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Climate Action 2009-2010


ARAUCO: COPING WITH THE CHALLENGE OF GLOBAL WARMING SPECIAL FEATURE 170 Arauco has come a long way since it began operations in 1972 with a single mill in central Chile and a handful of employees. Today, it has become a global leader in the production of sustainable forest products and pulp, with manufacturing facilities in three countries and some 1.5 million hectares (3.7 million acres) of forestland under management. As a leading actor on the world stage, Arauco is committed to minimising the impact of its operations on the environment as a whole, and on global climate change in particular. Accordingly, the company has defined its development strategy based on sustainable plantations, native forest protection and strict controls on greenhouse gas emissions. Arauco respects and conserves the full range of values and ecosystem services delivered by its plantations and natural forest holdings. In addition to supplying highquality, plantation-grown wood fibre, its vast forest estate serves as a carbon store – binding atmospheric CO 2 (carbon dioxide) and releasing oxygen into the air. Its natural forest holdings are biologically diverse, supporting hundreds of species of flora and fauna. In addition, the forests help provide clean water, offer recreational and educational opportunities, and have cultural and spiritual significance. The company’s commitment to conserving forest-based values is embodied in its decision to permanently set aside from harvest all of the 309,000 hectares (763,000 acres) of natural forestland that it owns. In addition, the company does not purchase any third-party wood that comes from natural forests. Arauco recognises that it does not operate in isolation, but that it is part of the global community and understands that its actions and operations can have impacts upstream and downstream of its facilities. That is why Arauco is committed to using its forest resources wisely, ensuring lasting benefits to society and the global environment, as well as to shareholders. And it is why Arauco is committed to continuous improvement and implementing best practices and innovations to ensure that its operations have minimal impact on the flora, fauna, water resources, atmosphere and climate of the planet. Through its Bioforest research centre, the company applies the latest biotechnological procedures in a search for new ways to increase the quality, production and performance of its plantations; to develop skills and plans in order to care for the biodiversity present in its forestry assets and to introduce improvements into the pulp production processes. BIOMASS COGENERATION The development of electrical-generation projects using forest biomass – a renewable resource – for fuel is an integral part of Arauco’s environmental policy. This policy calls for the comprehensive and efficient use of all forest resources, energy independence through reliance on self-generated electricity from renewable sources, and the provision of surplus electricity to Chile’s power grid. Forest biomass is a mix of tree bark, sawdust and other downfall from forest-products manufacturing. By debarking logs at its mill sites (rather than in the field), and using the bark as fuel, Arauco is able to realise a number of environmental advantages, including: } A reduction in the fuel load on its plantations, minimising both the incidence and intensity of forest fires; VISIT: WWW.CLIMATEACTIONPROGRAMME.ORG

} A substantial reduction in green house gas (GHG) emissions caused by the anaerobic decomposition of forest biomass in the field. Arauco utilises its forest biomass as a renewable fuel for the power boilers that cogenerate the steam and electricity required for its manufacturing operations. Biomass cogeneration allows for a high thermal efficiency, approaching 80 per cent in some cases. The company’s use of renewable forest biomass has virtually eliminated its dependency on fossil fuels in both pulp and forest-product manufacturing operations. In addition to meeting its own energy needs, Arauco generates a significant amount of surplus green energy and delivers it to the Chilean power grid (the Central Inter-connect System), helping to reduce the country’s dependence on coal and imported fossil fuels. Currently, Arauco has a total installed generating capacity of 504 Megawatts (MW) of electricity from biomass, including a surplus of up to 134 MW that can be sent to the grid, helping to meet the needs of onehalf million residential customers. Four of Arauco’s cogeneration power plants in Chile – one at its Trupan facility; two at its Nueva Aldea complex in the Bio Bio region; and one plant in the Los Rios region at the Valdivia mill – are registered as emission reduction projects within the Clean Development Mechanism (CDM) of the Kyoto Protocol. In its search for alternative sources to replace fossil fuels, Arauco, together with universities, NGOs and other private companies, established the Bioenercel Technological Consortium. This entity is developing a pilot facility to produce second-generation ethanol using lignocellulose, a raw material derived from forestry biomass. CARBON FOOTPRINT In December 2008, in demonstration of its commitment to minimising its greenhouse gas emissions and its contribution to global climate change, Arauco made a decision to embark on a comprehensive assessment of the carbon footprint produced by its operations in Chile, Brazil, Argentina and Uruguay during 2008. The assessment was completed in July 2009. Designed to benchmark Arauco’s emissions of the six greenhouse gasses (GHGs) covered by the Kyoto Protocol, the Carbon Footprint Assessment (CFA) will serve as a point of reference for efforts to reduce the company’s carbon signature. “Just as you need to know where you are before you can navigate to your destination, Arauco needs to know where it is, emission-wise, before it can embark on successful initiatives to reduce our role in global climate change,” said Arauco CEO Matías Domeyko. “Our Carbon Footprint Assessment does just that – it tells us where we were in 2008, allows us to see where we need to go, and, later, will enable us to measure how far we have come on our journey toward ensuring greater sustainability for our planet.” The Carbon Footprint Assessment was completed under the guidance of a US-based independent consulting firm, AECOM Environment. Fundación Chile, a nonprofit, non-governmental organisation committed to increasing the competitiveness of Chile’s industrial and commercial sectors, served as a consultant to the project team. To ensure the credibility and comparability of the study, AECOM Environment employed internationally accepted methodologies and calculation tools. Arauco’s CFA was designed to determine and report on Arauco’s direct and indirect emissions of carbon dioxide and total carbon dioxide equivalent (CO 2 e). CO 2 e was calculated using the Intergovernmental Panel on Climate Change’s global warming potentials for five GHG compounds: methane (CH 4 ), nitrous oxide (N 2 O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF 6 ). The CFA addressed: direct GHG emission sources owned or controlled by the company including stationary combustion and company-owned or company-controlled mobile and harvesting equipment (Scope 1); GHG emissions from indirect sources, such as purchased electricity and/or steam (Scope 2); and GHG emissions that occurred at other indirect sources as a consequence of company activities such as the transport of significant raw materials, transport of products, contractor transports, transport of wood, contractor woodharvesting equipment, and business travel (Scope 3). The CFA also addressed CO 2 that is stored (sequestered) during the long-term life of wood products produced during 2008 as well as carbon-neutral biomass-derived CO 2 emissions. In September 2009, Fundación Chile made a presentation about the AECOM Environment report to a large group of stakeholders. Fundación Chile noted that direct and indirect GHG emissions generated by Arauco were below those reported by other forestry companies around the world. (It should be noted that some parties question the comparability of different carbon footprint studies because of the different methodologies employed.) Fundación Chile also noted the beneficial environmental effect resulting from CO 2 captured by the annual growth of Arauco’s forests. Even though this factor is not taken into account when assessing a carbon footprint according to generally accepted methodologies, Fundación Chile, applying the most stringent measurement procedures, calculated that the CO 2 sequestered during 2008 by Arauco’s forests greatly exceeded the company’s GHG emissions during that period. “Completing our first Carbon Footprint Assessment does not mean that Arauco has crossed the finish line,” said CEO Domeyko. “Quite the contrary – we have put ourselves in the starting block for continued progress in reducing our greenhouse gas emissions. As with so many aspects of a shift toward greater sustainability, this is a marathon, not a sprint. But Arauco is definitely in the race to combat global climate change.” Enquiries Charles Kimber, Corporate Affairs and Marketing Director, ARAUCO Tel: (56-2) 4617438 | Email: SPECIAL FEATURE 171 VISIT: WWW.CLIMATEACTIONPROGRAMME.ORG