Key Messages from the NZBCSD Climate Change Launch

19 August 2002

Eric Barratt, Vice-chair NZBCSD

Why are we involved?

- Climate change is an increasingly important issue for businesses all over the world.

- While the exact legislative framework around climate change is still unclear, it is almost certain that business will be operating within a carbon constrained economy within the next few years.

- It therefore makes good business sense for business to get to work as early as possible to:

1. Understand and work to minimize their greenhouse gas emissions footprint; and

2. Identify business opportunities that are likely to arise out of a carbon-constrained economy.

- These activities represent:

- Intelligent entrepreneurship;

- Responsible risk management; and

- Good corporate citizenship.

- NZBCSD member companies understand this and in December 2001 we launched this Climate Change project. The objective of the project was to provide leadership and guidance to NZ businesses to:

- Understand their own emissions profile

- Capture the significant business opportunities that are arising out of the increased need to reduce greenhouse gas emissions

Who was involved?

- We were delighted to partner with the NZ Government on this project - their expertise and resources have been invaluable.

- The NZBCSD businesses that actively participated in this project were:

- BP NZ

- Hubbard Foods

- Landcare Research

- Meridian Energy

- Milburn Cement

- Urgent Couriers

- They have all identified opportunities for their businesses through participation in this project and we encourage all NZ businesses to use these stories to capture their own opportunities.

What was involved? - Phase 1 - identification of business opportunities

- In June of this year we released the results of the first phase of this project - a comprehensive report on climate change business opportunities. The report identified potential opportunities worth $350 million a year with an emissions reduction equal to taking around two million cars off the road. Our six participating member companies identified 32 additional opportunities. These included:

Resource efficiency opportunities such as:

- Improved fuel use management at Urgent Couriers

- Energy efficiency at Hubbard Foods

- The Warehouse are already saving over $3 million a year and avoiding emissions through energy efficiency.

- pportunities to participate in greenhouse gas markets and Kyoto mechanisms such as:

- Emissions trading - Meridian Energy are exploring opportunities here

- The Clean Development Mechanism - Milburn Cement could receive credit by improving the efficiency of their Chinese subsidiary plant opportunities to sell IP and services - Landcare Research have already captured a number of opportunities in this area, both here and overseas.

Since 1997 BP internationally has reduced its greenhouse gases by 10% from a 1990 base line and at the same time created $US650 million in value - Peter Griffiths will give you further insights into this shortly.

What was involved? - Phase 2 - emissions accounting and reporting guide:

- An essential first step to capturing these business opportunities is to clearly understand what your own emissions inventory looks like. We have therefore produced this “why” and “how” to GHG accounting and reporting to help businesses measure their emissions.

- Please use this guide and the associated website to help you - Andy from PwC is going to give you further insight into how it all works shortly - any feedback is most welcome.

Thank you!

- Thank you to all those who have made this project a success:

- Our participating members;

- PwC who have done a sterling job; and

- The NZBCSD Executive.

The challenge:

- We believe that NZ business has a real opportunity to benefit from a proactive approach to climate change issues. We would like to challenge all businesses to look at what our businesses have learned and then capture their own opportunities.

Minister Pete Hodgson:

The Minister’s full speech is available at [our website], his key comments were:

- Congratulations to the NZBCSD on its leadership and the Climate Change Guide - “it will help businesses to understand and account for their own greenhouse gas emissions¡Kthe “guide is both elegant in its design and accessible in its content”.

- The Government was delighted to partner with NZBCSD on this project - they have been great to work with.

- As international markets in emissions emerge it will be important for businesses to understand their emissions and look at ways of reducing them.

- It is likely to be more expensive for non-Kyoto countries (eg. Australia) to participate in global emissions markets.

- Government is on track both to ratify the Protocol and to confirm the general framework of our domestic policy.

- Kyoto ratification timetable - the election has delayed this by 2-3 months from the original ratification timetable (late August - just before the World Summit on Sustainable Development).

- Climate change policy development timetable - officials are currently finalizing cabinet papers.

- Kyoto will come into force if Poland and Russia ratify which looks likely.

- The Maui gas field is now running out. The replacement gas fields will be smaller and more expensive. Maui and the associated Think Big developments are coming to an end. We have used that large resource very quickly and it is now all but gone. Non-sustainable resource use has that effect!

- Reducing fossil fuel dependence reduces the risks of reliance on something that is intrinsically unsustainable. It also creates significant opportunities, as the work of the NZBCSD has shown.

- I look forward to the next phase of work from the Business Council with keen interest.

- Congratulations and thank you for having me!

Peter Griffiths, Managing Director, BP Oil New Zealand Ltd.

- Vital first step to journey is calculating own emissions.

- In 1997 BP’s global leader John Brown publicly acknowledged that climate change was a risk that warranted action

- BP therefore set the target of reducing their emissions to 10% below 1990 levels by 2010.

- This was a hard target - just like financial targets. At the time they were not sure how they were going to achieve it.

- They sought input from everyone inside company, and from many outside.

- They received hundreds of ideas on how emissions could be reduced.

- The target was achieved 7 years ahead of timetable and added US$ 650 million in value.

- The key thing to note was that there was no “silver bullet” - achieving the target was a combination of clever initiatives all over the world

- BP is now looking at the emissions associated with products they sell, they are:

- Engaged in cleaner fuel production

- Building their solar energy business

- Peter Griffiths encouraged all businesses to embark on the journey stating that the first step is the most important and that the NZBCSD Guide is a great tool to taking that step.

Louise Drolz, Tullett and Tokyo Liberty

Louise’s full presentation is available at [our website], her key comments were:

- Australian industry is concerned at the lack of certainty that the Howard Government is providing to business around Climate Change policy.

- The single biggest issue for business is certainty about the point of obligation.

- Endorsed the New Zealand Government’s approach of giving some early certainty to business on:

- Kyoto ratification - being “in the tent” provides NZ business with greater access to global emissions markets

- The likely climate change policy model, including:

- Points of obligation

- Negotiated Greenhouse Agreements for “competitiveness at risk” businesses

- “Being in limbo doesn’t do anyone any favours”.

- The current proposed policy model probably gives NZ businesses enough information to sketch out their own emissions path - Australian businesses have nowhere near this certainty.

- Emissions reduction credit generated within Australia are likely to be worth less than those from Kyoto countries.

- Unclear whether Australia’s “Climate Action Partnership” with the US will add more value to Australia than ratifying Kyoto would. The Partnership structure is very light on detail - it is very unclear how emissions trading would work.

- A recent survey of 35 key global businesses engaged on climate change issues revealed the overall expectations that:

- Kyoto will come into force by the end of 2002

- The average price of carbon credits will be $US 5.33 by 2005

- The average price of carbon credits will be $US 10.96 by 2005

However, the current low global price of credits does not reflect these expected future costs.

Andy Britton, Partner Risk and Assurance, PricewaterhouseCoopers

- Closed by noting that PricewaterhouseCoopers sees action on climate change issues as a risk management exercise, allowing businesses to maximise opportunities while minimising risk.

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