PETROBRAS The business case for action Future International Climate Policy Workshop The Business...

PETROBRAS

The business case for action

Future International Climate Future International Climate Policy WorkshopPolicy Workshop

The Business Case for Action The Business Case for Action

Ildo Luis SauerIldo Luis Sauer

Petrobras Gas and Energy DirectorPetrobras Gas and Energy Director

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G24 •Climate change poses one of the most significant challenges of the 21st century

• Responsibility to act on climate change

• The companies have assets or investiments that would be affected by changes in climate

• Prospect of increased regulation

• Small costs today can become material costs in the future

• Companies have begun to act in a variety of ways

• Need for further, substantial efforts to reduce greenhouse gas emissions

STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005STATEMENT OF G8 CLIMATE CHANGE ROUNDTABLE-JUNE/2005


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KEY PRINCIPLESKEY PRINCIPLES

• Policies based firmly on good science and rational economics

• Policy frameworks that use market-based mechanisms offer the best hope for unleashing needed innovation and competition

• Solutions must be global

• Integrated approach to the problem and its solutions is critically important – Business, Government and Consumers

• Climate change mitigation must not be viewed in isolation from other highly important challenges


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•More resources and attention on assessing the magnitude of

adverse effects on human health, natural ecosystems, and regional

and global economies - need of near-term adaptation measures

•Strengthen the global observation systems that are now underway

or may evolve in the future (e.g. sea level rise, sea/ice cover)

•Move expeditiously to adopt climate stabilization targets that will

define the scope and scale of mitigation needed in the years ahead


SCIENCESCIENCE

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Create long term valueCreate long term value

•Establish a long term, market-based policy framework extending to 2030 that will give investors in climate change mitigation confidence in the long term value of their investments. Establishing indicative signals extending to 2050 would also be beneficial

•Ensure that the policy framework is global in scope

•Define greenhouse gas emissions rights through a cap-and-trade system or other market-based mechanisms

•Address climate change as part of an overall sustainable development agenda, putting in place mechanisms which address the challenges of poverty, energy, and economic growth in emerging markets while mitigating greenhouse gas emissions.

POLICY FRAMEWORKPOLICY FRAMEWORK


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Unleash technological innovation through performance-based Unleash technological innovation through performance-based incentive programsincentive programs

•G8 governments must emphasize performance-based standards in new initiatives aimed at rapid commercialization of low carbon technology

•Ensuring compatibility with other societal objectives is equally important, together with the ability to optimize greenhouse gas reductions across product life cycles

Establish common metricsEstablish common metrics

Work toward convergence of existing greenhouse gas reporting processes and systems.

Utilize the power of procurement and supply chain driversUtilize the power of procurement and supply chain drivers

Business and the G8 governments should work together to establish a practical toolkit for integrating climate change into their global supply chain requirements

Business and government should commit to use such a common framework and encourage its use in stages of supply chains


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Facilitate greater investment in low carbon economic growth Facilitate greater investment in low carbon economic growth in emerging marketsin emerging markets

• The G8 governments should step up collaborative efforts with emerging market nations to streamline and encourage low carbon investment

• The G8 nations should engage in a major new partnership with China, India, Brazil, South Africa and Mexico to establish appropriate frameworks

• G8 governments that have ratified the Kyoto ProtocolKyoto Protocol should launch immediately a consultative process with the UNFCCC to engage experienced global businesses in an assessment of the CDM, with the goal of implementing measures to streamline the process substantially


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CONCLUSIONCONCLUSION

Business and governments can – and must – work together on work together on

climate change mitigationclimate change mitigation. Working together, we can identify and

implement policy measures that will create meaningful and effective

solutions, while at the same time ensuring long term value for

shareholders. With properly designed programs and incentivesproperly designed programs and incentives,

we can unleash the power of the market to accelerate the deployment of

low carbon technologies, engaging both producers and consumers alike.

And with the right kind of focus on both the needs and aspirations of needs and aspirations of

emerging marketsemerging markets, we can ensure that a truly global solution to the

problem is achieved.

We are firmly committed to do our part on climate change. A coordinated

and vigorous response from the G8 governments along the lines

suggested above will allows us to do even more.


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BRAZIL IN ACTIONBRAZIL IN ACTION

DEVELOPED COUNTRIES HISTORIC RESPONSABILITY ON DEVELOPED COUNTRIES HISTORIC RESPONSABILITY ON CLIMATE CHANGE CLIMATE CHANGE COMMON BUT DIFFERENTIATEDCOMMON BUT DIFFERENTIATED RESPONSIBILITIESRESPONSIBILITIES

AND BRAZIL ASSUMES ITS RESPONSIBILITIESAND BRAZIL ASSUMES ITS RESPONSIBILITIES

MAIN GOVERNMENTAL PROGRAMMES:MAIN GOVERNMENTAL PROGRAMMES:

KYOTO PROTOCOL COMPLIANCEKYOTO PROTOCOL COMPLIANCENATIONAL BIODIESEL PROGRAMMENATIONAL BIODIESEL PROGRAMME

PROINFAPROINFA

HISTORIC PROGRAMMES IN ACTION: HISTORIC PROGRAMMES IN ACTION: PROALCOOL, CONPET AND PROCELPROALCOOL, CONPET AND PROCEL

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PETROBRAS IN ACTIONPETROBRAS IN ACTION

PETROBRAS STRATEGY DECLARES ITS SOCIAL AND PETROBRAS STRATEGY DECLARES ITS SOCIAL AND ENVIRONMENTAL RESPONSIBILITYENVIRONMENTAL RESPONSIBILITY

AND PETROBRAS ASSUMES ITS RESPONSIBILITIESAND PETROBRAS ASSUMES ITS RESPONSIBILITIES

MAIN PROGRAMMES AND ACTIONS:MAIN PROGRAMMES AND ACTIONS:

DEDICATED AREA ON SUSTAINABLE DEVELOPMENT AND DEDICATED AREA ON SUSTAINABLE DEVELOPMENT AND GHG GHG EMISSIONS AVOIDANCE PROJECTSEMISSIONS AVOIDANCE PROJECTS

PETROBRAS ENERGY EFFICIENCY PROGRAMMEPETROBRAS ENERGY EFFICIENCY PROGRAMME

TECHNICAL AND FINANCIAL SUPPORT TO CONPETTECHNICAL AND FINANCIAL SUPPORT TO CONPET

BIOFUELS AND OTHER RENEWABLE ENERGY SOURCESBIOFUELS AND OTHER RENEWABLE ENERGY SOURCES

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Petrobras Energy Efficiency Petrobras Energy Efficiency ProgrammeProgramme

•Efficiency actions will save 3,919 bbl oil equivalent / day in 2006 and 7,080 bbl oil equivalent / day in 2011

•It is expected that these actions will avoid about 615 103 tCO2e in 2006 and 1,111 103 tCO2e in 2011

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Brazilian Programme for Rational Brazilian Programme for Rational Petroleum Use - CONPETPetroleum Use - CONPET

• CONPET actions reduced the burning of 272 106 liters of diesel in 2005

• These actions avoided about 974 103 tCO2

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BiodieselBiodiesel2006 2007 2008 2009 2010 2011

Petrobras Biodiesel Supply

[10³ m³/yr]1 15 345 572 742 855

Avoided Emissions

[10³ tCO2e/yr]2 26 587 972 1,261 1,454

Source: Petrobras Business Plan 2007-2011

•There are no approved baseline and monitoring methodologies of biofuel project activities in the context of Kyoto CDM

•All proposed methodologies include complex life cycle analysis of either the biodiesel and the diesel production chain

•There is no definition about CER (Certified Emission Reductions) “titularity”

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Coari-Manaus Gas PipelineCoari-Manaus Gas Pipeline• Operation scheduled for 2008

• Pipeline will supply natural gas for Manaus area

• Diesel and fuel oil will be substituted by natural gas at the power plants that supply Manaus system

• It is expected that the fuel substitution at these power plants will avoid about 9.5 106

tCO2e in the period 2008-2012

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Renewable Electricity Generation Renewable Electricity Generation Wind PowerWind Power

Source: Based on Petrobras Business Plan 2007-2011

•Until 2011 488 103 MWh will be generated from wind power plants

•It is expected that the renewable energy will avoid about 98 103 tCO2 in 2011

Wind Power 2006 2007 2008 2009 2010 2011

103 MWh 5 138 376 488 488 488

103 tCO2/year 1 28 75 98 98 98

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Renewable Electricity Generation Renewable Electricity Generation Small Hydropower Plant (SHP)Small Hydropower Plant (SHP)

Source: Based on Petrobras Business Plan 2007-2011

•Until 2011 975 103 MWh will be generated from SHP

•It is expected that the renewable energy will avoid about 195 103 tCO2 in 2011

SHP 2006 2007 2008 2009 2010 2011

103 MWh 0 0 557 975 975 975

103 tCO2/year 0 0 111 195 195 195

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Natural Gas Flaring ReductionNatural Gas Flaring Reduction

• Petrobras is making efforts to reduce natural gas losses

• 4.2 106 m3/day of natural gas flaring reduction avoided about 21 106 tCO2 in six years

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Conversion from single cycle to Conversion from single cycle to combined cycle power generationcombined cycle power generation

• Conversion from single cycle to combined cycle power Conversion from single cycle to combined cycle power generation in Petrobras power plants will avoid GHG generation in Petrobras power plants will avoid GHG emissionsemissions

• Três Lagoas Power Plant (MS) will have an increase of Três Lagoas Power Plant (MS) will have an increase of 110 MW in generation capacity, avoiding 400 10110 MW in generation capacity, avoiding 400 1033 tCOtCO22/year/year

• Canoas Power Plant (RS) will have an increase of 90 MW Canoas Power Plant (RS) will have an increase of 90 MW in generation capacity, avoiding 250 10in generation capacity, avoiding 250 1033 tCO tCO22/year/year

• There are also other similar projects in Petrobras thermal There are also other similar projects in Petrobras thermal power system that are being evaluated. For example, power system that are being evaluated. For example, Eletrobolt Power Plant could avoid about 120 10Eletrobolt Power Plant could avoid about 120 1033 tCOtCO22/year/year

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Turboexpander Electricity Turboexpander Electricity GenerationGeneration

• The instalation of turboexpanders in Petrobras’ Refineries can be considered elegible for CDM

• For example, a 22.4 MW turboexpander can avoid the emission of 86,600 tCO2/year

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NN22O Abatement in Fertilizer O Abatement in Fertilizer

ProductionProduction

• N2O technology abatement in fertilizer plants can contribute to reduce GHG’s

• Petrobras’ fertilizer plant could reduce 57 103 tCO2e/year

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Agrofertilizer ProductionAgrofertilizer Production

• Petrobras is developing a project to produce agrofertilizers from oil shale, which can substitute conventional fertilizers

• It is expected that the use of these agrofertilizers will avoid about 500 103 tCO2e/year

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EthanolEthanol• Brazil is pioneer and leader in ethanol large

scale production and use in vehicles• New technologies (e.g. flex-fuel) are

improving the use of ethanol in vehicles• It is estimated that ethanol will avoid about

93 106 t CO2e in the period 2006-2012• These emission reductions are not eligible

under current United Nations Framework Convention on Climate Change CDM rules (due to additionality issues)

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http://www.petrobras.com.br

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