Global Pharmaceutical Firm

Business Activity: Medical Products and Healthcare
Location: International
Project: Strategic Consulting

A major international pharmaceutical corporation sought to understand the potential impact of proposed federal energy and climate legislation on their energy expenditures. The client engaged the Sieben Energy Associates strategic consulting team to analyze how energy costs at their production sites might rise in the event the bill became law, given current levels of energy consumption and corporate growth expectations.

A price on carbon is a provision commonly include in bills that address climate change. Although the price may take many forms, it typically involves a charge levied against power generators and heavy industries based on their greenhouse gas emissions from fossil fuel combustion. Corporations with multiple large domestic manufacturing facilities and greater than 25,000 metric tons of carbon dioxide equivalent direct emissions are particularly vulnerable to the associated risks.

When the client approached SEA to calculate the financial impact of a specific climate bill on their business, SEA already had a thorough understanding of the legislation and its potential effects. After listening to the client’s needs and requesting historical energy consumption and cost information, SEA proposed a project that addressed their concerns. SEA’s consultants first audited and then compiled the energy data and utilized SEA-developed software tools to conduct a series of calculations and analyses involving electricity and fossil fuels, including natural gas, diesel, and various fuel oils.

By factoring in a range of carbon pricing estimates and accounting for unique electric generation mixes in different states, SEA forecasted the client’s energy spend through 2030. Emissions and cost projections through 2030 were plotted by fuel type and facility, and for various scenarios—including best, worst, and reference cases. SEA’s presentation to the client included a thorough discussion of the meaning of the results and recommendations.

Sieben Energy Associates successfully provided the client with a solid understanding of potential legislation and associated risks. But the strategic consulting team also provided the corporation with insights into potential opportunities, such as legislative provisions that might offer incentives for reducing their carbon footprint. Ultimately, SEA delivered reassurance: The client realized that their energy costs might rise under a federal program setting a price on carbon, but that the percentage increase in most scenarios was relatively modest and could be offset through improvements in energy efficiency.