Department of Energy and Climate Change established
October 3 saw the creation of The Department of Energy and Climate Change to be headed up by Ed Miliband. The new department will bring together a portion of the Department for Environment Food and Rural Affairs’ existing climate change responsibilities with the energy component from the Department for Business Enterprise and Regulatory Reform to focus on solving the challenges of climate change and energy supply. The newly appointed minister for the department said: “We will do all we can to ensure affordable fuel bills for people, put Britain at the forefront of creating green jobs and play our part in ensuring every country meets the climate change challenge”.
New White Paper looks at the future of carbon markets post-2012
Arthur D. Little, a management consulting firm, has recently launched The Carbon Margin with Carbon Futures – a new report which seeks to explore carbon market scenarios and their impact on business post-2012. The report looks into intergovernmental negotiations and legislation likely to emerge post-2012 and highlights the importance of understanding key policy outcomes in order to develop a carbon strategy with the flexibility to take them all into account.
On October 1, BT launched the BT Business Environmental Self-assessment Tool (BEST), a free online service aimed at firms with up to 250 staff that allows them to calculate their carbon footprint by in-putting data on their corporate travel, IT use and buildings. The service has been launched in the wake of new research from BT suggesting that while small businesses are increasingly keen to embrace more environmentally sustainable business models, they are often unclear on how best to do so. Experts remarked that efforts to get smaller firms to embrace green best practices had been hampered by the scaling back of some government advisory services in the wake of budget cuts at Defra earlier this year and warned that small businesses would only implement sustainability programmes where they could see a clear bottom line benefit.
BT has recently joined the ranks of government agencies, private companies, environmental consultancies and NGOs in launching a small business carbon calculation or self assessment tool (BEST) in October 2008.
The free online tool is designed to help any small businesses measure its carbon footprint, and energy use, and has been launched by BT in association with the environmental charity Global Action Plan. BT conducted some recent research which showed that small businesses are “keen to embrace environmentally sustainable business models, but unclear how best to do so”. This revelation will come as no surprise to the myriad of business environmental advisors who have been struggling for over a decade to sell the “green is good” message to the small business sector. BT has strong environmental credentials of its own, and BEST builds on the company’s previous carbon assessment services, (it launched a similar initiative for its corporate customers’ IT estates in 2007). However, BT’s tool enters a crowded market, with many other private and public service providers offering similar free calculators and / or paid for consultancy. One of the greatest problems for the small business sector is sorting through the plethora of voluntary initiatives and mandatory schemes, and although BEST is a useful addition, it does nothing to reduce this complexity.
The BEST carbon calculation would also be more useful if, at the end of the self assessment stage, it provided a signposting service to the business user to other free sources and information and advice. This would enable the company to tackle the far more difficult challenge of actually reducing its carbon impact once the measurement had been made.
Leading China CEOs’ landmark commitment to tackle climate change
On October 24, CEOs from three of China’s leading companies joined The Climate Group’s global coalition. China Mobile, the world’s largest wireless operator with 420 million subscribers, Broad Air Conditioning, the world’s leading manufacturer of low–energy air conditioning units and Suntech, the world’s third largest solar energy company, all made a commitment to fight global warming and play a key role in the world’s transition to a low carbon economy. Despite China already being the leading renewable energy producer in the world in terms of installed generating capacity, and being second largest recipient of sustainable energy investment ($12billion) of any other country in the world except Germany, it has recently over-taken the US as the world’s leading emitter of greenhouse gas with its 1.3 billion population currently accounting for 24% of total global emissions. Steve Howard, CEO of The Climate Group, remarked ‘China is fast establishing itself as a major global hub for low carbon investment, technology and leadership. Today’s CEO commitments are of national and global importance and significantly strengthen the global business axis needed to address climate change.”
HSBC establishes climate change research programme
On October 14, HSBC Global Markets announced the creation of a Climate Change Research Facilitation Programme in association with: Ernst & Young; New Energy Finance; Risk Management Solutions and The UK Met Office. The research programme, which will explore the potential impacts of climate change on global investment portfolios, has emerged as a research priority for the bank through its meetings with global investment managers to discuss the HSBC Climate Change Index. The Index, launched in September 2007, and built by HSBC’s Quantitative Research Team in consultation with Lord Nicholas Stern, was designed to reflect and track the stock market performance of over 390 key companies perceived to be best placed to benefit from the challenges presented by climate change. The index has highlighted that significant industrial realignment has already commenced in the path to a low carbon economy.
Contact:
HSBC Global Markets http://www.hsbcnet.com/treasury
EcoSecurities and ClimateBiz announce that more corporates are implementing carbon management strategies
EcoSecurities and ClimateBiz announced the findings of their ‘Carbon Offsetting Trends Survey 2008’ on September 24. This survey was one of the first research studies to focus on corporate attitudes in relation to the concept of carbon offsetting. The main highlights of the research, which sampled 65 large and multinational organisations, include the findings that 43% of organisations had already implemented an existing carbon management strategy, with a further 34% of organisations claiming to be in the process of developing one. Furthermore, 74% of all respondents indicated that their organisation had already started implementing internal emission reduction activities, with over 88% of organisations either currently undertaking carbon offsetting activities or considering offsetting in the future. The companies interviewed cited experience and reputation of the carbon credit supplier as most important when making a purchasing decision. The most desirable project location for the purchase of carbon offsets was North America, closely followed by South America.
On October 7, UPS became the first shipping firm to announce its participation in the US Environmental Protection Agency’s (EPA) Climate Leaders programme. Climate Leaders is an industry/government partnership that works with companies to develop comprehensive climate change strategies. Partner companies commit to reducing their impact on the global environment through completion of a corporate-wide inventory of greenhouse gas emissions, setting reduction goals and annually reporting their progress to the EPA.
UK companies see major opportunities coming from climate change
Despite the economic conditions, senior management of British companies perceive climate change as a major driver of new business opportunities. In addition, there is increasing investment in measuring and reducing the impact of emissions in company supply chains, as well as those related to product use and disposal. These are among findings to emerge from the Carbon Disclosure Project’s (CDP) 2008 Information Request to companies requesting greenhouse gas emissions data and climate change strategies. However, while 90% of FTSE 100 companies report through CDP, only 58% of FTSE 250 companies do so. The Carbon Disclosure Project, founded in 2000, represents 385 global institutional investors, with more than $57 trillion in assets under management.
Contact:
The Carbon Disclosure Project
+44 (0)4157199 www.cdproject.net
Europe needs to intensify actions to adapt to climate change impacts
A Report, titled Impacts of Europe’s changing climate, published on September 29 by the European Environment Agency, the World Health Organisation Regional Office for Europe and the Joint Research Centre of the European Commission highlighted the consequences of both observed and projected climate changes, including an increased risk of floods and droughts, loss of biodiversity, threats to human health and damage to economic sectors such as energy, transport, forestry, agriculture, and tourism. In outlining the extent and variance of vulnerability across different sectors and regions, the report proposes the setting up of a European Clearing House on climate change impacts, to make such data widely available to users, with the support of the EU Shared Environmental Information System, the EU Kopernikus programme on global monitoring for environment and security, and in collaboration with the WHO Climate, Environment and Health Information System.
Leading NGO working with global finance sector to develop first comprehensive industry framework for climate action
On October 6 The Climate Group announced its collaboration with a group of major international financial institutions to develop the first comprehensive global framework for the sector’s response to climate change. The new framework is aimed at guiding operational greenhouse gas emission reduction commitments, and providing strategic direction across the full range of products and services including research, asset management, retail banking, corporate banking, insurance and re-insurance, investment banking and project finance. It is intended to align with, and build on, existing initiatives to ensure a consistent and effective sectoral approach to tackling climate change. The desired outcome is to establish a common framework that will enable financial institutions to demonstrate the importance they place on embedding climate change considerations into core business strategy and activity and to publicly disclose progress against key indicators.
On October 30, a study by the University of East Anglia, published in the journal Nature Geoscience, asserted that it is now possible to attribute the temperature changes in both polar regions to human activity. The findings contradict the 2007 report of the Intergovernmental Panel on Climate Change, which said that Antarctica was the only continent where the human impact on the climate had not been observed. The new study found that in the Antarctic, global warming has had the greatest impact on coastal areas, causing the disintegration of ice shelves and the speeding up of the flow of glaciers to the sea.
Contact:
University of East Anglia http://www.uea.ac.uk
‘Global strategy needed’ to stop ozone deaths
A Royal Society report, launched on October 6, warned that ground level ozone gas, which is responsible for more than 1,500 deaths a year in the UK, is not being addressed by legislation and will only rise as climate change becomes more pronounced. More than 1,500 deaths in the UK in 2003 have been attributed to ozone – a figure which is expected to rise by 51% to 2391 in 2020. Owing to the transnational flow and impact of ozone pollution, the report has called for a global response to the problem. As well as being harmful in itself, ozone is considered to be the third most important greenhouse gas contributing to global warming. Research has also found that ozone can reduce the quality and quantity of crops such as wheat, rice and soybean and crop losses are expected to increase over the next two to three decades.
IDEAcarbon, a carbon market research firm, has forecast that industrial growth in the EU will be just 1% this year and will actually drop off by 0.7% next year. The company predicts total emissions from the EU Emissions Trading Scheme will come in at around 2.18 billion tones in 2008, some 98 million tonnes above the cap. In 2009 that shortfall is expected to shrink to 83 million tones, which means the price of carbon is likely to fall. Alessandro Vitelli, director of IDEAcarbon said: “Industrial companies are busy selling off any surplus EU Allowances (EUA) in order to raise short-term cash. EUA prices have fallen from their July 1 peak of €29.33 to a low on October 28th of €17.40. These surplus EUAs are being snapped up by European utilities, which face a far greater shortfall of allowances than their industrial counterparts.”
Goldman Sachs to market US Greenhouse Gas Emission Reductions
On October 27 financial services firm Goldman Sachs announced a strategic alliance with emissions reductions solutions firm Blue Source LLC to combine Goldman’s global commodities trading experience and financial risk management with Blue Source’s climate change portfolio. Goldman Sachs will off-take, structure and market a broad range of verified emissions reductions resulting from certain greenhouse gas reduction projects in Blue Source’s portfolio, including those associated with methane management from coal mining, wastewater treatment, landfills and animal waste; energy efficiency; carbon capture and sequestration from fertilizer and natural gas production; and industrial gas destruction.
Carbon pollution levels are rising so fast that the world has no realistic chance of hitting ambitious climate targets set by Britain and the G8, a report presented on September 30 to the Australian government has warned. The report, from economist Ross Garnaut, says existing carbon goals are based on out-of-date emissions figures, and are so ambitious that they could wreck attempts to agree a new global deal on global warming. Garnaut says that nations must accept a greater amount of warming is inevitable, or risk a failure to agree that “would haunt humanity until the end of time.”
The EcoSecurities and ClimateBiz survey suggests that more and more companies are considering the merits of carbon offsetting. Whilst there are strong merits to investing in offsets, such efforts run the risk of being discredited as simply side-stepping the real issue of eco-efficiency.
Companies certainly need to be cautious when including offsets in their emission reduction plans, as offsetting programmes are often fraught with difficulties. Critics question the “additionality” of reductions made by certain projects. They argue that some schemes generating carbon credits could have been implemented without carbon financing and as such they do not create genuine reductions from the “business as usual” scenario.
In addition, there is the long-term uncertainty associated with schemes which require immediate carbon finance, but do not generate the bulk of their carbon reductions until some distant point in the future (such as investments in forestry schemes).
Equally, there are questions about the role of intermediaries that add significant costs to the purchase of carbon offsets without the commensurate added value. Carbon credits may change hands multiple times before reaching the ultimate offsetting party. This can increase the cost of the offset without any benefit to the offsetting project or scheme.
Despite these challenges, carbon offsetting may still appeal to companies that are keen to boost their ‘green’ credentials as a basis for engaging with internal and external stakeholders on environmental issues. However, this is a risky strategy as it can easily be seen as ‘greenwash’ when not backed up by a credible carbon reduction strategy.
Ultimately, carbon offsets will only work for companies that have a clear strategy on climate change in place and use them only as a last resort in order to offset unavoidable emissions. Companies can also use carbon offsets as a component of their community investment initiatives, wherein the procurement of carbon credits can be linked to the delivery of wider social benefits, such as promoting sustainable livelihoods in remote, threatened or impoverished communities.
Companies must recognise that purchasing voluntary offsets as a short term marketing ploy is a high risk strategy. Any gains from such a move are likely to be quickly eroded under the light of closer public scrutiny and leave the perpetrators in a reputational ditch of their own making. Caveat emptor – let the buyer beware.
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