dramatically reducing the corporate carbon footprint world environment center & environment...
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Dramatically reducing the corporate carbon footprint
World Environment Center & Environment Science Center
Euan Murray
25th October 2007
Agenda
Introduction to the Carbon Trust
How we support companies to drive change
Working in supply chain & product footprinting
Introduction to the Carbon Trust
Who we are:
Independent company, funded by UK Government
Our role:
Help organisations reduce their carbon emissions and develop commercial low carbon technologies
Last year we:
Worked with >5,000 companies across UK
Identified savings of 4.6 million tCO2 worth £0.5 Billion in cost savings per year
Introduction to the Carbon Trust
We align private sector interests with public sector objectives:
– Our funding comes mostly from government, but
– Most of our board members are from the private sector
– In 2006/7 we had a budget of ~£110m and a staff of ~150
We are a company driven by our mission: to speed the transition to a low-carbon economy
We are focussed on cost effectiveness - £/tonne CO2 saved now or in future through new technologies
– We design and manage public sector-funded programmes, leverage in private sector funds where possible and re-invest our own returns
– As a Company Limited by Guarantee we can make profits but do not issue dividends
Agenda
Introduction to the Carbon Trust
How we support companies to drive change
– Our 5 business areas
Working in supply chain & product footprinting
We are reducing the technology and market risks of investing in a low carbon economy
#1: Insights
Aim: To increase awareness of climate change and the risks and opportunities it presents
Published 6 reports in 2006, e.g.Allocation & Competitiveness in
EU Emissions Trading SchemeBrand Value at Risk
Aim: To overcome technical barriers and lower investment risk
114 R&D projectsTechnology acceleration projects:
marine, microCHP, smart-metering, biomass for heat, low-carbon buildings
36 companies in business incubator
#2: Innovations
* Made up of a combination of listed and unlisted equity and cash received from sales awaiting re-investment before tax as at March 2006** Gross portfolio IRR from date of first investment (July 2002) to 31st March 2006, based on BVCA guidelines and including cash returned
Aim: To fill gaps in the market and make commercial returns
Launched “Connective Energy”2 new low carbon businesses
under development:Partnerships for RenewablesInsource Energy
Aim: To demonstrate good financial returns from low-carbon investments
Portfolio of 6 investments with a value of £13.0m* against acquisition cost of £6.7m (31% IRR**)
Launching £75m clean-tech fund
And we are creating the business case for the low carbon economy
#3: Enterprises #4: Investments
#5: Solutions works with companies to manage their carbon footprint
Company
Regulation
Profits
Reputation
Current threats…
Increase Profits
Reduce costs through energy management
Improve operational effectiveness
Develop new products or grow market share
Manage risks to fixed assets & supply chains
Comply with Regulation
Ensure compliance with legislation e.g. EU Emissions Trading, Climate Change Levy, Buildings Directives etc.
Enhance Reputation
Maximise brand & reputational impact of reducing carbon emissions
Engage consumers and other stakeholders
…lead to opportunities to..
Through Carbon Management, we help organisations identify current threats and future opportunities
#5: Our Solutions business worked with >5,000 companies last year
We help companies save energy costs and reduce their carbon footprint
NPV of Solutions Programme 2005/6£m
Carbon Trust costs
Capital investment
by companies
PV of lifetime energy savings
NPV of total cost
saving
(32)
(140)
417 245
Source: Carbon Trust Impact Assessment 2006; PIU report Feb 2002; Energy White Paper
What is good carbon management?
Stage 1:
Direct CompanyEmissions Reduction
Stage 2:
Supply Chain
Emissions Reduction
Stage 3 (Optional):
Offsetting
Agenda
Introduction to the Carbon Trust
How we support companies to drive change
Working in supply chain & product footprinting
What is the footprint of a product?
Aluminium Production
Sugar farming
Cola production
Packaging
Transportation Chilled storage
Refrigeration Can collection
Recycling or disposal
Disposal & recycling
Consumer use
Raw material
Product manufacturing
Total carbon footprint of the can of cola (illustrative)
Supply chain / value chain of a can of cola
Distribution & retail
Why the “product view” is key
Targets >50% of emissions
– Individual carbon
footprint of 11 tonnes
CO2 p.a.
The UN/IPCC, Kyoto
Protocol and China
The market – consumers
and brands
March launch of our work
Product Carbon Footprinting Methodology
Product Label
Standard development & international consultation
Defra & BSI British Standards
Pilot Development Projects
Launch focussed on 4 key things:
Carbon reduction label
Independent measurement
“Reduce or lose” commitment
New Pilot ProjectsCT testing the draft BSI standard with different products and in different sectors The partners will work with us to reduce their emissions and explore the best way to communicate the results
9 new projects:Aggregate Industries Hard landscaping productsCadbury Schweppes Dairy Milk bars Coca-Cola A still and a sparkling beverageThe Co-operative Group StrawberriesHalifax Halifax Web Saver AccountKimberly-Clark Andrex and Huggies nappies Marshalls Hard landscaping products Mϋller Dairy YoghurtsScottish & Newcastle Fosters lager & Bulmer’s cider
We will do further pilots throughout the year
Standard Development
BSI are leading the work to develop the PAS Standard
– Appointed a Steering Group from business, NGO, academics and government
– First draft prepared, using the CT methodology as base– First of two consultations commencing shortly– Details on the BSI website: www.bsi-global.com/PAS2050
International engagement in consultation is key– Single standard for multi-national companies to use– International expertise– New markets & partners for the Carbon Trust
Making Business Sense of Climate Change
QUESTIONS
Backup
Supply chain emissions reductions
Supplier energy
efficiency –
encouraging them
directly
Calculating product
carbon footprints –
identifying hotspots
Trinity Mirror example
Food miles as a proxy for climate change
Walkers34.5g Cheese & Onion
Innocent250ml Mango & Passion Fruit
Total = 75g CO2e Total = 294g CO2ePotato distribution: <1%
Making nitrogen fertiliser: >15%
Source: Carbon Trust Low Carbon Supply Chain Pilot, March 2007
Cutting food miles is important to reduce transport impactsBUT
Food miles is a poor indicator of the overall impactLocal sourcing may increase the footprint of a product
Growing & Packing: 23%Raw materials transport: 14%
Making the packaging: 30%
Smoothie-making: 21%
Distribution: 10%Disposal: 2%
The business need is growing
Further energy cost savings– e.g. 20% reduction on Boots Shampoo project
Historicalcost-saving
strategy
Consumer demand for companies to take action on climate change– Carbon Trust (Oct 2006): 60% of consumers
want to buy from companies doing the right thing on climate change
Consumer desire for low-carbon products– Globescan for LRQA (March 2007): 60% of UK
consumers want companies to provide more PoS information on climate change impacts
– 77% want independent assurance of company claims on climate change
New marketstrategy
Standard Development
BSI are leading the work to develop the PAS Standard
– Appointed a Steering Group from business, NGO, academics and government
– First draft prepared, using the CT methodology as base– First of two consultations commencing shortly– Details on the BSI website: www.bsi-global.com/PAS2050
Food & Grocery sector heavily involved:
– 2 representatives on the BSI Steering Group– Support from IGD, FDF, BRC and NFU– Lots of members of those organisations
Engagement, support and efforts invaluable