Energy Science Director

1
Carbon Footprint Issues
Keith Tovey MA, PhD, CEng, MICE, CEnv
Recipient of James Watt Medal 5th October 2007
Energy Science Director HSBC Director of Low
Carbon Innovation
CRed
2
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.

3
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

4
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 B
Company A
60 tonnes reduction
50 tonnes reduction
Cost for reduction is say 20/tonne Total cost
to company 1200
Cost for reduction is say 10/tonne Total cost
to company 500
Cost to achieve 10 reduction 110 tonnes
1700 or 15.45 per tonne
5
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 19 13 12 11 10
60
30
30
30
50 tonnes
20
10
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
6
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
200
60 tonnes
20
10
Target Reduction is 60 tonnes can be achieved
with an investment of 1200 Tradable value of
allowance low company buys allowances
7
Carbon Trading How it works -4

• Same Example with trading.
• Requirement for a 10 cut in emissions

Company A
Company B
Cost is much more expensive than for company
A. Would it be cheaper to purchase 60 tonnes of
allowances rather than 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
8
Carbon Trading How it works -5
Company A
Company B
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
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Carbon Trading How it works -6
Company A
Company B
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 _at_ 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
10
Carbon Trading How it works -7
Company A
Company B
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 _at_ 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
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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
Customers
Machinery
Product A
Raw Materials and transport
Factory/ Office/ Company/ Organisation
Product B
Process Energy Requirements
Product C
Energy for space heating/lighting
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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

13
Measuring Carbon Footprints

• Definition of Procedure

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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

15
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?
• 0900 approx each day, but additional reading at
  1700 say on Friday.
• Sub daily generally to intensive of data, but
  informative for a short intensive period e.g.
  up to a week.

16
Cumulative Saving Method
Time
saving
Before conservation strategies Improved
insulation to building Improved insulation on hot
water tank Degradation of performance
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Processing Raw Energy Data

• Cell e6 IF(C6"","",A6C6)
• 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"","",M624/F6)
• Copy cells j5n5 to all cells in respective
  columns