William F. Bailey, Principal ConsultantE. I. DuPont de Nemours and Co., Inc.Charlotte, NC

Reducing Greenhouse Gas Emissions in DuPont

Presentation Outline

Company Background and Transformation Commitment to Sustainable Growth Reducing Greenhouse Gas emissions Improving Energy Efficiency to Contain CO2 Emissions

An Overview of DuPont Today

Ranked 67th in the most recent Fortune 500 2003 business results

– $27 Billion in Sales– $1 Billion in Net Income

135 manufacturing facilities in 70 countries 60,000 employees Major business segments

– Performance Materials– Coatings and Color Technologies

DuPont Tyvek® Housewrap

DuPont is Transforming Itself

Since ranking 15th in the Fortune 500 in 1997, DuPont has– Spun off its Conoco petroleum unit (1998)– Acquired Pioneer Hi-Bred and Protein Technologies Inc. (1999)– Sold its pharmaceuticals business to Bristol-Myers Squibb (2001)– Sold its Dacron® polyester business to DAK Americas (2001)– Agreed to sell its Nylon and Lycra® business to Koch Industries

DuPont is recreating itself to achieve “sustainable growth”– Increasing shareholder and societal value…– While decreasing the environmental footprint of our operations…– Along the value chains in which we operate

Making “Sustainable Growth” Practical

Our goal: grow profits while reducing our impact on society To do this, our manufacturing plants must

– Reduce operating costs, energy use and emissions How will we reduce our costs and our emissions?

– Use Six Sigma and other methodologies to improve productivity How do we know we’re doing it?

– Measure our progress versus an established baseline How do our shareholders and society know we’re doing it?

– Commit to meet a publicly-stated level of performance

DuPont’s Public Commitment on Energy

We have committed to achieve the following by 2010– Reduce greenhouse gas emissions by 65% versus 1990– Hold total energy use flat versus a 1990 baseline– Supply 10% of total energy needs from renewable resources at a

cost competitive with best available fossil derived alternatives My presentation will discuss how we’re working to achieve

the first two goals

Greenhouse Gas Emissions in DuPont

Most of our CO2 emissions come from energy use

But CO2 is not our only Greenhouse Gas (GHG) emission– The manufacture of some refrigerants create HFC’s

– 1 pound of HFC-23 is equivalent to 11,700 pounds of CO2

– The manufacture of adipic acid creates N2O

– 1 pound of N2O is equivalent to 310 pounds of CO2

These other GHG’s dwarfed our CO2 emissions

1990 GHG Emissions (CO2 Equivalent)

18%

54%

28%

Carbon Dioxide Nitrous Oxide HFC's, PFC's and CH4

Reducing Non-CO2 GHG Emissions

To reduce GHG emissions by 65%, we had to change the way we make two profitable products: Nylon and HFC’s

We worked hard to develop innovative and cost-effective abatement methods for both HFC-23 and N2O– We developed advanced thermal destruction technology for N2O

– We co-developed a process to convert N2O to nitric acid– We used Six Sigma methodology to improve HFC process yields– We found markets for non-emissive uses of HFC-23– We are building facilities to incinerate the remaining HFC-23

These changes cost over $50MM but they were worth it…

We’ve met our GHG Goal 8 Years Early

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Carbon Dioxide Nitrous Oxide HFC's, PFC's, CH4

Greenhouse Gas Emissions have been reduced by 65% since 1990.

But What Are We Doing About CO2?

CO2 emissions are driven primarily by energy use Energy use is largely a function of production

– The more “stuff” you make, the more energy you use To grow earnings, you have to make more stuff, right? DuPont’s approach to sustainable growth says “No”

– We are striving to develop new, less energy-intensive products– We want to generate income from our knowledge + our products– We are using Six Sigma to improve yields and energy efficiency

Let’s look at our history of energy use…

DuPont’s Energy Use in the 1990’s

Although energy use was flat, production grew 35% This efficiency gain equates to $300MM in pretax profits! Our energy efficiency improved for a number of reasons

– Portfolio mix– Cogeneration– Yield improvements– Improved manufacturing uptime– Conservation measures

So, what do we do for an encore?

Picking the “High Hanging Fruit”

Keeping energy use flat gets more difficult over time If you make more pounds, you’ve got to use less energy/lb Improving the energy efficiency of existing plants is tough

– Most plants have hundreds of energy-using devices– Inefficiencies are usually invisible– Data required to pinpoint losses is frequently unavailable– On-site expertise to identify and make improvements is limited– Energy efficiency is not a product quality variable

So how do you reach the “high hanging fruit”?

Making the Case for Energy Efficiency

Additional work is required to improve energy efficiency This work must represent an attractive value proposition

– Potential benefits must outweigh cost of resources to work on it This is a complicated issue for most of our sites

– Site resources may not know how to reduce energy use Our approach to improving energy efficiency

– Uses Six Sigma to standardize improvement methodology– Leverages knowledge of the few to help the many

Let’s look at these in a little more detail…

What is Six Sigma?

A business management process to eliminate “defects” A methodology for improving a process in a structured way A set of tools to help identify and correct problems Let’s look at an example

– A plant has 7 centrifugal pumps to provide cooling water– Pumps operate in parallel to supply 15,000 – 60,000 gpm– Operators decide when to start and stop pumps– Are there any “defects” that increase energy use, cost and CO2

emissions?

Parallel Pump Example: The “Box Plot”

1 7:03 PM

2 11:03 PM3:03 AM3

7:03 AM4

The plot reveals that header pressure increases at night, because operators do not shutdown unneeded pumps to save energy.

The plot reveals that header pressure increases at night, because operators do not shutdown unneeded pumps to save energy.

In this example, each box object shows the distribution of header pressure data versus a time period

In this example, each box object shows the distribution of header pressure data versus a time period

The “Box Plot” enables one to analyze thousands of data points in a simple chart to “see” defects

The “Box Plot” enables one to analyze thousands of data points in a simple chart to “see” defects

Average of third quartile

Average of first quartile

Median

Lowest value within limit

The Six Sigma methodology enables us to quantify the cost of these “defects” and to eliminate them. This saved $120K/year in energy and reduced CO2 emissions at the utility generation station.

The Six Sigma methodology enables us to quantify the cost of these “defects” and to eliminate them. This saved $120K/year in energy and reduced CO2 emissions at the utility generation station.

How We Leverage Knowledge to Many

Virtual Workshops Comprehensive intranet website 600-person e-mail distribution list “Templates” for common Six Sigma projects Interactive web-based “self assessment” surveys

– “Qualitative”: Assesses behaviors related to energy use– “Quantitative”: Assesses energy efficiency of specific equipment

Bi-annual internal energy conferences

Virtual Workshops: Training, No Travel

The Instructor presents from his office using a speakerphone and his laptop PC...

Speakerphone

Laptop connected to DuPont network

and students receive the presentation in their site conference rooms using Microsoft NetMeeting®

Up to 22 Sites can participate in a single NetMeeting® workshop!

Image from the instructor’s PC is acquired over the network by NetMeeting and projected for easy group viewing

Speakerphone

Wide Area Network connection We’ve conducted over 20 of them in

the last 4 years

DuPont’s Intranet Website for Energy

Full searching capability across the site

Links to our Six Sigma tools and templates

Links to external websites

The Power of Targeted E-Mail in DuPont

E-mail is a powerful medium for interactive communication But not all 60,000 employees are interested in energy! We maintain a distribution list of 600 “energy professionals” We use this list for targeted communications

– “I’ve got a problem… can you help?”– Energy news and announcements

A recent exchange helped one of our sites quickly and safely extinguish a coal bunker fire

Six Sigma Pumping System Template

Original system had only a low pressure alarm set at 62 psig.

Original system had only a low pressure alarm set at 62 psig.

The new alarms enable the operators to run the “right” number of pumps for any load.

The new alarms enable the operators to run the “right” number of pumps for any load.

and a characterized alarm for high pressure…

and a characterized alarm for high pressure…

The Six Sigma project added a characterized alarm setpoint for low pressure…

The Six Sigma project added a characterized alarm setpoint for low pressure…

We captured the learnings from an early parallel pumping system project and developed a template for other plants to use on similar systems.

We captured the learnings from an early parallel pumping system project and developed a template for other plants to use on similar systems.

Energy Self Assessment Templates

We don’t have experts to cover 135 plants in 70 countries We have to help plants help themselves We’re developing web-based “self assessment” templates These enable plants to examine behaviors and systems on

their own to identify the most lucrative opportunities Experts can then help with feasibility and implementation of

specific opportunities

Competitive Pressures Demand Success

Despite our makeover, competitive pressures are still rising We have publicly committed to cut costs by $900 Million We spend $600 Million/year on energy, so it’s a big target We believe our approach to energy efficiency can reduce

costs and CO2 emissions by up to 10% Our shareholders and society are counting on us!