DuPont 2009 Annual Report Download - page 45

Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
The Kyoto Protocol to the United Nations Framework Convention on Climate Change entered into force in February
2005 and, while not ratified by the U.S., has spurred policy action by many other countries and regions around the
world including the European Union. Considerable international attention is now focused on development of a
post-2012 international policy framework to guide international action to address climate change when the Kyoto
Protocol expires in 2012. Proposed and existing legislative efforts to control or limit greenhouse gas emissions could
affect the company’s energy source and supply choices as well as increase the cost of energy and raw materials
derived from fossil fuels. Such efforts are also anticipated to provide the business community with greater certainty for
the regulatory future, help guide investment decisions, and drive growth in demand for low-carbon and energy-efficient
products, technologies, and services.
At the national and regional level, there are existing efforts to address climate change. Several DuPont facilities in the
European Union are regulated under the EU Emissions Trading Scheme (‘‘EU ETS.’’) In other countries, including the
U.S., policy debate continues. The current unsettled policy environment in the U.S., adds an element of uncertainty to
business decisions particularly those relating to long-term capital investments. If in the absence of federal legislation,
states were to implement programs mandating GHG emissions reductions, DuPont, its suppliers and customers could
be competitively disadvantaged by the added administrative costs and burden of complying with a variety of state-
specific requirements. A 2007 U.S. Supreme Court ruling directed EPA to determine whether carbon dioxide endangers
human health and, if so, to take steps to regulate it under the CAA. In December 2009, EPA made a determination that
carbon dioxide emissions endanger human health and the environment requiring EPA to pursue regulation of carbon
dioxide emissions under the CAA. Such regulation by EPA, in the absence of or in addition to federal legislation, could
result in more costly, less efficient facility-by-facility controls versus a federal, market-based cap and trade program.
Differences in regional or national legislation could present challenges in a global marketplace highlighting the need for
coordinated global policy action.
In the fourth quarter 2009, EPA issued the Final Mandatory Reporting of Greenhouse Gases Rule which requires
reporting of greenhouse gas (GHG) emissions in the United States beginning in 2010. EPA may adopt additional
requirements under the rule. The rule requires suppliers of fossil fuels or industrial greenhouse gases, manufacturers of
vehicles and engines, and facilities that emit 25,000 metric tons or more per year of GHG emissions to submit annual
reports to EPA. DuPont has about 30 sites that have a stake in one or more of the covered gases at which emissions
monitoring equipment must be installed. Until all regulatory requirements under the rule are finalized, considerable
uncertainty will remain regarding cost estimates. Based on the final rule and EPA’s 2009 proposal regarding additional
requirements, management does not expect that the cost to comply with the rule will be material to its operations and
consolidated financial position.
The company assesses the potential risks that climate change could present, and looks for opportunities to make its
overall portfolio less energy and emissions intensive. DuPont weighs energy use when investments or divestitures are
considered. The company continuously evaluates opportunities for existing and new product and service offerings in
light of the anticipated demands of a low-carbon economy.
Registration
The goal of the U.S. Toxic Substances Control Act (TSCA) is to prevent unreasonable risks of injury to health or the
environment associated with the manufacture, processing, distribution in commerce, use, or disposal of chemical
substances. Under TSCA, the EPA has established reporting, record-keeping, testing and control-related requirements
for new and existing chemicals. In September 2009, EPA announced its comprehensive approach to enhance the
Agency’s current chemicals management program under TSCA, including development of action plans. The Agency’s
actions on chemicals may include initiating regulatory action to label, restrict, or ban a chemical, or to require the
submission of additional data needed to determine the risk a chemical may pose. Also in 2009, EPA announced its
‘‘Essential Principle for Reform of Chemicals Management Legislation.’’ The company is monitoring these
developments under TSCA.
In December 2006, the European Union adopted a new regulatory framework concerning the Registration, Evaluation
and Authorization of Chemicals. This regulatory framework known as REACH entered into force on June 1, 2007. One
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