energy science director hsbc director of low carbon innovation cred carbon reduction carbon...
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Energy Science Director HSBC Director of Low Carbon Innovation
CRedCarbon Reduction
Carbon Footprint Issues
CRed
Keith Tovey MA, PhD, CEng, MICE, CEnv
Recipient of James Watt Medal5th October 2007
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Why– To assess overall performance of an organisation
– To assess requirements for a particular activity
Requirements• Needed to set a baseline against which improvements can
be measured.
• Large Organisations are already affected by EU-ETS – smaller one may well be incorporated before long.
• EU-ETS is a trading system for carbon emissions. Proactive companies can enhance benefit to company both from environmental perceptions and also financially.
• Boundary Definitions can be difficult
• Need to have an auditable and trackable system.
Measuring Carbon Footprints
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• Carbon Trading has potential to reduce carbon emissions at cheapest cost.
• Companies are given a free allowance which may be reduction on historic trends, an increase on historic trends, or at a constant level.
• Carbon Trading takes place between companies.
• If a company exceeds it allowance it can reduce its carbon emissions, or it can purchase allowances from someone who has a surplus.
• However, there is an ultimate buy out penalty if there are too few allowances.
• Currently this penalty 40 € a tonne in EU-ETS
Carbon Trading
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• Example with no trading.• Requirement for a 10% cut in emissions
Carbon Trading: How it works -150
0 to
nnes
600
tonn
es
Company A Company B
50 tonnes reduction
60 tonnes reduction
Cost for reduction is say € 10/tonne
Total cost to company
€ 500
Cost for reduction is say € 20/tonne
Total cost to company
€ 1200
Cost to achieve 10% reduction: 110 tonnes = € 1700 or € 15.45 per tonne
All Examples use Euros (€ )as the currency
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• Opportunities for Energy or Carbon Reduction• Trends are same, but factors vary depending on carbon intensity
Carbon Trading – Company A: How it works -2
B C DA50 tonnes 2010 30
E F G30 3060
Cumulative Carbon Savings
Cos
t p
er t
onn
e
30
2019
13121110
Target Reduction is 50 tonnes – can be achieved with an investment of € 500
Tradable value of allowance high: company makes profit by investing in other schemes
Tradable Value of Allowances
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• Opportunities for Energy or Carbon Reduction• Trends are same, but factors vary depending on carbon intensity
Carbon Trading – Company B: How it works -3
BCA
60 tonnes 20 10
G
200
Cumulative Carbon Savings
Cos
t p
er t
onn
e
30
262420
Target Reduction is 60 tonnes – can be achieved with an investment of € 1200
Tradable value of allowance low: company buys allowances
Tradable Value of Allowances
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• Same Example with trading.• Requirement for a 10% cut in emissions
Carbon Trading: How it works -4
Company A Company B
No Trading:Cost to achieve 10% reduction: 110 tonnes = € 1700 or € 15.45 per tonne
Tonnes reduction
Cost per tonne
Total cost
Project A 50 € 10 €500Project B 10 € 11 €110Project C 20 € 12 €240Project D 30 € 13 €390TOTAL extra
60 €12.33 €740
Tonnes reduction
Cost per tonne
Total cost
Project A 60 € 20 € 1200
Cost is much more expensive than for company A.
Would it be cheaper to purchase 60 tonnes of allowances rather than implementing reduction strategies?
With Trading:Cost to achieve 10% reduction: 110 tonnes = € 1240 or € 11.27 per tonne
If Company B paid more than € 12.33 this would be possible
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Carbon Trading: How it works -5Company A Company B
Tonnes reduction
Cost per tonne
Total cost
Project A 50 €10 € 500TOTAL extra
60 €12.33 € 740
Tonnes reduction
Cost per tonne
Total cost
Project A 60 € 20 € 1200
No Trading: total cost for 110 tonnes = € 1700 or € 15.45 per tonne With Trading: total cost for 110 tonnes = € 1240 or € 11.27 per tonne
What would be a realistic trade price?
If too low: little incentive for Company A to invest in Projects b, C, and D.
If too high Company B might be prepared to pay full cost rather than have the hassle
What happens if neither Company does anything? Under EU ETS they will have to pay fine of: €40 per tonne (phase 1) or €100 (phase 2)
In absence of brokers, optimum price is (€12.333 + € 20 ) / 2 = €16.167
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Carbon Trading: How it works -6Company A Company B
Tonnes reduction
Cost per tonne
Total cost
Project A 50 €10 €500TOTAL extra
60 €12.33 €740
Tonnes reduction
Cost per tonne
Total cost
Project A 60 € 20 €1200
No Trading: total cost for 110 tonnes = € 1700 or € 15.45 per tonne With Trading: total cost for 110 tonnes = € 1240 or € 11.27 per tonne
In absence of brokers, optimum price is €16.167
Company A are not obliged to do more than Project A
Cost for Projects B, C, and D would be €740
However, sell allowances @ €16.167 gives and income of €970
i.e. Total cost of extra projects is paid for and there is also a profit of € 230
Company B will also benefit
Paying €970 will save them €230 compared to implementing a 10% cut
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Carbon Trading: How it works -7Company A Company B
Tonnes reduction
Cost per tonne
Total cost
TOTAL extra
60 €12.33 €740
Tonnes reduction
Cost per tonne
Total cost
Project A 60 € 20 €1200
No Trading: total cost for 110 tonnes = € 1700 or € 15.45 per tonne With Trading: total cost for 110 tonnes = € 1240 or € 11.27 per tonne
In absence of brokers, optimum price is €16.167
Company A has all extra projects paid for and makes a profit of € 230
Company B saves € 230 compared to making saving
Schemes with and without trading result in same reduction, but Trading hopefully ensures cheapest options are implemented.
Case with brokers with commission @ 10% of trade value
Assume Commission is shared between sellers and buyers. Commission: €1.6167: Buying Price 16.975 (=16.167 + 1.6167/2): Selling Price 15.358
Profit now falls to €181.50 for Company A and saving is €181.50 for Company B
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• Scope of Measurement• A complete site/organisation• A particular product or activity• Clear definition of boundaries of system under investigation is
needed.
Measuring Carbon Footprints
Factory/ Office/ Company/
Organisation
Raw Materials and transport
Energy for space heating/lighting
Process Energy Requirements
Machinery
Machinery to make machines
Product A
Product B
Product C
Customers
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Scope of Measurement• A complete site/organisation• A particular product or activity• Clear definition of boundaries of system under investigation is needed. • How does one apportion energy/carbon emissions in multi-product systems?
– e.g. making several different products in a factory– stop production of all items but one and then do detailed measurement of production of that product.– Separately meter each product stream– Allocate inputs of energy/raw materials on basis of
• Cost• Weight• Energy Content• Some other rational basis
Measuring Carbon Footprints
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Measuring Carbon Footprints• Definition of Procedure
Transport of workforce to/from work
* At best Generally impossible to track except in very few isolated cases
Issue Precision of Data and values obtained
Auditable for tracking purposes
Direct Energy Use *** to ***** depending on how data are collected.
Yes potentially with high accuracy if data quality is good
Direct Process Emissions including primary materials
*** to **** Yes – (some limitations over materials).
Indirect Process Emissions (land use changes etc).
* to *** To some extent – accuracy low in many cases, better in others.
Procurement (other than primary materials)
* To some extent but accuracy will be generally very low
Direct Transport of primary materials and products including marketing
**** for road / rail – depending on records kept ** for air/sea transport -
Yes, but precision may vary from year to year with air/sea. Also what counts as business travel????
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Measuring Carbon Footprints
• Acquire Energy Consumption Data
• Analyse Energy Consumption – and hence estimate carbon emissions.– Need to normalise data to allow for
• annual Lighting variations• sub and super annual Heating variations• work scheduling
• Assess Awareness/Attitudes of individuals
• Advise on methods to reduce carbon footprint
• Account for performance in move to carbon reduction
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Acquiring Energy Consumption Data• Data needed
– Raw energy consumption – not financial costs– Estimated readings are problematic– Need Date and Time when readings were taken– Readings do not necessarily have to be taken at precisely same time each
period. – Check gas meters – what units are they using? cu ft? cu ft x 100, cu m?– Climate data on daily basis – also daylight hours.
• Frequency of readings?– Three monthly too long– One monthly generally too long except for initial appraisal – problems if
there are estimates or date and time is not known– Weekly? A compromise, but cannot extract difference between weekday
and weekend – or variations during week – switch off campaign in UEA.– Daily – good interval – more data intensive – how do you deal with
weekend if manual collection is taking place?• 09:00 approx each day, but additional reading at 17:00 say on Friday.
– Sub daily – generally to intensive of data, but informative for a short intensive period – e.g. up to a week.
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summer winter summer
winter
summer
Before conservation strategiesImproved insulation to buildingImproved insulation on hot water tankDegradation of performance
Time
savi
ngCumulative Saving Method
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• Cell e6 =IF(C6="","",A6+C6)– Copy to other cells in column E
• Cell f6 =IF(OR(E5="",E6=""),"",(E6-E5)*24)• Copy to other cells in column F
• Cell J6 =IF($F6="","",(G6-G5)*1000)
• Cell K6 =IF($F6="","",(H6-H5)*1000)
• Cell L6 =IF($F6="","",(I6-I5)*1000) copy into all cells in cols j to l
• Cell M6 =IF($F6="","",J6-K6-L6)
• Cell N6 =IF($F6="","",M6*24/F6)– Copy cells j5:n5 to all cells in respective columns
Processing Raw Energy Data