Carbon emissions reporting
Encyclopedia
Businesses worldwide face pressure to reduce the impact their activities have upon the environment
, and in particular the volume of greenhouse gases they produce. In the United Kingdom
, Department for Environment, Food and Rural Affairs (Defra)
has described climate change
as the "greatest environmental challenge facing the world today". Although there is currently no legislation in place in the UK forcing companies to reduce carbon emissions, tax benefits and consumer pressure provide a strong incentive for businesses to develop environmental strategies. Emissions trading
is the primary tool advocated by the UK Government for tackling global climate change, a method which aims to tackle emissions reduction at the points where there is the lowest cost for doing so. For emissions trading to work, a uniform method of reporting is necessary to allow for comparisons to be made across organisations. Kilograms of CO2 is the preferred unit of measurement for emissions and Defra have developed conversion tables which provide a standard CO2 cost for typical business activities, allowing organisations to report on the volume of CO2 they produce. This article describes the various methods by which businesses and organisations can report on their carbon emissions.
According to this chart of Annual Carbon Emissions by Region, it seems, assuming the graphs follow the same trend, that the leading political powers that are the greatest emitters of GHG’s are still currently the U.S. and Communist East Asia. The U.S. has always been a very energy intensive nation, but is the United States dependence on carbon emitting fuels going to be its downfall? Though not as technologically dependent Communist East Asia is catching up rather quickly, because of its high population and rapidly developing industries. China in particular, even though it had a “sudden stagnancy” of energy consumption, supply, and energy-related CO2 emissions in China from 1996 to 1999, has once again risen back to if not exceeding its old Emissions producing ways. Both the U.S. and China due to the high demand for electricity, use fossil fuels such as petroleum and coal in exceedingly great amounts. Many wonder why political powers such as these are not being pushed more towards going green, it comes down to the lack of enforcement of international law. There have been attempts to establish worldwide guidelines such as the Kyoto Protocall, which was a voluntary agreement amongst nations; however, they are only agreements and there was no way to enforce them. As a developing country, China is not an Annex I country and, therefore, is not subject to the mandatory emission-reduction targets specified in the 1997 Kyoto Treaty. However, China has been facing mounting international pressure on this issue due to its large emissions and is not responding pleasantly, blaming the U.S. for a majority of the issues of climate change. The U.S. although being one of the largest GHG emitters is making strides in the right direction, setting an example for other nations. Passed in late May, with the approval by the US House of Representatives Energy and Commerce Committee, the American Clean Energy and Security Act, which if enacted would create a cap-and-trade system for greenhouse gas emissions. For the first time in history, a US congressional committee has approved legislation that would establish a federal renewable electricity standard as well as a price for carbon emissions.
Even after considering the financial drawback; there are still a number of industrial board level leaders who encourage this new “Emission accounting.” Some progressive CEOs have been quoted embracing this new institution stating that it helped them cut back on their energy costs which had a positive return on their profits. A survey was conducted by DEFRA and PricewaterhouseCoopers that studied 150 large companies which reported their annual carbon emission. It found that 50 % of these companies reported having GHG (Green House Gas) reporting outweighed the costs. It further helps companies build their image among investors by becoming more environmentally friendly, which increases investment. Across the board of CEOs and board level leaders, there has been a slow but increasing transition for support of Carbon reporting. http://www.greenwisebusiness.co.uk/news/carbon-reporting-saves-money-for-businesses-says-study-1967.aspx
The two sectors mentioned above are tricky and often hard to implement cut backs on. They affect a large number of people which makes it more challenging to institute changes to help lower emissions. The UK federal government is committed to a 10% decrease on emissions, which has helped reduce emissions. Yet there still needs to be further collaboration and implementation between governments to help tackle this issue. http://sd.defra.gov.uk/2010/12/the-carbon-footprint-of-government/
There are advancements being made in both car production and home designs. Yet the transition is still needs further improvements. Until recently (2010/2011) the average MPG for cars has shown little improvement since the mid 1990s. The main drawback that exists in the transition towards a more efficient car or home is the cost. Higher costs of more efficient cars and homes, even though they have a net return over time, deters most buyers from making the change to a more environmentally friendly and efficient product.
This program is the initial step into countering rising emissions rate. If companies are forced to report their emissions, they will be more inclined to lower their impact. Furthermore, they will have the ability to attract more investments as consumers prefer environmentally friendly products.
Environment (biophysical)
The biophysical environment is the combined modeling of the physical environment and the biological life forms within the environment, and includes all variables, parameters as well as conditions and modes inside the Earth's biosphere. The biophysical environment can be divided into two categories:...
, and in particular the volume of greenhouse gases they produce. In the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, Department for Environment, Food and Rural Affairs (Defra)
Department for Environment, Food and Rural Affairs
The Department for Environment, Food and Rural Affairs is the government department responsible for environmental protection, food production and standards, agriculture, fisheries and rural communities in the United Kingdom...
has described climate change
Climate change
Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions or the distribution of events around that average...
as the "greatest environmental challenge facing the world today". Although there is currently no legislation in place in the UK forcing companies to reduce carbon emissions, tax benefits and consumer pressure provide a strong incentive for businesses to develop environmental strategies. Emissions trading
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
is the primary tool advocated by the UK Government for tackling global climate change, a method which aims to tackle emissions reduction at the points where there is the lowest cost for doing so. For emissions trading to work, a uniform method of reporting is necessary to allow for comparisons to be made across organisations. Kilograms of CO2 is the preferred unit of measurement for emissions and Defra have developed conversion tables which provide a standard CO2 cost for typical business activities, allowing organisations to report on the volume of CO2 they produce. This article describes the various methods by which businesses and organisations can report on their carbon emissions.
The leading emitters
Each year the world is becoming more and more industrialized and with that increased development of businesses, there is an increase in the demand for power and other needs of operation. With increased industries there is also an increase in the output of emissions, and in a decade where the world will be facing the real life effects of climate change, the idea of Carbon Emissions Reporting is becoming more prevalent. This is not a new idea that has just came about, GHG (Green House Gasses) emissions have been regulated and reported in a standardized way in some industries for years. Automobile manufacturers have responded to legislation in the past to reduce vehicle emissions in new designs (Melosi, 2004), which has led to an indirectly measurable reduction in GHG emissions. Utilities that generate electricity from, for example, coal burning power plants, have also been regulated with respect to emissions for a long time, initially to reduce more localized pollution and other environmental hazards such as acid rain. However, even to this day, these electricity generation companies are one of the largest culprits when it comes to the emissions of GHG. Due to the high levels of production of GHG on the daily by these industries, they are easy targets when dealing with the pressure that is being put on the idea of Carbon emissions reporting. As more and more evidence points us in the direction that global climate change is due to human activities, It is clear that the trend toward measuring and managing greenhouse gas (GHG) emissions on a global scale is not slowing, even though different countries and geographic regions are approaching the issue with different points of view and different levels of vigor(1). Along with an increase in measuring and managing GHG emissions, enterprises around the world should expect to see a higher level of independent assurance and audit reporting needed(1). This is due to a higher level of scrutiny on the credibility of their GHG reporting by a wide range of stakeholders(1).Political Powers
Multinational Corporations
Across the globe the need to know the effects of emissions has driven many central and local governments to study the rate of their emissions. In many developed nations there have been institutions around big Multinational Corporations to report on their emissions rate. Many critics say that forced carbon reporting has negative economical consequences. The main worry is how much it would cost companies in order to report and limit their emissions. Currently there is limited available options that allow companies to report their emissions, which makes it even more expensive to institutionalize. Thus companies tend to be strongly opposed to this movement. It creates a series of problems on their production and requires these companies to assure continual upgrade of their assembly line to stay efficient while producing enough to make profit.Even after considering the financial drawback; there are still a number of industrial board level leaders who encourage this new “Emission accounting.” Some progressive CEOs have been quoted embracing this new institution stating that it helped them cut back on their energy costs which had a positive return on their profits. A survey was conducted by DEFRA and PricewaterhouseCoopers that studied 150 large companies which reported their annual carbon emission. It found that 50 % of these companies reported having GHG (Green House Gas) reporting outweighed the costs. It further helps companies build their image among investors by becoming more environmentally friendly, which increases investment. Across the board of CEOs and board level leaders, there has been a slow but increasing transition for support of Carbon reporting. http://www.greenwisebusiness.co.uk/news/carbon-reporting-saves-money-for-businesses-says-study-1967.aspx
Governmental Institutions
Ironically in this push for further disclosure and action on carbon reporting from governments, significant amount of the emission comes from governmental institutions like the military and health sectors. These infrastructures, which guarantee public safety and ensure growth, demand an enormous source of energy to operate. In the United Kingdom, of the carbon that was emitted by the Central Government, 73% came from the Defense and Health sectors http://sd.defra.gov.uk/2010/12/the-carbon-footprint-of-government/. Similar trends are seen the United States as well as most developed nations by having most of their emissions come from activities within the defense and Health sectors.The two sectors mentioned above are tricky and often hard to implement cut backs on. They affect a large number of people which makes it more challenging to institute changes to help lower emissions. The UK federal government is committed to a 10% decrease on emissions, which has helped reduce emissions. Yet there still needs to be further collaboration and implementation between governments to help tackle this issue. http://sd.defra.gov.uk/2010/12/the-carbon-footprint-of-government/
Homes and Vehicles
The use of cars is more prevalent in the United States than any other nation in the world. Americans’ extensive use of private cars to reach their destinations makes vehicles in the United States one of the leading emitters of carbon. Cars use fossil fuels which produce carbon dioxide as a byproduct when burned to produce energy. Carbon reporting in this manufacturing field is done by measuring the MPG (Miles per gallon) of each car. Homes in the United States also use a lot of energy to power different heating/cooling and other appliances. There has been an increasing emphasis that has been put on the construction of homes and cars to try to make them more efficient. Car manufacturers are attempting to switch over to an alternate source of energy to help lower emissions and increase sales. Homes are being built with solar panels and more insulation to decrease their impact on the environment by lowering their energy consumption. Improvements like this can be attributed to carbon emission reporting.There are advancements being made in both car production and home designs. Yet the transition is still needs further improvements. Until recently (2010/2011) the average MPG for cars has shown little improvement since the mid 1990s. The main drawback that exists in the transition towards a more efficient car or home is the cost. Higher costs of more efficient cars and homes, even though they have a net return over time, deters most buyers from making the change to a more environmentally friendly and efficient product.
Mandatory Green House Gas reporting
Many environmentalist and organization in favor of green energy support the proposal of mandating companies/ factories to starting reporting green house gas emissions. Mandatory green house emission reporting is often neglected by business owners for several reasons. The main one being that it creates a drag in their production and most of all it would cost a lot to implement. In a study conducted by DEFRA, it was determined that it costs a factory on average $55,000 to start this process. Furthermore, companies would face increasing scrutiny if consumers understood the impact they have on the environment. Therefore mandatory GHG reporting didn’t receive enough support. In the past there were several attempts to institute such legislation but none received enough votes to pass Congress. But in the wake of BP oil crises in the Gulf of Mexico and increasing social awareness about the environment, the Environmental Protection Agency (EPA) started the environmental Green House Gas Reporting Program. The EPA’s GHG reporting program became a law on January 1, 2010. It forces 85% of the nation’s top emitters to report on how much GHG they have emitted. In no ways does it mandate them to cut back on their overall emissions. According to this law companies are due to report their emission for the year of 2010 on March 21 of 2011. In the first year of this legislation only 85% of the nations leading emitters are required to report their annual reports. Plans are to slightly increase this number each year to ultimately have 100% of major emitters in the nation to start keep tabs on the amount they emit.This program is the initial step into countering rising emissions rate. If companies are forced to report their emissions, they will be more inclined to lower their impact. Furthermore, they will have the ability to attract more investments as consumers prefer environmentally friendly products.
Drawbacks to Mandatory Reporting
Carbon reporting is a task that is rarely done in the business world today and book keeping of how much carbon is emitted presents a daunting challenge for some companies. That is why there are several organizations that oppose this proposition. Many of them are in the energy producing or providing realm of industries. These industries argue that since they heavily rely on smaller facilities that are located in remote areas, it will cost significantly more than other sectors to implement changes. The EPA estimates that rule of mandating carbon emission reporting will cost the oil and gas industry $62 million for the first year and $19 million in subsequent years http://www.nytimes.com/gwire/2010/11/09/09greenwire-epa-issues-emissions-reporting-rules-for-oil-a-30139.html/%20Energy%20and%20environment. Most oil and gas companies expect this rate to be higher. According to some oil companies’ estimates the rate could range from somewhere between $100 million and $850 million on data management software alone. http://www.nytimes.com/gwire/2010/11/09/09greenwire-epa-issues-emissions-reporting-rules-for-oil-a-30139.html/%20Energy%20and%20environment.Who Is to Blame
Because carbon foot printing is a relatively new procedure, it is expected that there will be some confusion about the appropriate means and boundaries to adopt for these impact analyses. The boundary of a carbon footprint can vary depending on how it was calculated and how much responsibility the company or person being foot printed is willing to take on. Some examples of where problems like this could arise are similar to the following: Should a consumer be responsible for the electricity purchases of an aluminum producer far down the supply chain of producing an iPod? Should Apple be held responsible for these purchases and thus account for them in its own footprint? What about the aluminum producer itself? It is clear that in the case of any complicated product, any number of different players in the supply chain could claim responsibility for the emissions associated with producing materials, basic chemicals, and other low-value-added goods that end up embedded in final consumer goods. If we are expecting to be able to achieve total GHG accounting without double counting, multiple counting of responsibility is problematic. The point is, that if everyone foot printed their own operations, the system would run perfectly, but there is a flaw in this for there would be a huge amount of trust and honesty needed for this to be a reliable system. http://www.nytimes.com/gwire/2010/11/09/09greenwire-epa-issues-emissions-reporting-rules-for-oil-a-30139.htm.Reference
- http://sd.defra.gov.uk/2010/12/the-carbon-footprint-of-government/
- http://www.treehugger.com/files/2010/09/carbon-emissions-reporting-belongs-global-financial-accountants.php
- http://carbon-emissions-reporting.com/category/carbon-market
- http://www.hss.energy.gov/nuclearsafety/env/guidance/ghg/ghg_reporting.pdf
- http://www.pwc.co.uk/eng/publications/carbon_reporting.html
- http://www.nytimes.com/gwire/2010/11/09/09greenwire-epa-issues-emissions-reporting-rules-for-oil-a-30139.html
- http://greeneconomypost.com/carbon-accounting-7439.htm
Works Cited
- Garvin, Peter. "Carbon Accounting: Beyond The Calculation and Looking To The Future." Green Economy Post 9 Feb. 2010. < http://greeneconomypost.com/carbon-accounting-7439.htm >.
- Ma, Chunbo, and David Stern. "Biomass and China's carbon emissions: A missing piece of carbon decomposition." Energy Policy 36.7 (2008): 2517-2526. Web. 8 Dec 2010.
- Smith, Done. "US sets the standard." Renewable Energy Focus 10.4 (2009): 26-27. Web. 8 Dec 2010.