GREEN ENERGY FACTS

Set Targets

The second step in any carbon management plan is to set an emission reduction target.

Scientists are calling for global emissions reductions of 80% by mid-century, which equates to a year on year absolute reduction of circa 4%. This is a minimum requirement and, whilst it may sound small, if a business is growing, it is difficult to sustain this level of absolute reduction in the medium to long term. In reality, many businesses choose to set a target of net zero immediately (Influxive) – because they view this as putting them in a leadership position, building their brand reputation for employees and customer and delivering a measurable commercial return.

Setting a stretching target also provides a strong position from which to engage other parts of a supply chain – it is much easier to persuade suppliers and/or customers to act if you are seen to have made real progress yourself. Supply chain engagement is seen as increasingly important because ultimately carbon emissions are driven by the quantity and type of products and services that we as consumers choose.

Reduce

Once targets have been set the next step is to achieve them – and this should be done through the most cost effective mix of internal and external emission reductions.

Internal reductions are those that take place within the boundary of the ‘thing’ (company, product, service or business process) that is being measured. External reductions are those that take place in projects outside the boundary of the thing that is being measured (known as ‘carbon offsets’). These external emissions reductions are packaged up and traded as carbon credits to ‘offset’ emissions.

The dilemma that many organisations face is how to balance internal and external reductions. Should they, for example, seek to reduce emissions ‘as far as possible’ internally before considering offsetting? The problem with this approach is one of time and material impact: you cannot change overnight the profile of a car fleet or a manufacturing process; with substantial commitment, many organisations could see carbon reductions of 20% in the medium term. But scientists are calling for 80% reductions, now. 

Carbon offsetting enables an immediate reduction of CO2 emissions to net zero, and then time to put in place effective strategies for cuts to internal emissions.

One of the values of using external reductions or carbon credits within your strategy is that they provide a benchmark against which to evaluate alternative internal reduction opportunities. For example, if the cost of carbon credits is £10/tCO2, then internal emissions reduction measures which cost more than this – based on any capital investment needed, annual cost savings achieved (e.g. in the case of energy efficiency measures) and the lifetime of the measure – should be considered carefully before the investment is made.

Taking this systematic approach will ensure that the most cost-effective combination of internal and external emission reduction projects are selected to deliver on the agreed target.

The quality of carbon credits selected is vitally important if they are to be viewed as a credible part of any strategy. A number of standards have emerged lasting recent years as leaders: The Clean Development Mechanism of the Kyoto Protocol (CDM); The Voluntary Carbon Standard (VCS); the Gold Standard. Credits certified to one of these standards will be viewed positively by stakeholders.

Carbon credits under any standard have a further attribute of importance -- their ‘vintage’ – which is an indication of when the emissions reductions were or will be generated.

Clients have the option of selecting credits from both past and future vintages.  Purchases of past vintages have no delivery risk, unlike future vintages. Purchasing future streams of credits is an option open to clients that wish to see carbon finance directed to new emission reduction opportunities. 

Clients should ensure that their communications are consistent with the vintage of the credits that they are using.  When future vintages (i.e. credits that have not yet been generated or verified) are used for offsetting purposes, clients should not claim that their emissions have already been offset. The Influxive Company monitors and guarantees future vintage credits contracted under the Influxive® mark.

Communicate

In any voluntary carbon management programme, where achieving a commercial return is essential if the programme is to be sustainable in the long-term, communicating to stakeholders will be key.

The most important stakeholders are likely to vary from company to company. Some carbon management programmes may be internally-focussed, in which staff will be key, other programmes may be more customer-focussed – aimed at differentiating a specific product or service.

We have developed a series of Influxive® brandmarks, which can act as a shorthand to help communicate specific carbon management activities. For the audience, it acts as a signal that the action taken has been of the highest quality and covered by a process of 3rd party assurance.