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Carbon Footprint Issues
Keith Tovey MA, PhD, CEng, MICE, CEnv
Recipient of James Watt Medal
5th October 2007
CRed Energy Science Director CRed
Carbon Reduction HSBC Director of Low Carbon Innovation
Measuring Carbon Footprints
Why
– To assess overall performance of an organisation
– To assess requirements for a particular activity
Requirements
• Needed to set a baseline against which improvements can
be measured.
• Large Organisations are already affected by EU-ETS –
smaller one may well be incorporated before long.
• EU-ETS is a trading system for carbon emissions.
Proactive companies can enhance benefit to company both
from environmental perceptions and also financially.
• Boundary Definitions can be difficult
• Need to have an auditable and trackable system.
Carbon Trading
• Carbon Trading has potential to reduce carbon emissions at
cheapest cost.
• Companies are given a free allowance which may be
reduction on historic trends, an increase on historic trends, or
at a constant level.
• Carbon Trading takes place between companies.
• If a company exceeds it allowance it can reduce its carbon
emissions, or it can purchase allowances from someone who
has a surplus.
• However, there is an ultimate buy out penalty if there are too
few allowances.
• Currently this penalty 40 € a tonne in EU-ETS
Carbon Trading: How it works -1
• Example with no trading.
• Requirement for a 10% cut in emissions
All Examples use Euros (€ )as the currency
Company A Company B
60 tonnes reduction
50 tonnes reduction
600 tonnes
500 tonnes
Cost for reduction is
Cost for reduction is
say € 20/tonne
say € 10/tonne
Total cost to company
Total cost to company
€ 1200
€ 500
Cost to achieve 10% reduction: 110 tonnes = € 1700 or € 15.45 per tonne
Carbon Trading – Company A: How it works -2
• Opportunities for Energy or Carbon Reduction
• Trends are same, but factors vary depending on carbon intensity
30
20
Cost per tonne
19
Tradable Value of Allowances
13
12
11
10
A B C D E F G
50 tonnes 10 20 30 30 60 30
Cumulative Carbon Savings
Target Reduction is 50 tonnes – can be achieved with an investment of € 500
Tradable value of allowance high: company makes profit by investing in other schemes
Carbon Trading – Company B: How it works -3
• Opportunities for Energy or Carbon Reduction
• Trends are same, but factors vary depending on carbon intensity
30
26
24
20
Cost per tonne
Tradable Value of Allowances
A C B G
60 tonnes 20 10 200
Cumulative Carbon Savings
Target Reduction is 60 tonnes – can be achieved with an investment of € 1200
Tradable value of allowance low: company buys allowances
Carbon Trading: How it works -4
• Same Example with trading.
• Requirement for a 10% cut in emissions
Company A Company B
Tonnes Cost per Total Tonnes Cost per Total cost
reduction tonne cost reduction tonne
Project A 50 € 10 €500 Project A 60 € 20 € 1200
Project B 10 € 11 €110 Cost is much more expensive than for
Project C 20 € 12 €240 company A.
Project D 30 € 13 €390 Would it be cheaper to purchase 60
TOTAL 60 €12.33 €740 tonnes of allowances rather than
extra implementing reduction strategies?
No Trading:
Cost to achieve 10% reduction: 110 tonnes = € 1700 or € 15.45 per tonne
With Trading:
Cost to achieve 10% reduction: 110 tonnes = € 1240 or € 11.27 per tonne
If Company B paid more than € 12.33 this would be possible
Carbon Trading: How it works -5
Company A Company B
Tonnes Cost per Total Tonnes Cost per Total cost
reduction tonne cost reduction tonne
Project A 50 €10 € 500 Project A 60 € 20 € 1200
TOTAL 60 €12.33 € 740
extra
No Trading: total cost for 110 tonnes = € 1700 or € 15.45 per tonne
With Trading: total cost for 110 tonnes = € 1240 or € 11.27 per tonne
What happens if neither Company does anything?
Under EU ETS they will have to pay fine of:
€40 per tonne (phase 1) or €100 (phase 2)
What would be a realistic trade price?
If too low: little incentive for Company A to invest in Projects b, C, and D.
If too high Company B might be prepared to pay full cost rather than have the
hassle
In absence of brokers, optimum price is (€12.333 + € 20 ) / 2 = €16.167
Carbon Trading: How it works -6
Company A Company B
Tonnes Cost per Total Tonnes Cost per Total
reduction tonne cost reduction tonne cost
Project A 50 €10 €500 Project A 60 € 20 €1200
TOTAL 60 €12.33 €740
extra
No Trading: total cost for 110 tonnes = € 1700 or € 15.45 per tonne
With Trading: total cost for 110 tonnes = € 1240 or € 11.27 per tonne
In absence of brokers, optimum price is €16.167
Company A are not obliged to do more than Project A
Cost for Projects B, C, and D would be €740
However, sell allowances @ €16.167 gives and income of €970
i.e. Total cost of extra projects is paid for and there is also a profit of € 230
Company B will also benefit
Paying €970 will save them €230 compared to implementing a 10% cut
Carbon Trading: How it works -7
Company A Company B
Tonnes Cost per Total Tonnes Cost per Total
reduction tonne cost reduction tonne cost
TOTAL 60 €12.33 €740 Project A 60 € 20 €1200
extra
No Trading: total cost for 110 tonnes = € 1700 or € 15.45 per tonne
With Trading: total cost for 110 tonnes = € 1240 or € 11.27 per tonne
In absence of brokers, optimum price is €16.167
Company A has all extra projects paid for and makes a profit of € 230
Company B saves € 230 compared to making saving
Schemes with and without trading result in same reduction, but Trading
hopefully ensures cheapest options are implemented.
Case with brokers with commission @ 10% of trade value
Assume Commission is shared between sellers and buyers. Commission: €1.6167:
Buying Price 16.975 (=16.167 + 1.6167/2): Selling Price 15.358
Profit now falls to €181.50 for Company A and saving is €181.50 for Company B
Measuring Carbon Footprints
• Scope of Measurement
• A complete site/organisation
• A particular product or activity
• Clear definition of boundaries of system under investigation is
needed.
Machinery to
make machines
Machinery
Product A
Raw Materials
and transport Factory/ Office/
Company/ Product B Customers
Process Energy Organisation
Requirements Product C
Energy for space
heating/lighting
Measuring Carbon Footprints
Scope of Measurement
• A complete site/organisation
• A particular product or activity
• Clear definition of boundaries of system under
investigation is needed.
• How does one apportion energy/carbon emissions in multi-
product systems?
– e.g. making several different products in a factory
– stop production of all items but one and then do detailed
measurement of production of that product.
– Separately meter each product stream
– Allocate inputs of energy/raw materials on basis of
• Cost
• Weight
• Energy Content
• Some other rational basis
Measuring Carbon Footprints
• Definition of Procedure
Issue Precision of Data and Auditable for tracking
values obtained purposes
Direct Energy Use *** to ***** Yes potentially with high
depending on how accuracy if data quality is
data are collected. good
Direct Process Emissions *** to **** Yes – (some limitations over
including primary materials materials).
Indirect Process Emissions * to *** To some extent – accuracy
(land use changes etc). low in many cases, better in
others.
Procurement (other than * To some extent but accuracy
primary materials) will be generally very low
Direct Transport of primary **** for road / rail – Yes, but precision may vary
materials and products depending on records from year to year with air/sea.
including marketing kept ** for air/sea Also what counts as business
transport - travel????
Transport of workforce * At best Generally impossible to track
to/from work except in very few isolated
cases
Measuring Carbon Footprints
• Acquire Energy Consumption Data
• Analyse Energy Consumption – and hence estimate carbon
emissions.
– Need to normalise data to allow for
• annual Lighting variations
• sub and super annual Heating variations
• work scheduling
• Assess Awareness/Attitudes of individuals
• Advise on methods to reduce carbon footprint
• Account for performance in move to carbon reduction
Acquiring Energy Consumption Data
• Data needed
– Raw energy consumption – not financial costs
– Estimated readings are problematic
– Need Date and Time when readings were taken
– Readings do not necessarily have to be taken at precisely same time each
period.
– Check gas meters – what units are they using? cu ft? cu ft x 100, cu m?
– Climate data on daily basis – also daylight hours.
• Frequency of readings?
– Three monthly too long
– One monthly generally too long except for initial appraisal – problems if
there are estimates or date and time is not known
– Weekly? A compromise, but cannot extract difference between weekday
and weekend – or variations during week – switch off campaign in UEA.
– Daily – good interval – more data intensive – how do you deal with
weekend if manual collection is taking place?
• 09:00 approx each day, but additional reading at 17:00 say on Friday.
– Sub daily – generally to intensive of data, but informative for a short
intensive period – e.g. up to a week.
Cumulative Saving Method
Time
saving
summer
summer winter summer
winter
Before conservation strategies
Improved insulation to building
Improved insulation on hot water tank
Degradation of performance
Processing Raw Energy Data
• Cell e6 =IF(C6="","",A6+C6)
– Copy to other cells in column E
• Cell f6 =IF(OR(E5="",E6=""),"",(E6-E5)*24)
• Copy to other cells in column F
• Cell J6 =IF($F6="","",(G6-G5)*1000)
• Cell K6 =IF($F6="","",(H6-H5)*1000)
• Cell L6 =IF($F6="","",(I6-I5)*1000)
copy into all cells in cols j to l
• Cell M6 =IF($F6="","",J6-K6-L6)
• Cell N6 =IF($F6="","",M6*24/F6)
– Copy cells j5:n5 to all cells in respective columns
