The case for zero carbon
To build a business case for the zero-carbon transition, it’s necessary to identify why a business should invest in the change. Matt Dracup, ENGIE’s Industrial Energy Service Director, and Richard Sulley, Senior Energy and Sustainability Manager explain the financial, regulatory and societal drivers behind the transition and how to quantify the impact a business is currently having on global emissions.
Numerous factors are driving businesses to begin their transition to zero carbon. Amongst these are tighter legislation, growing consumer pressure and the necessity to remain competitive, however climate change and sustainability stand out as the core issues.
The financial risks of climate change are becoming clearer, with financial experts like Mark Carney, the Director of the Bank of England, stating publicly that “companies that don’t adjust to the new world will fail to exist”.
Climate change is having an impact on the world, and companies need to adapt to the changing environment. They also need to adapt to the change in the regulatory environment, because the cost of carbon is forecast to increase significantly over the coming years; if companies don’t have a grasp of what they emit, they could be priced out of the market all together.
Pressure is also coming from the government in the form of the clean growth strategy which was first announced at the end of 2017 but amended in April 2019. This strategy put the 2050 net-zero target into law and aims to maintain business growth while eliminating carbon emissions. As part of the clean growth strategy the government laid out initial plans of how it was going to support businesses to reduce their carbon emissions while maintaining growth.
Alongside government pressure, societal pressures are building, with activists like Extinction Rebellion and Greta Thunberg making the headlines weekly. But pressure is also coming from inside, with employees and even children asking what we’re doing to mitigate the climate crisis.
All of these pressures combined are building a case for businesses to look at their processes and how much carbon they’re generating.
Quantifying a business’ impact
So how do businesses quantify their impact? They should start by looking at what emissions they’re emitting and their sources.
We know carbon dioxide and its impact on global warming, but methane and nitrous oxide are also emitted by certain manufacturing processes. Methane, for example, has 28 times more Global Warming Potential (GWP) than CO2, and Nitrous Oxide is 265 times that of CO2, so we need to consider all Greenhouse Gases when assessing environmental impact
In terms of carbon reduction, we look at three types of emissions:
- Direct emissions – Scope 1
- Energy indirect emissions – Scope 2
- Other indirect emissions – Scope 3
Scope 1 emissions are from sources that are owned or controlled by the business entity:
- Fuel combustion
- Vehicle fleet. (Logistics, company vehicles and grey fleet).
- Fugitive emissions
Bought-in energy has associated emissions. These are classed as scope 2 and include:
- Buying electricity from the grid
- Purchased heat, steam or cooling
Scope 1 and 2 are easy to measure but scope 3 requires more work. There’s embedded carbon in almost everything, even office buildings, bicycles and windfarms have embedded carbon from their production. To make this calculation simpler we see scope 3 as a business’s supply chain’s scope 1 and 2, calculating this should cover most of an organisation’s scope 3.
Emissions aren’t solely created by burning fuels but can come from elsewhere. Fugitive emissions arise from processes that emit greenhouse gases. For example: A factory with an effluent treatment plant slowly digesting a vat of waste emits carbon dioxide (aerobic) or methane gas (anaerobic) and nitrous oxide. Chemical production processes can directly emit GHGs. Farming has fugitive emissions, in particular methane, from cows’ digestion.
Most carbon accreditation schemes only look at scope 1 and 2, but scope 3 shouldn’t be ignored, businesses need to push their supply chain to address their own scope 1 and 2.
Streamlined Energy and Carbon Reporting
While a company’s emissions have largely remained unseen by the public, the new Streamlined Energy and Carbon Reporting (SECR) is about to change this. The first SECR deadline is coming up in April and will mean that information on every large company’s emissions will be made publicly available through their annual reports. For quoted companies, all green-house gas emissions will need to be reported on, including those related to energy consumption; for non-quoted large companies, all carbon emissions related to energy consumption will need to be reported This will go alongside a narrative report on what you have done and are planning to do to reduce carbon emissions. In terms of societal and supply chain pressure, there’s never been a more important time to act.
Find out more about Streamlined Energy and Carbon Reporting.
Find out more about the Zero-Carbon Transition.
This presentation was first given to members of the Food And Drink Federation.
Listen to the full webinar here > https://www.fdf.org.uk/webinar-the-zero-carbon-transition.aspx