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by by Michael Gerbis, P.Eng. Michael Gerbis, P.Eng. President, The Delphi Group President, The Delphi Group Innovation & climate change Innovation & climate change Igniting the Next Industrial Revolution Igniting the Next Industrial Revolution DELPHI DELPHI

by Michael Gerbis, P.Eng. President, The Delphi Group Innovation & climate change Igniting the Next Industrial Revolution DELPHI

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bybyMichael Gerbis, P.Eng.Michael Gerbis, P.Eng.

President, The Delphi GroupPresident, The Delphi Group

Innovation & climate changeInnovation & climate changeIgniting the Next Industrial RevolutionIgniting the Next Industrial Revolution

DELPHIDELPHI

Carleton University 2002 DELPHIDELPHI

OverviewOverview

The Delphi GroupThe Delphi Group

Climate Change – where are we?Climate Change – where are we?

The New Carbon MarketplaceThe New Carbon Marketplace

Thinking Out of the Box!Thinking Out of the Box!

Attributes to Thrive and SurviveAttributes to Thrive and Survive

DiscussionDiscussion

Carleton University 2002 DELPHIDELPHI

The Delphi GroupThe Delphi Group In Business since 1987 In Business since 1987 ““Catalyze Change Through Innovative Catalyze Change Through Innovative

Strategies that Generate Environmental, Strategies that Generate Environmental, Social and Financial Dividends”Social and Financial Dividends”

Environment & Clean Energy Technologies

Climate Change & Sustainable Energy

Health and Environment

EXCEL, EECO, GLOBE and Corporate

1997 – 2001 Tripled Size and Revenues1997 – 2001 Tripled Size and Revenues

Carleton University 2002 DELPHIDELPHI

THE GREENHOUSE EFFECTTHE GREENHOUSE EFFECT

Incoming Energy

Reflected EnergyOutgoing Energy

Energy TrappedBy Greenhouse Gases

Carleton University 2002 DELPHIDELPHI

International consensusInternational consensus

1.1. Earth is warmingEarth is warming 7 of 10 warmest years on record in the 1990s IPCC projected range 1.0 - 3.5º C over next 100

years

2.2. Discernible human influenceDiscernible human influence

3.3. Trend to Continue Resulting in ImpactsTrend to Continue Resulting in Impacts more extreme weather events (insurance!!) human health, environment, economy, ocean levels,

river and lake systems, agriculture, tourism… Canada more affected than most countries because of

its large size & northern land mass

Carleton University 2002 DELPHIDELPHI

Impacts of Climate ChangeImpacts of Climate Change

Carleton University 2002 DELPHIDELPHI

Climate ChangeClimate Change

UNFCCC (1992)UNFCCC (1992) The Kyoto Protocol (1997)The Kyoto Protocol (1997)

Agreed to 5.2% reductions of GHG CO2, CH4, N2O, HFC, PFC, SF6

Flexibility Mechanisms (CDM, JI, IET) & sinks

Critical Dates & TimelinesCritical Dates & Timelines 1990 baseline 1998-2008 transition period 2008-2012 budget period

Carleton University 2002 DELPHIDELPHI

CANADA’S EMISSIONS PROJECTIONCANADA’S EMISSIONS PROJECTIONAND THE KYOTO TARGETAND THE KYOTO TARGET

450

500

550

600

650

700

750

800

850

1990 1995 2000 2005 2010 2015 2020

Kyoto targetsix percent below 1990 levelForecast

694

MT CO2 - equivalent

682

764

199 Mtor

26%

565

601

Carleton University 2002 DELPHIDELPHI

Projected GHG EMISSIONS BY Projected GHG EMISSIONS BY PROVINCE PROVINCE

0

20

40

60

80

100

120

140

160

180

200

220

240

260

1990 2010

Atlantic

Quebec

Ontario

Man

itoba

Sask.

B.C. a

nd

Ter

ritorie

sAlber

ta

+23%

+40%

+38%+40%

+24%

+17%

+10%

MT CO2 - equivalent

Carleton University 2002 DELPHIDELPHI

Pathway to sustainabilityPathway to sustainabilityNorth American and European Markets ForNorth American and European Markets For

Environmental Goods and ServicesEnvironmental Goods and Services

Level ofLevel of

IndustrialIndustrial

PurchasingPurchasing

ActivityActivity

Stage 1: Stage 2: Stage 3: Stage 4:Stage 1: Stage 2: Stage 3: Stage 4:

Auditing and EMS and Environment SustainableAuditing and EMS and Environment Sustainable

Compliance ISO 14000 and Business DevelopmentCompliance ISO 14000 and Business Development

Integration DriversIntegration Drivers

Source: The Delphi Group, 1998Source: The Delphi Group, 1998

Carleton University 2002 DELPHIDELPHI

FOSSIL FUELS

Coal

Oil

Natural Gas

The Path to Sustainable EnergyThe Path to Sustainable Energy

BIOMASS

• Dung

• Wood

• Straw

nuclear

Renewables

• Solar

• Wind

• Biomass

• Geothermal

?

• Fusion

• Hydrogen

• Tidal/wave

Carleton University 2002

Carleton University 2002 DELPHIDELPHI

The Emerging The Emerging “Carbon Marketplace”“Carbon Marketplace”

Converging ForcesConverging Forces Trend towards Trend towards

Sustainable EnergySustainable Energy Rapid InnovationRapid Innovation Global Energy Market Global Energy Market

ReformReform Concern over health Concern over health

impactsimpacts Kyoto PotentialKyoto Potential Opportunity & RiskOpportunity & Risk

Demand for

Climate Change

Solutions

Capital Stock Turnover

Kyoto Flexibility Mechanisms

International Finance

Institutions

Economic Growth

Climate Change Mitigation Measures

Corporate Competitiven

ess and Eco-

Efficiency

Energy Market Liberalization

Energy Security and Interest in Renewables

Health and Air Quality Benefits

Carleton University 2002 DELPHIDELPHI

The Product of ConvergenceThe Product of Convergence

Quantity

The Right Choices

Eco-Efficiency Pollution Prevention Clean Energy

More Sustainable

Practices

Triple Bottom Line

Reduced Health Effects

GHG Reductions

Air Pollution Reduction

Carleton University 2002 DELPHIDELPHI

corporatecorporate Risks Risks

““Uncertainty Factor” Uncertainty Factor” Int’l Process “Devil’s in Details” National Leadership (lack thereof) Cost, cost, cost…benefits? Rate of Return & Price of Credits Unknown

““Share-Value Exposure”Share-Value Exposure” Differentials in GHG emissions Decreasing Value of Capital Stock Production, expansion, acquisitions

Relative Impact on Global CompetitorsRelative Impact on Global Competitors

Carleton University 2002 DELPHIDELPHI

Corporate OpportunitiesCorporate Opportunities

Gain Competitive AdvantageGain Competitive Advantage Productivity, Energy Efficiency Differentiate Yourself from Competitors

Hedge Your Bets – Offset Future RiskHedge Your Bets – Offset Future Risk Added Value through Offset CreditsAdded Value through Offset Credits DiversificationDiversification

Leverage technology and R&D Exploit new markets Create new value-added business ventures

Enhance Shareholder ValueEnhance Shareholder Value

Carleton University 2002 DELPHIDELPHI

Leaders & laggardsLeaders & laggards

Four Levels of ActionFour Levels of Action Strategic Integration Sitting on Fence (Baselines Being Done) ‘Not on the Radar Screen’ Yet Moving against the flow

Leaders Moving AheadLeaders Moving Ahead BP, Shell Int’l, Transalta, DuPont, Suncor

Energy, OPG, Alcan, Dofasco Cities of Toronto, Calgary, Banff, Halifax Denmark, UK, Netherlands

Carleton University 2002 DELPHIDELPHI

Emerging InnovationEmerging Innovation

600 diversified firms 600 diversified firms Generally High-tech Generally High-tech

solutionssolutions Strong R&DStrong R&D $3 billion & 23,000 $3 billion & 23,000

jobsjobs Global Market Global Market

between $150 - $400 between $150 - $400 billion billion

Increasing 5%/yrIncreasing 5%/yr

ClimateChange

Companies

Eco-Efficiency

BuildingDesign &Operation

AdvancedMaterials

Renewable& NewEnergy

E-Commerce

Biotech

Carleton University 2002 DELPHIDELPHI

Many companies see Many companies see opportunitiesopportunities

Buildings New Processes

Fuel Cells Future Fuels

Carleton University 2002 DELPHIDELPHI

So What Does This Have to Do So What Does This Have to Do with me?with me?

New Business Realities => Next Industrial New Business Realities => Next Industrial Revolution*Revolution*

Radical Increases in Resource Productivity Biomimicry Evolution From Manufacturing to Service and Flow

Economy Increasing Investment in Natural Capital

*Taken from “Natural Capitalism” by P. Hawken, A. & H. Lovins

Carleton University 2002 DELPHIDELPHI

IndustryIndustry“Thinking out of the box”“Thinking out of the box”

Interface – New Factory in Shanghai had a 92% Interface – New Factory in Shanghai had a 92% energy saving by new designenergy saving by new design

Looked at whole pumping system and discarded old style of economics

Sized pumps based on large pipes rather than small pipes (50% increase in dia = 86% drop in friction)

Installed pipes first then equipment

12 fold reduction in energy, simpler and faster construction, less floor space, easier maintenance, and better performance (e.g. saved 70 kW of heat loss)

*Taken from “Natural Capitalism” by P. Hawken, A. & H. Lovins

Carleton University 2002 DELPHIDELPHI

BuildingsBuildings“thinking out of the box”“thinking out of the box”

The International Netherlands Group (ING) BankThe International Netherlands Group (ING) Bank 540,000 ft540,000 ft22

Strong Vision & a Strong Vision & a Multidisciplinary TeamMultidisciplinary Team

3 Year Process – Everyone 3 Year Process – Everyone Had to Understand Had to Understand EverythingEverything

Added Capital = $700kAdded Capital = $700k Annual Energy Savings of Annual Energy Savings of

$2.9 mil (1996) / 1/10$2.9 mil (1996) / 1/10thth 15% reduction in 15% reduction in

absenteeismabsenteeism

*Taken from “Natural Capitalism” by P. Hawken, A. & H. Lovins

Carleton University 2002 DELPHIDELPHI

TransportationTransportation“Thinking out of the box”“Thinking out of the box”

Whole-system designWhole-system design ultra light; low-drag; ultra light; low-drag;

hybrid-electric; hybrid-electric; efficient accessories efficient accessories

3 to 53 to 5 x better fuel x better fuel economyeconomy

equal or better equal or better performance, safety, performance, safety, aaffordability ffordability

*Taken from “Natural Capitalism” by P. Hawken, A. & H. Lovins

http://www.rmi.org/sitepages/pid386.asp

Carleton University 2002 DELPHIDELPHI

““thinking out of the box”thinking out of the box”Maunsell – Aberfeldy Golf Club Footbridge BridgeMaunsell – Aberfeldy Golf Club Footbridge Bridge

Major span – 63 mMajor span – 63 m 1st1st major advanced major advanced

compositecomposite footbridge footbridge Maunsell worked with Maunsell worked with

Dundee UnivDundee Univ. . engineering students engineering students who who provided theprovided the bridge bridge erection team.erection team.

Assembled in 10 weeks, Assembled in 10 weeks, no craneage, minimal no craneage, minimal foundations, 20 yr foundations, 20 yr maintenance schedulemaintenance schedule

Carleton University 2002 DELPHIDELPHI

““thinking out of the box”thinking out of the box”Clean Development Mechanism (CDM)Clean Development Mechanism (CDM)

Market-based mechanism:Market-based mechanism:– Assist Annex 1 countries to comply with

their reduction targets under Kyoto– Increase rate of return, financial

attractiveness– Reduce risk and enhance markets

Sustainable DevelopmentSustainable Development– Build developing country capacity– Transfer state-of-the-art technologies– Environmental and health co-benefits

Carleton University 2002 DELPHIDELPHI

Attributes to THRIVE Attributes to THRIVE & survive& survive

Breadth of UnderstandingBreadth of Understanding Strong technical skills Business Savvy – but it’s not just about

old style economics Interpersonal & Communication Skills Ability to Think Out of the Box (and assess

different perspectives) Work within a “Fear of Change” Be Adaptable

Carleton University 2002 DELPHIDELPHI

““Thinking Out of the Box”Thinking Out of the Box”

Carleton University 2002 DELPHIDELPHI

““thinking out of the box”thinking out of the box”

““Innovation is not always about having Innovation is not always about having a new idea, more often it’s about a new idea, more often it’s about

stopping having an old ideastopping having an old idea."."

Carleton University 2002 DELPHIDELPHI

The Delphi GroupThe Delphi Group

For More Information Contact:For More Information Contact:

Mike Gerbis, P.Eng.Mike Gerbis, P.Eng.President, The Delphi GroupPresident, The Delphi Group

428 Gilmour St.428 Gilmour St.Ottawa, Ontario K2P 0R8Ottawa, Ontario K2P 0R8

Tel: (613) 562-2005 Fax: (613) 562-2008Tel: (613) 562-2005 Fax: (613) 562-2008email: email: [email protected]@delphi.caWebsite: Website: www.delphi.cawww.delphi.ca