Shell Plc · LSE:SHEL
Shell — Seminar in Tokyo (October 2003)
20 slides from Shell's conference presentation, Oct 14, 2003
Slide 1: Implementing the Kyoto Protocol: The Role of Business
Implementing the Kyoto Protocol The Role of Business David Hone Group Climate Change Adviser Shell International Limited
Slide 2: Three fundamental questions
Three fundamental questions. . . . 1. What can a legislative approach offer towards meeting national Kyoto greenhouse gas targets? 2. What sort of approach can work for industry and deliver the environmental result that the country wants? 3. Why should business play an active role in shaping this po
Slide 3: Emissions Reduction Roundabout
Emissions Reduction Roundabout Indirect Approaches Assess the results? • Voluntary framework Is further action • Taxes needed? • Efficiency targets etc. . . Kyoto Target Action by business and consumers
Slide 4: Why are indirect approaches problematic?
Why are indirect approaches problematic? Type of Specific target Other Factors influencing the total Approach for Industry greenhouse gas emissions Reduce GHG = GHG Emissions Emissions Reduce GHG = Emissions X Number of Intensity per tonne units Improve Best Operating = Plant Energy X process X Numb
Slide 5: Three Paths to Kyoto Compliance??
Three Paths to Kyoto Compliance?? 1st Kyoto Period 120 110 100 -6% 117% Target 90 Business as Usual 80 Early Implementation 98% 104% Just in Time 94% 70 Late Implementation 60 1990 2000 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 6: The Reality of Meeting Kyoto!!
The Reality of Meeting Kyoto!! 1st Kyoto Period 120 110 100 -6% Target 90 Business as Usual 80 Early Implementation 94% Just in Time 94% 70 Late Implementation 94% 60 1990 2000 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 7: Utilising CDM to help meet the target
Utilising CDM to help meet the target 1st Kyoto Period Japan GHGs, million tonnes of CO2 1600 1400 1200 All paths now meet 1000 the Kyoto target CERs, million tonnes of CO2 0 800 CDM - Business as Usual -50 CDM - Early Implementation CDM - Just in Time -100 CDM - Late Implementation Business as Usua
Slide 8: Project Timelines
Project Timelines Major Project: Oil to Gas Switch in a large refinery 10 % emissions saving at the site 2004 2005 2006 2007 Design, costing, Construction, testing, Internal evaluation final approval, Tender, award start-up etc. phased and approval planning approval, contract, order with shutdown ga
Slide 9: The impact of project timing
The impact of project timing Business as usual Needed reduction path Design Internal Tender, award Construction, testing, Minor Project start-up etc., in line with evaluation & contract, order normal shutdown approval equipment Internal Design, costing, Construction, Major Project evaluation final a
Slide 10: What about CDM projects??
What about CDM projects?? Big projects in developing countries can take even longer to implement than those at home. The timeline can easily stretch to 5+ years. Major Design, costing, Construction, Project Internal evaluation final approval, Tender, planning award testing, start-up etc. phased No s
Slide 11: Assessing the right projects
Assessing the right projects • The ONLY way emissions are reduced are from investment & implementation of new technologies. • Companies MUST make these investment decisions efficiently so that the total cost of compliance for the economy is kept to a minimum. • Companies need a financial measure to
Slide 12: What does a market approach have to offer?
What does a market approach have to offer ? • Achieves clear environmental targets with certainty • Captures lowest marginal cost of abatement • Enables efficient calculation of investment decisions, i.e. should we build or buy • Enables the finance & development of new technologies • Enables us to
Slide 13: The CO2 Commodity
The CO2 Commodity • Typical commodity markets are underpinned by a real physical substance, such as oil, wheat or gold. 9 The market knows much about the supply of and demand for this substance, both now and for many years into the future. 9 As a result, participants in the market have the confidenc
Slide 14: Why should business have a role?
Why should business have a role? Reminder: 9 The CO2 commodity can only be created by legislation. 9 The enactment of such legislation shapes the commodity and the resulting market. The participation of business in this process means: 9 That they can influence the rules of the market. . . . . . and
Slide 15: This is the sort of market we want
This is the sort of market we want CO2 Prices 2006 12.5 2007 13.2 2008 14.4 2009 15.1 2010 15.8 2011 16.5 2012 17.9
Slide 16: Which is characterised by . . .
Which is characterised by . . . • Policy stability which gives the market confidence in the value of the “commodity”. • Transparent and simple allocation of allowances for many years ahead. • Widely inclusive participation. CO2 Prices 2006 12.5 2007 13.2 2008 14.4 2009 15.1 2010 15.8 2011 16.5 2012
Slide 17: Shell Advocacy on Trading in Europe
Shell Advocacy on Trading in Europe Group position on the EU-ETS: • Supports the proposal from the commission; • Seeks mandatory industry participation across the EU; • Seeks absolute caps; • Proposes “up-front” allowance distribution out to 2012; • Opposes auctioning of allowances; • Believes the p
Slide 18: Quick reminder – The EU Market Structure
Quick reminder – The EU Market Structure • All major emitters in the EU 9 Power generators 9 Oil refiners 9 Pulp and paper 9 Mineral industries 9 Cement 9 Chemical industry (from 2008) 9 Other combustion >20 MW • 2000+ facilities just in the United Kingdom • Mandatory participation and absolute caps
Slide 19: Strategy to meet the Kyoto target
Strategy to meet the Kyoto target • Planning needs to start now to make significant reductions in emissions at home by 2008 or to implement enough CDM projects in good time. • Industry needs early clarity on specific targets to spearhead the project development cycle. • A legislated market trading s
Slide 20: The Challenge and Benefits For Industry
The Challenge and Benefits For Industry Challenge: • Working with government to convert a growing melange of regional systems, national taxes and voluntary actions into a single coherent trading system. Benefits: • Delivers the required environmental result. • Stable future investment environment. •