Download What does it mean to be carbon neutral?

What does it mean to be carbon neutral?
A definition
“Carbon neutrality refers to the calculation of an entity’s total carbon release as zero, brought
about by balancing the amount of carbon it releases with the amount it offsets. Offsetting
describes the practice of removing carbon dioxide emissions from the atmosphere by funding
carbon projects that lead to the destruction of greenhouse gas emissions, the prevention of
their release into the atmosphere or the sequestration of carbon dioxide.”1
This definition clearly has some shortfalls. How do you calculate? What is ‘total carbon’
release? What qualifies as an offset? This highlights a need to set specific parameters and
agree standards to be met before anyone can claim carbon neutrality along the same lines
as organic claims or fair-trade. But under whose authority can parameters be set? It remains
to be seen whether it is indeed possible to set parameters for carbon neutrality and, for
example, establish the benchmark scope of emissions for which an organisation is
responsible. So it will help to examine why a company might go carbon neutral and then how
it can do so.
Why go carbon neutral?
1. To save money / reduce operating costs. By voluntarily calculating and assigning a
cost to their carbon emissions, companies can begin to prepare for the inevitability of
an economy in which carbon dioxide and other greenhouse gases are regulated. This
is an important step towards managing carbon emissions efficiently and identifying
potential for reductions and cost savings. A very effective way of reducing emissions
is by being more energy efficient. A positive by-product of this is a reduced energy bill
which saves money, particularly in the context of high energy /oil prices;
2. Corporate Social Responsibility (CSR). Going carbon neutral can form a
complementary part of a wider CSR strategy, especially if the projects which are
invested in reflect the locations of company operations and give something back to
the surrounding communities.
3. Leading by Example. Companies are choosing to reduce emissions and go carbon
neutral in order to influence and drive emissions reductions amongst peers faster
than the current pace of legislation;
4. Demand from stakeholders. Shareholders that want to see carbon reducing efforts/
neutrality or employees who are motivated by working for a socially responsible
company can influence organisations to work towards carbon neutrality;
5. Compliance. Companies responsible for 46% of the emissions in the EU are part of
the EU Emissions Trading scheme with allocated caps on their emissions and are
entitled to reduce their overall emissions by procuring a fixed volume of offsets;
1
Adapted from: http://en.wikipedia.org/wiki/Carbon_neutral
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6. Green Marketing/ boosting green and socially responsible credentials – Developing
carbon neutral products or services can help companies to reach new customers who
increasingly care about the environmental impact of products and services that they
buy. Going carbon neutral sends a powerful message to consumers, competitors and
the public that you share their concern over climate change, are taking steps today to
neutralise your emissions and that by buying from, investing in or promoting your
business the public at large can help combat climate change;
7. Reputational risk. More and more, companies that do nothing with regards to climate
change are publicly criticised. For some companies, it is too much of a risk not to be
taking steps to address climate change due to the risk of negative public opinion.
How does an organisation become carbon neutral?
Carbon neutrality begins with the measurement of an organisation’s emissions footprint. This
helps identify opportunities to reduce emissions in its processes and operations. Neutrality is
completed by offsetting the remaining unavoidable emissions through the procurement of
carbon credits, before communicating this to stakeholders.
1.
Measurement of Emissions.
Emissions measurement will normally follow an accepted protocol such as the GHG
Protocol.
The approach follows guidelines developed by the WRI/WBCSD GHG Inventory Protocol
and requires organisations to differentiate between three different ‘scopes’ of emissions, as
outlined below:
Scope 1: Direct emissions: These emissions occur from company-owned or controlled
sources, predominantly occurring from heat combustion such as natural gas in boilers and
fuel emissions from company vehicles. WRI also recommends including GHGs from
chemical production (for the manufacturing sector), as well as significant sources of HFC
leakage that may result from refrigeration or air conditioning.
Scope 2: Indirect emissions: These emissions occur from the generation of purchased
electricity, steam, or heat. While consuming electricity, emissions occur where the electricity
is generated.
Scope 3: Other indirect emissions: These are emissions from sources not owned or
controlled by the company, but are nevertheless a consequence of the company’s activities.
For service sector firms, Scope 3 emissions typically include those associated with business
air travel, staff commuting, and emissions related to office supplies (such as paper use) and
business activities (such as waste).
The calculation of an organisation’s emissions footprint will depend entirely on the scope
employed, and further decisions have to be made as to what is included and what is not
included within each scope. Calculations within the aviation sector, such as the radiative
factor for fuel burn at altitude are not yet fully understood so it is important to know exactly
how the final measurement in tonnes of CO2e will be reached.
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2.
Reducing emissions in your organisation.
The primary purpose of an emissions measurement is to identify how different areas of the
business are contributing to the overall carbon footprint. This allows proper consideration for
where processes can be altered or investment can be made to reduce emissions. This
usually has the dual benefit of increasing efficiencies and saving money over time.
Carbon neutrality is an iterative process so an annual emissions measurement allows for
benchmarking, to measure year on year the success of initiatives and investments.
Emissions reductions focus on what the organisation can do to reduce its own emissions.
The success of these initiatives will depend on the level of ‘buy-in’ within the organisation.
Board sponsorship and budgeting for emission reductions facilitate large scale operational
changes (e.g. a switch to buying renewable only energy). The companies that are most
successful in reducing their emissions are those for whom efficiencies and reductions
become a way of life/business as opposed to an additional operational responsibility.
Companies such as Danone have even gone as far as linking annual bonuses with
emissions performance to achieve wholesale change within the organisation.
3.
Offsetting remaining emissions.
To become carbon neutral, companies procure offsets from emission reduction projects
across the globe to neutralise those emissions for which it is prohibitively expensive or
restrictive to reduce through internal abatement measures.
The guiding principle behind offsetting and one of the key drivers to the Kyoto Protocol is the
desire to promote technology and investment transfer to non-Annex 1 countries (developing
and non-Western economies). Climate change is a global phenomenon; therefore it does not
matter where an emission reduction is achieved, so long as it is independently verified as
being real and additional.
By recognising the transfer and eligibility of offsets achieved by introducing clean technology
to non-Annex 1 countries, there are several beneficial outcomes. Firstly, the investor of the
technology achieves their goal in reducing an equivalent tonne of CO2. Secondly, the host
country of the emission reduction project benefits from the introduction of the technology and
from the investment. Thirdly, by creating an offset market, the emission reduction will be
achieved where it is most economically feasible. Finally, the offsetting mechanism
incentivises all countries, regardless of their per capita emissions to participate in the fight
against climate change.
An emission reduction project must be able to prove that it would not have occurred without
the revenue created through selling the carbon offsets, i.e. it would not have happened under
a ‘business as usual’ scenario. This concept is known as additionality. Offsets are measured
in units of one tonne of CO2 equivalent.
4.
Communicating carbon neutrality
Internal communications are an important part of any successful carbon neutral programme.
Internal communications should focus on engaging and educating employees and suppliers
about what the company is trying to achieve and what part they can play in reaching this
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goal., Communications can be used to both encourage internal stakeholders to reduce their
emissions wherever possible and help to engage them with the ‘story’ behind the projects
which have been chosen as part of the offsetting scheme
External communications must carry a high level of transparency and accountability in
relation to how the company is actually achieving its carbon neutral status. This includes
accuracy in the measurement process and scopes, informing consumers on all of the
initiatives to reduce emissions and specific achievement goals of those initiatives. The
communication needs to show how at least some of the chosen offset projects reduce
emissions. Finally, communications must be able to reveal the year on year success of the
initiatives against the benchmarks from the previous year to bolster the overall credibility of
the carbon neutral programme. Communications must reflect the overall objective of
becoming carbon neutral. If the objective is to save money, your communication should
correspond with this objective. One company that has successfully become carbon neutral,
Google, has done so on account of the bottom-up drive from its employees who want Google
to be leading the fight against climate change. Consequently, Google’s communications are
predominantly internal.
Summary
Becoming carbon neutral is an admirable achievement for an organisation, though much
more complicated than it may initially seem. In the absence of a benchmark definition,
carbon neutral necessarily has different meanings to different people. To avoid criticism or
confusion it is imperative to clearly explain specifically what you mean by your carbon neutral
claim and how you have reached your zero net emissions calculation. Carbon neutrality
involves careful thinking, planning and budgeting but can have excellent results, both in
savings achieved through efficiencies and external recognition for being a low carbon
pioneer. Companies that have successfully become carbon neutral:
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Have a clearly defined motive for becoming carbon neutral;
Have well scoped and accurate emissions measurement;
Have employee and management buy-in;
Implement specific and quantifiable internal emission reduction initiatives;
Procure real, permanent and additional offsets;
Keep their communications accurate, transparent and commensurate with their
overall carbon neutral objectives.
Niall Thorburn
EcoSecurities
Commercialisation Manager
September 2008