Carbon Game is On!

Concept – Tools - Implementation

Sitra workshop for carbon neutrality

Radisson Blu Seaside Helsinki 15.4.2015

Katriina Alhola

Jáchym Judl

Part I – About Carbon Neutrality concept

Part II – Methodologies for carbon

neutrality and examples of pro-active

companies

2

Content

● The global concern about climate change and the challenge of

keeping global warming in the level of two degrees has raised

interest towards ’carbon neutral’ concepts in society and business

life

● Businesses benefit from carbon neutrality approach e.g. by reduced

energy and resource use leading to lower costs and optimised

supply chains, strengthened reputation, new products and

businesses and increased competitiveness

● Carbon neutrality – although often defined by common usage - is a

message to customers and staff implying that climate issues and

emission reductions are incorporated into the business

3

Why do we strive for carbon neutrality?

Carbon neutrality is seen as a means for organizations and society to

respond to the challenges of climate change mitigation.

“To be carbon neutral means

having a net zero carbon footprint”

Definition of carbon neutrality based on

literature

Carbon neutrality can be achieved through a transparent process of:

1) Measuring and calculating GHG emissions, i.e. carbon footprint

2) Reducing emissions as much as possible

3) Offsetting the remaining emissions

Source: (DECC/Defra 2009)

4

”The Standard for Carbon Neutrality” PAS 2060 describes carbon

neutrality as a process including:

5

Calculating carbon footprint according to ISO 14064-1 or GHG corporate protocol.

The organization must develop a carbon management plan that includes a public commitment to

carbon neutrality, outlines a time scale, specific targets for reductions, the planned means of

achieving reductions and how residual emissions will be offset. The reductions should be either in

the total amount of carbon emitted (in absolute terms) or a reduction in carbon intensity (in relative

terms), for example carbon emissions per unit output or per € of turnover.

MEASUREMENT

REDUCTION

By high quality, certified carbon credits (Clean Development Mechanism, Joint Implementation or

Voluntary Carbon Standard), verified by third party.

OFFSETTING RESIDUAL EMISSIONS

Disclosure of all the documentation including evidence of emission reductions and retired offsets. The

standard accepts self validation, other party validation and third party independent validation.

DOCUMENTATION AND VERIFICATION

How to achieve carbon neutrality?

6

Document Level and focus Scope and type

GHG Protocol

(WBCSD/WRI)

Organizations; to measure, manage, and report greenhouse

gas emissions.

International

standard

ISO 14064-1 Organizations; to specify principles and requirement for quantification

and reporting of greenhouse gas (GHG) emissions and removals. It

includes requirements for the design, development, management,

reporting and verification of an organization's GHG inventory.

International

standard

PAS 2050

(British

Standard

Institution)

Products and services; to specify requirements for the assessment of

the life cycle GHG emissions (builds on existing life cycle assessment

methods established through BS EN ISO 14040 and BS EN ISO

14044).

UK / international

guidelines

PAS 2060:2014

Carbon

neutrality

Organizations; Specification for the demonstration of carbon neutrality UK standard /

international

specification

Defra/DECC Organizations; how to measure and report corporate greenhouse gas

emissions

UK guidance

National carbon

offset standard

Business operations, products, events;

Guidance on genuine voluntary offsets and its minimum requirements

for calculating, auditing and offsetting a carbon footprint to achieve

carbon neutrality.

Australia /

voluntary program

/ standard

In addition, a wide range of private companies have launched their own certificates and

evaluation process for carbon neutrality, which is often based on the guidance given in

GHG Protocol and/or ISO 14001 standards for footprint calculation. For example:

Carbon Neutral Protocol / Carbon Neutral Company

Review of standards and guidance to carbon

neutrality, examples:

Roadmap to get there

Carbon neutrality concept

– from a process of gaining energy-

efficiency to an ultimate goal of business?

7

Process view:

How to reduce emissions?

Strategic view:

How the company works?

What the company does?

Measure

Reduce

Compensate

Carbon neutrality – the ultimate

strategic goal for business?

How to communicate about

carbon neutrality targets and

achievements?

8

Part 2

Methodologies for carbon neutrality

and examples of pro-active

companies

How to define the boundaries for the calculations, i.e. which emissions and

from which sources should be included, and how these should be

calculated and measured?

Emission scopes:

9

How to calculate carbon footprint?

All direct GHG emissions, such as emissions from facilities operated by the company or its fleet.

Indirect GHG emissions from consumption of purchased electricity, heat or steam.

Direct emissions1

Indirect emissions2

Other indirect emissions, such as the extraction and production of purchased materials and fuels,

transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related

activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc.

Other emissions3

Source: GHG Protocol

After all GHG emissions have been accounted, reduction targets must be

set. Different methodologies and approaches are used.

10

What methodologies are used to set

reduction targets?

• The Sectoral Decarbonisation Approach (SDA)

• The 3% Solution

• Carbon Stabilization Intensity (CSI)

• C-FACT (Corporate Finance Approach to Climate-Stabilizing Targets)

• The Center for Sustainable Organization’s (CSO) context-based carbon metric

• GHG emissions per unit of value added (GEVA)

• MARS methodSource: http://sciencebasedtargets.org/existing-methodologies/

Science-based accounting methodologies

How to compensate emissions?

● Carbon offsets to CDM / JI projects or Voluntary Emission

Reductions (VER)

● Carbon credits

● Positive handprint?

11

How could companies compensate emissions in a way that would cause

genuine additional emission reductions without increasing emissions

elsewhere, and avoiding double counting at the same time?

Questions to ask the offsets provider:

12

→ What is/are the specific offset project type(s) (e.g., wind farm, methane capture, etc.) in your portfolio and where

are the carbon offset projects located?

→ Have your carbon offsets been certified to a recognized standard (Gold Standard, CDM, VCS, Climate Action

Reserve, Green-e Climate Protocol for Renewable Energy, etc.) to ensure quality? If so, please list the

standard(s).

→ What steps have you taken to ensure that the carbon offsets you are selling are additional?

→ How do you ensure that the greenhouse gas reductions that your carbon offsets represent are quantified

accurately?

→ Are 100 per cent of your offsets validated and verified by accredited third parties?

→ If you are selling offsets that will be created in the future (i.e., forward crediting), what mechanisms (insurance

or otherwise) have you put in place to ensure those offsets will actually be delivered?

→ What percentage of your portfolio (by tonnes of CO2e) is made up of offsets from tree-planting or agricultural

soils projects? If it is a significant percentage (more than 20 per cent of your portfolio), how do you address

permanence risks?

→ Do you use a publicly accessible registry to track your offsets? If yes, please list the website. If not, how do you

ensure that your offsets are only sold to one buyer? And do you "retire" offsets that you sell?

→ What is your company doing to educate consumers about climate change and the need for government policy

to deal with it?

→ Are you a member of the International Carbon Reduction and Offset Alliance (ICROA), which has a Code of

Best Practice that members must adhere to?

Source:

http://www.davidsuzuki.org/publications/downloads/2009/climate_offset_guide.pdf

Examples of pro-active companies

Ikea

13

One of the leading brands in carbon neutrality. Uses their

environmental credentials in communication with customers.

Committed to be 100 % carbon neutral by 2020.

Committed to produce as much renewable energy as they consume

in their operations.

The share of renewable energy:

→ 37 % in 2013

→ 70 % in 2016 (target)

→ 100% by 2020 (target)

To become carbon neutral by 2012 and the world’s most sustainable retailer.

Examples of pro-active companies

Marks & Spencer UK

14

Carbon neutrality was extended to include all M&S operated and joint venture stores, offices,

warehouses and delivery fleets worldwide.

2007: carbon neutral by 2012

2013: carbon neutrality in broader context

2014-2020: new business model

Engaging customers and moving towards new business models.

2020 onwards: carbon positive

New sustainable ways of doing business that are carbon positive, circular and fair.

M&S aims at being carbon positive company. Footprint calculation

according to GRI Global Reporting Initiative G4.

Examples of pro-active companies

15

Footprint calculated according to the GHG Protocol. Calculations are

verified by an external auditor. Google claims to have be carbon neutral

since 2007.

Google’s view on carbon neutrality:

How about being carbon positive?

Examples of pro-active companies

Google

16

Examples of pro-active companies

Google’s Carbon Offsets

17Source: http://static.googleusercontent.com/media/www.google.com/en//green/pdfs/google-carbon-offsets.pdf

Examples of pro-active companies

Interface

18

● Emissions accounting according to the GHG Protocol.

● Emissions reduced by 71% per unit of product from 1996

to 2013, aim is to eliminate any negative impact of the

company by 2020.

In 2014 Interface’s European manufacturing:

● Consumed 95% renewable energy

● Reduced absolute carbon by 90% compared to 1996

● Did not send any waste to landfill

Company which is proactive and sets an

example. Eco-design is core of their products.

LCA is applied widely.

Picture credits: http://wp39.gtnbuildingmaterials.com/library/products/flooring/carpet/interfaceflor-llc-carpet-tile-viva-

colores-redesign-matrix/

Carbon neutrality in the Finnish context

Posti

19

Aims to reduce carbon-dioxide emissions by 30% by 2020, in relation to net

sales (compared to 2007).

Carbon neutrality on the product

level: Posti Green

Carbon neutrality of the company on the national level in 2015

Carbon neutrality of the company on the global

level..?

Offsets not in Finland or Kyoto countries.

Carbon neutrality in the Finnish context

20

Why some Finnish companies communicate their carbon reduction efforts

and some don’t?

● Do the current carbon neutrality targets really help to maintain the level of 2

degrees threshold in rise of temperature?

● Should we have stricter definition and more precise emission reduction

targets built in to the concept of carbon neutrality?

● How can we distinct between those companies that take real effort to cut

their emissions and those that choose to offset most or all of the emissions

with no actions for energy efficiency or emission reductions?

● What kind of compensation mechanisms are acceptable and lead to real

GHG emission reductions?

● Is the definition of zero net emissions through the steps “Measure –

Reduce – Offset” introduced in guidelines a sufficient definition/content for

carbon neutrality?

● How transparent the carbon neutral claims really are?

● Should we rather talk about low carbon instead of carbon neutral?

21

Carbon neutrality – reality or a buzzword?

The term is widely used despite the lack of clear rules for gaining carbon

neutrality and the claims rely on companies’ own interpretations. More

precise ‘rules’ are needed in order to develop the concept further.