In response to the ever-increasing concern over the question of climate change, PotashCorp has developed a carbon management strategy to reduce its greenhouse gas (GHG) emissions and its operations' carbon footprint. The plan comes in the wake of the company's commitment to reduce greenhouse gas emissions per tonne of production by 10 percent between 2007 and 2012.

PotashCorp's ambitious vision for the future is based on three guiding principles. First, to ensure compliance with future regulations in the most effective manner; secondly, to protect the company's good sustainability reputation as it develops its strategy; and lastly, to explore opportunities for generating revenue in new regulatory frameworks.

The first step toward achieving a sound strategy was clear.

"Meeting our reduction goals required that we first take a look at what our overall carbon footprint looks like in order to develop a strategy for reducing that footprint," said John Hunt, PotashCorp Vice President of Safety, Health and Environment and a member of the Climate Change Subcommittee. To collect this information, PotashCorp sought out the services of URS, a respected management services company specializing in environmental solutions.

The report submitted by URS pinpointed the greenhouse gas emission footprint of each facility. It also provided the insight that enabled PotashCorp to devise a management strategy consisting of emission reduction projects for the largest emission units, as well as potential future compliance responsibilities and opportunities.

In 2008, PotashCorp budgeted to install N₂O monitors at its Augusta and Geismar nitric acid plants to document its baseline rate of N₂O emissions. The nitric acid plant at Lima is already operating an N₂O monitor. By monitoring and establishing the baseline of N₂O emitted by its nitric acid plants, the company can document its achievements in reducing those emissions. One of the potential reduction methods under consideration involves installation of low-N₂O emitting catalysts for manufacturing nitric acid.

PotashCorp's Trinidad nitrogen facility has reduced its emissions on a per-tonne of production basis as a result of energy efficiency projects in 2006 and 2007. The company is investigating the sale of emission credits related to those emission reductions. Evaluation is ongoing in 2008.

PotashCorp has also committed to retiring more than 1,500,000 tonnes of carbon dioxide equivalent emissions by the end of 2010 as part of its enrollment in the Chicago Climate Exchange (CCX). CCX members make a voluntary, but legally binding, commitment to meet annual GHG emission reduction targets. Companies that reduce below the targets have surplus allowances to sell or bank; those that emit above the targets comply by purchasing CO₂ allowances from other CCX members.

PotashCorp's membership in CCX is yet another step in a comprehensive plan to manage its greenhouse gases, and will serve as training for the US government's anticipated adoption of some form of cap-and-trade program in the future. Since the company has significantly reduced its GHG emissions from the CCX baseline levels (1998-2002), it will have the opportunity to sell CO₂ equivalent on the CCX market.

To remain on the cutting edge of this issue, PotashCorp is active in The Fertilizer Institute. In 2007, the company's Vice President of Procurement, Karen Chasez, and Senior Director of Corporate Relations, Tom Pasztor, were named to The Fertilizer Institute's new Climate Change Task Force. Chasez is the chairman. The task force will monitor new and proposed GHG regulations and inform and advise TFI's fertilizer company membership about the issue.

Future regulations in the countries where PotashCorp operates are still unclear, but most observers believe that climate change will be addressed through a cap-and-trade program in the US, very similar to the Kyoto regulations. Under this system, the US government would establish an emission baseline, and "cap" emission levels at that baseline amount.

Over time, the regulations would require GHG emissions to be lower for the entire country. Many of the proposed regulations reduce GHG emissions by 70 percent over 40 years. The emission levels at each plant site or company would not be important as long as the emissions for the entire country were meeting the milestones. Therefore, certain companies could sell their "allowances" to emit GHGs and others could buy allowances to emit GHGs. This is the "trading" part of the regulation. Six GHGs are mentioned in most of these proposed regulations, but the majority of emissions are from CO₂, N₂O and methane.

PotashCorp realizes that it must continue to work with all its stakeholders to address climate change concerns. With only 3 percent of the earth's surface available for farming, the company firmly believes this land must remain in use for growing crops if the world is to have sustainable food production.

The UN's Intergovernmental Panel of Climate Change Fourth Assessment Report states that about 17 percent of the man-made GHG emissions are from land use. This includes activities such as deforestation. This is why PotashCorp believes in high-yield farming and other best practices concerning land use. The company highlights these activities and others on its Enriching website, www.potashcorpenriching.com.

PotashCorp also supports the research of the International Plant Nutrition Institute (IPNI) to determine the science behind land use and GHG emissions. In December 2007, IPNI issued its report Greenhouse Gas Emissions from Cropping Systems and the Influence of Fertilizer Management. PotashCorp believes that the best course of action will come by working together and making informed decisions.



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