Carbon footprints – issues and opportunities€¦ · Senior Consultant Johns Environmental...

Johns Environmental © 2009

Carbon footprints – issues and opportunities

FPRF – Issues & Opportunities Seminar

Dr Stewart McGlashan

Senior ConsultantJohns [email protected]

Johns Environmental © 2009 Slide 2

C-footprint is not a trivial exercise

C-footprints differ to Emission Trading

Corp. sustainability will drive the issue

Strategic & creative footprint reduction

Stakeholder communication is critical

Carbon footprints - Summary


What are they?Life cycle assessment processSub-set of Ecological FootprintsSystem-wide view of emissions profile

Definition (UK Carbon Trust)

“the total set of greenhouse gas (GHG) emissions caused directly and indirectly by an individual, organization, event

or product”

Carbon Footprints


Current applications – Carbon Footprints

Manage footprint & reduce over timeBenchmark current operations/businessScope 1 & 2 focusInternal focusSome external/marketing implications

3rd party (Customer & Government) reportingExternal demand for emissions profileSustainable business practicesScope 1, 2 & (sometimes) 3 focusSignificant stakeholder implications

– E.g. WalMart


Examples of Scope 1, 2 & 3


Manage the footprint & reduce emissionsUnderstand & quantify emissionsRelatively quick and straightforwardEmissions reductions program

Accurate 3rd party reportingFor CSR or marketing purposesTo fulfil requests from business or retail customers, or from investorsTo ascertain what level of emissions they need to offset in order to become ‘carbon neutral’.

US EPA Mandatory Reporting of GHGsNon-tariff, technical barrier to trade

Carbon Footprints – Motivation


Food miles is refers to the distance food is transported from the time of its production until it reaches the consumer

BackgroundUK origin (1990s)One dimensional assessment of environmental impact of food.

ImplicationsSignificant issue for trading nations (Australia & NZ)Does not account for production efficiencyUp to 80% of emissions produced prior to farm gate

OutcomeEncouraged potential ‘carbon’ inefficienciesNon-tariff technical barriers to trade

Case Study: Food Miles


Carbon Footprints & Sustainable Business

Walmart and Global Sustainability

Advocating for one set of social and environmental standards, and one third-party auditing system, to be used by all global retailers and brands.

Strengthening compliance requirements, supplier standards and developing a more comprehensive audit and supplier development program.

Partnering with suppliers on reducing their environmental impact and on improving efficiency and product quality.

Johns Environmental © 2009 Slide 9•Queensland Government Department of Environment and Resource Management Business Sustainability Roadmap. Accessed from http://www.epa.qld.gov.au/register/p00771aa.pdf on 24/09/2009


Direct emissions & electricityOnsite fuel usageOnsite electricity usageUse of own transport

Government standard reportingEmissions Trading Schemes approachAB 32

Scope 1 & 2 emissions only

Internal carbon efficiency and offsets

Managing Carbon Footprints – Basic approach


Basic approachDirect emissions & electricity

Onsite fuel usageOnsite electricity usageUse of own transport

Emissions Trading Schemes approach

Carbon Footprints – calculation

State kg CO2-e/kWhNew South Wales and Australian Capital Territory 0.89Victoria 1.22Queensland 0.91South Australia 0.84Western Australia 0.87Tasmania 0.12

National Greenhouse and Energy Reporting (Measurement) Technical Guidelines v1.1 Table 7.2 pp307 v1.1 2008


California ‘signed’ Kyoto Protocol2020 emissions reduced to 1990 levelsScoping Plan (options)May have Cap and Trade scheme

AB 32 - Global Warming Solutions Act of 2006“many businesses in California will need to make investment decisions with regard to expansion, modernization, relocation, etc. This creates a great deal of regulatory uncertainty for these businesses because the requirements are not yet known.That uncertainty could lead to delays in projects that create jobs, increase economic activity and in some cases reduce greenhouse gas emissions.”

http://www.ab32ig.com/documents/CertifiedEarlyAction.pdf


MethodologyEmissions Trading Schemes use this approach

Full carbon footprint (Life-cycle assessment)1. Define the methodology2. Specify the boundary and scope of coverage3. Collect emissions data and calculate the footprint4. Verify results (optional)5. Disclose the footprint (optional).

Full Carbon Footprints – LCA


First of two critical elements

GHG Protocolwww.ghgprotocol.org

ISO 14064 (Parts 1-3)1. design, develop, manage and report GHG

inventories.2. GHG projects specifically designed to

reduce GHG emissions or increase GHG removals

3. describes the actual validation or verification process

Full Carbon Footprints - methodology


Second of two critical elements

UNFCCCUNFCC.itFramework Convention on Climate Change

Underpins technical guidelines1. Scope 1-3 emissions2. Collect emissions data and calculate the

footprint3. Verify results (optional)4. Disclose the footprint (optional).

Full Carbon Footprints – boundary & scope


Current applications – Emissions trading

Example schemesWaxman-Markey (Cap & trade)EU ETSAustralian CPRS

Implications for renderersScope 1 & 2 focusEnergy intensive industryFinancial penaltyLittle chance to pass on costs

Major stakeholder/customer consequencesSource ‘non-taxed’ products


The Cap and Trade Scheme

Govt. sets limit on permitted emissions (cap)

Govt. allocates rights (allowances) to emit below expected emissions levels

Allowances are given for free or auctioned

Emitter can thenCut productionInvest in clean technology

Domestic or internationalBuy allowance to cover the short fall


Waxman-Markey EU ETS AU CPRS

Emissionstargets

3% below 2005 levelsby 2012.

20% below 2005levels by 2020.


21% below 2005levels by 2020 inabsence of globalagreement.

30% below 2000levels by 2020 in eventof global agreement.


108% of 2000 levelsby 2012.

5% below 2000 levels by 2020 in absence of global agreement.

15% below 2000levels by 2020 in event of global agreement.


Coverage 86% of US emission 52% of EU emissions 75% of Australian emissions

Price controls Minimum auction price of US$10, rising at 5% plus CPI each year.No price cap.

No price cap. Price cap of A$40 for first 5 years, rising at twice CPI.


Business implications of Carbon Footprints

Carbon is not an environmental issuea market issue

Regulations will alter the price of carbon

New rules will affect energy pricing

Strategy1. Know your carbon exposure2. Take action to reduce your carbon footprint & assess

business opportunities3. Influence the Policy-Development Process


Know your carbon exposure

Analyse carbon emission profile through the value chainAnticipate company’s vulnerability to regulation

Knowing how your business model will be impactsIdentify source, types & magnitudeAssess vulnerability of business lines to constraints on those emissionsKnow whether you will be a buyer or seller in carbon marketsCompare your vulnerability to your industry peers

What gets measured gets managedTools and techniquesData management systems

Look at financial risk/exposure


Reduce Carbon Footprint & Seek Opportunity

Assess reporting obligationsAre you required to report?

Capital Expenditure & Depreciation issuesProduct life

Business caseFuture value of carbon

Involve leadershipEmployee buy-in

OpportunitiesBiogas generationBiofuelsCapture within corporate boundaries


Influence the Policy Development Process

Seek to influence the debate of the rules of schemeGain a seat at the policy development tableNeed to have taken credible action

“if you are not at the table you are on the menu”(source unknown)

Five issues to resolve:1. What to count2. Credit for early action3. Allowance allocation in a cap & trade system4. Cost-control mechanism5. Whom to regulate

There will be Government funding programs


Finally

Full C-footprint is not a trivial exercise

C-footprints differ to Emission Trading

Corp. sustainability will drive the issueLook at financial risk/exposure

Strategic & creative footprint reduction

Stakeholder communication is critical


Contact details

Stewart McGlashan Ph.D., GAICDSenior Consultant

Johns Environmental Pty LtdP.O. Box 534Aspley QLD 4034

M: 0450 901 213P: 07 3863 0051F: 07 3863 0057E: [email protected]


Case study – Australian CPRS impact on renderers

Assumptions 1No transport fuel estimationsTypical data supplied by ARA

Slide 25

Medium LargeProduction(tonnes raw material)

250 tonnes per day90000 tpa

500 tpd180000 tpa

Wastewater Treatment Yes (NGERS method 1)Gas (GJ/tonne water removed)

4.5

Electricity (kWhr/tonne water removed)

100

Yield(tonnes/tonne raw material)

0.45


Case study

Assumptions 2Carbon Permit Price $10 (2011-12)

# CPRS White Paper page (xxxi)* Department of Treasury, Australia’s Low Pollution

Future, The Economics of Climate Change Mitigation, 2008, Table 6.15

Slide 26

Low Base High $10Carbon permit price (AEU)# $15 $25 $35 $10Scope 1 pass through(Coal, Natural gas, LPG etc)

80% 100% 120% 100

Scope 2 pass through(Electricity price increase)*

15% 20% 25% 15%


Case study - Energy and Emissions results

Slide 27

(Units per annum) Medium Large

Raw Material (tonnes per day)(tonnes per annum)

25090000

500180000

Product (tonnes per annum) 40500 81000

Wastewater (tonne CO2-e) 7175 14351

Gas (TJ)Gas (tonne CO2-e)

22511543

45023085

Electricity (kWhr)Electricity (tonne CO2-e)

4,950,0004505

9,900,0009009


Case study result – Medium (250 tonnes per day)

NGERS -> YES (Energy = 240TJ)

CPRS -> No direct liability (Scope 1 = 18,700 tCO2e)

Slide 28

Cost Impacts Low Base High $10

Direct Scope 1 (WW) $0 $0 $0 $0

Indirect Scope 1 (Gas) $138k $289k $485k $115k

Scope 2 (Electricity) $37k $50k $62k $37k

Scope 3 - - - -

Total CPRS cost impacts $176k $338k $547k $152k

Total per tonne RM $1.95 $3.76 $6.07 $1.70

Total per tonne Product $4.34 $8.35 $13.50 $3.77


Case study result – Large (500 tonnes per day)

NGERS -> YES (Energy = 480TJ + 46,400 tCO2-e)

CPRS -> Yes (Scope 1 = 37,400 tCO2e)

Slide 29

Cost impacts Low Base High $10

Direct Scope 1 (WW) $215k $358k $502k $144k

Indirect Scope 1 (Gas) $277k $577k $969k $231k

Scope 2 (Electricity) $74k $99k $124 $74k

Scope 3 - - - -

Total CPRS cost impacts $567k $1,035k $1,596k $449k

Total per tonne RM $3.15 $5.75 $8.86 $2.49

Total per tonne Product $6.99 $12.78 $19.70 $5.54


Minimising exposure/risk

Purchase carbon permits (AEUs)EfficiencyChange fuel sourceAbate

e.g. Cover pond then:1. Flare2.Use onsite3.Transmit offsite

Gas flare


Australian Emission Units

600 million tCO2-e generated annually (Garnaut)

$12 Billion p.a. @ $20/tCO2-e

Large plant = 37,400 tCO2-eThus

Purchase of permits will be at a premium

Key issue – avoid the liability

Carbon footprints – issues and opportunities€¦ · Senior Consultant Johns Environmental...

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