The Business Challenges of the future Low Carbon Economy - Niall Brady

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Niall BradyIBM WW Technical Development Manager

Green Sigma™

The Business Challenges of the Future Low Carbon Economy

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Opening Position

“The richest nations in the world use great quantities of energy and do so with stunning sophistication and startling obliviousness………...the vast majority of Americans and Europeans are no more aware of using energy than they are of breathing air”

Source : “The End of Oil” Paul Roberts 2005

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Standard of Living Assessment

Sub Saharan Africa

India

Standard of Living

Survival

China

Eastern Europeemergingeconomies

Ireland

Western Europe

America

1st Worldeconomies

3rd world economies

Areas of SE Asia/South America

Comfortable

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Global Energy Use Breakdown

Source : http://commons.wikimedia.org/wiki/Image:Energy_consumption_versus_GDP.png Frank van Mierlo

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Source : World Resources Institute's CAIT 4.0 database

Global Carbon Footprints

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Source : http://www.waterfootprint.org/?page=files/WaterFootprints

Global Water Footprints

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*The amount of land you would need to support your lifestyle is called your Ecological Footprint. The ecological footprint is one way of measuring the impact a person has on the environment.

Global Ecological Footprints*

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How we got here : Energy – Wealth Development Cycle

Increased Purchasing Power

Increased Demand Goods & Services

Increased Business Activity

Wealth Generation

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Energy – Wealth Development Cycle Results

All underpinned by the availability of cheap energy

=Rising Wealth

Bigger Homes : Heat & Light Energy Budget

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Bigger Applicances :TV’s,Fridges Energy Budget

Bigger/Additional Cars+

Energy Budget

+Frequent & FarReaching Holidays Energy Budget

+Changed Eating Habits Energy Budget

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The Future : WW Energy Forecasts

Source : International Energy Agency’s World Energy Outlook Report 2007

The International Energy Agency forecasts that by 2030:

fossil fuels will remain the dominant source of energy worldwide, meeting 83% of the increase in energy demand;

emissions from power generation will account for 44% of global energy-related emissions by 2030, as demand for electricity rises;

coal will provide the largest incremental source of power generation, with the majority of this increase likely to be in China (55%);

over 70% of the increase in global primary energy demand will come from developing countries, reflecting rapid economic and population growth;

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Today’s Energy / Environmental Dilemma

Today’s

Dilemma

Climate ChangeIt is clear and accepted from the

growing body of scientific evidence that our continued use fossil fuels will lead

to significant irreversible climate change impacts on our planet

Rising Energy CostsRising costs of energy, now a

Boardroom Level Issue

Energy Supply & SecurityArrival of Peak Oil – security of energy supply now brought into question – reducing resource – increased demand emerging

economies

Impending RegulationTo reduce emissions of

greenhouse gases such as the EU Emissions Trading Scheme, Climate Change

Levy, and Building Regulations

….while maintaining/developing our standard of living !

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Energy Environmental Solution

There is no silver bullet solution to our dilemma !!

Source : Bill McKribben National Geographic October 2007 “The New Carbon Math” referencing Princeton researchers Robert Socolow and Stephen Pacala describing 15 “stabilization wedges” with each carbon-cutting wedge would reducing emissions by a billion tonnes of CO2 a year by 2057.

“The 15 Stabilisation Wedges”

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1) Introduce systems to capture CO2and store it underground at 800 large coal-fired plants or 1,600 natural-gas-fired plants.

2) Use capture systems at coal derived hydrogen plants producing fuel for a billion cars.

3) Use capture systems in coal derived synthetic fuel plants producing 30 million barrels a day.

The 15 Wedges : Carbon Capture and Storage

The 15 Wedges : Low Carbon Fuels4) Replace 1,400 large coal-fired power plants with

natural-gas-fired plants.

5) Displace coal by increasing production of nuclear power

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6) Increase wind-generated power to 25 times current capacity.

7) Increase solar power to 700 times current capacity.

8) Increase wind power to 50 times current capacity to make hydrogen for fuel-cell cars.

9) Increase ethanol biofuel production to 50 times current capacity. About one-sixth of the world’s cropland would be needed.

10) Stop all deforestation.

11) Expand conservation tillage to all cropland (normal plowing releases carbon by speeding decomposition of organic matter).

The 15 Wedges : Renewables and Biostorage

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The 15 Wedges : Energy And Conservation

12) Improve fuel economy of the two billion cars expected on the road by 2057 to 60 mpg from 30 mpg.

13) Reduce miles traveled annually per car from 10,000 to 5,000.

14) Improve coal-fired power plant efficiency to 60 percent from 40percent

15)Increase efficiency in heating,cooling, lighting, and appliances by 25 percent.

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IBM’s Low Carbon Response : Big Green Innovations Initiative

– Carbon Management– Green Sigma™– Green Data Centre Services– Green Hardware

– Alternative Energy – PV Technology

– Advanced Water Management– Water network management– Sensors and systems integration– Filtration technologies

– Computational Modeling– Deep Thunder Weather Forecasting– Carbon Logistics Modelling

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IBM’s IT Carbon Management Portfolio

Green Sigma™Process Optimisation

Business Energy ProfilingDatacentre Energy Profiling

Major kWhr and annual tCO2e savings

Hardware “Design for the Environment”Energy Management Services

Green Datacentre Design Services

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Datacentre Services : Power & Cooling Optimisation

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Datacentre Service : Mobile Measurement Technology

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21 Measure Analyze

Capture

Capture high resolution temperature and flow data using unique IBM sensor array

Model data center and use optimization algorithms to identify improvement targets

• Thermodynamic Energy Savings

• Transport Energy Savings

• Deferred Investment DC Sq. Footage

Significant energy savings and/or delayed capital investment

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Journey to the Green Data Centre

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Green Sigma™: Lean Six Sigma Methods Used In Concert To Achieve Maximum Results

Traditional Lean Methodologies“As-Is Flow” “To-Be Flow”

Increase efficiency Simplify work flows

Focus on high-value steps Waste Reduction

A Lean enterprise is one that delivers value to its

stakeholders with little or no wasteful consumption

of resources.

Product or Service Output

Critical Customer Requirement

Defects: Service unacceptable to

customer

B A

Product or Service Output

Critical Customer Requirement

Defects: Service unacceptable to

customer

B A

Product or Service Outputs

Six Sigma Methodologies

Increase consistency Reduce variation Eliminate defects

In a Six Sigma enterprise, everyone is focused on identifying

and eliminating defects.Customer-driven

Customer-driven

Voice of the

Environment

Voice of

the

Business

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Green Sigma™ Core Component Toolkit

1.Metering & Monitoring

Green Sigma TM

3. Applied Statistical Techniques

2.Mgm

t Systems

Carbon C

onsole

Integrated Carbon Offering

1.Metering & Monitoring (Data Capture)

WHAT (defining key process indicators kpi’s) and HOW “if you can measure it you can manage it”

2. Mgmt Systems Carbon Console (Data Management)

IBM’s Green Sigma™ Console based on Portal Technology Active management of Green Focus Area with Statistical Process Control engine

3. Applied Statistical Techniques (Data Analysis) Based on IBM’s extensive Lean Sigma Consultancy experience & expertise Specialist Developed Statistical Analysis & Control

© Copyright IBM Corporation 2008

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Step 3 : Management SystemGreen Sigma™ offers automated metering feeds to an active management dashboard using a Statistical Process Control engine

© Copyright IBM Corporation 2008

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IBM Green Sigma™ Engagement Lessons Learned

The need for a true picture of energy position is becoming a business priority - specifically Data Centres “SUV’s of the Business World”

The gap between business’ current energy usage understanding and the preferred position is much wider than believed – do not underestimate the work and timelines involved

The value of a targeted and effective central management system is crucial (realtime )

In depth statistical analysis including use of SPC is effort well spent – significant impacts on bottomline (15%-20%)

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Summary : Business Challenges of Low Carbon Economy

Key company priorities to operate in a future low Carbon Economy

1. There will be a need to modify existing business models to include green and carbon emission reduction at its core - in the low carbon future, companies will have to be green to grow

2. Redouble their focus to improving energy efficiency, particularly in the areas of buildings & transportation

3. Companies need to be able to measure their carbon footprint, and develop effective reporting systems and procedures that set the benchmark for reporting carbon emissions performance in the future

Source : Confederation of British Industry Climate Change commissioned a report on how businesses need to adapt to a low carbon economy - adoption of the UK Climate Change Bill published Nov 2007

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Closing Position

US President Elect Obama talked about “the need for NASA Apollo or Manhattan type project” to build a new alternative energy economy, to manage and take control of the our energy and carbon future.

However there is an argument for the opposite of inward focused effort here, more that we take what we know and spread it to every corner of the world – continuing the NASA analogy “it’s tasking ourselves with putting everyone on the moon*” As a Species, historically we don’t have a great track record in pulling together for the common good !!

Replacing our “startling obliviousness” with “informed insight” will lead us to effective energy conservation as our starting point – as business leaders the onus is on us to take the lead !*Source : Bill McKribben National Geographic October 2007 “The New Carbon Math”

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Questions ?