Ex-Accenture Chief James Hall Appointed as Carbon Clear Chairman

Following another year of excellent growth and the expansion of our carbon management services, Carbon Clear is pleased to announce the appointment of our first Chairman.

James Hall, who previously held the posts of Managing Partner at Accenture UK and Chief Executive of the UK Identity and Passport Service, will take on the role of Chairman of Carbon Clear from 1st August 2011.

James’ extensive experience of corporate strategy and delivery will help to develop Carbon Clear’s services and guide its fast-growing team of carbon management experts.

Mark Chadwick, CEO of Carbon Clear, said “Carbon Clear has gone from strength to strength this year despite a challenging economy. We’re thrilled to have James Hall on board and believe his broad experience will help us to achieve even better results for our clients.”

James Hall said “Carbon Clear is an ambitious company in a very interesting market – one that is topical given the pressures on companies to demonstrate a responsible approach to their business. I am delighted to have the opportunity to join them as they plan their next stage of growth." 

(Carbon Clear Website)

Airlines, the EU-ETS and Biofuels

The ever-informative news aggregators at Climate Connect have done an interesting wrap up of European airlines' efforts to prepare for inclusion in the EU Emissions Trading Scheme (EU-ETS).  From 2012, airlines that operate from the EU will have to keep their greenhouse gas emissions within a cap set by regulators, or else buy carbon credits for their excesses.

Airlines are pursuing various measures to escape the cost of buying allowances or offsets.  Some, like those in China and the U.S., are suing.  Most European based airlines, however, are looking at ways to reduce their emissions without necessarily reducing the number of flights.  Key in these efforts is a switch to biofuels.  As Climate Connect reports, KLM has begun operating commercial flights between Paris and Amsterdam using a biokerosene blend derived from used cooking oil.  Lufthansa will use a 50% biofuel blend in one engine on flights between Hamburg and Frankfurt (planes are designed to fly and land safely on one engine). And British Airways is planning to procure modest amounts of biofuel from municipal waste by 2014.

All of this is superficially encouraging, until you consider the routes on which they are using these more "environmentally friendly" fuels.  Paris to Amsterdam is 500 km (300 miles).  That's 3 hours 18 minutes from city centre to city centre by rail.  By air it's a 1 hour 15 minutes flightr, plus 2 hours check-in and travel out to the airport for a total journey time that's the same or even longer than taking the train. The time savings are more in the airlines' favour on the Frankfurt-Hamburg route, but not by much.

Who exactly is making all those flights, and why?
 
I understand that the airlines want to test the use of biofuels on routes where there's somewhere safe to land if things go wrong - the mid-Atlantic is not the place to discover there's a problem.  However, I worry that making too much noise about their pioneering use of biofuels on extremely short-haul flights raises reputational risks for the airlines.  Greenhouse gas emissions from short-haul airplane flights are about 10X those of rail travel. Using biofuels to cut those emissions by 20% or so does not make short-haul flights an environmentally benign option, especially when more sustainable alternatives already exist.

Another English Speaking Country Puts a Price on Carbon

First the UK, and now Australia.

On Sunday, the Australian Government launched its "Clean Energy Future", which aims to decouple economic growth from greenhouse gas emissions.

The initiative combines a number of measures to drive emission reductions throughout the economy while minimising the pain felt by ordinary citizens:

• a carbon tax of AUS$23 (US$24.50/ £15/ €17.40) on the largest polluters, which will convert to a cap and trade system by 2015;
• income tax reductions and rebates for individuals and families to balance out the trickle-down effects of the carbon tax;
• incentives to promote renewable energy;
• policies to encourage lower-emissions land use measures.

The Australian scheme aims to reduce emissions by 159 million tonnes CO2e by 2020 - equivalent to taking 45 million cars off the road.  It throws down the gauntlet for U.S. policy makers who are concerned that bold measures will harm the economy.

Let's hope they're paying attention, and are brave enough to raise the ante.

Drought Threatens Southern U.S.

A crescent of states stretching from Deleware to Arizona are in the grip of a deepening drought that the New York Times says may rival the Dust Bowl.

The drought is breaking records across the southern states, with Oklahoma's rainfall only 28% of normal.  Wells are running dry. Crops are withering in the field, where they had a chance to grow at all.  Farmers are sending cattle to slaughter because they cannot afford to feed them. As the Times reports, the economic damage from the drought could surpass $3 billion in Texas alone.

Interestingly, the Times does not mention climate change as a possible cause of the drought - a La Niña weather system in the Pacific gets the blame.  Indeed, it is difficult to blame any single incident on a long term global phenomenon.  However, this drought - and ther earlier Midwestern floods, Russian heatwaves and a host of other recent weather disasters - are precisely the types of impacts that we can expect from global climate change.


What lessons can we learn?  One is that adaptation to climate stress is costly and manifests itself in unpredictable ways - even in wealthy economies with good infrastructure.  Higher grain prices in the U.S. will cause ripples in global commodity markets, squeezing pocketbooks and potentially threatening food security in developing nations. The drought is likely to cause a short term collapse in the price of beef as ranchers bring cattle to market early.  This means less money in farmers' pockets and less tax revenue for Southern states - even as the U.S. economy continues to struggle. And shrinking aquifers threaten the continued growth of towns and cities across the American South.

Wealthy nations are struggling to restart their economies and reduce budget deficits. Few will relish taking on the costs associated with worsening climate change.  Developing countries are even less prepared.  Compared to these costs, measures to limit global warming - energy efficiency, renewables, and others - can seem like a bargain.

(Back to the Carbon Clear website)

High Carbon Emitters Have Lower Market Value

Research has suggested a link between financial success and sustainability success for years. And, last month another study punctuated this fact once more; the market cares if your company is actively measuring and reducing carbon emissions.

A study undertaken by researchers at the University of Wisconsin, University of Notre Dame and Georgetown found a negative correlation between emissions and the values of companies in the S&P 500. In fact, they estimated that for every additional ton emitted by a company, company value declines by approximately $200,000 USD.

The research is derived from a review of S&P 500 companies that reported to the CDP between 2006 and 2008.

That the market attaches an implicit cost to carbon (despite that an explicit cost does not exist) is not new.

Over the past few years a strong link has been made in studies between companies who have transparent CSR (Corporate Social Responsibility) practices and positive stock ratings. For example, a collaborative study by scholars at Harvard and the London Business School found that after surveying 4,100 publicly traded companies over the course of 13 years (1997 to 2009) a clear trend emerged. That trend was that equity analysts increasingly view a company’s CSR strategies as value creation strategies that reduce uncertainty about future profitability. As a consequence, analysts have more favorable ratings to companies that have sustainability strategies in place.

Beyond meeting investor expectations, managing and reducing your emissions internally can result in operational cost savings, new revenue opportunities, and enhanced brand reputation.

All this begs the question, is your company actively curbing carbon emissions, and thus generating stronger market value? If no, why not? You’re missing out on valuable business opportunities and soon your investors will take notice.

"All the Trees Will be Very Unhappy"

The ongoing effort to protect and revitalise forests is one of the key ways people are coming together to combat climate change.  Deforestation, after all, is responsible for around 20% of global greenhouse gas emissions.

Now, ecologists are hinting that climate change is causing yet another harmful feedback loop that reduces forests' ability to store carbon.

Throughout the tropics, lianas compete with trees for light, water and soil nutrients.  These fast-growing vines use the tree trunks for support and then sprout luxuriant leaves when they reach the tree canopy.  Where lianas are particularly aggressive, trees are weaker and die faster.  In some cases, they become so thick that trees are more easily blown over in heavy wind and rain.  The fallen trees die, but the flexible lianas survive and sprout new shoots.

As ecologist Dr. Stefan Schnitzer notes in the New York Times article, “If you come back in a year, it will have changed,” he said. “There will be a whole lot of vines in there, all rooted, all growing. And all the trees will be very unhappy.”

Faster growing trees are better able to compete with lianas, but these tend to have softer, less dense wood - which stores less carbon.  All told, the growth of lianas can reduce the carbon storage capacity of a forest by as much as 10%, according to the article.

Now for the climate feedback connection: lianas appear better able than trees to adapt to extended dry periods, precisely the conditions expected in much of the tropics as the planet warms. Lianas also appear more effective at utilising extra carbon dioxide to form new growth, so increasing atmospheric CO2 concentrations could be enhancing lianas' competitive advantage versus slower-growing trees.  In other words, human activity may be impeding forests' ability to absorb CO2, which makes it harder to reduce CO2 concentrations.

Long-term studies to understand how lianas and trees interact are just beginning, but this is a sobering reminder of the unanticipated effects of global climate change.

After the DECC Quality Assurance Scheme

As mentioned in earlier posts, the UK Government is ending support for its Quality Assurance Scheme (QAS) for carbon offsets.  So what happens now?

The first point to recognise is that this isn't the end of the world for the voluntary carbon market. Few serious companies participated actively in the scheme, and even those sold relatively few QAS approved carbon offset credits. In terms of quality control and integrity, the QAS was obsolete before it even launched, having been overtaken by the Code of Practice launched in 2008 by the International Carbon Offset and Reduction Alliance (ICROA).  The ICROA Code is followed by some of the largest carbon offset retailers around the world and governs the types of carbon credits sold, the way carbon footprints are calculated, the reduction advice given to customers, and the way members and their customers communicate a company's "carbon neutral" status.  It should be no surprise to learn that Carbon Clear is a founding member and has actively led the evolution of the Code.

Last year the British Standards Institute launched a carbon neutrality specification that mirrors many aspects of the ICROA Code - but not the QAS.

The second point is that the end of the QAS helps unshackle the voluntary carbon offset market.  The original planners of the QAS sent mixed messages, describing the characteristics of a quality carbon credit, and then rejecting VCS and Gold Standard credits even when they were shown to meet those criteria.  What is more, subsequent Government guidance documents all pointed to the QAS as the arbiter of quality, despite rising criticism from indsutry.

VER credits from VCS, Gold Standard and elsewhere offer a number of benefits over the QAS approved varieties.  First, these credits are directly traceable to specific projects that often provide co-benefits unmatched in the compliance credit world.  Voluntary offset customers want credits that help them communicate their environmental and ethical credentials to stakeholders.  It's much easier to accomplish this objective with an improved cookstove project in rural Malawi than a faceless industrial gas destruction project in China, or even more-faceless European allowances from a German steel mill.  What is more, these VER credits are often half the price of compliance credits - and sometimes even less.  One wonders how many customers were discouraged from offsetting by these mixed messages from the QAS.

By announcing that Government would now look to the carbon markets to establish best practice, DECC is removing a barrier to the adoption of carbon credits that meet these and other quality standards. Companies that previously offset through QAS-approved credits will be in a better position to engage with their stakeholders, and DECC is to be applauded for this bold move.

Indeed, I expect the UK voluntary carbon credit market to experience a renaissance as a result of DECC's decision.  As always, Carbon Clear is here to help.

Government Abandons Shunned Carbon Offset Assurance Scheme

The Department of Energy and Climate Change (DECC) has announced that it will close its Quality Assurance Scheme for Carbon Offsetting. The move will be welcomed by the vast majority of carbon offset providers and customers who declined to participate in the scheme since its outset.

Despite a consultation exercise in 2007 and 2008 to which many carbon offset market participants responded, the Quality Assurance Scheme refused to include popular carbon offset credits certified by organisations such as the Gold Standard and Verified Carbon Standard.

Providers of these verified emission reduction (VER) credits argued that DECC’s refusal to approve these credits was confusing and counter-productive, as these credits tend to be most popular with voluntary offset customers and meet all of the conditions laid out by DECC for quality carbon offset credits. What is more, these carbon credit types provide much needed finance for clean energy and forestry projects in the developing world. As a result, members of the industry body ICROA declined to apply for accreditation under the Quality Assurance Scheme. [Carbon Clear is a Founding Member of ICROA.]

Only nine other organisations participated in the scheme, and many of these providers offered VERs alongside the scheme’s approved credits, leaving consumers and businesses confused when comparing different carbon offset schemes. Despite initial projections, the scheme was never able to become self-sustaining, requiring DECC to part-fund the scheme.

In a statement, DECC announced that “the carbon market has moved on substantially since the introduction of the QAS and DECC now believe it is for the market to set best practice for carbon offsetting”. DECC confirmed it will no longer provide financial support for the Quality Assurance Scheme and that it will close on 30 June 2011.

Mark Chadwick, CEO of Carbon Clear says, "Carbon Clear is internationally recognised as a best practice provider of carbon offset credits, and by working with us businesses looking to ensure that their carbon offsets are certified, real and permanent can offset with confidence."

DECC QAS, R.I.P.

According to this article, the Government's so-called "Quality Assurance Scheme" for carbon offsetting has finally gotten the axe due to lack of interest.

I could have told them back when it was first announced that it was inappropriate and would be a waste of time and money.

Actually, I did.

I'll comment more fully on what this announcement means later today.

DECC Announces Fourth Carbon Budget

The UK Department for Energy and Climate Change (DECC) released the Government's fourth Carbon Budget on Tuesday.  Britain was the first country to enact legally binding limits on greenhouse gas emissions that extend beyond the 2012 expiry of the Kyoto Protocol.

The 2008 Climate Change Act requires the Government to publish a series of five-year budgets that put the country on a path to achieving an 80% reduction in greenhouse gas emissions by 2050.  The first Carbon Budget (2008-2012) limits greenhouse gas emissions to 3,018 million tonnes CO2 equivalent (MtCO2e) - 23% below 1990 levels.  The second Carbon Budget (2013-2017) is geared to achieve a 29% emissions reduction, and the third Carbon Budget (2018-2022) put the Government on track to achieve 35% reduction below 1990 levels.

Under the Fourth Carbon Budget, which covers the period 2023-2027, total UK emissions will be only 1,950 MtCO2 - half of 1990 levels. The Government is now pushing the rest of the EU to adopt a more ambitious 30% emissions reduction target by the year 2020 - up from the current 20%.

Given the difficulty of replacing fossil fuels in the transportation sector (a topic to which we'll return in subsequent blog posts), other sectors will see disproportionate emission reductions.  In particular, GHG emissions from the power sector will have to drop  almost to zero.  All fossil fuel-fired power plants will have to have carbon capture and storage (CCS) technology - or cease operation.  Already, the 750 MW Tilbury power station is in the process of switching to 100% renewable biomass instead of coal.  Their fuel pellets will come from a purpose-built plant in the southeastern United States.  Imports of biomass for heat and power in the UK will likely skyrocket in this low-carbon future.

Similarly, few if any residences will be able to0 use natural gas to provide heat and hot water - renewable energy and efficiency will have to pick up the slack.

Achieving these ambitious reductions will require major structural changes in how we live, work and play.  The UK Government is providing an array of carrots and sticks in the form of the EU-ETS, Carbon Reduction Commitment, feed-in-tariffs and other policies to provide incentives for organisations and individuals to reduce emissions.  At Carbon Clear, we're committed to helping companies identify opportunities that arise from these shifts.  Keep watching this space for more ideas and analysis.

(to the Carbon Clear Homepage)

IEMA Handbook 2nd Edition Published!

The long-awaited second edition of the Institute of Environmental Management and Assessment's (IEMA) handbook "Environmental Management in Organizations" has been published by Earthscan.  The Handbook, a 560-page tome, is intended to be the reference of choice for IEMA's 14,000+ members, and for others who require an introduction to key environmental management issues.  Carbon Clear is a corporate member of IEMA, and I'm pleased to have been invited to contribute the chapters on Energy and on Climate Change.

The editors, John Brady, Alison Ebbage and Ruth Lunn, wanted to perform a "root and branch" review and update of the handbook to reflect changes in environmental thinking and priorities since the first edition was released back in 2004.  That's no small feat given how much the ground has shifted over the past seven years!  Based on the copy that arrived on my desk the other day, I think they've done an admirable job.

One of the big shifts since 2004 has been the increased worldwide focus on climate change and sustainable energy issues.  In the first edition, these topics were lumped together in a single (well-written) chapter.  This time, the editors decided to create two standalone chapters on these important subjects, and also worked to weave climate change themes throughout other chapters in the Handbook.

I think this was the right choice.  Aside from giving me the opportunity to author two chapters instead of one, providing separate space for each issue acknowledges that while energy and climate change are related, they are not the same thing.  Energy production and consumption are major sources of greenhouse gas emissions, but so are agriculture, deforestation, and the production of industrial gases like hydro-fluorocarbons (HFCs) and sulphur hexafluoride (SF6).  Separate chapters allow the editors (and author) freedom to explore the broader implications each has for environmental managers.

With the Handbook's publication, the Carbon Clear Blog will be focusing on some of the issues and themes discussed in the Climate Change and Energy chapters.  Stay tuned!

10 Questions to Ask Your Carbon Offset Vendor

Investing in carbon offsets is an efficient and cost effective way to quantifiably reduce the environmental impact of your organization. Such investments also demonstrate a strong commitment to combating climate change. Having said that, navigating the world of carbon offsets as a novice can be overwhelming. Even as an educated buyer, market jargon persists, and new standards and offset vendors must constantly be evaluated.

To provide clarity surrounding carbon offset purchases, below are 10 questions you should ask your offset vendor prior to purchasing credits. The questions were developed by Canadian environmental organization, the David Suzuki Foundation, and can be found in their report ‘Purchasing Carbon Offsets’. In reproducing them here, I’ve provided context and/or answers to help you understand what to look for in responses.

1. What are the specific offset project type(s) in your portfolio, and where are they located? (project types refer to wind farm, methane recovery, etc.)

Asking this question will help you to select vendors who can supply credits from projects and places that match your brand identity. For example, a transportation company might be interested in a transportation carbon reduction project, or a company with operations globally might want to support a project in a country where they operate.

2. Have your carbon offsets been certified to a recognized standard (Gold Standard, CDM, VCS, Climate Action Reserve to ensure quality? If so, please list the standard(s).

Make certain the credits you purchase are from third party verified projects of the highest quality and whose reductions are monitored annually by outside, independent auditors. The standards above are widely considered the market’s highest.

3. What steps have you taken to ensure the carbon offsets you are sell are additional?

Additionality is a key indicator of whether or not a project is high quality. It is the concept that a project could only occur because of the funds generated by the sale of the offset credits. If the project could have proceeded without carbon finance, then the project is not truly ‘additional’ and does not go beyond a business-as-usual scenario. In other words, your money is contributing to a project that would have gone on without your additional investment. If the project could not have gone forth without carbon financing, then the project passes the Clean Development Mechanism (CDM)’s additionality test. Find out if your vendor’s projects pass the CDM additionality test.

4. How do you ensure that the greenhouse gas reductions that your carbon offsets represent were quantified accurately?

Here again, look for credits that have been certified to well-recognized standards that monitor project performance on an annual basis. Refer to question 2.

5. Are 100% of your offsets validated and verified by accredited third-party auditors?

If this is not the case, you risk having your vendor offset a project that is not third party verified on your behalf. Having third party verification by independent auditors will ensure the project is actually happening and its reductions are real and ongoing.

6. If you are selling offsets that will be created in the future (i.e., through forward crediting), what mechanisms (insurance or otherwise) have you put in place to ensure those offsets will actually be delivered?

Sometimes carbon credits are forward sold, meaning they are sold before completing the certification process. This is because forward selling generates funds to operate the project in the present term, and offers a cost effective option for buyers, as not-yet-certified credits are typically cheaper than their certified counterparts. If buying forward credits, make certain that your vendor provides guarantees to deliver in the event the project fails and the offset you purchased never came about. Such guarantees might include offering you credits of equal value if your forward credits do not materialize.

7. What percentage of your portfolio (by tonnes of CO2e) is made up of offsets from tree planting or agricultural soils projects? If it is a significant percentage (more than 20% of your portfolio), how do you attempt to address permanence risks?

While trees are great for the environment, sequestering carbon as they grow, they do not necessarily make good carbon offset credits. The reason for this concerns permanency. Trees eventually succumb to death due to logging, natural decay, or natural disasters like a forest fire or hurricane. Their presence is not permanent on the landscape, meaning sequestered carbon will eventually be reversed. If you do buy from a tree planting project, make sure your vendor has a mechanism in place to address permanence risks, like holding a certain number of credits in the portfolio that will not be sold, acting as a buffer.

8. Do you use a publicly accessible registry to track and retire your offsets? If yes, list the websites. If no, how do you ensure your offsets are only sold to one buyer?

Purchased credits should be retired in a recognized carbon market registry to guard against double counting (selling the same credit twice). In today’s voluntary carbon market, there are a few key registries used among retailers. For those companies that sell VCS certified offsets, the APX and Markit registries are used to issue, track and retire credits. Find out where your vendor retires credits and if desired, request proof of retirement (e.g. a web screen shot of the registry noting your specific credits as retired).

9. What is your organization doing to educate consumers about climate change and the need for government policy to deal with it?

A top quality vendor not only sells offset credits, but also emphasizes reductions in the consumption of greenhouse gas emissions internally within an organization. Doing this typically means the vendor is committed to more than just selling you offset credits, and wants to contribute more widely to climate change education.

10. Are you a member of the International Carbon Reduction and Offset Alliance (ICROA), which has a Code of Best Practice that members must adhere to?

ICROA is a non-profit formed by leading project developers and retailers of carbon offset credits to drive up industry best practice and provide market credibility. The hallmark of the organization is a code of best practice, to which all members must publicly report. The code requires practices like selling only credits of the highest market quality, taking a measure, reduce and then offset approach towards emission reductions, and offering reduction advice for clients. Visit ICROA’s website to learn more at www.icroa.org

If you are interested in purchasing offsets for your business or organization, Carbon Clear can help identify projects that will meet your offsetting needs. We are both project developers and retailers of carbon credits and thus have an intimate knowledge of the market. Contact us today to learn more.

The CDP’s Carbon Action Initiative: What you need to know

Last week the CDP (Carbon Disclosure Project) announced its new Carbon Action initiative, an initiative led by institutional investors who combined manage assets of over $7.6 trillion dollars.

The initiative is fueled by an overwhelming belief that an increasingly fossil fuel constrained economy will have immense cost and other impacts on the performance of businesses worldwide. And, the investment community wants to know that the companies they invest in are doing something to manage these impacts. The logic follows that reducing costs now and warding off future price increases will deliver greater shareholder value both immediately and in the long run.

To add to this, the signatories of the Carbon Action initiative, which include groups like CCLA Investment Management, Aviva Investors, Boston Common Asset Management, and Calvert Asset Management have said that starting in 2013, they will begin divesting in companies that do not publicly disclose reduction targets to the CDP.

Steve Waywood, Head of Sustainability at Aviva Investors, a founding supporter of Carbon Action, commented, “We believe that the external costs of greenhouse gas emissions will become internalized into company cash flows and profitability. We encourage companies to consider what actions that they can take now to reduce emissions”

Through the Carbon Action initiative, the CDP is encouraging companies to do the following:

1. Measure and report your GHG emissions

2. Make year-on-year emissions reductions

3. Identify and implement investments in GHG reduction initiatives that will have a positive return on investment

4. Publically disclose emission reduction targets

What does this mean for your business? Two things, if you are a Global 500 company, you will have already received your CDP request for information letter. If not, you may experience a trickle down effect if you work with Global 500 companies looking who will be looking for new opportunities to reduce carbon (and costs) in their supply chains.

If you need help with your CDP response, or are interested in protecting or boosting your brand reputation by making an unsolicited response, Carbon Clear can help. Visit http://www.carbon-clear.com/us/services/carbon_disclosure_project

Carbon Clarity: Another Way to Think About Offsets

As part of my occasional series on increased "Carbon Clarity", I’d like to suggest an approach that may help understand how carbon offsets work. 


I've noted many times before that companies and organisations are going beyond compliance to measure and reduce their greenhouse gas emissions, so let’s start with the organisation’s carbon footprint.

While even the most basic carbon management initiative will include a plan for tackling emissions from the company’s own operations and their purchased energy (Scopes 1 and 2), the main carbon footprint standards don’t explicitly require organisations to measure emissions from suppliers, partners, customers and staff. One – dangerous – way to reduce Scope 1 and 2 emissions is to simply outsource those emission-intensive activities to a third party.  A firm could sell off its delivery fleet and hire a courier company to make deliveries on its behalf.  You can make a causal link between the organisation and these emissions, but they’re caused – and controlled – by someone else.

However, companies that ignore their Scope 3 emissions are missing an important opportunity to engage their stakeholders, or worse, are potentially exposing themselves to reputational risks. in the example above, the firm that hired the delivery company isn’t reducing emissions, it is simply shifting the burden to someone else.  Best practice is to take responsibility for those outsource emissions.  My company Carbon Clear is not alone in making this argument: the BSI’s PAS 2060 carbon neutrality standard requires organizations to include their Scope 3 emissions whenever possible, and the latest revisions to the GHG Protocol are also focused on ways to include more of these third-party emissions.

What happens when a company works to reduce their Scope 3 emissions? Generally speaking, they are promising to devote resources to measuring and reducing part of someone else’s Scope 1 and 2 carbon footprint.  They can then take credit for helping make those reductions happen.

This sounds a lot like the definition of carbon offsetting.  An offset is a purchased reduction from outside the organisation’s boundaries, used to count against the organisation’s own footprint.  In both cases, the company is paying for a reduction from a source beyond their immediate control.

To be clear, carbon offsets are not exactly the same as Scope 3 emission reductions. The original emissions from, for example, a factory in India were not included in the organisation’s carbon footprint (unless the organisation happens to own or purchase supplies from that factory).  The purchased reductions from switching fuel sources at that factory therefore would not count as a reduction within the Scope 3 footprint; while the reductions are real and would not have happened without that payment, they're outside the footprint.

Nevertheless, the effect on the environment and the message the company sends to stakeholders are the same.  Both offsets and Scope 3 measures are “outsourced” emission reductions.  The company has leveraged resources to make real, measurable cuts outside its organisational boundaries. As a result, the company has made a greater impact in the fight against climate change than it could have with a more inward-focused approach to reducing carbon.


(To the Carbon Clear homepage)

Carbon Clarity

If you do an internet search for the phrase "carbon management", you will find a range of companies offering their services.  Rather worryingly, a number of these appear to have some confusion as what carbon management really is.  For example, one company seems to suggest it is basically a quick carbon footprint measurement followed by carbon offsetting.  Another seems to think carbon management is basically energy management with an emissions coefficient thrown in to get an equivalent amount of carbon dioxide.

Climate change is one of the most important issues facing the planet, so the more people engaged in carbon management the better - so long as they're doing it right.  Doing it wrong risks wasting time, energy, and money, and potentially delaying the transition to a low-carbon economy.

In this post, we'll discuss what carbon management is, what it isn't and why that difference is so important.

At Carbon Clear, carbon management is all about clarity. Carbon clarity means having the right information and using that information to make good decisions.

More specifically, we view carbon management as a systematic process to identify and address the risks and opportunities presented by climate change.

The basics of our approach are straightforward enough.  As they work through the process, clients who engage our services learn:

• What is my climate change exposure?
• How will my business be affected by climate change?
• How can my business adapt to gain commercial advantage?
• Will my processes need to change in a low-carbon world?
• Are we prepared for these changes?
• What can I do now? What do I need to do?
• What do my stakeholders expect and how can I address them?
• How do I measure success?

So far, so good - nothing that should surprise anyone who has worked with us before.

But there's a difference between saying and doing.  There are a lot of tools out there and a lot of specialist providers who have a hammer in search of a nail.  It's the first part of the definition that gives our approach to carbon management its clarity and power.

Note in particular the use of the phrase "systematic process".  At Carbon Clear we find that it is often counter-productive to pre-judge where a company's greatest exposure to climate change risks and opportunities will lie.  Perhaps the greatest risk is their exposure to energy prices that incorporate a rising cost of carbon.  Perhaps the risk lies in supply chain disruptions caused by increasingly severe weather.  Perhaps the risk is reputational, as the news media, customers and investors punish climate laggards and reward pioneers.

Limited tools can result in limited thinking.  Many larger companies already employ half-hourly energy meters and legislation like the UK's CRC Scheme means the number of meters in use is growing.  Companies can therefore deploy software that enables them to track energy consumption and engage in long term energy planning and targeting. Despite their power, however, these tools are not enough. As we have pointed out before, carbon management involves people throughout the company, from energy managers (the natural users of these software tools), to the HR director, the chief financial officer, and the communications manager. Each of these players will process information in a different way and have a different definition of a successful outcome.  At best, this diversity makes an energy-focused software tool a difficult sell.  At worst, it potentially leaves a company blind to all the other greenhouse gas emission sources in their business and to the other ways that climate change can affect them.

Similarly, unless we understand the resources and constraints available to the company, it may be premature to specify in advance the actions they should take to tackle those risks and opportunities.  Just as a physician will discuss all the options before sending a patient off to surgery, a carbon management professional should help a company understand the choices and trade-offs available to them.  The universe of possibilities is vast: should they invest in energy efficiency, renewable energy, demand management, supply chain optimisation, fuel switching, improved transport management, employee and customer engagement, corporate restructuring, new product development, etc, etc...? The answer, of course, is "it depends".

And within each of these categories lies a potentially bewildering number of specific approaches.  Within the category of energy efficiency should the focus be on improved metering, lights, motors, insulation, load management, user behaviour or some other solution? What's the trade-off between investing to optimise existing equipment and undertaking a retrofit before the current equipment has reached the end of its useful life?  And who decides?

Carbon clarity means using clear, systematic thinking to cut through these complex variables to find the right carbon management solutions for your company.  As the examples above illustrate, carbon management isn't a single tool.  It isn't just a carbon footprint, and it isn't a gadget you can buy.  And while carbon credits may play a role, carbon management isn't just (or even mainly) about carbon offsets.

At Carbon Clear, we're your carbon management partner.  We provide carbon clarity to help you change climate change from a risk to an opportunity. And we help you choose the tools that will translate those opportunities into results.

(Carbon Clear homepage)

Why managing your carbon impact is inevitable

I believe that every business in the UK will be managing its carbon impact in 5 years. Many companies are already doing so, but there are many that are not. Those against it usually argue that investment in non-core activities is difficult, especially in this time of fiscal austerity. While this may be an understandable response, I believe it is short-sighted. Reducing your carbon impact will save you money and strengthen your business, and the sooner you do it, the sooner you can build expertise and enjoy the benefits.

Let’s look at the business case for a moment. Carbon management consultants like us have been harping on about cost savings for years. It’s not just rhetoric, nor is it rocket science. Any organisation that can work out ways to use energy more sensibly will knock a massive chunk off its electricity, gas and fuel bills. As energy prices won’t be going anywhere but up in the future, the savings accumulate accordingly.

Then there is legislation. The coalition turned the CRC Energy Efficiency scheme into a tax as part of its Comprehensive Spending Review, with the additional tax bill for the smallest participants now estimated at over £40,000 a year from 2012. On top of that they face fines for non-compliance if they don’t accurately measure their emissions. So the better you manage your carbon, the smaller your tax bill. And it’s unlikely to stop there. A recent government consultation on corporate law and governance is the first part of the coalition’s commitment to ensure that social and environmental duties are included in company reporting.

The good news is that consumers like to see companies ‘doing their bit’. They might not want to make massive changes in their own lifestyles or pay a premium for green credentials, but they do show a preference for sustainable products and services. A 2009 Europa survey found that more than 8 in 10 EU citizens felt that a product’s impact on the environment is an important element when deciding which products to buy. Brands embracing the low-carbon agenda are associated with a ‘can do’ approach, social responsibility, and innovation.

The flip side of this is, of course, that companies not tackling their environmental impact are at risk of losing out to their more forward-thinking competitors. In a 2010 PwC survey of the FTSE 350, 85% of companies are now disclosing their carbon emissions. They need to, because ethical and environmental procurement is becoming mainstream. So even non-consumer-facing businesses are vulnerable to loss of competitiveness if they supply, for example, to a major retailer such as a supermarket, or to the public sector.

Not convinced? You won’t be alone. But in 5 years time I believe you will be at a disadvantage if you don’t take these messages seriously. I think there is a good chance you’ll wind up managing your carbon anyway, eventually. Best practice suggests adopting a low-carbon approach to build value and bring in new business today. Why wait?

Mark Chadwick is CEO of Carbon Clear, a London-based carbon management consultancy.

What’s on your plate? Agriculture, meat, and carbon

(The following article originally appeared in the 15 November 2010 (no. 108) issue of the IEMA journal "the environmentalist", and is posted here with permission from the publisher.)

Most greenhouse gas reduction initiatives – including those promoted on these pages – have focused on energy industry and transport as these sectors comprise the bulk of measurable human-induced emissions.  In addition, international climate negotiations (UN-REDD) have focused increasing efforts on reducing emissions from deforestation and degradation.

In general, agriculture has received less attention in carbon management policy and legislation, despite the fact that more of the earth’s surface is dedicated to farmland than to cities.   Agriculture is estimated to account for anywhere from 10% to 40% of global anthropogenic GHGs.

One agricultural topic that has received more attention is the environmental consequence of the globalization of food as a commodity product. Should the carbon impact of our globalized food system and meat-intensive diet be part of the debate?  Are there farming practices closer that could reverse this pattern?

                                                                                                               

Loving our Livestock

Modern society seems to have a love-hate relationship with livestock.  An ice cream manufacturer might use images of grazing cows to symbolise fresh, natural products, and yet food scares from BSE to E. coli infections highlight some of the apparent risks of industrial agriculture.

A similar contradictory relationship exists when it comes to greenhouse gas emissions from agriculture. Intensive livestock rearing generates both direct and indirect greenhouse gas emissions, while improved practices can result in quantifiable emission reductions and support the transition to a lower-carbon economy.    The extent to which agriculture is a source or sink for GHGs depends on existing regional land-use and management practices. An important related question is what the alternative uses for the land would be, and whether those uses would generate even greater emissions than agriculture?  

The beef carbon footprint

Greenhouse gas emissions arise at every step in getting a hamburger or steak to our tables, from preparing the soils, to growing the animal feed, to housing and feeding animals, managing their waste, transporting the animal to market, to meat processing, packing, refrigeration, transport, and finally cooking. 

At each stage, GHG emissions are released - and can be mitigated.  How cows are raised– e.g. whether grain fed or pasture raised-makes a difference. Most cattle are fed a diet rich in corn and alfalfa. These grains are often grown using artificial fertilisers produced through energy intensive means and harvested with mechanised farm equipment.    However, the lower GHG intensity of grass-fed cattle is not always better if pastures are overgrazed and cause soil degradation and soil carbon loss.  And the demand for grazing lands can put pressure on nearby forests resulting in significant emissions from deforestation.

The multi-stomached cow, while well equipped to digest otherwise inedible grasses, burps largevolumes of the greenhouse gas methane – anywhere between 100 and 700 litres per animal per day.  The animal waste is also a source of methane emissions if it is stored in large lagoons where it decomposes anaerobically. And depending on the application of manure and/or nitrogen fertilizers for feed crops, nitrogen can be released into the atmosphere as N₂0.  Both methane (CH₄) and nitrous oxide (N₂0) are particularly significant greenhouse gases as the former has a global warming potential 21 times that of CO₂ and the latter, 310 times that of CO₂.

By adding up all of these emissions sources and dividing by the amount of meat produced, it is possible to estimate the carbon footprint of each piece of beef.  According to a 2009 analysis, a 150 gram burger is responsible for approximately 2 kg CO₂ equivalent the same as driving 15 km in an average car.

The cumulative effect of our burger eating is huge.  According to the U.S. Environmental Protection Agency report, “Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2004," beef cattle accounted for 71% of methane emissions in that country in 2004. The FAO estimates that cows and other livestock worldwide are responsible for total 18 percent of greenhouse gas emissions, a bigger share than for transport. As incomes rise in poorer countries, so does global meat consumption, potentially undermining efforts to reduce emissions.

Carbon Management on and Off the Farm

While attention is turning increasingly to the problem of carbon-intensive global livestock production, campaigners, policy makers and journalists have said less about the opportunities for better management practices on domestic farms.  It is possible to adapt the well-tested “reduce, reuse, recycle” hierarchy to our production and consumption of food to find ways to reduce the greenhouse gas impact of the food we eat.

Accordingly, the first approach is to reduce demand of high emissions foods like beef by reducing food waste.   Careful meal planning and better storage can significantly reduce the amount of food purchased and sent to landfill without being eaten.  A second approach is to encourage a shift in favour of lower-carbon protein sources like pork (single-stomach pig), poultry and legumes will reduce GHGs.  In the short term, however, it will prove difficult to separate people from their beef burgers and Sunday roasts.  What is more, these efforts may be swamped by changing diets in the developing world.

Improving practices and finding farm & carbon management synergies

Is it possible, then, to raise cattle that emit less methane, and to reduce emissions associated with feeding them?  Here the results to date have been promising.  Studies have shown that changing pasture can reduce gaseous emissions by 20%, and including garlic in cattle feed can reduce emissions by 50% and lead to healthier cattle[1].  Optimizing the diet of animals not only improves the efficiency of weight gain for animals (i.e. meat) but also reduces the methane emissions. About 6% of the energy input to the cow is released as methane gas from the cow.

Best practices on farms have great potential to mitigate GHGs and improve carbon sequestration. Biomass and carbon comprises much more than the plants and animals immediately obvious on the farm. Land-use practices such as ploughing or tillage intensity can determine the extent to which soil is a sink or source for GHGs. Ploughing up grassland releases up to 84 tonnes per hectare CO2e in England and up to 330 tonnes CO2e per hectare in Scotland.[2] On the other hand, grazing animals can help maintain grasslands if grazing in controlled and pastures are rotated.  By reducing land clearing and minimizing soil disturbance, soil’s role in storing carbon and available nitrogen for plants can be maximised and soil structure and microbial activity can be enhanced to increase agricultural productivity.

In short, best practice pasture management can help soils sequester carbon while, on the other hand, poor practices (e.g. overgrazing, excessive nitrogen use, and forest destruction) will lead to increases in GHGs.  “Using existing technologies and best management practices, US agriculture could sequester 350-550 million tonnes of CO2e per year and current N2O and CH4 emissions could be decreased by 20-40%.”[3] 

Reducing or eliminating nitrogen-based artificial fertilisers as part of a programme of integrated farm management can reduce greenhouse gas emissions from soil.  Spreading manure on croplands has the dual benefits of replacing artificial fertilisers and reducing the volume of methane-generating waste lagoons.

Where waste lagoons are unavoidable, they can aerated to break down the waste aerobically, producing CO2 instead of the more powerful greenhouse gas methane.  An alternative is to capture the methane and flare it or use it to generate renewable heat and electricity.  Feed-in tariffs and standard contracts in the UK and US provide generous incentives for farmers to generate power in this way, in order to displace fossil fuel-fired generation (as described in our article in issue 104 of  ‘the environmentalist’.

A final approach is to look at local land use practices.  The decision about the best use of a given parcel of land is made jointly by landowners, local communities, government and other stakeholders.  Allowing livestock grazing may be considered the best way to preserve open space, which also allows recreation and provides habitat for native species.  The challenge then is to ensure that the practice helps to reduce net emissions rather than contributing to them.

Reducing over-grazing and using perennial grasses helps to maintain soil structure and reduce soil carbon emissions.  Managing sites for some woodland growth can aid carbon sequestration and conservation. Indeed, livestock can be part of a program to control invasive species and encourage native ones.

As farmers in the USA have learnt, wind farms are often a perfect complement to livestock grazing.  Around the town of Klickitat, Wisconsin, landowners have given wind developers permission to install over 600 turbines, generating enough power to supply 300,000 to 400,000 homes.  In this way, local farmers are making a significant contribution to the low-carbon economy. What is more, the landowners earn approximately $18,000 (about £11,000) per year for each turbine on their land – a significant boost to modest local incomes.[4] 

Conclusion

Domesticated livestock have been with humanity since before written records began. It is important that we recognise the carbon cost of our intensive agriculture and food choices, and continue to seek ways to balance our meat consumption with our need to combat climate change.


Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore MIEMA,CEnv is Managing Director at carbon management company Carbon Clear Limited.

References:

1 Soil Carbon and Organic Farming, Soil Association, November 2009 http://www.soilassociation.org/

2 Climate Change and Greenhouse Gas Mitigation: Challenges and Opportunities for Agriculture, US Council for Agricultural Science and Technology, May 2004

3 Nathan Fiala, “The Greenhouse Hamburger”, Scientific American, February 2009.

4 http://www.decc.gov.uk/assets/decc/statistics/climate_change/1_20100414165435_e_@@_GHGnatstatsrelease140410rev1.pdf

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[1] http://www.thebeefsite.com/news/29884/afbi-study-on-methane-emissions-in-ruminants

[2] Ibid

[3] Climate Change and Greenhouse Gas Mitigation: Challenges and Opportunities for Agriculture, US Council for Agricultural Science and Technology, May 2004

[4] http://www.eenews.net/Greenwire/2010/10/18/

Carbon Neutrality: In From the Cold

(Ed: This article was originally written by Jamal Gore and Suzy Hodgson in October 2009 for the IEMA journal "the environmentalist", but was never published. Nevertheless, its content remains relevant. Enjoy!) 

Companies around the world are increasingly taking action to reduce and offset their greenhouse gas emissions. A few years ago, businesses took pains to publicise their reduction programmes, so much so that in 2007 the term “carbon neutral” gained an official dictionary entry.  However, in more recent years companies have appeared less willing to draw attention to their low-carbon initiatives.

Sorting a market muddle

Some of this reluctance stems from confusion and even cynicism about “carbon neutral” claims.  While most agree that carbon neutrality requires measurement, reduction and offsetting, many claims have been plagued by a lack of transparency.  In one highly publicised example, a computer company was criticised for making its offices and business travel “carbon neutral”, while ignoring the much larger emissions from the manufacture and use of its core product.  Few companies that have gone carbon neutral publicly disclose all aspects of their carbon footprint.

As a result, it has been difficult for stakeholders to understand how organisations’ footprints are measured, and whether internal reductions or offsets have been used to achieve carbon-neutral status.  Without an objective standard and faced with accusations of “greenwash” many companies have understandably wished to keep a low profile.

We think this is a missed opportunity.  By promoting their carbon reduction initiatives, businesses have an opportunity to engage staff and customers and are more likely to stay the course during difficult economic conditions.  

The UK Government and the British Standards Institute (BSI) seem to agree, stepping forward with parallel solutions to address this market failure.  In late 2008, the Department for Energy and Climate Change (DECC) launched an informal process to develop guidance on using the term “carbon neutral”. The main aim was to provide clarity for former Prime Minister Tony Blair’s target to make all Government estates “carbon neutral” by 2012, but also to provide greater clarity for other organisations and serve as a reference to reinforce the Government’s Green Claims Code.

At roughly the same time, BSI began working on a new Publicly Available Specification (PAS 2060:2010) to give guidance on making carbon neutral claims.  BSI was responding to a perceived need from businesses for a consistent approach to carbon neutrality.  BSI intends to serve the interests of a wide range of industrial sectors, both in the UK and abroad, with a PAS that is useful, relevant, and authoritative and potentially serves as a precursor to an ISO standard.

Both the DECC guidance document[1] and the BSI specification[2] have the potential to create a more level playing field for organisations working in this area.  The two documents are generally in lockstep in their references to accepted standards and protocols for carbon footprint quantification and reporting of greenhouse gas emissions (see our article “Whose footprint is it anyway?” in issue 53 of the environmentalist.), and both outline the key stages of carbon management, i.e. determining the subject scope, measuring the footprint, implementing a reduction plan, requantifying the residual carbon footprint, and offsetting.

Setting the scope

 As readers of our previous articles may recall, the boundaries for an organisation’s carbon footprint set the stage for the rest of the carbon management process.  Without a credibly scoped footprint, the organisation’s reduction programme may fail in the court of public opinion.

BSI and DECC take similar approaches to scoping emissions, using the GHG Protocol and ISO 14064 as their starting point.  DECC recommends that at a minimum, emissions within Scope 1 (sources under the organisation’s direct control) and Scope 2 (from purchased energy) be included. In addition, DECC recommends that organisations include their “significant” Scope 3 [other indirect] emissions with guidance for determining significance. 

As DECC does with the word “significant”, BSI provides guidance for determining “materiality” for Scope 3 emissions, stating that “those Scope 3 emissions deemed to be material to the subject shall be included.” To remove doubt about what must be included, BSI states that where the subject is an organisation, “the boundaries shall be a true and fair representation of the organisation’s greenhouse gas emissions (i.e. shall include all emissions relating to core operations including subsidiaries owned and operated by the organisation.)” 

Clearly, “significant” and “material” do leave room for managerial discretion in determining Scope 3 emissions.  DECC and BSI both recognise that organisations will differ in the extent to which they are responsible for, or can influence the emissions of third parties who pollute as a result of the organisation’s activities. Nonetheless, organisations are required to document their decisions transparently. However, differences in interpreting Scope 3 mean that the DECC guidance and BSI specification do not make it easy to rank carbon-neutral organisations in a league table. 

Reductions done right

 Both the DECC guidance document and BSI’s specification require organisations to put in place a programme of internal reductions in order to make a credible claim.  DECC requires three “separate” and distinct management steps - measurement, reducing, and offsetting, specifically stating “a carbon neutral claim consisting only of calculating emissions and offsetting should not be made.”  This requirement addresses those critics of carbon offsetting, who see it as a substitute for reducing emissions within the organisation’s boundaries [see our article “Carbon offsets: a last resort?” in issue 64 of the environmentalist].

BSI takes a different approach. While PAS 2060 requires an ambitious plan for internal reductions, it acknowledges that it may take several years for these plans to bear fruit.  PAS 2060 allows companies to recognise, as part of this longer-term target, reduction activities begun before the carbon reduction claim.  This approach reflects that organisations can often reap significant reductions in the first year, but that subsequent reductions might require significant investment and be realised more slowly.  Requiring a set reduction every year might inadvertently discourage companies from making investments in ambitious long-term emission reduction activities.

Interestingly, neither guidance document specifies a minimum level of internal emissions reduction.  Instead, they require that organisations announce a reduction plan and publicly disclose their progress each year, allowing stakeholders to scrutinise activity and form their own opinions regarding their appropriateness.

Offsets – an essential component

 As for carbon offsets, DECC and BSI acknowledge that, while internal reductions are an important way to demonstrate an organisation’s commitment and set the organisation’s course to a lower-carbon future, internal measures alone are unlikely to lead to zero net emissions. 

Both guidance documents outline the methodology and strict requirements for offsets.  These criteria include requirements that all offsets used to achieve carbon neutrality are:

• Genuine
• Additional
• Without leakage
• Permanent
• Independently verified by a third party
• Transparent (i.e. supported by publically available project documentation on an established registry)

Beyond this point, the two guidance documents diverge.  Recognising the national and international organisations likely to use PAS 2060, BSI does not specify particular offset quality standards, but provides a list of popular schemes that meet these criteria, including the Clean Development Mechanism, Voluntary Carbon Standard, and Gold Standard.  Regardless of the standard, BSI requires organisations to publicly disclose the type and quantity of offset credits used to balance out their residual emissions.  Again, BSI relies on public opinion to drive good behaviour.

DECC, on the other hand, recognises only those offsets that have been accredited under the Government’s Quality Assurance Scheme.  At present, only “compliance” credits from the Kyoto Protocol and the EU ETS can be accredited under this scheme. These credits typically cost twice as much as voluntary credits certified under other schemes – and sometimes even more. While DECC recognises that voluntary carbon credit standards have the potential to meet the criteria for generating quality offset credits, and often provide social and environmental co-benefits, the Department states that it is currently unable to vouch for their quality.  Organisations that wish to use unaccredited offsets are required to demonstrate that they have performed due diligence and met the criteria described above.

Which to use?

As the above points demonstrate, the DECC and BSI documents share a number of common elements: GHG Protocol/ ISO 14064 footprints, a plan for measurable internal reductions, high quality carbon offsets, and public disclosure throughout.

But, the differences between these two documents mean that they are not interchangeable.  DECC is more prescriptive in the timing of internal reductions and the types of offset credits organisations can use to achieve carbon neutrality.  The more flexible BSI approach will appeal to organisations that operate across national boundaries, and to large organisations making significant long term capital investments to achieve their internal reductions, or whose offsetting bill is so large that a reliance on compliance credits might force them to abandon the effort altogether.

On the other hand DECC’s approach, , may be more attractive to organisations that are already demonstrating year-on-year reductions and using compliance credits for their offsetting, or who prefer to rely on an implicit Government endorsement of their lower-carbon initiatives to deal with stakeholder scepticism.  The more prescriptive approach and implied hierarchy of the DECC guidance may offer the impression of increased rigour, even as it excludes some would-be users.

Conclusion

Because these two documents allow organisations to choose the scope for their measurement, reduction and offsetting programmes, they do not facilitate direct comparisons between organisations making carbon neutral claims. Even so, they both have the benefit of making these claims more specific, transparent, and readily verified.  As a result, we expect this guidance help reduce stakeholder scepticism and make it easier for organisations to speak more confidently about their carbon reduction initiatives.

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[1] Department of Energy and Climate Change, Guidance on carbon neutrality, 30 September 2009

[2] PAS 2060:2010 Publically Available Specification for the demonstration of carbon neutrality.

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