Thursday, 30 April 2009

Conjunction Junction

Time for some definitions:
  • and.  (-conjunction used to connect gramatically coordinate words, phrases, or clauses) along or together with; as well as; in addition to; besides; also; moreover.
  • or. (-conjunction used to connect words, phrases, or clauses representing alternatives) "books or magazines", "to be or not to be".
'And' and 'or' are both conjunctions, but they serve nearly opposite functions.  Compare these two sentences:
  1.  "Given the threat of climate change, should our company reduce internal emissions as much as possible or use carbon offsets?"
  2. "Given the threat of climate change, should our company reduce internal emissions as much as possible and use carbon offsets?"
One little word can result in such a huge change in thinking.  Using "or" when we talk about climate change means we take a suite of viable solutions off the table.  Using "and" enables us to consider a wider range of options.

As I noted in a blog post exactly one year ago, there is no single source of greenhouse gas emissions, and there is no single solution.  We have to seek the most ambitious, fastest emissions reductions possible, wherever they may occur.  When it comes to carbon, we need internal reductions and offsets.

Eurostar celebrates two years of 'Tread Lightly'

High-speed rail operator Eurostar on Monday celebrated the two-year anniversary of its 'Tread Lightly' environmental initiative, and issued a progress report on its five-year carbon reduction target.

In 2007, the company pledged to reduce carbon dioxide emissions per passenger journey 25% by 2012.  At the same time, they embarked on a 10-point plan to reduce their other environmental impacts, and to make passenger journeys carbon neutral by offsetting the remaining CO2 emissions.

In the first two years of 'Tread Lightly', Eurostar has exceeded their carbon reduction target, achieving a 31% reduction through increased passenger numbers and a switch to lower-carbon electricity sources.  While the company expects per passenger emissions to increase slightly due to a recession-linked fall in passenger numbers, they have nevertheless raised their overall emission reduction target, to 35% by 2012.  As CEO Richard Brown notes, "This is challenging and requires significant investment of resources."

Eurostar's initiative is notable for its dual approach - they have pledged to reduce and offset, and are delivering tangible, verifiable results on both fronts.

Carbon Clear is proud to be Eurostar's carbon credit provider for the offset component of 'Tread Lightly'.  As a business, Eurostar has offset more than 70% of the unavoidable emissions attributable to their operations.  Their partnership focused approach has been a good match to our own, where we work together to support carbon projects that deliver robust, additional emissions reductions while helping communities in poorer countries make the transition to a low-carbon future.

Total Launches New Fuel Card

(from the  company press release)
Total is launching a new fuel card which will enable fleets to track their CO2 emissions based on actual performance, rather than claimed figures.

TotalCard Green provides fleet managers with real-world fuel consumption reports based on the petrol or diesel bought, and then calculates the fleet’s actual CO2 emissions.

Total, which has 850 filling stations throughout the England and Wales, then offers advice on implementing a CO2 reduction plan (correct vehicle maintenance, use of advanced fuel and lubricants and advice on driver behaviour) and provides price incentives on advanced fuels such as its Excellium product which is claimed to reduce fuel consumption by nearly 4%.

The fuel company will follow up the plan with reports to show the differences in both litres fuel and carbon emissions made by following the plan.

Samuel Vermeersch, TotalCard development manager, said: “We know that more and more companies are looking at ways to reduce their carbon footprint and we strongly believe our card will help them optimise their fuel spending and make carbon management much easier for them.”

As part of the scheme, Total will contribute to the Carbon Clear carbon offsetting pro-gramme, based on the fuel volumes bought with the new card, and offer customers the chance to offset their emissions through the company.

For more information on the card, go to

Wednesday, 22 April 2009

The Carbon Reduction Commitment – A New Role for Environmental Managers

The original version of this article appeared in the April (No. 76) issue of the IEMA journal 'the environmentalist'.

On 12th March the UK Department for Energy and Climate Change released the draft user guide for the Carbon Reduction Commitment (CRC). In this article, we provide an introduction to the CRC and explain what it means for environmental managers.

In a recent newspaper interview, Energy and Climate Change Minister Joan Ruddock asserted that the government had thoroughly announced this impending legislation and that businesses are well aware of their obligations. Based on feedback from Carbon Clear’s ongoing winter and spring workshop series, we are not so sure.

Approximately 20,000 UK firms will have to submit a CRC information disclosure to the Environment Agency by Summer 2010, while roughly 5,000 will have to pay registration fees and participate in the full scheme.

CRC information notices and registration requests are sent to the billing address on record with each company’s electricity provider. As a result, government information on the CRC is now landing on the desk of the facilities manager or the accounts payable department, not with the energy or environment manager.

Despite its innocuous-sounding name, companies should not take the Carbon Reduction Commitment lightly. As with any new regulatory requirement, failure to prepare poses serious financial and reputational risks. At the same time, environmental managers are well-placed to help their companies use the CRC to achieve real emissions reductions, cut costs, and identify new sources of competitive advantage.

The CRC in A Nutshell
The Carbon Reduction Commitment is designed to help the UK Government meet the 80% greenhouse gas reduction target set out in the Climate Change Act. It is a mandatory, auction-based emissions trading scheme targeted at large, non-energy-intensive companies - supermarkets, office blocks, and the like. Every company, charity, and government body with at least one half-hourly electricity meter needs to be aware of the CRC.

Like the EU Emissions Trading Scheme (EU-ETS), the CRC uses market forces and competition to drive corporate carbon reductions at the lowest overall cost (see our article “Emissions Trading, Going Global?” in issue 60 of the environmentalist). In the introductory phase of the CRC (April 2010-March 2013), participants will buy emissions allowances equal to their carbon footprint at a price of £12 per tonne CO2.

But once the CRC enters the “capped” phase in April 2013, government will limit the number of allowances and auction them to the highest bidder. At the end of the recording year, firms that end up with more allowances than they require to meet their obligations can sell them into the secondary market, while firms with a shortfall will have to purchase more or face a punitive fine.

One of the innovations in the design of the CRC is that revenues raised through the Government’s sale or auction of allowances are recycled back to participants via a publicly viewable league table. Companies with a better-than-average league table score may receive more money back than they put in, while those that score poorly will receive less. In addition, we anticipate that customers will use the league table to help identify lower-carbon suppliers of goods and services.

In the first year of the CRC, a company’s ranking in the league table is determined solely by how much of the organisation’s emissions are covered by voluntarily installed automatic metering (AMR), and how much of the organisation’s emissions are covered by a Carbon Trust Standard or Energy Efficiency Accreditation Scheme certificate. In subsequent years, league table rankings will be based primarily upon the organisation’s absolute emissions reductions compared to all other participants, and the relative improvement in emissions compared to company growth.

Your CRC Carbon Footprint
The carbon footprint that an organisation reports under the CRC is only a subset of the total organisational footprint included in an ISO 14064 or WRI/GHG Protocol emissions inventory (see our articles “Whose footprint is it anyway?” in issue 53 and “Counting the cost of outsourcing” in issue 55 of the environmentalist). In particular, the CRC only focuses on what ISO 14064 calls direct and energy-indirect emissions (Scopes 1 and 2 under the GHG Protocol). These are emissions from on-site energy production and emissions from purchased electricity and gas. Supplier and customer emissions are excluded.

Next, the CRC excludes emissions from transport vehicles and the onward supply of energy to other organisations. The next set of exemptions are for organisations that are fully or part-covered under a Climate Change Agreement (CCA) or the EU ETS. Excluding these emissions from the CRC footprint ensures that organisations are not forced to report emissions that are already regulated.

Carrots and Sticks
The CRC could have major financial implications for companies, especially in a challenging economic climate. DECC expects the CRC to lower annual corporate energy bills by nearly a billion pounds by 2020 as companies find the most cost effective ways to reduce their emissions. These savings translate into improved profitability and a stronger economy. Moreover, lower emissions means a smaller outlay for allowances in subsequent years, and the CRC’s recycling mechanism means that companies that perform above average on the league table may get back from the scheme more money than they put in.

On the other hand, getting it wrong poses risks. Approximately 20,000 companies with at least one half-hourly meter will be required to submit an initial Information Disclosure – failure to do so will result in a one-off fine of £1,000. The 5,000 or so organisations required to participate fully in the CRC will face an immediate fine of £5,000 if they do not register by the deadline, and will face an additional fine of £500 for each subsequent day of delay.

Failure to provide a footprint report by the deadline also results in an immediate fine of £5,000, and a further fine of £0.05 per tonne of CO2 per day, rising to £0.10 per tonne of CO2 per day after 40 days. Once the scheme is up and running, failure to provide an annual report results in the same level of fines, plus a bottom ranking in the league table.

Where emissions are incorrectly reported, a fine of £40 per tonne of CO2 incorrectly reported will be levied. Failure to purchase sufficient allowances will also incur a £40 per tonne CO2 fine. Outright falsification of evidence is considered a criminal offence, punishable by imprisonment of up to three years and a fine of up to £50,000.

Implications for Environment Managers
This is only a summary as the CRC guidance document is 84 pages long, and the background consultation document tops out at over 200 pages of detailed explanation. However this brief overview demonstrates how important it is for environmental managers to understand the requirements and to lead their organisations’ response to the CRC.

Under the CRC, environmental management is elevated to a strategic role that, if executed properly, can deliver measurable competitive advantage to the company. But if the requirements are not properly addressed, significant costs will be incurred.

The financial carrots and sticks in the CRC and the reputational spur of a public league table may make a number of otherwise borderline or low-priority environmental initiatives more attractive. For instance, environmental managers may now be able to fast track boiler retrofit or lighting replacement schemes that might otherwise be starved of investment, or get the go-ahead to install onsite renewables where the cost of carbon under the CRC makes them economical.

The CRC may also spur the formation of cross-functional teams that integrate environmental management into every corner of the organisation. For example an organisation’s CRC team might include:

  • the environment manager: to identify best practice emissions reduction measures, co-ordinate the team, calculate the organisation’s carbon footprint and manage reporting and record-keeping with the facilities manager;
  • facilities: to implement technology-based energy saving measures throughout the company;
  • human resources: to help develop a staff “green team” to mainstream low-carbon thinking into the corporate culture;
  • finance: to evaluate the trade-off between energy efficiency investments and purchasing allowances, and then find the required cash. For example, a company with a 100,000 tonne CRC footprint will need to come up with £240,000 to purchase allowances during the first compliance period;
  • communications: to manage the media response to the company’s public league table ranking relative to its competitors which could be brand enhancing or damaging; and
  • a director-level representative to raise the profile and priority of the initiative and report progress to the Board of Directors.

A Model for the Rest of the World
The UK is the first nation to implement a national beyond-Kyoto cap and trade emissions scheme. It is unlikely to be the last. Just two days before DECC released their guidance document, the U.S. Environmental Protection Agency announced that it is planning its own emissions reporting system.

This reporting scheme, a precursor to national cap-and-trade, targets approximately 13,000 facilities (rather than organisations) across all sectors, responsible for between 85-90% of the country’s greenhouse gas emissions. As proposed, the regulation requires the reporting of only direct GHG emissions (scope 1) but is asking for public comment on including energy indirect emissions (scope 2) among other aspects in its lengthy 1,410 page proposal. The final rule is expected within the year, followed by a cap and trade scheme to be in place by 2012. EPA’s enforcement action could result in a fine of up to $32,500 per day for violators.

Our informal enquiries indicate that other nations are watching the UK and USA closely to determine whether some version of the CRC or the imminent USA programme will work in their own countries and how a global system of reporting and trading of GHG emissions may function in a global marketplace.

Government regulation on corporate carbon emissions is not the only reasons firms may wish to support green initiatives in the midst of an economic downturn. As we described in our article “The end of the low-carbon agenda” in issue 72 of 'the environmentalist', environmental programmes also help to demonstrate the company’s commitment to sustainability, improve staff morale and retention, and attract new customers. Regulations like the Carbon Reduction Commitment provide an added incentive, and help environmental managers quantify the potential risks and benefits in a language that other parts of the company can easily understand.

Suzy Hodgson, AIEMA, is a principal consultant and Jamal Gore, AIEMA is the managing director at specialist carbon management company, Carbon Clear Limited.

Friday, 17 April 2009

Sainsbury Gets It Exactly Wrong

Like many consumer-facing busineses around the world, Sainbury has embarked on a greening initiative that includes an effort to reduce in the company's carbon footprint.

Earlier this week, Neil Sachdev, commercial director for UK supermarket retailer J. Sainsbury was asked to discuss his view on carbon offsets.

"It just passes the problem to a third party. It makes more sense to focus on energy efficiency, where there are clear economic and environmental savings."

With all due respect, Mr Sachdev has gotten it exactly backwards. Not just a little off target; his view is exactly counter to how offsets work.

Poor brick makers in Nicaragua are not razing their country's forests for fuel because they want to; they're doing it because they can't readily access a cleaner alternative. Similarly, the owners of an Indian textile mill would prefer not to use polluting coal or fuel oil to generate heat for their factory, but cleaner alternatives simply may be unfeasible.

People in poorer countries are not emitting greenhouse gases into the atmosphere because they enjoy it. Their pollution is a symptom of energy poverty - their inability to access cleaner sources of energy. The savings from switching to more cost effective and cleaner alternatives are clear.

Additionality - a key concept in the carbon world - means proving that the project would not have happened without the expectation of carbon credit funding. So purchasing carbon offset credits means providing the funds to create projects that would otherwise not exist, and that displace more polluting activities.

In other words, purchasing carbon offset credits means you're not passing on the problem; just the opposite. Using carbon credits means you're passing on a solution.

To be fair, Sachdev was trying to argue that purchasing offsets was a less efficient use of funds than reducing his company's own emissions. But as I've explained previously, it doesn't have to be either-or. Reducing emissions anywhere helps the climate; a tonne of CO2 reduction at home doesn't have some magical climate benefit that an overseas reduction lacks.

In that same article, a representative from beverage maker Diageo referred to offsets as a "last resort". This language implies that it is acceptable to wait to achieve some emissions reductions. Unfortunately, climate change is such a huge problem that we don't have a moment to spare. We simply cannot afford to reduce, then offset. We have to pursue both at the same time.

The planet doesn't care whether your emission reduction is costly or cheap, so long as it happens swiftly. So the real challenge is to find the activities that will generate the most ambitious, fastest, and most cost-effective reductions.

In many cases, energy saving measures at home will be low-cost or actually save money. In other cases, reducing carbon close to home will be relatively expensive. In those cases, it would be more cost effective to help Nicaraguan brick makers and Indian textile mills reduce their emissions instead.

Climate change is too big a problem to fight with one hand tied behind our back. At Carbon Clear, we encourage our clients to do more to help the environment by embarking on a comprehensive reduce-AND-offset programme. It's time for other companies to come on board.

(Carbon Clear homepage)

Tuesday, 14 April 2009

The End of the Low-Carbon Agenda?

The original version of this article appeared in the February (No. 72) issue of the IEMA journal 'the environmentalist'.

The emergence of corporate greening and corporate carbon reduction coincided with an unprecedented global economic boom. But does companies’ renewed focus on survival and the bottom-line mean they will abandon their low-carbon initiatives?

Recent evidence from both the United Kingdom and United States indicates that cash-strapped consumers are changing their buying behaviour. The growth of the UK organic food sector has fallen by 73% as shoppers cut costs. In the USA, organic producers are also witnessing slower than usual growth. Electric vehicle sales have stalled on both sides of the Atlantic, and Britain’s Nice Car Company has filed for administration. And according to Autodata, US hybrid vehicle sales in November 2008 were 53% lower than in 2007, compared with a 37 per cent drop in overall car sales.

Consumer items such as organic food or hybrid cars can cost at least 15% more than their “less-green” counterparts. For increasingly cost-conscious consumers, it appears this price premium is too much to bear. Gloomy retail sales across Europe and the USA underscore the lack of consumer and business confidence in the economy.

Are corporations taking a similar path? What does the financial crisis mean for the low-carbon agenda?

Making it pay

Companies struggling to get working capital loans or meet payroll may find it hard to justify long-term investments in energy efficiency, renewable energy, and greener manufacturing techniques. Many firms plan to defer new investment until their cash situation becomes clearer. When they do spend, they expect a clear payback.

One form of payback on environmental investment may come in the form of increased sales.

InfoPrint Solutions Company, a joint venture of Ricoh and IBM, has offices in 36 countries around the world. InfoPrint has focused on sustainability as a key component of their “triple bottom line” since hiring Joe Czyszczewski as chief sustainability officer in November 2007. The company has differentiated itself from its competitors in the printer market, by shifting its efforts from selling printers, to offering “work flow solutions”. As Joe, puts it, “we can look beyond the printer at the end-to-end supply chain and full life cycle.”

A recent InfoPrint's pilot study shows that a greener option can help them meet customers’ preferences for less direct mail, while providing clear energy and environmental benefits.

When InfoPrint surveyed over 1,100 consumers, 40% responded that the paper inserts accompanying “must read” documents such as bills are “always impersonal and irrelevant”, and a further 86 percent said they “never purchased a product or service after receiving a separate promotional document.” Infoprint has tackled the problem of “junk” inserts with tailored promotional information printed directly on customers’ bill statements. Paper usage can be reduced by 33% while increasing the mailing’s relevance to their clients’ customers. And since these inserts are pre-printed in bulk, the associated energy and environmental impacts of printing at an offset press, transport and waste can be avoided.

According to InfoPrint’s research, 43% of American households receive between one and three account statements, 39% receive between four and six statements each month, and 13% receive between seven and nine each month by post. We calculate that reducing the weight of each statement sent to American households by 3 grammes would save an estimated 20,233 tonnes of paper and 50,583 tonnes of CO2 – roughly equivalent to 15,000 return flights between New York City and London.

InfoPrint’s venture was launched with great fanfare at the height of the economic boom. Just over one year on, InfoPrint is a telling case study. Rather than scaling back, cutting staff, and allowing sustainability to slip down the list of priorities, the company has set its sights firmly on profit and sustainable growth tied to greener products and services.

Save Carbon – Save Cash

Initiatives which reduce energy and resource consumption and waste can contribute directly to cost savings. These cash-conserving measures are unlikely to be ignored in an economy when companies are squeezing every ounce of efficiency out of limited resources.

Marriot Hotels announced a five point environmental strategy to help address climate change in 2008, with a key goal to green their $10 billion supply chain. On his “CEO Blog” Bill Marriott on 6 January 2009 says, “Because of our size and scale, we can ask our vendors, ‘How can you make your products more environmentally friendly?’ And they've come up with some great solutions that don't cost any more money, which is good news in the current economy.”

As part of their “costless greening” programme, Marriott is introducing pillows stuffed with filling made from recycled bottles, and about 500 of their hotels are trialling “coreless” bathroom tissue, which “should save about 119 trees, 3 million gallons of water and 21 tons of packaging waste every year.” If Marriot rolled out “coreless” bathroom tissues in all of its hotel rooms, we calculate that the carbon savings could be an estimated 221 tonnes. And if recycled plastic instead of a virgin plastic product becomes the filling of choice in all of Marriot’s 2,900,000 pillows, the carbon reductions could amount to 11,300 tonnes annually.

Staying Competitive

Firms that choose to abandon their green initiatives may find themselves in a minority.

Eighty percent of corporate sustainability executives surveyed from across North America plan to maintain or increase levels of sustainability-related spending in 2009, despite the current economic conditions, according to Panel Intelligence's Quarterly Sustainability Tracking Study. Their November 2008 survey found that despite a declining U.S. economy and lower oil prices, corporate investment in energy efficiency remains strong.

The survey found that eighty-two percent of respondents rated energy efficiency as the most important area of current focus and investment, and that corporate spending on sustainable waste management initiatives is expected to grow by 20 percent in 2009, the highest percentage increase of any subcategory. Cost savings, revenue generation and brand strength are the most important drivers of environmental and clean technology initiatives.

Preparing for the future

More companies also recognise that failing to maintain their low-carbon initiatives could prove costly in the long run. Environmental initiatives are a key tool for engaging employees and maintaining morale in challenging circumstances. Customers and stakeholders are unlikely to believe that environmental improvement is “part of the corporate DNA” if green initiatives are cut whenever the economy slows.

Government is even less likely to show understanding. In the UK, the Government has introduced the Carbon Reduction Commitment, with a performance league table and compliance costs equivalent to about 11% of companies’ energy bills. Meanwhile, regional greenhouse gas emissions trading systems have been rolled out in North America, with most analysts expecting the incoming Obama Administration to introduce a national cap-and-trade scheme during the next year. Firms that abandon their carbon reduction programmes in the short term are likely to find their costs increasing down the line.

Challenges and barriers

It is clearly in companies’ long-term interest to continue pursuing a low-carbon agenda. But in a difficult economy, cash is king. The inability to borrow for capital intensive investments may prevent companies from taking measures that provide clear and lasting benefits. As discussed in our previous the environmentalist article (issue no. 68), low-carbon investments also tend to have disproportionately high employment and societal benefits. A case could therefore be made for government incentives to encourage businesses to go green.

Governments have an array of financial and policy tools to stimulate continued investment in lower-carbon business practices. These include tax incentives, direct subsidies, regulatory clarity that levels the playing field for different technologies, and direct government procurement that generates economies of scale and drives down the cost of green technology for businesses.

As Deere & Company CEO Robert Lane notes, “There need not be an inherent contradiction between government and business nor a perpetual dependence. Public policies can provide useful "pump priming" for new, evolving industries, creating the infrastructure needed for markets to develop and businesses to grow.” Deere proved to be ahead of the curve as these remarks are not recent – they were made in October 2006.


Climate change will not wait for the economy to recover. It is up to us to make the most of the opportunities that present themselves and take action now. Lee Scott, Jr., President and CEO of Wal-Mart Stores, captured this spiriti in his remarkes to the National Retail Federation on 12 January 2009, when he said, "If we as a country want to get through this time...and position ourselves to prosper and lead in the years ahead, then we need to tackle the hard issues. We cannot afford to postpone solving these problems."

Suzy Hodgson, AIEMA, is a principal consultant and Jamal Gore, AIEMA, is the managing director at specialist carbon management company Carbon Clear Limited.

Thursday, 2 April 2009

The CRC: One Year and Counting

The UK's Carbon Reduction Commitment comes into effect on April 1st, 2010. For the 5,000 companies and public bodies covered under this mandatory cap-and-trade scheme, the countdown clock starts now. For the 20,000 organisations with a half-hourly meter required to submit a CRC Information Disclosure, the clock starts now.

Carbon Clear is working to help companies understand the implications of the Carbon Reduction Commitment and position themselves for competitive advantage. We have been running CRC briefing workshops throughout Winter and Spring 2009 to help our clients prepare, and I'll be posting on this blog our upcoming article on the CRC, to be published in a forthcoming edition of "the environmentalist" journal. For those who can't wait, you can find our top-level overview here.

The CRC could have significant financial and reputational implications for your business. And the clock is ticking.

(Carbon Clear homepage)