carbon accounting (jon malcolm 9-6-09)
TRANSCRIPT
www.xcarbon.co.uk
Carbon Accounting
Jon MalcolmDirector of Xcarbon Limited
9th June 2009
www.xcarbon.co.uk
“Climate change is probably the greatest long-term challenge facing the
human race.”
Tony Blair, March 2006
www.xcarbon.co.uk
“If we go beyond two degrees [of global warming] we will raise hell”
John Schellnhuber CBE• Chief scientist on climate change at the G8 meeting in Germany 2007• Founding Director of the Potsdam Institute for Climate Impact
Research in 1991• Director of the Tyndall Centre for Climate Change Research in
Cambridge UK• Longstanding Member of the Intergovernmental Panel on Climate
Change (IPCC)
www.xcarbon.co.uk
“Climate change is one of the most pressing issues facing our society today. The best scientific
projections indicate that we have very little time left –indeed less than 100 months – in which to alter our
behaviour drastically”
HRH Prince of WalesNobel Laureate Symposium
May 2009
www.xcarbon.co.uk
Global Warming – Main Causes
• Solar Radiation• Land coverage• Ice coverage• Aerosols• Greenhouse gases
o Carbon dioxide (CO2)o Methane (CH4)o Nitrous Oxide (N2O)o Others
www.xcarbon.co.uk
The relative contribution to global warming
Source: The UK Climate Change Programme, HM Government (Mar 2006)
63%
24%
10%3%
Carbon Dioxide
Methane
Nitrous Oxide
Others
(over the next 100 years of current emissions of greenhouse gases)
www.xcarbon.co.uk
Increase in CO2 10,000 years ago to present
Source: IPCC
www.xcarbon.co.uk
Some effects of global warming
• Melting ice caps and glaciers – Reduction of albedo• Melting permafrost – Release of methane• Thermal expansion of oceans – Rising sea levels• Methane release from ocean methane hydrates• Climate will change
www.xcarbon.co.uk
Some effects of climate change
• Heat waves• Droughts• More precipitation• Flooding• Storm surges• Disruption of Asian monsoon
www.xcarbon.co.uk
Some implications
• More crop failures – food shortages & higher food prices
• Loss of low lying land – less agricultural land• Water shortages• Migration of people from drought areas• Migration of people from low lying land• Increased weather damage – higher insurance
premiums
www.xcarbon.co.uk
Some implications for businesses
Physical Impacts
• Vulnerability of physical assets• Supply chain disruption• Risk management, insurance and adaptation
costs• Workforce disruption• Business disruptions
www.xcarbon.co.uk
Some implications for businesses
Regulation
• Regulation of operational emissions• Carbon markets• Compliance costs• Disclosure• Tax, subsidies, credits• Product standards• Litigation risks
www.xcarbon.co.uk
Some implications for businesses
Reputation
• Increasing public concern• Consumer, retailer and societal perceptions• Brand / image impact• Employee and investor perceptions
www.xcarbon.co.uk
Some implications for businesses
Market effects
• Changing consumer attitudes and demand patternso Influencing consumer buying behaviouro Driving consumer buying behaviour
• Preference foro Green productso Low carbon productso Sustainable productso Carbon neutral and carbon zero companies
• Supplier pressure on supply chain• Environmental criteria in tenders• New technologies, products and markets
www.xcarbon.co.uk
Energy – Huge Price Rises
Energy demand
• Increasing demand worldwide especially China, India • Increasing populations• Increased residential demand
(3 million new homes in UK by 2020)• Increasing summer demand - air-conditioning
www.xcarbon.co.uk
Energy – Nuclear plant closures
0
2000
4000
6000
8000
10000
12000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Year
MW
Sizewell B Heysham 2 Torness Dungeness B Heysham 1 HartlepoolHunterston B Hinkley Point B Wylfa Oldbury
www.xcarbon.co.uk
Electricity Generation Fuel Mix1 April 2007 to 31 March 2008
1.9Other
5.5Renewables
16.1Nuclear
43.5Natural Gas
33Coal
% Energy Source
www.xcarbon.co.uk
Comparison of Generation Fuel Mix
0
50
100
150
200
250
300
350
400
450
1990 2000 2010 2015 2020
TWh
Pumped StorageImportedRenewablesNuclearGasOilCoal
Source: DTI UK Energy and CO2 Emissions Projections July 2006
www.xcarbon.co.uk
Why account for carbon
www.xcarbon.co.uk
LegislationInternational
• Kyoto Protocol (average 5% CO2 reduction for developed countries)• Kyoto replacement (‘deep cuts in emissions’)
EU Directives
• EU Emissions Trading Scheme• EU Energy Performance of Buildings Directive• EU Bio-fuels Directive• EC Directive on Energy End Use Efficiency and Energy Services• EC Energy Labelling Directive• Others
www.xcarbon.co.uk
LegislationNational and Local
• Climate Change Levy and Climate Change Agreements• Renewables Obligation• Climate Change Act• Carbon Reduction Commitment• Carbon Emissions Reduction Target (CERT)• Building Regulations• Energy Performance Certificates
o Commercial and public buildingso Residential and rented properties
• Display Energy Certificates• Vehicle Excise Duty and Company Car Tax• Merton 10%• Other
www.xcarbon.co.ukSource: Defra
CCL: 990,000 orgs., 51 MtC
Rest - ES directive980,000 orgs; 15 MtC
Small businessesdo not pay CCL:3m orgs; 1 MtC
EU ETS
Refineries & Offshore:70 orgs; 10 MtC
EU ETS exc. Refineries & Offshore300 orgs., 13MtC
CCAs4,700 orgs21 MtC5,000 orgs;
14 MtCNo emissions
overlap with CCAsor direct emissions
targeted by EU ETS
CRC
Non-residential emissions by policy
www.xcarbon.co.uk
Units of Carbon
• Carbon dioxideo gCO2, kgCO2, tCO2
o Product labelling, vehicle emissions, CRC• Carbon dioxide equivalent
o tCO2eo Accommodates other greenhouse gaseso Kyoto Protocol, carbon trading
• Carbono Some government figures, Carbon Trust loans
1 tCO2 = 1 tCO2e = 0.2727 tonnes of Carbon
www.xcarbon.co.uk
Where to account for carbon (and / or energy)
Mandatory
• Kyoto Protocol• EU Emissions Trading System (EU ETS)• Carbon Reduction Commitment (CRC) from 2010• Energy Performance Certificates (EPCs)• Display Energy Certificates (DECs)• Annual reporting from 2012
www.xcarbon.co.uk
Where to account for carbon (and / or energy)
Voluntary
• Carbon footprint measuremento Organisationso Productso Events
• Carbon Disclosure Project (CDP)• Annual reports / CSR reports• Carbon offsetting• Business and investment decisions
www.xcarbon.co.uk
Carbon Footprinting Standards
• GHG Protocol• Global Reporting Initiative (GRI)• ISO 14064• Carbon Trust Standard• PAS 2050• The Carbon Reduction Label• BS 8901
www.xcarbon.co.uk
Carbon Footprinting
Basic Approach
• Onsite fuel usage• Onsite electricity usage• Use of transport controlled by the organisation• Convert the consumption figures into tCO2e using
standard emissions factors
www.xcarbon.co.uk
Producing a full carbon footprint
• Define the methodologyo GHG Protocol approacho PAS 2050:2008 from the BSI
• Specify the boundaries o Organisational Boundaryo Operational Boundary (Scopes 1, 2 & 3)o Time period
Carbon Footprinting
www.xcarbon.co.uk
Carbon Footprinting
Transport – Business
Transport – Commuting
Production of purchased materials
Waste Disposal
Transport - Product
Leased assets, franchises, outsourcing
Use of products
Purchased electricity,
heat & steam
Fuels Combustion
Owned Transport
Process Emissions
Fugitive Emissions
Scope 1Direct
Scope 2Utilities - Indirect
Scope 3Other Indirect
www.xcarbon.co.uk
Carbon Reduction Commitment
• New scheme• Applicable to firms with over 6,000 MWh of half-hourly
metered electricity (e.g. large commercial and public sector organisations)
• Mandatory emissions trading• Allowances to be sold in introductory phase then
auctioned• Funds raised to be recycled according to a league
table• League table based on carbon reduction performance
www.xcarbon.co.uk
Carbon Reduction Commitment
• Exclusionso All transport emissionso Organisations with over 25% emissions in
Climate Change Agreementso Direct emissions sources covered by EU ETS
• Penalties for non-complianceo Failure to register: £5,000 + £500 per dayo Failure to provide annual report or footprint report:
£5,000 + £0.05 per tCO2 per dayo Failure to comply with commitment: £40 per tCO2o Publication of non-compliance
www.xcarbon.co.uk
Carbon Accounting• Useful KPI• Re-evaluate all processes of organisation• Identify savings opportunities• Necessary in business and investment decisions• Essential in drive to sustainability / survival• Compliance with legislation• Useful in strengthening relationships with customers and
suppliers
www.xcarbon.co.uk
CIMA MastercourseAccounting for carbon
14th July 2009London
• How carbon legislation impacts organisations• Carbon footprints• Carbon offsetting• Reducing energy and carbon costs• Investment and business decisions
