The DuPont journey from Safety to Sustainable Growth

7-Sep-12 9

1990

DuPont Sustainability Journey


Cost savings: $6 Billion (USD) Industry recognition: “Laggard” to “Leader” 427th consecutive quarter dividend

DuPont has achieved a significant footprint reduction

* TRI = Toxic Release Inventory

Sources:

DuPont Global Reporting Initiative (GRI) report: http://www2.dupont.com/Sustainability/en_US/assets/downloads/2011_DuPont_GRI_Report.pdf

DuPont Sustainability Progress Report: http://www2.dupont.com/Sustainability/en_US/index.html

7-Sep-12 10 DuPont Sustainability Journey


Reducing Environmental Footprint

Greenhouse Gas Emissions > 14.62 MM metric t CO2-e Water Conservation > 32 billion gallons Fleet Fuel Efficiency > 100% leading tech vehicles Air Carcinogens > 0.9 million pounds Independent Verification of Site Programs 100 % site Serving the Marketplace Environmentally Smart Opportunities from R&D > $US 640 M Products that Reduce GHG > $US 2 Billion revenue Revenues from Non-Depletable Resources > $US 8 Billion Products that Protect People > 1,000 products

Core Value Performance We continue to drive towards the Goal of Zero in each of our

Core Value areas (Safety, Environment, Ethics, Respect for People)

DuPont is on track to deliver 2015 Footprint and Market Facing Goals

DuPont Sustainability Progress Report: http://www2.dupont.com/Sustainability/en_US/DuPont_2010_Sustainability_Progress_Report.pdf



An Integrated Approach to Develop and Operationalize World-Class Energy Management

Division & Site Structure Roles & Accountability Performance Management

Bottom-up business

review

Top-down critical issues identification

Goals development & benchmark

Stakeholder engagement

Management System Design and Implementation

Detailed targets

Corporate Analysis &

Prioritization, KPI

Communicate & Cascade Leadership

Process & Tools Organization

Structure 3 4

5 2

Organizational Processes

Assess & Envision Sustain

Leadership Alignment Planning & Initiatives Execution Influence Model

Competence Best Practice Talent Management

1

Guidelines, Standards

Business Units Plans

Cultural Transformation

Capability Building


12


Integrated Operations Management Systems

Focus on what really matters, with the right

people

The right tools and practices to solve root

level problems

People instinctively

doing the right things

The right skills and coaching

Mindsets and Behaviors

Role modeling/

coaching dialogue/ difficult

discussions

Capabilities Engine

Technical Model Managing Process

6

An integrated management system that fully develops people and organizational capability for effectiveness and creativity in utilizing assets and eliminating all waste, e.g. energy waste.

Current and future requirements for capability and performance

7-Sep-12 13

Required Business outcomes

DuPont Sustainability Journey


How to Get Started on Energy Efficiency ? The Key Success Factors

Develop Skills and Capabilities of People to Support Cultural Change

Implement a Vertically Integrated Management Approach to Drive Results

Connect Diverse and Complex Components of Energy Management and Efficiency

Elevate Energy and its Cost as a Strategic Business Issue

Identify and Execute the Right Opportunities to Drive Maximum Gains

1

2

3

4

5



Elevate Energy and its Cost as a Strategic Business Issue 1

• Understanding business implications of energy consumption and escalating costs

• Analyzing implications of energy cost variability on portfolio profitability • Benchmarking and quantifying the total opportunity value.

What are strategies for developing attractive, “non-cap” opportunities?

Universe of Attractive Business Improvement

Opportunities

Universe of Energy Improvement Opportunities

Capital Improvements


15


Identify & Execute the Right Opportunities to Drive Maximum Gain 2

Assess Plant Energy Use (1st or 2nd Party)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Month

Implement Changes

Identify Project Opportunities Quantify Stake for Savings Determine Feasibility Prioritize Improvements

Capital Projects

First Savings Achieved

-100%

-50

-0 Typical Savings Run Rate

Six Sigma Projects

Repeat Assessment Process Every 3 Years

Institute Monthly Program Reviews with Plant Manager

Plant Manager Appoints Plant Energy Champion

Appoint Plant Energy Team

Opt in

Set Breakout Target [Beginning of each year]


16


A range of methodologies should be used to select and fund projects ranging from simple cost-effectiveness to the most detailed triple-bottom line ROI sensitivity analyses across the whole company portfolio

Implement a Vertically Integrated Management Approach to Drive Results

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 16000000

Cum

ulat

ive

Ener

gy S

avin

gs, G

J

Cumulative Cost $k

Energy Projects Pareto Curve

80% of Cumulative Savings from projects below the line.

-$250,000 $250,000 $750,000 $1,250,000 $1,750,000

13

3

19

7

14

11

4

20

5

18

1

8

12

9

16

17

15

Cost Effectiveness, $k

Proj

ects

Energy Projects Cost Effectiveness

Cost Effective

Not Cost Effective

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Base

line

Ene

rgy

Usa

ge

Ener

gy P

roje

ct R

educ

e C

oal L

oss

A

Ener

gy P

roje

ct L

ong

Wal

l Per

form

ance

A

Ener

gy P

roje

ct E

lect

ricity

Mon

itorin

g D

Ener

gy P

roje

ct D

iese

l Mon

itorin

g B

Ener

gy P

roje

ct F

lota

tion

Opt

imis

atio

n A

Ener

gy P

roje

ct E

lect

ricity

Mon

itorin

g C

Ener

gy P

roje

ct L

ong

Wal

l Rel

iabi

lity

A

Ener

gy P

roje

ct R

educ

e C

oal C

onta

min

atio

n

Ener

gy P

roje

ct L

ong

Wal

l Eng

inee

ring

A

Ener

gy G

oal

Baseline

Energy Reduction Projects Energy Goal

Ener

gy S

avin

g G

J

Selected Projects

Cumulative GJ Reduction Impact of Selected Energy Reduction Projects

14313

19211201067

12

4

175816191815

2627280

1

2

3

4

5

6

7

8

9

10

0 1 2 3 4 5 6 7 8 9 10

Low

<---

------

------

------

-----

Cos

t Im

pact

-----

------

------

------

- > H

igh

Hard <------------------------------------ Ease of Implementation ------------------------------------> Easy

Energy Projects Priority Matrix

CHPP

Util

isatio

n A

Elec

tric

ity M

onito

ring

B

Dies

el M

onito

ring

B

Redu

ce C

oal L

oss A

Flot

atio

n O

ptim

isatio

n A

Engi

ne P

rogr

am A

Digg

er U

tilisa

tion

A

Redu

ce C

oal C

onta

min

atio

n

Exca

vato

r Rat

e Im

prov

emen

tEx

cava

tor U

tilisa

tion

ADi

esel

Mon

itorin

g A

Long

Wal

l Per

form

ance

A

Long

Wal

l Rel

iabi

lity

A

Elec

tric

ity M

onito

ring

D

Elec

tric

ity M

onito

ring

C

Long

Wal

l Eng

inee

ring

A

Elec

tric

ity M

onito

ring

ASh

ovel

Rat

e Im

prov

emen

t ADr

aglin

e Ra

te A

Shov

el U

tilisa

tion

A

1500 kt 2500 kt 6000 kt

-200

-150

-100

-50

0

50

100

150

200

Incr

emen

tal c

ost

$/to

nne

(Tot

al E

mis

sion

s)

kT CO2-e Cumulative Project Life Abatement

Marginal Abatement Cost Curve (Selected Projects by Saving)

$23 Carbon Cost

Indicative Projects Labelled as ExamplesIndicative Projects Labelled as ExamplesIndicative Projects Labelled as ExamplesIndicative Projects Labelled as Examples

3


17


Connect Diverse and Complex Components of Energy Management and Efficiency

Recognize the Energy Challenge

Develop Energy Plan

Energy Mapping

Prioritize & Quantify Capital Projects

Integrate in to Capital Planning Process

Execute Capital Projects

Low cost/ Non-capital Investment Projects

Cross-functional Facilitated Improvement Projects

Input

Methodology Subject Matter

Exper t ise Resources

Management of Change (MOC)

Operational Excellence

Identify & Prioritize Opportunity

60% Opportunities but substantial capital investment

40 % Opportunities with low capital

investment

4


18


Energy Management – How To Drive the Culture ?

These elements, and the system for realizing them, form the best practice reference model against which cultural change is implemented

Strong Leadership

Appropriate Organizational Structure

Focused Processes and Actions

Integrated Energy Management

Culture

Engaged & Committed Leadership

Challenging Goals, Policies, & Principles

Metrics and Data-Driven Decisions

Integrated Energy Efficiency Organization

Responsible Line Organization

Timely Recognition of Success

Consistent & Targeted Business Planning Process

Commitment to Training & Development

Effective Communication System

Standard Improvement Methodology

5


19


Backup Slide Energy Efficiency – Programs in Singapore (EDB)


21


Backup Slide Energy Efficiency – A Sustainability Journey


22


Backup Slide - Why Industrial Energy Efficiency?


23

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