DuPont 2015 Annual Report Download - page 48

Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
47
Considerable uncertainty exists with respect to environmental remediation costs, and, under adverse changes in circumstances,
the potential liability may range up to $1.0 billion above the amount accrued as of December 31, 2015. However, based on existing
facts and circumstances, management does not believe that any loss, in excess of amounts accrued, related to remediation activities
at any individual site will have a material impact on the financial position, liquidity or results of operations of the company.
Pursuant to the Separation Agreement discussed in Note 3 to the Consolidated Financial Statements, the company is indemnified
by Chemours for certain environmental matters, included in the liability of $492 million, that have an estimated liability of $291
million as of December 31, 2015 and a potential exposure that ranges up to approximately $610 million above the amount accrued.
As such, the company has recorded an indemnification asset of $291 million corresponding to the company's accrual balance
related to these matters at December 31, 2015.
As of December 31, 2015, the company has been notified of potential liability under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA or Superfund) or similar state laws at about 500 sites around the U.S., including
approximately 100 sites for which DuPont does not believe it has liability based on current information. Active remediation is
under way at approximately 140 of these sites. In addition, the company has resolved its liability at approximately 190 sites, either
by completing remedial actions with other PRPs or by participating in "de minimis buyouts" with other PRPs whose waste, like
the company's, represented only a small fraction of the total waste present at a site. The company received notice of potential
liability at one new site during 2015 compared with three and five similar notices in 2014 and 2013, respectively.
Environmental Capital Expenditures
In 2015, the company spent approximately $20 million on environmental capital projects either required by law or necessary to
meet the company's internal environmental goals. The company currently estimates expenditures for environmental-related capital
projects to be about $40 million in 2016. In the U.S., additional capital expenditures are expected to be required over the next
decade for treatment, storage and disposal facilities for solid and hazardous waste and for compliance with the Clean Air Act
(CAA). Until all CAA regulatory requirements are established and known, considerable uncertainty will remain regarding estimates
for future capital expenditures. However, management does not believe that the costs to comply with these requirements will have
a material impact on the financial position or liquidity of the company.
Climate Change
The company believes that climate change is an important global issue that presents risks and opportunities. Expanding upon
significant global greenhouse gas (GHG) emissions and other environmental footprint reductions made in the period 1990-2010,
as of 2014 the company reduced its environmental footprint, achieving reductions of 9 percent in GHG emissions intensity and 8
percent in water consumption versus a 2010 baseline. In addition, as of 2014, the company achieved an 11 percent reduction in
energy intensity from non-renewable resources versus a 2010 baseline. The company continuously evaluates opportunities for
existing and new product and service offerings in light of the anticipated demands of a low-carbon economy.
The company is actively engaged in efforts to develop constructive public policies to reduce GHG emissions and encourage lower
carbon forms of energy. Such policies may bring higher operating costs as well as greater revenue and margin opportunities.
Legislative efforts to control or limit GHG 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. Similarly, demand is expected to grow for products that facilitate
adaptation to a changing climate.
There are existing efforts to address GHG emissions at the national and regional levels. Several of the company's facilities in the
European Union (EU) are regulated under the EU Emissions Trading Scheme. China has begun pilot programs for carbon taxes
and trading of GHG emissions in selected areas. The current unsettled policy environment in the U.S., where many company
facilities are located, adds an element of uncertainty to business decisions, particularly those relating to long-term capital
investments.