Carbon itself isn’t complicated…
but the ‘Carbon Economy’? Moreso….
It therefore pays to have a basic understanding of the science. And after that, the maths, economics, legislation, schemes and behaviours – all of which should add up to a fuller understanding of the obligations all businesses face in today’s drive to a low carbon economy.
Carbon is the fourth most abundant chemical element on Earth, and it’s plentiful throughout the solar system and in the atmosphere of most planets.
Because it’s very rare that one element is converted to another (under terrestrial conditions) the total amount of carbon on the Earth doesn’t change. This means that the natural processes that use carbon must get it from somewhere, and deposit it somewhere else.
This is known as the carbon cycle.
Plants extract carbon dioxide (CO2) out of the environment and use it to create vegetable matter, or biomass. This process transforms carbon from a gaseous to a solid state. Animals eat some of this vegetable matter, and the carbon is eventually released back into the atmosphere as CO2, as the animal expires, transforming it back from solid to gas.
Some vegetable matter is buried and decomposes over millions of years to form fossil fuels. This fixes the carbon into solid state for aeons – until the fossil fuel is burnt, releasing the carbon back into the atmosphere as CO2.
The Earth is heated by shortwave radiation in the form of solar energy reaching us from the sun. This energy is absorbed by the Earth’s surface, but the heat generated is then re-emitted in the form of infrared – or longwave – radiation that cools Earth as the heat is reflected back into space.
It’s this balance between the incoming solar energy and the reflected infrared radiation that determines the Earth’s temperature.
However, some of the outgoing infrared radiation is trapped by what are known as greenhouse gases, such as water vapour, CO2, methane, nitrous oxide and ozone.
This is commonly called the greenhouse effect – in itself this is an essential good for the planet as without the greenhouse effect the Earth’s surface would be, on average, 33°C colder than it is.
But because key greenhouse gases – most importantly CO2, methane and nitrous oxide – have been exacerbated and have accumulated over time the ‘natural’ greenhouse effect has been strengthened considerably to the point where the greenhouse effect is seen as a negative.
It’s widely accepted that atmospheric CO2 has increased by about 40% since the beginning of the industrial revolution, from around 280 to about 390 parts per million (ppm).
Records from ice cores suggest that it is now at its highest level for the past 800,000 years.
It’s also been shown that the extra CO2 that we can measure in the air today has a chemical fingerprint that links it to fossil fuels, suggesting that today’s high concentrations are caused by our own actions.
Levels of other greenhouse gases, such as methane and nitrous oxide, have also increased significantly since pre-industrial times – again driven by emissions from burning fossil fuel, as well as from forest clearance and agriculture.
More than 30 billion tonnes of CO2 are emitted globally each year by burning fossil fuels.
Already the Earth’s surface temperature has warmed by around 0.75°C since 1900 and by around 0.4°C since the 1970s alone.
And this isn’t an immediately reversible trend, even if all greenhouse gas emissions were to stop, the world is still expected to warm by around 0.6 (+/- 0.3)°C.
But if no action is taken to reduce emissions, temperatures are forecast to rise even further.
According to the Department for Energy and Climate Change (DECC), depending on the future levels of greenhouse gas emissions, increases in global average temperatures may be between 1.1 and 6.4°C compared with 1990 levels by the end of this century.
In addition to the rising temperatures DECC lists the other potential impacts as:
- Rising sea levels – average sea levels could rise by between 18cm and 59cm by the end of the century.
- Extreme weather – Heat waves and heavy rain could become more common, while droughts could become more intense.
- Ocean acidification – rising CO2 levels lead to a more acidic ocean system endangering species
- Food and water – excessive temperature rises could impact yields of all major cereal crops.
The costs of climate change could be equally as huge as the forecast natural impact.
The Stern Review on the Economics of Climate Change published by the UK government in 2006 said that
“Without action, the overall costs of climate change will be equivalent to losing at least 5% of global gross domestic product (GDP) each year, now and forever. Including a wider range of risks and impacts could increase this to 20% of GDP or more.”
It has been estimated that reducing emissions to avoid the worst of this would cost around only 1% of global GDP each year.
Even the non-environmental economic implications are therefore compelling on both a macro and micro level.
In 1997 the Kyoto Protocol was adopted to fight global warming. It is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC), an international environmental treaty with the goal of achieving the “stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.”
By September 2011, 191 nations had signed up to the Kyoto Protocol.
In the UK in 2008, in response to the Kyoto Protocol, the Climate Change Act was passed.
Its primary aim was to ensure that the net UK carbon account for all greenhouse gases for the year 2050 would be at least 80% lower than the 1990 level.
Another goal of the Act was to enable the UK to become a low-carbon economy. The Act empowered ministers to introduce measures to achieve a range of greenhouse gas reduction targets.
More recently, the Carbon Plan, which was published in December 2011, set out plans for achieving the emissions reductions committed to in the country’s first four carbon budgets.
A key part of the UK legislation was the Carbon Reduction Commitment, which came into force on 1 April 2010.
The CRC Energy Efficiency Scheme applies to businesses that use more than 6,000MWh (6,000,000 kWh) of electricity a year, and have at least one half-hourly electricity meter.
It is a mandatory scheme that aims to promote energy efficiency and cut emissions among large public and private sector organisations. It is estimated that such businesses are responsible for around 10% of the UK’s emissions.
The CRC includes a range of reputational, behavioural and financial drivers to encourage organisations to put in place energy management strategies and help them to better understand their energy usage.
While the main aim of the initiative is to reduce the carbon emissions by at least four million tonnes a year by 2020, the additional benefits include:
- Costs – using the scheme as a cue to reduce carbon emissions and become more energy-efficient will also enable savings on business electricity. This could be enough to offset any cost of carbon allowance needed by individual businesses, giving them a financial advantage over less efficient competitors.
- Reputation a company performing well in the league table would benefit from positive publicity, which could ultimately help attract a whole new set of eco-conscious customers
Being a CRC participant involves:
- measuring and reporting on your annual carbon emissions
- buying an allowance from the government to cover your carbon emissions
- appearing in a carbon emission performance league table against your peers
The subject businesses are obliged to buy an allowance to cover their emissions – currently this is set at £12 per tonne of CO2.
The CRC is however only one way the UK is aiming to deliver its emissions targets.
Another approach is carbon offsetting. A way to cut a business’s carbon footprint immediately and meet the increasing expectation to do so from stakeholders and customers.
With carbon offsetting, businesses effectively negate the effect of their carbon emissions by buying credits for an equivalent reduction in carbon elsewhere.
So for example, they could buy carbon offsets from a wind farm that has been rewarded with them for producing clean energy.
Carbon offsetting has come in for criticism however with detractors arguing that it’s no substitute for reducing actual carbon emissions.
On its own, carbon offsetting does not solve climate change, but it does have a part to play.
It isn’t only formal schemes and rules that can drive emission reductions.
There are many changes companies can make to their processes, behaviours and buildings in order to reduce their CO2 emissions but there will always be a limit to what they can change when such moves are either not economically viable or where the subject is an essential, immovable element of their business.
Regardless, these ‘Internal’ reductions take time to kick in (changing a business’s fleet of vehicles to eco-versions, for example), and even targets of 20% reductions can be difficult to achieve for some businesses.
However behaviour change is the key to reduction, and not only does it bring benefit to the environment, albeit on a small basis individually, but it also provides businesses, large or small with the opportunity to reduce the costs, as well as the impact, of their energy usage.
From the smallest business to the entire planet, carbon has a resonance like few others in the modern world.
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If you’d like to know more about how your business can benefit from the schemes and tariffs on offer call us on 0800 051 5770, we’d love to hear from you.