This is a topic I’ve been meaning to write about for a while, but due to the depth required even in an introductory piece, and, thus, the time it would take to construct a post I’d be happy with, I’ve been putting it off until I had the time. I still don’t have the time, but Industry Week just published The ‘What, Why, How and When’ of Carbon Footprinting, which is a really good introduction to the topic. It’s five pages, but worth the read. I’ll highlight some of the key points below, and add a few of my own.
The article starts off by noting that H.R. 2764, signed into law by President Bush in December of 2007, contains a section that states that of the funds provided in the Environmental Programs and Management account, not less than $3,500,000 shall be provided for activities to develop and publish a draft rule not later than nine months after the date of enactment of this Act, and a final rule not later than 18 months after the date of enactment of this Act, to require mandatory reporting of greenhouse gas emissions above appropriate thresholds in all sectors of the economy of the United States’.
This is a lot more innocuous than it may sound. This says that, by September of this year, reporting guidelines on draft emission standards will be drafted and, more importantly, by July of 2009, GHG emission reporting will be mandatory in the US – just like it is in Australia under the National Greenhouse and Energy Reporting Act of 2007. (And if you’re reading this down under and need help preparing the reports, there’s a new offering by Tradeslot Pty Ltd called Carbon Navigator that might be able to help.)
Chances are those guidelines will be similar to the mandatory reporting regulation that California is expected to introduce any day now, which is expected to be largely based on the GHG protocol Standards developed through a joint effort of the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI), which is becoming the defacto Global Standard.
However, the introduction of legislation is not a bad thing. Collection of this data will help consumer and manufacturer alike! Consumers will have the power to differentiate between green claims and green reality, and the companies that are green in practice, and not just in advertising, will gain favor in the hearts and minds of environmentally conscious consumers. Furthermore, forward-thinking managers will be able to use the resulting data to reduce costs, drive efficiencies, and even open up new sales opportunities. Without the data collection effort that is required to properly tabulate and report emissions, Wal-Mart would have never figured out that the refrigerants used in its grocery sections contributed a greater percentage of its greenhouse gas footprint than its truck fleet!
So what is a carbon footprint? It’s a greenhouse gas emissions inventory that includes all of the greenhouse gases (methane, nitrous oxide, and HFCs) in addition to carbon dioxide that is generated by a company in its day to day activities.
How is it measured? The GHG Protocol specifies standard calculation methods and provides worksheets that a company can use to calculate its carbon footprint in a manner that can be compared in an apples-to-apples fashion with other companies. It has three scopes:
- emissions from sources owned by the company
- emissions from electricity purchased from the grid
- emissions created by suppliers in the company’s value chain
The first time you do it, it will be a major undertaking. Eaton Corp. started doing ISO 14000 (environmental management) back in 2000, but wasn’t able to aggregate verifiable data until 2006. However, the article contains some advice from John Hoekstra of Summit Energy in implementing a program to document and report carbon footprints. It goes as follows:
- Know the Goal and the Road Ahead
A formal plan lets you focus on the key data requirements.
- Set a Realistic Baseline
Understand your operations and determine if it is possible to compile a historical emissions inventory that meets data materiality thresholds.
- Define the Boundaries
Bite off what you can cost-effectively chew.
- Map out all of your Sources
Identify each facility, asset, and potential emissions source.
- Make appropriate assumptions.
Identify ways to calculate emissions that ensure completeness, but balance level of detail. Where possible, use the GHG Protocol as a guide.
- Centralize Data Management
Data is the key.
- Be flexible
The regulatory requirements are going to be in a state of formation and flux globally for some time. Be sure you can modify and enhance reporting processes and systems as required.
and to this I’d add
- Be patient
You’re not going to accomplish all of your goals overnight.
- Start Now!
As per rule 8 above, it’s going to take some time – so get a jump start on it and you’ll be a leg up over the competition and that much closer to identifying cost savings opportunities that are environmentally friendly.
Until you’ve collected the data, you won’t know where your biggest offenses lie and where your biggest opportunities are. Consider the example of a life-cycle analysis on a 12-pack of glass bottled beer that found that 68% of the carbon footprint was due to supplied materials, and that glass bottles accounted for an astonishing 56% of the carbon footprint.
The life-cycle analysis that will be required as part of the carbon footprinting will pay off! Consider the recently published article Life-cycle Analysis Pays Off in the same publication that documented Caterpillar’s Life-cycle analysis project where they found that the remanufacture of a cylinder head reduced GHG emissions by 50%, energy usage by 80%, water usage by 90%, and material usage by 99%, when compared to the manufacturer of a new one.