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SPE Distinguished Lecturer Program
Primary funding is provided by
The SPE Foundation through member donations
and a contribution from Offshore Europe
The Society is grateful to those companies that allow their
professionals to serve as lecturers
Additional support provided by AIME
Society of Petroleum Engineers
Distinguished Lecturer Programwww.spe.org/dl
21-Jul-11 Carbon Management and Sustainable Development 2
This year marks the 50th
anniversary of the SPE Distinguished Lecturer program.
Please visit our site to learn more about this amazing program.
www.spe.org/go/DL50
Carbon Managementand
Sustainable Development
Ashok B Chakraborty
Oil & Natural Gas Corporation Limited(ONGC)
New Delhi, India
Society of Petroleum Engineers
Distinguished Lecturer Programwww.spe.org/dl
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Coverage
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• Climate change & the issues
• Global requirements & initiatives
• Carbon management strategies
• Mitigation & adaptation
• Sustainable development & growth
• Question- Answer Session
Climate change & the issues
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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
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Source: Stern Report
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IPCC on climate change
• CO2 levels at their highest for 650,000 yrs
• Climate change unequivocally accepted
• Next 10-15 yrs critical, CO2 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 CO2 seen inadequate,450 ppm emerging as new consensus figure
* IPCC-Inter Governmental Panel on Climate Change
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150
200
250
300
350
400
450
500
550
-10
-50
510
-400 -350 -300 -250 -200 -150 -100 -50 0
CO
2co
nce
ntr
atio
ns, p
pm
v
Tem
pera
ture
(degr
ees
Cels
ius)
rela
tive
to t
oday
Thousands of years relative to present
Pre-industrial
CO2
Current
CO2
Hoped for stabilization
(CO2 equivalent)
Paleo-climate & CO2 record, Vostock ice cores, Antarctica
Current CO2
equivalent
Source: Antarctica Ice core studies
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Projected impacts of climate change on agriculture, forestry and ecosystems
Region Possible impacts on agriculture, forestry and ecosystems
Africa
By 2020
• 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.
Asia
By 2050
• Rapid reduction in fresh water availability in Central, South, East & SE Asia
Latin America
By mid century
• Gradual replacement of tropical forest by savanna in eastern Amazonia
• Semi-arid vegetation will tend to be replaced by arid-land vegetation.
• 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.
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
Source: IPCC AR4
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Floods are increasing, even in drought-prone Africa
Source: World Bank Report (2010)
People affected by climate related disasters (in millions)
Source: World Bank Report (2010)
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Back
Global requirements
& initiatives
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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 People21-Jul-11 Carbon Management and Sustainable Development 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.
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18
Two pathways to consider
No target under the Kyoto Protocol
Opportunity to respond to the
market through the Clean
Development Mechanism
Sectoral agreements
National action agreements
Funding via market mechanisms
Use of clean-technology funds
Direct recruitment to
cadre of nations with
targets
National emission target
2013 - 2020
2013 - 2020
2018 - 20302008 - 2012
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Action by
developed countries
• Measurable,reportable
verifiable mitigation
action /commitments
• Implementation of
action on adaptation
• Action to support
action by developing
countries
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 mitigation21-Jul-11 19Carbon Management and Sustainable Development
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
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Temperature target translates into
global emissions reduction target
Source: IPCC, AR4 WG1 SPM
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2°C Trajectory
Carbon Management and Sustainable Development
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 established21-Jul-11 24Carbon Management and Sustainable Development
Inevitable trade off?
Economic
development
Environmental sustainability
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Carbon management
Imperatives before E & P industry:
• Activities include burning, processing, flaringand transporting of fossil fuels that emit CO2
• E & P - adopt initiatives in mitigating GHG(CO2) emission, monitor/control same
• Future allocations, caps, long term framework/ investment will focus on this
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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?
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E & P industry perspective
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29
Heavily dependent on fossil fuels
Global energy consumption*
Source: BP Statistical Review of World Energy
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Global fossil carbon emissions
Consumption (2006)
3.1* billion tonnes
3.9* billion tonnes
2.6* billion tonnes*oil equivalent p.a.
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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 ?
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32
Oil Biomass Gas Coal Nuclear Renewables
Primary Energy
Liquids
Direct combustion
Industry and
Manufacturing
Mobility
Final Energy
Agriculture
and Land
Use
Energy
En
erg
y
En
erg
y
Buildings
Power
Generation
The “energy and CO2 economy”
21-Jul-11 32Carbon Management and Sustainable Development Back
Carbon management strategies
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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
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Carbon disclosure
• Reduce it, trade it or offset it, first count it
• Corporate strategy - from unknown tocarbon neutral or carbon positive
• Carbon counting, standards, boundaryissues, reporting & targets
• Assess & value de-carbonising potential,both upstream and downstream
• Investing for climate solutions : potential,prediction & provision
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Path to carbon neutral
Know your
carbon footprint
Minimize carbon
footprint
Become
zero carbon or
carbon neutral
Develop
GHG
inventory
Manage
GHG
inventory
Plan
GHG
inventory
Register with
international
organizations
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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
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Carbon Management
Steps:
• Develop: - GHG inventory (& prediction)
- GHG accounting system
- GHG information system
• Develop climate protection policy
• Develop sustainability reporting
• Purported benefits (stakeholders)
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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
21-Jul-11 39Carbon Management and Sustainable Development
Back
Mitigation & adaptation
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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
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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
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BackSource: World Development Report (2010)
Sustainable development and
growth
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Carbon projects development
Key challenges:
• Project selection
• Collaboration /
partnership
• Assessment &
validation
• Risk management
insights
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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
21-Jul-11 45Carbon Management and Sustainable Development
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”.
21-Jul-11 46Carbon Management and Sustainable Development
47
A new
direction is
needed
The way
we
produce
and use
energy
today is
not
sustainable
21-Jul-11 47Carbon Management and Sustainable Development
Back
Question- Answer Session
21-Jul-11 48Carbon Management and Sustainable Development
Society of Petroleum Engineers
Distinguished Lecturer Program
www.spe.org/dl
Ashok B Chakraborty
Oil and Natural Gas Corporation(ONGC)
21-Jul-11 Carbon Management and Sustainable Development 49
Society of Petroleum Engineers
www.spe.org
Join SPE!
www.spe.org/join
THANK YOU
FOR YOUR ATTENTION !
Email: [email protected] / [email protected]
21-Jul-11 50Carbon Management and Sustainable Development