Andrew Whitehead: Why counting carbon emissions makes sense

Oct 15 2009 by Andrew Whitehead, Birmingham Post

Before any element of a business can be effectively controlled, it needs to be properly understood.

For greenhouse gas emissions, this means monitoring and recording either the emissions or the processes that produce them. 

It should come as no surprise that organisations around the world are increasingly required by law to monitor and report carbon emissions.   

Last year’s Climate Change Act introduced a pathway for mandatory carbon accounting in the United Kingdom and as a first step, required the Government to publish guidance on the calculation of Greenhouse Gas (GHG) emissions by October 1 2009.

This guidance will assist with the reporting of these emissions and it emerged on cue at the end of September. A review will now follow, to be carried out by December 2010, to evaluate the contribution that GHG reporting is making towards achievement of the government’s climate-change objectives.

Assuming the contribution to be positive, we can expect regulations under the Companies Act to make reporting mandatory by April 2012. 

Similarly, the United States Environmental Protection Agency has recently finalised a rule that will require power plants, large industrial facilities and car manufacturers to start monitoring their GHG emissions from January next year, with annual emission reports from March 2011. 

Why is all of this significant? Well, some consistency is badly needed, because there are many ways an organisation might calculate the impact of operations on the environment.

The size of an organisation’s carbon footprint calculated on some basis or other has captured the imagination in recent times, often as no more than a green branding exercise. 

Some have argued for carbon ‘neutrality’ on the basis of a narrowly-defined accounting exercise and an offset scheme which barely stands up to close scrutiny. 

We also have a European emissions trading scheme which captures larger emitters and the power sector. The CRC Energy Efficiency Scheme also begins soon, covering many smaller businesses and public sector organisations. Whilst both schemes entail reporting of emissions, neither covers an organisation’s whole activity. 

British companies can expect mandatory carbon accounting in due course, so there are many advantages to following this new guidance before it becomes a compliance issue. 

Of course, whilst the key focus is reducing carbon emissions, the twin benefit is the impact in reducing bills. Furthermore, businesses are increasingly required to show their commitment to carbon reduction as part of their customers’ procurement processes. In current times, are any more reasons required for an organisation to begin counting its carbon? 

* Andrew Whitehead is partner and head of energy and utilities at Martineau