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10 Jul 2009
While scientists debate the nuances of climate change and governments impose greater regulation around carbon emissions, businesses are left trying to measure the impact their work is having on the environment. But do they have the right tools?
Under the terms of recent and forthcoming legislation – such as the European Union Emission Trading System (EU ETS) – governments across Europe will have to account for all of their carbon emissions. As the largest multinational emissions trading scheme in the world, the EU ETS in particular is setting the bar very high. This is putting pressure on those in the business community to live up to these standards. Businesses represent the bulk of emissions in any given developed country; in order for a government in any EU country to hit its targets, companies at home will need to pull their weight.
It’s part of an increasing trend to view carbon as something that should be managed at all stages of a product or service life-cycle – even to point of purchase. The intentions are good, of course, but as yet there is no universally agreed method for the comprehensive measurement of carbon emissions. This is prompting serious concern among businesses within the public and private sector.
“Some companies, such as those in the power sector, burn fossil fuels directly and their carbon measurement processes are therefore fairly straightforward,” says David Nancarrow, managing director of environmental management and remediation with Atkins. “But other businesses emit carbon in a more indirect manner with a significant proportion of their carbon emissions being embedded within their products and services. As a result, these are more difficult to reliably measure and hence control.”
For example, the electronics industry faces a particular challenge in this area, as many of its products and associated sub-components derive from numerous different locations, involving a variety of different carbon-releasing activities from a number of sources.
“Businesses are keen to extend carbon savings over and beyond the manufacturing stage right through the entire product’s life-cycle,” agrees Guy Mercer, associate director and head of corporate sustainability at Atkins.
For example, Atkins developed a bespoke carbon measurement tool for Pace plc that helps the company monitor the carbon emissions associated with its supply chain.
“Pace is working to improve the life-cycle performance of its Set Top Boxes (STBs) and has embarked upon a new initiative to do this called Design for Environment, whereby its designers continually strive to reduce the life-cycle impact of their products, including the associated carbon emissions,” says Mercer. Atkins’ carbon measurement tool applies to supplier companies, which represent over 50 per cent of all components used in Pace’s STB products, providing a commendable start in tackling its product-related carbon emissions.
Reducing life-cycle impacts is a positive way to reduce carbon emissions, but this is only the beginning. According to Mercer, there is no reason why, eventually, this approach could not be applied to virtually all goods and services in circulation, in much the same way that society accounts for the flow of money.
Carbon measurement and accountancy tools will almost certainly be part of any future strategy for businesses, but will they be able to advance quickly enough? Mercer believes the measurement tools being created by Atkins are already setting the standards in many areas and will continually improve over time.
“Atkins continues to invest in the development of carbon measurement tools and clients can use one or a number when applying them to their businesses, projects, products or services,” he says. Legislation clearly cannot be escaped, but some sectors are still far behind in preparing for their anticipated carbon reduction targets.
“Business has struggled when it comes to addressing the urgency of tackling carbon emissions,” warns Mercer. Many remain unaware of how (and to what extent) they contribute to the causes of climate change. Crucially, some fail to realise what they can (and arguably must) do to minimise their contribution. This remains no excuse for inaction, argues Mercer, and organisations should seek to get to a reasonable state of understanding of these fundamental aspects very quickly. For example, for any business looking to produce new infrastructure, one of Atkins’ carbon accountancy tools offers a clear starting point for making a responsible environmental decision before the first brick is even laid. The web-based Remediation Options Carbon Calculator (ROCC) calculates the CO2 emissions of individual brownfield sites and works out which remediation technique is the most environmentally friendly option.
Devised to quantify the carbon of existing land, it also works to define the consequences of the carbon emission of materials brought to the project. For Gavin Bollan, head of business, air quality and greenhouse gas management at Atkins, this represents a significant advancement in carbon quantification.
“You can’t just take a snapshot of a consequence. We’re concerned with the carbon consequences of a project before, during and after,” he explains.
Carbon tools are poised to become a vital ingredient for any business that needs to track its emissions and this includes most large commercial and public sector organisations, so why is there currently no standardised accounting tool available?
“At present, we can’t compare carbon accounting standards and systems to those of financial accounting,” Mercer explains. “Let’s not forget that financial accounting systems and standards evolved over hundreds of years and recent events have shown that these are still far from perfect. Sadly, the imperative for action to tackle climate change does not afford the same time-scale for carbon accounting. Hence, reliable carbon accounting is still relatively new and still very far from perfect too.”
Indeed, the majority of professionals involved in the carbon quantification field are cautious not to refer to current accounting tools as a panacea. They prefer to look on them as the most effective starting point available for reporting on climate change right now.
“We are really trying to close the gap between no carbon accounting and perfect carbon accounting tools,” says Mercer. “We are striving to provide tools that offer clients and users a reasonable and reliable means of making informed judgements about the carbon impact of their project options.”
While the speed of climate change is encouraging the development of new carbon measurement and reporting solutions for greenhouse gases (eg PAS 2050 Specification for the assessment of the lifecycle greenhouse gas emissions of goods and services), Mercer acknowledges that there is still much work to be done in this area: “We have an imperfect problem that, for the moment, only has imperfect solutions.”
Nonetheless, carbon accountancy tools deliver a real mechanism for firms to understand and manage their carbon behaviour. They also happen to be complex systems that are proving difficult in winning the public’s imagination. This puts them in stark contrast with their predecessors, including carbon offsetting, which were often presented to shareholders in neat, easily digestible chunks.
Carbon offsetting’s irresistible image was not lost on many organisations, who initially seized it as an easy way to win the environmental PR war. But as Mercer warns, “offsetting, while it can have a role to play, is not a sufficient response to the challenges of climate change as it does not usually require us to make the behavioural changes that are undoubtedly required.”
No-one understands this more than those sectors facing the toughest legislative targets. For example, UK water companies need to act quickly to reduce their emissions for Phase One of the Carbon Reduction Commitment, which begins in January 2010. It’s an uphill struggle: the water sector accounts for three per cent of total energy use in the UK and is responsible for four million tonnes of CO2 a year.
Fifty-six per cent of all its greenhouse gas emissions stem from wastewater treatment. Drought, flooding, water quality changes and coastal erosion are further headaches, and the industry’s environmental reputation has taken a battering in recent years. The pressures facing the water industry are huge and their difficulties are compounded by the limited extent of tracking emissions in industry to date, even though the water sector is ahead of some sectors in its thinking. The development of carbon tools will be important in further guiding emissions control.
For Southern Water in the UK, Atkins developed a carbon calculator to estimate the CO2 emissions associated with both infrastructure and processes. Information on emissions can be accessed from pipelines right through to water meters, providing a comprehensive carbon-emitting picture. The calculator gives users the option to record greenhouse gas emissions from embodied carbon found in primary construction materials and components, as well as CO2 emitted during the construction process. Similar work has also been carried out for Sutton & East Surrey Water and South East Water.
The tool also allows the user to analyse CO2 emissions when assets are in operation. This is particularly important in the UK water industry: carbon emissions associated with the construction of new infrastructure and the operation of these assets must be reported to the Water Services Regulation Authority (Ofwat).
Atkins’ carbon accounting tools can even help companies make more informed financial decisions based on capital cost efficiency. The Carbon Calculator enabled both Southern Water and Pace to compare both the environmental cost of future activities and their financial cost. It uses a mechanism that works out the price of emissions based on the Shadow Price of Carbon, published by the UK’s Department for Environment, Rural and Food Affairs (Defra).
Mercer argues that reliable carbon measurement and accounting tools will help companies get their environmental and financial balance sheets in good standing for the future. He also notes that companies that apply these tools now will be in better shape even beyond the current recession.
“Economic history tells us that recessions last a few years but climate change operates over much longer timeframes,” he says.
While mitigating climate change through embodied and operational auditing is currently focused on business, we all engage in energy-impacting lifestyles. Does this mean that there could be carbon accountancy tools developed for individual use some day, in anticipation of a government-imposed rationing scheme?
Mercer considers it unlikely that stringent individual carbon rationing will feature in a political party manifesto in the immediate future, but would certainly not rule it out in the longer term.
Indeed, the recent “carbon budget” of 2009 indicates that the UK is to adopt carbon budgeting as one way to reach the country’s overall target for carbon reduction, namely 80 per cent by 2050. However, Mercer and many other sustainability experts agree that, as climate change accelerates, the need for carbon measurement and accounting methods will be more sought after then ever before.
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