Accounting and reporting avoided emissions along the value chain
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Accounting and reporting avoided emissions along the value chain

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http://www.leonardo-energy.org/webinar/accounting-and-reporting-avoided-emissions-along-value-chain ...

http://www.leonardo-energy.org/webinar/accounting-and-reporting-avoided-emissions-along-value-chain

Companies want to go beyond emission reductions in their own operation facilities and supply chains, by designing products that reduce emissions at downstream customers. A fuel efficient tire, for example, reduces greenhouse gas (GHG) emissions when driving a car. Such emission reductions are also called “avoided emissions”. Despite the opportunities, companies face challenges when introducing their innovative products to the market. The International Council of Chemical Associations and World Business Council for Sustainable Development commissioned Ecofys to write guidelines for accounting for and reporting greenhouse gas emissions avoided along the value chain of chemical products. The guidelines provide a global standard methodology and are a worldwide example on how to calculate and communicate the GHG benefits of products.

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Accounting and reporting avoided emissions along the value chain Presentation Transcript

  • 1. Annemarie Kerkhof 26/06/2014 Webinar: Accounting and communicating avoided emissions – Senior Consultant
  • 2. © ECOFYS | | Content > What are avoided emissions? > Why communicate about avoided emissions? > How to calculate avoided emissions? > The guidelines for the chemical industry developed by WBCSD (World Business Council for Sustainable Development) and ICCA (International Council of Chemical Associations) with support of Ecofys > Sectors with high potential for avoiding emissions 26/06/2014 Annemarie Kerkhof
  • 3. © ECOFYS | | Avoided emissions Scope 1, 2 & 3 Activities of companies to reduce their emissions 26/06/2014 Annemarie Kerkhof Company Emission reduction at the facilities of the company itself Emission reduction in the company’s value chain Emission reduction enabled by green product portfolios Low-carbon economy
  • 4. © ECOFYS | | Use What are avoided emissions? 26/06/2014 Annemarie Kerkhof Product X Material acquisition UseProduction End-of-life Material acquisition UseProduction End-of-life Product A Emission reduction enabled by product X Company A Solution provider Avoided emissions are emission reductions that occur outside of a product’s life cycle or value chain, but as a result of the use of that product.
  • 5. © ECOFYS | | Use Example: Fuel-efficient car tyres 26/06/2014 Annemarie Kerkhof Additive for car tires Material acquisition Production End-of-life Material acquisition UseProduction End-of-life Car Emission reduction enabled by chemical additive Car manufacturer Chemical company Picture: freeimages.com © ColinBroug
  • 6. © ECOFYS | | Use Example: Light-weighted aircraft 26/06/2014 Annemarie Kerkhof Lightweight specialty metal Material acquisition Production End-of-life Material acquisition UseProduction End-of-life Aircraft Emission reduction enabled by light-weight metal Airline Company producing specialty metals and alloys Picture © Paul Hemming
  • 7. © ECOFYS | | Use Example: Insulated houses 26/06/2014 Annemarie Kerkhof Insulation material Material acquisition Production End-of-life Material acquisition UseProduction End-of-life House Emission reduction enabled by insulation material Construction sector Chemical company Picture © Erwin Wodicka
  • 8. © ECOFYS | | Example: Fuel-efficient ball bearings 26/06/2014 Annemarie Kerkhof Fuel-efficient ball bearing Material acquisition UseProduction End-of-life Wind mill Ball bearing reduces friction which enables higher energy production Wind farm Company producing ball bearings Use Material acquisition Material acquisition ProductionProduction End-of-lifeEnd-of-life Picture © Ecofys
  • 9. © ECOFYS | | Terminology > The term “Avoided emissions” was introduced in the GHG protocol Scope 3 Corporate Value Chain (Scope 3) Accounting and Reporting Standard of WRI (World Resource Institute) and WBCSD (2011) > “Climate Positive Products” refer to the same concept and is used in the WWF Climate Savers Program > “Enabling effect” is used in the report of GeSI (2008) > The term “Scope 4” is also sometimes used to refer to avoided emissions (Ecofys, 2012) 26/06/2014 Annemarie Kerkhof
  • 10. © ECOFYS | | Why communicating about avoided emissions? 26/06/2014 Annemarie Kerkhof Benefits of communicating avoided emissions • Marketing of products. Emission savings (and cost savings) is a feature of the product in addition to quality and price • Differentiate from competitors by communicating the total amount of avoided emissions related to the company’s green product portfolio • Raising awareness at value chain partners, stakeholders and policy makers Use Product X Material acquisition Production End-of-life Material acquisition UseProduction End-of-life Product A Company A Solution provider Emission reduction enabled by product X
  • 11. © ECOFYS | | Example SKF > BeyondZero from SKF: http://www.beyondzero.com/ 26/06/2014 Annemarie Kerkhof
  • 12. © ECOFYS | | Example Dutch Telecom Company KPN > Easy to communicate and interactive web-based tool: http://www.kpnbespaarmeter.nl/ 26/06/2014 Annemarie Kerkhof
  • 13. © ECOFYS | | Example of Goodyear > Goodyear: fuel-saving calculator http://www.goodyear.com/en- US/tires/assurance-fuel-max 26/06/2014 Annemarie Kerkhof
  • 14. © ECOFYS | | How to calculate avoided emissions? 26/06/2014 Annemarie Kerkhof Use Product X Material acquisition Production End-of-life Material acquisition UseProduction End-of-life Product A Emission reduction enabled by product X Company A Calculating avoided emissions • Based on Life Cycle Assessment (LCA) • Difference between the life cycle GHG emissions from two alternative solutions for achieving the same user benefit • Methodological challenges: • Choice of reference situation/baseline • Uncertainty in future developments • Distribute benefits among value chain partners • Include multiple environmental impacts Solution provider
  • 15. © ECOFYS | | Standards & Guidelines > Credibility of results is highly important > Standards and guidelines have been developed to avoid green washing 26/06/2014 Annemarie Kerkhof ICT (GeSI) Chemical sector (WBCSD/ICCA)
  • 16. © ECOFYS | | Guidelines WBCSD & ICCA > Developed by 20 leading chemical companies and under the umbrella of WBCSD and ICCA, and supported by Ecofys > Developed between July 2012 and June 2013 > Published on October 14, 2013 at http://www.icca- chem.org/avoidedemissions and http://www.wbcsd.org/chemicals.aspx > Seek to improve comparability and credibility in measurement and communication of avoided emissions 26/06/2014 Annemarie Kerkhof
  • 17. © ECOFYS | | Methodological issues addressed in the guidelines 1. Selection of the baseline 2. Uncertainty in future developments 3. Attribution of avoided emissions to value chain partners 4. Simplified calculation methodology 5. Inclusion of multiple environmental impacts 26/06/2014 Annemarie Kerkhof
  • 18. © ECOFYS | | Use 1. Selection of the baseline: issue 26/06/2014 Annemarie Kerkhof Product X Material acquisition Production End-of-life Material acquisition UseProduction End-of-life Product A Company A Solution provider Use Material acquisition Production End-of-lifeBaseline Baseline: • Old product • Product with same function in the market with high sales volume • Industry average
  • 19. © ECOFYS | | 1. Selection of the baseline: guidelines > Guidelines WBCSD & ICCA: first decide at what level in the value chain the study focuses: – Chemical product level: reduction in emissions of a product relative to an alternative (chemical) product or the industry average – End-use level: contribution of chemical product to emissions avoided by the use of a certain low-carbon technology, relative to the currently implemented (mix of) technologies 26/06/2014 Annemarie Kerkhof
  • 20. © ECOFYS | | 1. Selection of the baseline: guidelines 26/06/2014 Annemarie Kerkhof Example: Different levels in the value chain of wind electricity generation and relevant alternatives that satisfy the same user benefit
  • 21. © ECOFYS | | 1. Selection of the baseline: guidelines > Solutions to be compared shall: – Be at the same level in the value chain – Deliver the same function to the user – Be used in the same application – Be distributed/used on the market, and not in the process of being banned, in the reference time period and geographic region. – For the solutions to be compared at a specific level in the value chain this implies: ● If the study is conducted at the chemical product level any alternative established product(s) with a high (combined) market share, based on sales volume in the reference year, shall be used. A sufficiently high market share is normally considered to be 20% and above. ● If the study is conducted at the end-use level, the weighted average based on shares of all currently implemented technologies for the same user benefit (including the studied end-use solution to which the chemical product contributes) shall be used. – Be exchangeable for the typical customer in the selected market in terms of quality criteria – Be as consistent as possible with the solution of the reporting company in terms of data quality, methodology, assumptions etc. 26/06/2014 Annemarie Kerkhof
  • 22. © ECOFYS | | 2. Uncertainty in future developments: issue > For some products the use phase can be very long, e.g. the use phase of a building can be 50 years, the use phase of a wind mill can be 20 years > Future uncertainties include changes in energy-efficiency, energy mix, end-of-life treatment and user behavior, which can change the estimated avoided emissions 26/06/2014 Annemarie Kerkhof Use Material acquisition Production End-of-life Product A Company A Use Material acquisition Production End-of-lifeBaseline Takes place in future years, possibly >50 years Takes place in past or present
  • 23. © ECOFYS | | 2. Uncertainty in future developments: guidelines > Guidelines WBCSD & ICCA: – First calculate the baseline that assumes no future changes (i.e. use latest actual data) – For products with a long use phase, e.g. more than 10 years, the reporting company should provide a qualitative scenario analysis, explaining how each key parameter might change in the future and how this influences the calculated avoided emissions. – Instead of performing a qualitative analysis, the reporting company may calculate an alternative scenario using a discount factor. 26/06/2014 Annemarie Kerkhof
  • 24. © ECOFYS | | Use 3. Attribution of avoided emissions to value chain partners: issue 26/06/2014 Annemarie Kerkhof Additive for car tires Material acquisition Production End-of-life Material acquisition UseProduction End-of-life Car Car manufacturer Chemical company Car tires Material acquisition UseProduction End-of-lifeTyre manufacturer How to attribute avoided emissions to value chain partners? Important to avoid double counting.
  • 25. © ECOFYS | | 3. Attribution of avoided emissions to value chain partners: guidelines > The reporting company must clarify its role in realizing the avoided emissions in the value chain, by using the table below: 26/06/2014 Annemarie Kerkhof
  • 26. © ECOFYS | | 3. Attribution of avoided emissions to value chain partners: guidelines > The reporting company shall report total emissions avoided along the complete value chain and > shall report the significance of the contribution of its product to the end-use solution according to the functionality approach as presented in the table of the previous slide. > In addition, the reporting company shall describe the specific role of its product in such a way that the reader understands how it is related to the GHG emission avoiding function of the end-use solution. 26/06/2014 Annemarie Kerkhof
  • 27. © ECOFYS | | 4. Simplified calculation: issue > Limited data availability with regard to end-use solutions such as a house or an automobile. > The solutions to compare might have identical phases or processes in their life cycles that contribute equal amounts of GHG emissions to each solution. 26/06/2014 Annemarie Kerkhof
  • 28. © ECOFYS | | 4. Simplified calculation methodology: guidelines > Whenever possible, the full life cycle should be considered when calculating avoided emissions, in order to comply with the requirements of ISO 14044. > Simplified approach omits identical parts or processes in the life cycle of the solutions to be compared 26/06/2014 Annemarie Kerkhof GHG emissions expressed in CO2e/functional unit
  • 29. © ECOFYS | | 5. Inclusion of multiple environmental impacts: issue > The guidelines focus on GHG emissions, while other environmental impacts can be important as well. > Trade-offs can take place when at the same time GHG emissions are reduced while other environmental impacts are increased. > Ideally, avoided emissions accounting takes all life cycle impact categories into account. 26/06/2014 Annemarie Kerkhof GHG emissions Other environmental impacts, e.g. water depletion, toxicity
  • 30. © ECOFYS | | 5. Inclusion of multiple environmental impacts: guidelines > If a full LCA study is not possible initially, companies may start with an analysis restricted to greenhouse gases as a first step > The reporting company shall check if trade-offs with other environmental impacts exist by doing a screening LCA > If trade-offs are identified, the reporting company shall report on these environmental impact categories in the same way as it reports on GHG emissions and should consider not reporting avoided emissions at all. 26/06/2014 Annemarie Kerkhof
  • 31. © ECOFYS | | Use of the Guidelines of chemical sector > The guidelines aim to improve comparability and credibility of communication on avoided emissions enabled by chemical products > Recommended to be used by all chemical companies globally and interested stakeholders > Consistent reporting will increase the credibility of the entire chemical industry as a solution provider for climate change mitigation > Should be regarded as a first global effort and not as final guidelines > Fair reporting needs coordination with value chain partners: feedback on the guidelines from value chain partners and others highly welcomed 26/06/2014 Annemarie Kerkhof
  • 32. © ECOFYS | | Sectors with potential for avoiding emissions 26/06/2014 Annemarie Kerkhof Number NACE 1 Chemicals and chemical products 2 Renting of machinery and equipment and O. 3 Electricity, gas and water supply 4 Electrical and Optical equipments 5 Manufacturing n.e.c.; recycling 6 Post and Telecommunication 7 Rubber and Plastics 8 Construction 9 Machinery and Equipment n.e.c. 10 Other supporting and Auxiliary Transport Ac. Source: Ecofys, 2012
  • 33. © ECOFYS | | Conclusions > Strengths Focus on solutions instead of focusing on reducing problems. It can be an incentive for companies to start thinking of innovative low-carbon solutions. > Weaknesses Without proper standardization there is a risk of green washing. An international standard may increase the credibility of avoided emissions values. 26/06/2014 Annemarie Kerkhof
  • 34. Annemarie Kerkhof Senior consultant Kanaalweg 15-G | 3526 KL Utrecht | The Netherlands T: +31 (0)30 662 3047 M: +31 (0)6 21469834 E: a.kerkhof@ecofys.com I: www.ecofys.com