CARBON REDUCTION
Opinion
F
or many thousands of private and public
organisations, 2010 will be a milestone year
in the move to a low-carbon economy. The
YEAR OF THE
requirement to purchase carbon allowances
under the Carbon Reduction Commitment
(CRC) in April 2010 will bring the issue of cli-
mate change and carbon emissions to the desk of
the finance director or CFO for first time in
organisations captured by this legislation.
The CRC is the subject of a current round of
CRC
government consultation, which is beginning to
cause considerable debate and controversy.
Next year, the Carbon Reduction Commitment comes into force.
While the Treasury’s overall objective is to
achieve fiscal neutrality, there will be winners
But will it be a millstone or a golden opportunity for organisations?
and losers in the business community and the Paul Ruyssevelt gives some advice
public sector as a result of openly accessible
information. The CRC league table of perform-
ance will add reputational risk to the list of issues
that executive boards will need to consider when
responding to the CRC.
Despite early government assurances, the leg-
islation has become increasingly complex with
the inclusion of first year early mover metrics, a
gradual move to cap and trade over time, and the
evolution of straight sale of allowances in 2010
to auctions from 2013. Add to this the require-
ments to obtain, store, manage and report ener-
gy data to a standard that goes well beyond
many organisations’ existing practices, and we
have a scheme that could impose a significant
administrative burden.
So, is this a millstone or a golden opportuni-
ty? Achieving compliance is fundamental and
there are certainly penalties for any breach, such
as fines on directors if data is not readily avail-
able for inspection. However, organisations
should be aiming much higher to reach the more
substantive financial and reputational rewards
that result from successful and proactive carbon
management. The cash benefits of greater energy
efficiency, better resource utilisation and signifi-
■
Considering the overall strategy, employed priority status in the boardroom rather than
cantly lower overheads are compelling. over a three- to five-year timescale, which will being confined, as it has been historically, to the
Typically, energy and resource cost savings, reduce CO
2
emissions. By establishing specific specialist attention of energy managers.
which deliver perpetual rather than one-off ben- targets, the organisation can ensure the CRC Achieving competitive advantage will require
efits, can be in the range of 10-25%. makes a positive return and long-term net cash directors to adopt a transformational shift in
The question for many organisations will be savings on utility expenditure their decision-making processes and in their
where do we start? A simple five point plan
■
Identifying the range of projects that can be knowledge of organisational exposure to carbon
might entail: implemented to reduce CO
2
across the organ- risk. In the run up to 2010, immediate efforts
■
Establishing if the organisation is in or out of isation’s sites and establish a priority ranking should focus on reviewing their business
the scheme. If more than 6,000MWh of elec- for remedial measures using a Marginal activities from a carbon perspective. This will
tricity was used on sites with half hourly Abatement Cost Curve (see diagram above) involve using new skills from both within and
metering or automatic metering in 2008, the outside their businesses to review the applicabil-
organisation will qualify From 2012 onwards, executive boards are likely ity and scope of their technology and systems,
■
Knowing how much CO
2
the company is to face even greater pressures with the prospect the interdependencies between teams, and the
responsible for emitting from stationary of obligatory CO
2
emissions reporting in the integrity and relevance of their management
sources, that is buildings and factories, not cars annual company report. Consultation on this intelligence. These foundations are necessary to
and lorries. This will determine the number of policy is expected this month with the govern- plan investment that will generate the optimal
allowances that need to be purchased ment reviewing the contribution that carbon carbon savings, ensuring emissions liabilities are
■
Deciding if either of the early mover metrics reporting could make to reducing UK emissions turned into real, lasting and competitive assets.
can be implemented by achieving the Carbon and the attendant costs by December 2010. The time to undertake this review is now.
Trust Standard or installing automatic meter- Given the very real threat of hefty penalties,
reading systems. This will help the first year increasing operational costs and reputational Paul Ruyssevelt is strategic projects director at
league table position damage, carbon strategy needs to assume a Camco International
Sustainable Business 5❘ May 2009 2
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