How Big Is Your Carbon Footprint? - FMI · From footprint to $$ Measure Data gathering Calculating Reporting Monitor From "one-time" to "over time“ From "consulting exercise" to

How Big Is Your Carbon Footprint?

September 9, 2008FMI Energy & Technical Services

Conference

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Today’s Discussion

Background

What is a Carbon Footprint?

Why should my business do it?

What does it mean to me?

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Current US energy picture

Significant investment is needed to provide availability and reliability of generation, transmission, and distribution.

• Electric demand projected to grow 19% over next 10 yrs• Electric capacity expected to increase 6%• Cost of building new capacity risen substantially• Aging grid - beyond capacity, inefficient• Required investment over $10 trillion in G-T-D over next

25 years to meet demand

Source: International Energy Agency

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Current US energy picture

Other cost drivers:

• Fuel costs (Oil, Coal, NG)• Renewable energy standards• Price of carbon

The 2005 Energy Act moves the market to real time pricingwhich will increase end-user rates.

Energy costs are projected to increase significantly year over year while investments are made.

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Challenge for Food Retail

Managing energy and CO2 across:

• Highly distributed sites

• Multiple energy consuming assets

• Highly variable energy use

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It starts with a carbon footprint

“You cannot manage what you cannot measure”

- Rear Admiral Grace Murray Hopper, USN

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What’s in a carbon footprint?

• Direct Emissions• Furnaces, generators, etc.• Refrigerant leaks• Vehicles (your own, 3rd party)• Industrial processes

• Indirect Emissions• Grid electricity use

• Optional tracking• Business travel

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Carbon Footprint – Grocery Retail

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HFCs- High GWP Gases

•One 100 pound cylinder of R-404A leaked to atmosphere equals:

• 27 Chevy Suburban's Diving 12,000 miles Each• Or 38 Acres of Forest

(Carbonfund.Org ) *2006 Chevy Suburban's 4WD

US EPA has required tracking of refrigerants since 1994. Potential fines of $32,500 per day.

Roadmap for the futureFrom footprint to $$

MeasureData gatheringCalculatingReporting

MonitorFrom "one-time" to "over time“From "consulting exercise" to "business process“

ManageData, Information, Knowledge, InsightMake decisions that support goals

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Why should my business do it?

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Risk

Legislation

Cost drivers

GAAP / SEC

Competition

Public Interest

Opportunity

Monetization of Carbon

First mover advantage

Common Sense

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Risk - Legislation

• International Efforts – Kyoto

• National legislation – Warner / Lieberman

• Regional Initiatives – RGGI, WCI, Midwest Accord

• State Legislation – AB32!

• Local initiatives – Mayor’s conference14

Risk – Financial reporting

• Significant efforts underway to better understand “environmental liability” from an accounting point of view

• GAAP• SEC• Shareholder Resolutions• Climate Disclosure Project

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Risk – Competition & Public Interest

• Your competitors are doing it right now

• Your customers are interested in what you’re doing…

…and not doing

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Opportunity!

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Monetizaton of Carbon

• It’s already happening• European Emissions Trading Scheme (EU ETS)• Voluntary markets globally

• Chicago Climate Exchange (CCX)• NYMEX Green Exchange• OTC

• Financial value created from reduction against baseline

• Project based reductions (Credits)• Allowances from reductions from baseline

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A footprint is not a credit

• A credit cannot exist without a footprint• A credit is created from a reduction• A credit cannot exist without verification

• Additionality• Permanence• Tracking • Documentation

• Cannot create financial value without a baseline and on-going tracking

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How do we pay for this?

New sources of capital

• Efficiency reduces costs

• With additionality, can create CO2 credits

• Additionality + Verification= 21 year credit

• Monetize credits on voluntary market

• Efficiency gains + captured credits supports funding of projects

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How do we pay for this?Promote Energy Efficiency

Source: McKinsey & Co.

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Bad News / Good News

• Bad News– It’s coming quickly– It’s complicated– It means more work for you and your team

• Good News– You have most of what you need to do a footprint– You can save money and make money at the same

time– You and your team are more important than they

thought!23

Paul HepperlaDirector of Energy Services

Verisae, Inc.612-455-2347

phepperla@verisae.com

Questions?

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