Corporate Carbon Performance Indicators The Amsterdam Global Conference on Sustainability and Transparency  Academic Confe...
You can't manage what you don't measure <ul><li>Increasing Stakeholder request for carbon disclosure: </li></ul><ul><ul><l...
Assessing a company’s carbon performance  <ul><li>Which scope is important?  </li></ul><ul><li>How to deal with inputs and...
3 scopes and 2 dimensions of carbon usage  from a LCA perspective
Assessing a company’s carbon performance  <ul><li>Which scope is important?  </li></ul><ul><li>How to deal with inputs and...
<ul><ul><li>CARBON INTENSITY </li></ul></ul><ul><li>extent to which the business activities are based on carbon usage for ...
Assessing a company’s carbon performance  <ul><li>Which scope is important?  </li></ul><ul><li>How to deal with inputs and...
5 pillars for standardizing carbon accounting  Sector focus  Carbon usage  (Numerator)  Business Metric (Denominator)  Car...
Contact:   Dr. Timo Busch Dept. for Management, Technology, and Economics ETH Zurich  tobusch@ethz.ch    www.sustec.ethz.c...
Empirical example
Coal [per short ton] Petroleum (RFO) [per barrel] Natural Gas [per mega cubic feet] CO2 [per metric ton] 2004 2030 – Busin...
Results in detail
Business metrics that can be applied  Business metric Description Unit of production Business output in non-monetary terms...
Cost approaches that can be applied  Approach Costs to be determined (e.g.) Source (e.g.) a) costs based on market prices ...
Management: get started & keep the ball rolling define the scope of system boundaries & measurement level for carbon usage...
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GRI Conference- 28 May - Busch- Carbon Performance and Measurement panel

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GRI Conference- 28 May - Busch- Carbon Performance and Measurement panel

  1. 1. Corporate Carbon Performance Indicators The Amsterdam Global Conference on Sustainability and Transparency Academic Conference / Carbon Performance and Measurement 26-28 May 2010, Amsterdam Timo Busch | Group for Sustainability & Technology
  2. 2. You can't manage what you don't measure <ul><li>Increasing Stakeholder request for carbon disclosure: </li></ul><ul><ul><li>Financial markets: carbon matters financially </li></ul></ul><ul><ul><li>Climate policy: policy evaluation </li></ul></ul><ul><li>How to assess corporate carbon performance? </li></ul>
  3. 3. Assessing a company’s carbon performance <ul><li>Which scope is important? </li></ul><ul><li>How to deal with inputs and outputs? </li></ul>
  4. 4. 3 scopes and 2 dimensions of carbon usage from a LCA perspective
  5. 5. Assessing a company’s carbon performance <ul><li>Which scope is important? </li></ul><ul><li>How to deal with inputs and outputs? </li></ul><ul><li>Physically or monetary? </li></ul><ul><li>Performance now or in future? </li></ul><ul><li>Relatively or in absolute terms? </li></ul>
  6. 6. <ul><ul><li>CARBON INTENSITY </li></ul></ul><ul><li>extent to which the business activities are based on carbon usage for a defined scope and fiscal year </li></ul><ul><ul><li>CARBON DEPENDENCY </li></ul></ul><ul><li>change in physical carbon performance within a given time frame </li></ul><ul><ul><li>CARBON EXPOSURE </li></ul></ul><ul><li>monetary implications of the business activities due to carbon usage for a defined scope and fiscal year </li></ul><ul><ul><li>CARBON RISK </li></ul></ul><ul><li>change in monetary carbon performance within a given time frame </li></ul>4 corporate carbon performance indicators Dynamic
  7. 7. Assessing a company’s carbon performance <ul><li>Which scope is important? </li></ul><ul><li>How to deal with inputs and outputs? </li></ul><ul><li>Physically or monetary? </li></ul><ul><li>Performance now or in future? </li></ul><ul><li>Relatively or in absolute terms? </li></ul><ul><li>If relative: what is an adequate denominator? </li></ul><ul><li>Which scope should be covered? </li></ul>
  8. 8. 5 pillars for standardizing carbon accounting Sector focus Carbon usage (Numerator) Business Metric (Denominator) Carbon- and energy-intense industries Scope 1, 2 and upstream scope 3 Sales Energy utilities Scope 1, 2 and upstream scope 3 Energy (MWh) Commerce and service industries Scope 1, 2, and transport & traveling Sales Industries with products and services that are carbon-intensive during the usage phase Direct and indirect emissions in usage phase Product or service unit Financial institutions Amount of assets, investments and loans screened for a) carbon intensity b) carbon risk c) low-carbon efforts Sum of lending and investment portfolios
  9. 9. Contact:   Dr. Timo Busch Dept. for Management, Technology, and Economics ETH Zurich  tobusch@ethz.ch www.sustec.ethz.ch Literature:   Busch, T. (2010). Carbon performance indicators revisited. Journal of Industrial Ecology, (in press). Busch, T., & Hoffmann, V. H. (2007). Emerging carbon constraints for corporate risk management. Ecological Economics, 62(3-4), 518-528. Hoffmann, V. H., & Busch, T. (2008). Corporate Carbon Performance Indicators: Carbon Intensity, Dependency, Exposure, and Risk. Journal of Industrial Ecology, 12(4), 505-520. Hoffmann, V. H., & Busch, T. (2007). Carbon Constraints in the 14th and 21st century. Journal of Industrial Ecology, 11(2), 4-6.
  10. 10. Empirical example
  11. 11. Coal [per short ton] Petroleum (RFO) [per barrel] Natural Gas [per mega cubic feet] CO2 [per metric ton] 2004 2030 – Business as usual; EIA AEO07 Reference Case 2030 – Carbon Constraints Scenario; EIA Analysis of S.1766 Limited Alternative Case 2’309 3’338 2’803 Natural Gas Nuclear Renewables Coal Petroleum v US electricity production [TWh] US CO 2 from electricity production [million tonnes] US carbon in- and output prices [2005 US$] The numbers in detail
  12. 12. Results in detail
  13. 13. Business metrics that can be applied Business metric Description Unit of production Business output in non-monetary terms Total costs Expenses for generating the business output Costs of goods sold Direct expenses incurred in producing the company’s output; excludes indirect costs such as office expenses or advertising Value added Value of the company’s production step; emphasis is on one part of the value chain Turnover resp. sales Value of the company’s production step and all upstream business activities; allows valid comparison regardless of the size of different businesses Market capitalization or equity Market value of a company or value of private equity EBIT resp. EBITDA Approximate measure of a company's operating cash flow
  14. 14. Cost approaches that can be applied Approach Costs to be determined (e.g.) Source (e.g.) a) costs based on market prices Crude oil and natural gas http://www.wtrg.com Coal http://cr.mccloskeycoal.com EU ETS allowances http://www.pointcarbon.com b) costs based on the company’s internal cost accounting Fossil fuel and energy consumption Company’s cost accounting Shortage of EU ETS allowances Company’s cost accounting c) abatement costs based on mitigation options Efficiency increase Comparisons of costs in different industries: Metz et al. (2001); Llewellyn (2007) Substitution Cost estimates for fossil fuel alternative energy technologies: Barker et al. (2006) Offsetting 2006 average prices for a ton of CO2-eq generated by a CDM project: US$ 10.70 primary market; US$ 17.76 secondary market (Capoor & Ambrosi, 2007); cost for avoiding a ton of CO2 via CCS: US$ 40-220 (IPCC, 2005) d) internalization costs of external effects price to the depletion of fossil energy resources Weitzman (1999): prices the depletion of resources such as oil Sabour (2005): external costs of exploitation of oil damage costs Clarkson et al. (2002): £70 per ton in 2000 and an annual increase by £1 per ton Nordhaus (2006): $20 in 2000 and $80 in 2100 as optimal costs for carbon
  15. 15. Management: get started & keep the ball rolling define the scope of system boundaries & measurement level for carbon usage chose adequate business metrics determine carbon intensity define cost approach for carbon usage determine carbon exposure define time frame for dynamic analysis & carbon and energy market scenarios determine carbon dependency analyze corporate sensitivity towards carbon related changes in the business environment derive optimization strategies & use results for reporting Carbon Management Framework derive carbon risk
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