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World Bank Presentation

World Bank PresentationSeptember 23, 2009 – Washington DC

Climate Change and Trade

CONFIDENTIAL. This document contains trade secret information. Disclosure, use or reproduction outside Cargill and inside Cargill, to or by those employees who do not have a need to know is prohibited except as authorized by Cargill In writing. (Copyright Cargill, Incorporated 2009. All rights reserved.)


Cargill At A GlanceCargill is an international provider of food, agricultural and risk management products and services. With 160,000 employees in 67 countries, the company is committed to using its knowledge and experience to collaborate with customers to help them succeed.

Customers We ServeAgriculture

Cargill originates, processes and distributes grain, oilseeds and other commodities to makers of food and animal nutrition products. It also provides crop and livestock producers with farm services and products.

Food

The company collaborates with food manufacturers, food service companies and food retailers to provide food and beverage ingredients and meat and poultry products that help them serve their customers better.

Health

Cargill develops science-based, health promoting ingredients and ingredient systems for makers of food, dietary and pharmaceutical products.

Risk management

Cargill provides agricultural, food, financial and energy customers with risk management and financial solutions in world markets.

Industrial

Cargill serves industrial users of salt, starch and steel products. It also develops and markets sustainable products made from agricultural feedstocks.

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• Impact of Climate Change

• Impact of Climate Change Policy

• Cargill GHG action steps to date

Three Perspectives on Climate Change


• Evaluate potential scenarios• Where will food be grown?

– Northern shift?– Food production in equatorial and arid regions? Elsewhere?– SPS Issues: Animal, Plant and Human Disease and Pests Issues– Impact on Trade Patterns

• How will food and goods be shipped?– Inland waterways– Ocean transportation

• In what form will food be shipped: Bulk, Fresh, Frozen, Cooked,Processed?

• What does this portend for Economic Growth, Food Production, Marketing, Risk Management, Food Security, Customer Demands, Operations, and Regulatory and Trade Measures?

• Investment Horizon

Impact of Climate Change“Business Adaptation”

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• Regulatory Compliance Costs• Technology investments to increase efficiency and reduce GHGs• Allowances for Cap and Trade Programs• Tax Considerations• Offset Projects• Allowance and Offset trading opportunities• GHG Standards-Global, National, Regional, State, Private, NGO• Cumulative Impact on Supply Chain—Gains and Losses?• Cumulative Impact on International Trade Rules

– Protect both climate and multi-lateral trading system– Border Measures: Climate Protection vs. Disguised Protectionism– Free Allowances: A subsidy?– Potential Challenges under WTO-GATT

• Impact of climate change policy on food security, trade flows and developing countries?

• Net Impact of Climate Change Policy

Impact of Climate Change Policy


Cargill Action Steps To Date

•1998 Cargill’s first GHG inventory

•2000 Cargill establishes company wide energy goals

•2005 Cargill establishes GHG goals

•2007 Cargill joins Chicago Climate Exchange

•2009 Cargill Establishes Corporate Wide Climate Change

Steering Team

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• Improve energy efficiency by 20 percent against fiscal year 2001 baseline.

Cargill’s Environmental Goals


• Increase use of renewable energy to 10 percent of energy demand.


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A voluntary, but legally binding commitment to reduce absolute greenhouse gas (GHG) emissions from our U.S. locations by joining the Chicago Climate Exchange® (CCX®) requiring us to reduce emissions by 6 percent by 2010 (from a 1998-2001 baseline) and to achieve annual milestones along the way.



• Technical Solutions– Capital Investments

• Heat Exchangers• Properly sized motors• Co-generation

Energy Efficiency Drivers

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• Technical Solutions– Capital Investments

• Heat Exchangers• Properly sized motors• Co-generation

– Cargill Process Optimizer



Cargill Process Optimizer: The Path to Significant Sustainability and Profitability Enhancements

• 5% - 15% Energy savings• 5% - 25% Effluent reductions• 2% - 5% Raw material savings• 2% - 10% Capacity increases

Operational improvements Operational improvements identified by CPO identified by CPO

yield results quickly yield results quickly 2 year Paybacks2 year Paybacks

Successfully applied to over 100 Successfully applied to over 100 facilities worldwidefacilities worldwide

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• Technical Solutions– Capital Investments– Cargill Process Optimizer

• Behavioral Based Solutions– Energy Management– Education– Training and Communication


Monitoring Operations in China Checking Steam in Ottumwa, Iowa


• Technical Solutions– Capital Investments– Cargill Process Optimizer

• Behavioral Based Solutions– Energy Management– Education– Training and Communication

• Why is energy efficiency important?– “Energy efficiency improvements not only lower our costs, they reduce

the carbon footprint for customer products.”


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Cargill GHG Reduction Key Actions

• Continue to improve energy efficiency in our plants– FY 2009 energy efficiency cost savings are 180 million dollars

• Diversify our energy use away from fossil fuels– Renewable energy project examples

• Sunflower hulls• Cocoa Hulls• Coconut Hulls• Palm Hulls• Wood• Spent Sugar Cane• Biogas from Wastewater Treatment• Landfill Gas• Ethanol• Biodiesel


Cargill Biomass to Energy Projects

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Biogas in Pork Plant in Beardstown, Iowa


Biogas in Beef Plant in Schuyler, NE

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Biogas water treatment pond; Dodge City, Kansas

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GreenHouse Gas ReductionMethane recovery systems

Replaced over 20% of the natural gas demand at 11 processing facilities with biogas.

Reduced greenhouse gas emissions by 1,300,000 metric tons over 4 years.

First of its kind Methane Recovery System installed in newly constructed sow breeding facility in Morrilton, AR.

Cargill Meat Solutions Sustainability efforts

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Potable Water Use ReductionBeef processing facilities have reduced water usage 13%

Pork processing facilities have reduced water usage 18%

Turkey processing facilities have reduced water usage 13%

Waste water treatment and reuse

Cargill Meat Solutions Sustainability efforts


Sugar Brazil Bagasse

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Cargill Grain Oilseed Supply Chain Asia-Pacific: Sunflower Hulls


Cargill Animal Nutrition: Honduras Biomass Boiler

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Cocoa Hulls - Africa


Methane Digester: Wendell, Idaho

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• GEEPG leverages Cargill’s involvement in all energy markets and helps companies, under:

mandatory carbon compliance; voluntary offsetting targets; and social investment strategies

•GEEPG trades UN Certified Emission Reductions (CERs), under the Kyoto Protocol Clean

Development Mechanism; Emissions Reduction Units (ERUs); Voluntary Emission Reductions (VERs); Chicago Climate Exchange - Carbon Financial Instruments (CFIs); European Union

Allowances (EUAs).

•Through Green Hercules Trading, a wholly owned subsidiary of Cargill Inc., GEEPG has a diversified

portfolio of carbon reduction/renewable energy projects in a variety of sectors (such as

hydropower, wind, biomass power, N2O) in countries such as India, China, Pakistan, Kenya,

Uganda and Mexico.

•These projects contribute to sustainable development in local communities and credits can

be used for compliance in developed countries, such as Japan.

Global Emissions, European Power and Gas

Trading GEEPG helps manage carbon, for Cargill

in Europe and externally, by sourcing, registering and selling carbon offsets,

worldwide.

OpportunityRiskCompliance


• Evaluate impact of climate change to make the best long-term decisions.

• Evaluate effect of climate change policy to ensure compliance with regulatory regimes, but also understand the broader effect it could have on global trade rules, developing countries, customers, supply chains and the market.

• Cargill has engaged in efforts to improve efficiency, reduce GHGemissions and help customers and suppliers manage their supply chain and their carbon and energy risks.

Summary

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Thank You

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