1. 1 Perspectives for a Low Carbon Economy in Brazil Scenarios and Challenges within the Carbon Markets Porto Alegre, May 2012 Dr. Wolfgang Jockel TÜV Rheinland Group

2. 2 1. TÜV Rheinland on a Glance 2. Status of Carbon Markets 3. Low Carbon Economy 4. Carbon Neutrality and Carbon Footprint 5. Case Studies from Brazil / Colombia 6. Summary and Perspectives Contents

3. 3 Shaping the future. Together.

4. 4 140 Years of Innovation Your advantage: our experience. 2009 World‘s largest photovoltaic lab 1926 First material analysis laboratory 1900 Vehicle inspection and driving license tests 1957 Commitment to environmental protection: dust register in Cologne 2006 Joined the UN Global Compact 1872 Entrepreneurs take the initiative and set up the DÜV to ensure the safety of their manufacturing plants 1969 International product tests and certifications 1918 Activities in the energy and mining sectors 1975 Medical work 2007 Represented on all continents

5. 5 Business Units of TÜV Rheinland Overall, much more than adding up parts Industrial Services Mobility Products Life Care Training and Consulting Systems

6. 6 At Home on All Continents 500 locations in 63 countries around the world. Year 2011 14,400 People and 1,4 billions € Revenues.

7. 7 7  1990 – Starts activities with foreign products  2001 – First office in Brasilia – Services for ANATEL  2001 – First accreditation - ANATEL  2003 – Office in São Paulo – INMETRO Accreditation  2003 – Office in Rio de Janeiro for PETROBRAS  2006 – Acquisition of UCIEE – Certification Services  2006 – Acquisition of ORPLAN – Inspections  2007 – TÜV Rheinland do Brasil takes control over DUCTOR  2010 – TÜV Rheinland do Brasil takes control over GERIS TÜV Rheinland do Brasil

8. 8 8 Certification of Management Systems IT and Communications Systems Security Civil engineering systems SASSMQ (Chemical hazardous products safety certification) Parking certification Gas installations Automotive management systems Social Responsibility Systems Elevator, Conveyor and Machine Techn. Industrial Engineering Safety Civil Engineering Energy and Environment Project Management and Supervision Industrial Services Electrical Services and products Mechanical and Machinery Services Medical Device Services EMC and Telecomm. Services Ergonomic and Usability Service Market Access Services RoHS Explosive atmospheres Informatic services Safety devices Electrical Protection devices CE certification Products Foods and food technology Life Care Auditor trainings Norm trainings Research and Development Management Coaching and Training Education Services of TÜV Rheinland do Brasil

9. 9 9 TÜV Rheinland do Brasil  Workers ~ 2.200  Offices in Brazil 8  Laboratories 1  INMETRO Accreditations~ 107  Clients ~ 2.000  Emitted Certifications~ 8.000

10. 10 TÜV Rheinland do Brasil TÜV Rheinland do Brasil - Biggest certification company in Brazil (Electrical devices)  Product Certifications;  INMETRO accredited laboratory;  Follow-up Services;  Conformity certifications;  Quality systems certifications;  Development of Civil Engineering projects;  Sectorial Programs;  Complete certification service paquetes.

11. 11 Environmental Protection Air Pollution Control Emission Monitoring of Industrial Plants Waste Treatment and Waste Management TÜV Approval / Certification of CEMS/AMS Air Quality Control Acoustics and Noise Protection Urban Development Planning Acoustics in Commerce and Industry Architectural Physics and Outdoor Machines Energy and Climate Energy Technology Energy Efficiency and Rational Utilization Test Laboratory for Energy Appliances Climate Protection Kyoto-Mechanisms CDM/JI and Others EU Emissions Trading and Sustainability Solar Energy Photovoltaik PV und Solar Therm Indoor and Outdoor Test Facilities Approval of Solar Plants and Power Stations Applied Research and Specific Projects Further Activities Projects and Studies: GIS, Audits, etc. Certification and TUVDOTCOM Business Field: ENERGY & ENVIRONMENT

12. 12 1. TÜV Rheinland on a Glance 2. Status of Carbon Markets 3. Low Carbon Economy 4. Carbon Neutrality and Carbon Footprint 5. Case Studies from Brazil / Colombia 6.Summary and Perspectives Contents

13. 13 Carbon Systems for GHG Standards Clean Development Mechanism CDM Joint Implementation JI - Flexible Mechanisms under Kyoto Protocol EU Emission Trading System (EU ETS) - EU legislation of GHG reduction TÜV Rheinland is accredited for Project Validation + Verification Voluntary Carbon Standard (VCS) - Voluntary program of GHG reduction Chicago Climate Exchange (CCX) - Voluntary program of GHG reduction Voluntary Markets Compliance Markets Gold Standard (GS) - Voluntary program of GHG reduction Program of Activities PoA

14. 14 Registered CDM Projects Worldwide Data source: UNFCCC website, September 2011 China 55 %1410 India 25 %705 Brazil 7 %194 Mexico 5 %129 Malaysia 3 %96 Indonesia 2 %70 Colombia 1 %32 Peru 1 %24 Ecuador 0.7%16 Costa Rica 0.4%8 TOTAL 100% 2.684 China India Brazil Colombia Peru

15. 15 Data source: UNFCCC website, September 2011 Registered CDM Projects Worldwide by Scope WindHydro Biomass Methane Avoidance Landfill Own Energy

16. 16 China 70 %408´919.730 India 19 %112´173.710 Brazil 10 %57´377.019 Colombia 0,2 %1´069.716 Ecuador 0,2 %1´131.968 Peru 0,1 %619.651 Costa Rica < 0,1 %320.463 Amount of Issued CERs Millions of t CO 2

17. 17 1.TÜV Rheinland on a Glance 2.Status of Carbon Markets 3. Low Carbon Economy 4.Carbon Neutrality and Carbon Footprint 5.Case Studies from Brazil / Colombia 6.Summary and Perspectives Contents

18. 18 Baseline for Low Carbon Economy It is an economy in which: Growth of GHG emissions is halted and then reduced Carbon has a price and affects balance sheets Energy from fossil fuels is made a constrasting resource Enterprise stakeholders take action based on carbon Carbon presents a risk and an opportunity to the enterprise A low carbon economy includes the implementation of carbon neutrality schemes, geo- engineering and adaptation to global warming Minimal output of GHG emissions into the biosphere, esp. CO 2

19. 19 Social compliance Time Complexity Corporate Social Responsibility Occupational Safety Product Safety & International Certification Environmental Ownership Ergonomics & Usability Information Security Society’s Expectation REACH ELV WEEE Environmental compliance Carbon Footprint Water Footprint ISO 14001 ISO 16001 Set up of a Low Carbon Economy Sustainable systems for all sectors

20. 20 Low Carbon Economy - Targets Transport Integrate aspects from sectors around technologies that produce energy and materials with low GHG emissions, efficient use of these and good practices of waste handling. Industry Relevant Sectors Agriculture / Forestry Services Building Smart motors, Industrial process automation, Dematerialisation Alternative fuels, Cogeneration, Heat recovery, Environmental control systems Smart logistics and buildings, Dematerialisation (teleworking), Smart grid Smart logistics, Transport optim- isation, Efficient vehicles, Traffic flow monitoring, Planning+Simulation Smart grid, Efficient power generation, CHP

21. 21 1.TÜV Rheinland on a Glance 2.Status of Carbon Markets 3. Low Carbon Economy 4. Carbon Neutrality and Carbon Footprint 5.Case Studies from Brazil / Colombia 6.Summary and Perspectives Contents

22. 22 Carbon Credits in Economic Markets -E CDM / JI -E offset project CAP = EUA ERU/CER VER Carbon Footprint Carbon Neutrality Voluntary Standards Compliance Market Kyoto Standards (CDM / JI)

23. 23 How to Reach Carbon Neutrality ? CO 2 release CO 2 offset Atmosphere CO 2 release – CO 2 offset = 0 The Principle of Offsetting Emission Sources Company Product Manufaction

24. | Implementation of Carbon Neutrality System Basis: „Carbon Offsetting“ and „CO 2 - Compensation“ Retirement of registered carbon credits / or rights Offset ProjectRegistry Supplier of CO 2 neutral products Atmosphere Generated certificates in metric units Registered certificates with serial numbers Buy and retire the certificates Removal of these emissions

25. 25 Carbon Footprint Certificates Compensation Calculation Consultant Product Suppliers Independent Test + Certification Award Registry Program Supplier Project Standard Retirement Product Suppliers Consultant Approval Process of Carbon Neutrality

26. 26 Why Carbon Neutral Products ? Look at their benefits EnvironmentTechnology ImageQuality Indirect investment in climate protection projects will be actively supporting of environmental protection objectives Climate protection projects abroad help to transfer technology and promote sustainable development A positive image is the good perception of problems which means a multiplication of the effects The Carbon Footprint calculation shows potential for innovations and improvements.  CO 2 emissions verified  CO 2 neutral  Annual Audit

27. 27 Corporate Sustainability Management and reporting (e.g., GRI, ISO 14.001, ISO 16.000, OHSAS 18.000) Key Performance Indicator (KPI) systems Corporate Carbon Footprint Supply Chain Management Product Sustainability Life Cycle Assessment Design for Environment Product Carbon Footprint Carbon Footprint Sustainable Systems for e.g. Industries

28. 28  Tool to assure quality and energy efficiency  Increase of transparency and identification of "hot spots"  Reinforce the position within the supply chain  Basis of legal framework  Pre-requisite for certification as a climate neutral company  Good for the company’s image  Compatibility with other management systems and certifications 28  CO 2 emissions verified  CO 2 neutral  Annual audit Reasons to certify a Corporate Carbon Footprint Carbon Footprint Benefits

29. | Cost of a Climate Neutrality Process ? Example: Compensation of 1,0 ton CO 2 EUA´s 2009/10 @ 15 €/t 17,80 € VCU not China 2009/10 @ 3,10 €/t 3,70 € GS VER 2009/10 @ 7 €/t 8,30 € Additional costs need to be added for the carbon footprint Additional costs need to be added for the carbon footprint 3,10 € 7,00 € 15,00 € 3,10 € 7,00 € 15,00 €

30. 30 1. TÜV Rheinland on a Glance 2. Status of Carbon Markets 3. Low Carbon Economy 4. Carbon Neutrality and Carbon Footprint 5. Case Studies from Brazil / Colombia 6. Summary and Perspectives Contents

31. SUSTAINABLECARBON.COM 31 Red ceramic industry Red ceramic factory Red ceramic industry :  Energy intensive: non-renewable fuels:  Native timber  Coal  Fuel oil  Low efficiency:  Inadequate kilns  Manual feeding of fuels  No operational control  Carbon intensive:  Average 0.295 tCO 2 e/ton of production in Latin America¹ (peaking at 1.54 tCO 2 e/ton)  High environmental and social impacts. ¹ Agencia Suiza para el desarollo y la Cooperación COSUDE: Programa de Eficiencia Energética en Ladrilleras Artesanales de America Latina para Mitigar el Cambio Climatico

32. Insert photo caption here SUSTAINABLECARBON.COM 32 Energy efficiency Chamber kiln  Kiln replacement and retrofit:  Combustion efficiency (reduced energy demand)  Improved burning process (reduced production losses)  Process improvement:  Fuel processing (biomass shredders)  Automatic feeders  Termopars  Employee training Automatic feeders

33. SUSTAINABLECARBON.COM 33 Renewable biomass Elephant grass Glicerin Sawdust Rice husk Eucalyptus wood Industrial residues  Renewable energy generation:  GHG emission reduction  Useful destination of residues  Sustainable development  Carbon credits  Energy efficiency:  Combustion efficiency (reduced particle size)  Fuel processing  Environmental compliance:  Legal compliance  Pollution mitigation  Environmental and social benefits.

34. SUSTAINABLECARBON.COM 34 Ceramic factories in Bogota metropolitan area Gold Standard VER project involving energy efficiency and partial fuel switch to renewable biomass Project Proponents:  C.I. Ecoeficiencia S.A.S  Sustainable Carbon  Ladrillera Santander  Ladrillera Las Tapias 3 129.000 tCO2e reduced from 2010 to 2017 Project benefits:  Promotion of renewable energy matrix in Colombian ceramic sector  Energy efficiency  Sustainable development

35. SUSTAINABLECARBON.COM 35 Manure composting Composting technology Swine manure composting Automated composting unit UMAC® Technology  Aerobic treatment of manure.  Methane avoidance.  Evaporation of manure water content. (nearly 97% of untreat manure).  GHG emission reduction and carbon credits.  Displacement of anaerobic lagoons.  Operational and environmental benefits.

36. SUSTAINABLECARBON.COM 36 Pig farmers in Santa Catarina / BR  Bundling of 20 small to medium farms  Between 1.000 to 4.000 animals per farm  (manure flow of 10m³ to 40m³ per farm per day)  Composting sites measuring 100m x 8m  (investments between 50 kUSD to 100 kUSD)  Between 500 to 2.500 carbon credits per farm per year.  Total of 22.000 credits per year for the bundled project.

37. SUSTAINABLECARBON.COM 37 Necessary investments:  Retention tanks (civil works)  Composting site (civil works)  Composting technology & machinery  LPC consulting  Monitoring equipments;  Maintenance and substrate (sawdust) Pig farmers in Santa Catarina / BR

38. Insert photo caption here SUSTAINABLECARBON.COM 38 Project benefits Organic compost  Small and micro projects – contribution for the sustainability of family agriculture.  Contribution to sustainable development and GHG emission reduction.  Production of high quality organic compost –income generation for the swine  Mitigation of environmental impacts of swine farming (water, soil, air)  Large potential for replicability. 38 Growing swine

39. 39 1. TÜV Rheinland on a Glance 2. Status of Carbon Markets 3. Low Carbon Economy 4. Carbon Neutrality and Carbon Footprint 5. Case Studies from Brazil / Colombia 6. Summary and Perspectives Contents

40. Insert photo caption here [insert photo] SUSTAINABLECARBON.COM 40 SUPPLIER PROJECTED GROWTH The voluntary carbon market will continue to grow 2015 projected market size 406 MtCO2e Third party standards will continue to play a powerful role in shaping the market

41. 41 Brazil on the Way to Set up a Low Carbon Economy Business Opportunities Optimization of process operations will create carbon savings and delivery of carbon credits Emissions Reduction Using of advanced technologies will provide a wide range of advice and support for all sectors and companies of all sizes Policy Set up of appropiate policy frameworks to motivate companies in investments in carbon goods and services Areas of Focus Innovation policy, fiscal incentives, Green buildings, goods and products

42. 42 Thank You ! Dr. Wolfgang Jockel TÜV Rheinland Energie und Umwelt GmbH Am Grauen Stein, D-51105 Köln Email jockel@de.tuv.comjockel@de.tuv.com Web www.tuv.comwww.tuv.com