Reducing Carbon Emissions In The

Automotive Value Chain

#CRSummit2016

Panel Introductions – Al Hildreth, GM

AIAG GHG Workgroup Activities – Sherry Mueller, Ford

Importance of Supplier Engagement in Auto OEM GHG Reduction

- Doug Andrews, Lear

Delivering Sustainability – Lee Kindberg, Maersk

Let SmartWay track your carbon footprint – Erik Herzog, US EPA

SmartWay

Panel questions and discussion

Agenda

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Sherry Mueller

Ford Motor Company

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Automotive Industry Guiding Principles

Automotive Companies Are Expected To Pursue Environmental Responsibility Throughout The Supply Chain, including GHG management

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GHG Workgroup Activities

GHG Webinar – Reporting & Reduction

– Start with the Why (Session 1)

– GHG Protocol – boundaries, QA/QC, data gathering (Session 2)

– GHG calculation: Scopes 1-2 (Session 3)

– GHG calculation: Scope 3 (Session 4)

– Allocation to customers and Reporting Systems (Session 5)

Global GHG Regulations

2016 Update CDP-Climate Change Questionnaire

CDP Action Exchange Update

DOE Superior Energy Performance Overview

The AIAG GHG Workgroup Provides A Forum For Streamlining GHG Reporting & Promoting Emissions Reductions (webinar online at AIAG)

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Automotive Carbon Footprint

Engaging OEM Supply Chain Is Key To Reducing An Auto OEMs Carbon Footprint

Sectors With High GHG Emissions

• Metals and mining

• Electric power generation

• Plastics and resin manufacture

• Chemical manufacturing

GHG Sources in Supply Chain

Source: GM

Contributors to Automotive OEM Carbon Footprint

Category Magnitude of

Contribution

Use of Sold Product (Driving)

Purchased Goods/Services and Capital Goods

OEM’s Scope 1+2

Upstream/Downstream Transportation

All Other Scope 3 Categories: Fuel & Energy, Waste, Franchises, Employee Commuting, Processing of Sold Products, Business Travel, Investments and Leased Assets

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Used with permission from CDP

Global GHG Regulations

(Emissions Trading Schemes)

GHG Regulations Continue To Expand Across The Globe

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Delivering Sustainability: Supply Chain Transportation Lee Kindberg Director, Environment & Sustainability

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• Maersk Line is an enabler of global trade, connecting goods and services to

people and economies around the globe

• Shipping affects the lives of billions of people, with 90% of the world’s

international trade travelling by sea

• With our global presence, we create local employment and stimulate business

activity in more than 125 countries

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Supply chain transportation environmental

impacts can now be calculated.

Factors include:

• Modes of transportation used

• Energy efficiency of each mode

• Distance traveled by each mode

• Cargo weight and volume

• How is the impact calculated?

Factory Rail/ Truck

Warehouse Port Truck Air/ Ocean

Port Rail/ Truck

Warehouse Truck Point of sale

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Carbon Impacts of Logistics Operations

Network Optimisation Equipment Utilisation Carrier Selection Packaging Transport Mode

Air

Truck

Ocean 6

16

47

560

Rail

25 Barge

CO2 per Transport Mode (g/ton-km)

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Shipping emits ~2% of the world’s CO2 emissions while transporting 90% of

the worlds goods

Transport 1 pair of shoes from

China to North Europe

China

100 g

CO2

North

Europe

20 Km 0 Km

18x more

1800 g

CO2

Mode energy-efficiency is critical in supply chain

transportation choices.

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The best-accepted are from BSR’s Clean Cargo Working Group,

which includes >80% of the global container capacity.

>85% of the

global container

capacity in 2015

membership

Annual Data

Collection

Standardized CO2

methodologies

Verification

protocol.

Standard methods are available to report and verify

the environmental impacts of ocean shipping.

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Calculating the CO2 footprint of a single

shipment or a global logistics network:

Single shipment or route comparison:

• 1. Look up the CCWG CO2 emissions factor for the trade lane (carrier-specific or industry average).

• 2. Determine the distance traveled between port of origin and port of destination using Dataloy or other nautical distance resources.

• 3. Multiply the CO2 emission factor with the distance between the ports and the number of containers for that shipment.

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To calculate a company’s CO2 footprint from ocean transport: 1. Identify the trade lanes and port pairs used.

2. Determine the number of containers shipped between each port pair on each

trade lane.

3. Look up the CCWG CO2 emissions factor for each trade lane and the distance

travelled between each pair of ports.

4. Multiply the CO2 emission factor times the number of containers for that port

pair times the distance between the ports.

5. Add up the CO2 emissions for all the trade lanes of interest.

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De-speeding

the Supply

Chain

(18%)

Opportunities for supply chain

impact reduction:

Source: World Economic Forum – Supply Chain Decarbonization – the Role of Logistics and Transport in Reducing Supply Chain Carbon Emissions

ABATEMENT POTENTIAL

FE

AS

IBIL

ITY

IN

DE

X

Clean Vehicle

Technologies

(18%)

Optimized

Networks

(13%) Low Carbon

Sourcing &

Manufacturing

(16%) Near

Shoring

(?%)

Packaging

Reduction

(14%)

Modal

Switches

(12%)

Reverse

Logistics

(9%)

Energy

Efficient

Buildings

(<5%)

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Transportation CO2 Emissions can be reduced.

Part of supply chain Driver of emissions Ways to reduce emissions (examples)

Ocean transportation

Air transportation

Port moves

Domestic distribution

Warehousing

• Volume moved

• km covered

• kg moved

• km covered

• Number of containers

• Transportation mode

(truck vs. rail)

• km covered

• Volume moved

• Number of days in warehouse

• Number of CBM

• Higher container utilisation

• Use of more eco-friendly carriers

• Air to Sea-Air conversion

• Higher container utilisation

• 20’ to 40’ conversion

• CFS-CY conversion

• Higher utilisation of delivery trucks/vans

• Double-decker trailers

• Increased use of rail

• Use of bio-fuel

• Reduce safety stock

• DC bypassing

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Vessels are increasingly fuel efficient.

Verified by:

Key Initiatives: New vessels

Eco-Retrofitting vessels

“Smart steaming”

Network design

Focus on energy efficiency for

sustained performance

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2015 results: 42% less CO2 per container per km vs. 2007

2020 goal: Reduce CO2 by 60% vs. 2007

This reduces fuel use, CO2 and other air emissions.

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Decoupling growth and environmental impact

Changes in Global Containers Shipped and Total CO2 Produced

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Since 2007, Maersk Line has managed to grow our business while reducing emissions to the environment.

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Comparing routes for CO2 emissions

Routing via… Total Distance CO2 per FFE

Miami 2574 km 1.47 kg

Savannah 2601 km 0.82 kg

Difference 1% -44%

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Example: Central America to Atlanta, Georgia

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Logistics Sustainability = Efficiency

• Improved Container Utilization • Modal Shift: Air to Sea-Air

Air

Ocean

Operational Impact: modal shift from 100% air to 50%

air / 50% ocean

Cost Impact: 50% savings potential identified

Carbon impact: 69% reduction in CO2

As-Is

Operational Impact: 15% reduction in container

volume

Cost Impact: 14% savings potential identified

Carbon impact: 16% reduction in CO2

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#CRSummit2016

What we’ve learned about supply chain calculations:

1. Use a consistent calculator approach

2. Transportation footprints can and have been reduced

3. It’s the total lifecycle footprint that matters

• Transportation is just part of the total.

• You have to do the full analysis to see the big picture

4. Focus on improvements and incorporating CO2 into business decisions

5. Opportunity: work together to reduce both CO2 emissions and costs

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Panel Discussion Q&A

Insert department name via

‘View/Header and Footer…’

CCWG produces CO2 index factors for 25 trade lanes and provides industry averages. An Environmental Performance Survey also provides qualitative progress information.

Dry Container CO2 Index factors for Trade Lanes to/from North America (grams CO2 /TEU km)

Trade Lane CCWG 2011

Industry Average

Maersk Line 2011 Trade

Lane Averages

Asia--North America East Coast (EC) 71.85 55.7

Asia--North America West Coast (WC) 65.10 58.0

North Europe--North America EC/Gulf 75.88 70.3

Mediterranean--North America EC/Gulf 79.29 63.8

North America--Africa 76.86 76.9

North America EC--Middle East/India 78.72 78.0

North America--South America (EC/WC) 71.44 103.9

North America--Oceania 85.52 82.7

Resources: BSR paper, Maersk Line overview, 2011 data

The index includes

weighted avg. of

all vessels and

services on that

trade lane.

ML’s internal

calculator uses

route-specific

factors.

Example:

ML’s TP6 service

2011 was 49.1

2013 factors:

ML TP6: 41.4

Asia – USWC 43.3

CCWG avg: 56.2

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Insert department name via

‘View/Header and Footer…’

The CCWG “How-To” Guide provides resources for integrating sustainability into procurement processes

http://www.bsr.org/reports/BSR_CCWG_

Calculate_Manage_Emissions_2015.pdf

http://www.bsr.org/en/collaboration/group

s/clean-cargo-working-group

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Logistics Sustainability = Efficiency

CFS Consolidation Study Container Backhaul Program

As-Is

Operational Impact: 15% increase in CFS usage, volume reduction of 15% (433 containers)

Cost Impact: $852k identified cost savings

Carbon impact: 583 ton reduction in CO2

To-Be

Thailand Plant Damco

Cross-Dock

Laem Chabang

Port

Raw Material Import

container

Finished Goods

container

Finished Goods

container

Operational Impact: eliminated 2.4 million ‘empty running’ kilometers traveled

Cost Impact: $170k identified cost savings

Carbon impact: 700 ton reduction in CO2

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