A Corporate Perspective: the Significance of the Kyoto Mechanisms Tom Jacob DuPont October 29, 2002 UN Framework Convention on Climate Change

F Science-based solutions... u Food & Nutrition u Health Care u Apparel u Home & Construction u Electronics u Transportation F From a global company u Operations in 70 countries

F A company concerned about climate change –Committed in ‘91 to reducing GHG’s –Reduced our global emissions by over 50% during decade of ‘90’s –New goals for coming decade u Attain 65% reduction from ‘90 u Maintain flat energy consumption u Source 10% of energy from renewables

Perceived Environmental Risk Very High Perceived Economic Risk Very High Climate Change & Industry Low

Perceived Environmental Risk Very High Perceived Economic Risk Very High Climate Change & Industry Low Non-Issue Low

Perceived Environmental Risk Very High Perceived Economic Risk Very High Climate Change & Industry Low Non-Issue Environmental Issue Low

Perceived Environmental Risk Very High Perceived Economic Risk Very High Climate Change & Industry Low Non-Issue Economic Issue Environmental Issue Low

Perceived Environmental Risk Very High Perceived Economic Risk Very High Climate Change & Industry Low Non-Issue Economic Issue Environmental Issue Low DUPONT

Perceived Environmental Risk Very High Perceived Economic Risk Very High Climate Change & Industry Low Non-Issue Economic Issue Environmental Issue Significant Complex Challenge Low

A LONG TERM ISSUE Concentration ( ppmv ) Stabilization at: X Pre- Industrial Potential Concentration Targets

A LONG TERM ISSUE Concentration ( ppmv ) Stabilization at: X Pre- Industrial Potential Concentration Targets Total Emissions (CtC/yr) Toward Stabilization at: “Business as usual” Related Emission Pathways Total current emissions

A LONG TERM ISSUE Concentration ( ppmv ) Stabilization at: X Pre- Industrial Potential Concentration Targets Total Emissions (CtC/yr) Toward Stabilization at: Developing country emissions “Business as usual” Related Emission Pathways Total current emissions

A LONG TERM ISSUE Concentration ( ppmv ) Stabilization at: X Pre- Industrial Potential Concentration Targets Total Emissions (CtC/yr) Toward Stabilization at: Developing country emissions “Business as usual” Related Emission Pathways Total current emissions Kyoto Protocol

The Longer-Term Challenge F Continued emissions in developed nations F Growing Population --> Growing Emissions F Long-term Need –Reduce global emissions, while strengthening global economy F Increasing pressure on emissions!!

Longer-Term Solution F Technology evolution/revolution –Accelerate technological advancement u Encourage technological innovation F Mobilize globally –Global economic vitality --> diffusion of technology u Economic growth in more climate-friendly way F Key Notion: Cost-Effective Use of Capital

Markets & Flexibility F Market-stimulated investment ---> Global emissions growth –Must have global system encouraging innovation and cost-effective climate action u Workable, integrated market mechanisms u Incentive for FDI as well as climate- specific investment F Must develop, identify and act on least-cost opportunities to minimize impact of that growth

Greenhouse Gas Reduction Cost Marginal Cost of Greenhouse Gas Reduction Projects

Greenhouse Gas Reduction Cost Marginal Cost of Greenhouse Gas Reduction Projects ** ** **

Greenhouse Gas Reduction Cost Marginal Cost of Greenhouse Gas Reduction Projects ** ** ** Priority For Investment

100% 20%40%60%80%100% 80% 60% 40% 20% Environmental Benefit Cost The “80-20” Rule You accomplish 80% of the environmental benefit with the first 20% of costs.

100% 20%40%60%80%100% 80% 60% 40% 20% Environmental Benefit Cost The “80-20” Rule High Cost/Low Return

100% 20%40%60%80%100% 80% 60% 40% 20% Environmental Benefit Cost The “80-20” Rule High Cost/Low Return Low Cost/High Return

100% 20%40%60%80%100% 80% 60% 40% 20% Environmental Benefit Cost The “80-20” Rule

100% 20%40%60%80%100% 80% 60% 40% 20% Environmental Benefit Cost The “80-20” Rule Trading is the key!

Bye, Now...