Exergy Consortium Carbon Footprint Calculation

Going green, first step Carbon Footprint Methodology & Case Studies

Exergy – An Overview Operations Exergy is a technology & management company with a vision to solve global environmental issues. Solutions Carbon Clean Tech; Carbon & Energy Management; Carbon Neutral Branding Alliances Governments, Research Institutions & Partners for global scaling. Clients Power Plants, Oil Companies, Cement Producers, Iron & Steel Producers and others…

Key messages GHG reporting and verification is a journey  Much of the non-financial data has never been verified and is not robust  Our expectations are that “Greenwash” claims will increase  In the midst of the challenge lies opportunities to reduce emissions and costs  3 Carbon Footprint - Methodology & Case Studies

Introduction  Measuring carbon footprint is a journey that takes companies well beyond the core process of calculating GHG emissions. The following case studies illustrate two major phases of carbon footprinting describing the implementation of a roadmap to measure emissions and the verification process Some Drivers  • Pressure on businesses to be seen to act positively on climate change. • Stakeholders are already holding companies accountable for their ‘carbon footprint.’ • Becoming a key measure of performance. It‟s also increasingly becoming, a critical factor in both competitive tenders and consumer buying decisions. • Commercial drivers make it imperative to put action on climate change at the heart of business strategy. • Helps prepare for NZ ETS regulatory environment and its direct (reporting/trading obligations) and indirect (carbon cost) impacts 4 Carbon Footprint - Methodology & Case Studies

Contents Case Study 1: Measurement 1. Indentify Scope and Sources 2. Select Measurement Approach 3. Collect Activity Data 4. Apply Calculation Tools Optional: Third Party Suggestions Case Study 2: Review 5. Independent Verification 6. Consolidate into Corporate Inventory 7. Implement Improvement Suggestions Outcomes & Benefits 5 Carbon Footprint - Methodology & Case Studies

Case Study 1 Roadmap to measurement Measurement stages of the GHG calculation and indentification process 1. Identify scope 7. 2. and sources Implement Select a improvement measurement suggestions approach Business 6. Consolidate 3. activity into Collect activity creates corporate inventory data emissions 4. 5. Apply calculation Independent tools verification 7 Carbon Footprint - Methodology & Case Studies

Case Study 1 Roadmap to measurement Background  The company has been measuring and reporting it‟s carbon footprint in the past but has more recently moved towards more general sustainability reporting. As part of its commitment to sustainability the organization has been reviewing its carbon inventory calculation approach.  Consultants were engaged to review, discuss and standardize (ISO; GHG Protocol) existing carbon footprint and make recommendations for future iterations. Intent  Enhancing the credibility of the existing inventory, and presenting a pathway to enable the 2008/2009 financial year carbon inventory to be reviewed against the requirements of ISO 14064-1 “Specification with guidance at the organizational level for quantification and reporting of greenhouse gas emissions and removals”; and to enable a limited assurance audit to be undertaken in the 2008/2009 financial year. 8 Carbon Footprint - Methodology & Case Studies

Case Study 1 Roadmap to measurement 1 – Identify scope and sources  Organisational Boundaries: choose between control based approach and equity share based approach to determine organisation‟s boundaries  Operational Boundaries: identify emissions associated with operations (either direct or indirect)  Scope: categorize scope and sources • scope 1 = direct emissions • scope 2 = indirect emissions • scope 3 = „sphere of influence‟ (NB: mandatory reporting but inclusion on a case by case basis)  Baseline: chose a baseline year (NB: usually first reporting year) 9 Carbon Footprint - Methodology & Case Studies

Case Study 1 Roadmap to measurement 2 – Select a measurement approach  The amount of C02e should be calculated by multiplying the activity data sourced by the organisation by the relevant emission factors  The sources of relevant data and the emission factors which have been used should be presented as such: Emission or Data Collection Emission Factor Source Reporting Removal Unit Factor of Status & Scope Source (tonnes of C02) 10 Carbon Footprint - Methodology & Case Studies

Case Study 1 Roadmap to measurement 3 – Collect activity data  Activity data examples: - Bills and invoices - Quantity of items procured to determine tonnage consumed - Number of cars in fleet - Litres of fuel procured - Taxi kilometres travelled - Distance between office and nearest postal centre - Distribution Loss factors - Significant emissions caused by contractors 11 Carbon Footprint - Methodology & Case Studies

Case Study 1 Roadmap to measurement 4 – Apply calculation tools  ISO is explicit on selecting or developing calculation approaches, GHGP refers to calculation tools that WBCSD/WRI have also developed.  These tools provide step-by-step guidance and electronic worksheets to help users calculate GHG emissions from specific sources or industries (cross-sector and sector- specific calculation tools are available)  In agreement to relevant standards, accreditation or verifying bodies use customized sets of tools to help calculate emissions (e.g. carboNZero uses encourages to use E- manage developed by Landcare) 12 Carbon Footprint - Methodology & Case Studies

Case Study 1 Roadmap to measurement Optional: third party suggestions  Measuring the carbon footprint of a company involves processes and data that have never been verified. In order to minimize errors as follow are a few suggestions made to the client to accompany the measurement roadmap: • Conduct a carbon inventory gap analysis • Conduct an applicability test on all inventory decisions as per ISO 14064-1 requirements and maintain an audit trail. • Develop a linked spreadsheet that references all data sources used and methodologies for calculations • Implement a standardised reporting format (NB: in this case the ISO 14064-1 format) • Hire consultant when data is difficult to measure 13 Carbon Footprint - Methodology & Case Studies

Case Study 2 Review Process Review stages of the GHG calculation and indentification process 1. Identify scope 7. 2. and sources Implement Select a improvement measurement suggestions approach Business 6. Consolidate 3. activity into Collect activity creates corporate inventory data emissions 4. 5. Apply calculation Independent tools verification 15 Carbon Footprint - Methodology & Case Studies

Case Study 2 Review Process Background  The company has been measuring and reporting its carbon footprint and has more recently moved towards full monitoring across the company. As part of its commitment to full monitoring, the entity has been reviewing its carbon inventory calculation approach.  Deloitte was engaged to conduct a review of the Greenhouse Gas (GHG) Inventory. Intent  This inventory was intended as the first verifiable step towards establishing the company‟s carbon footprint, and introducing programs to manage that footprint. The intention is that a similar inventory will be produced and verified on an annual basis. Systems and processes to gather and report emissions are intended to be a normal part of how the organization does business 16 Carbon Footprint - Methodology & Case Studies

Case Study 2 Review Process 5 – Independent verification  This review consisted primarily of enquiry, analytical procedures and discussions, in accordance with the Review Engagement Standards issued by The New Zealand Institute of Chartered Accountants (ISAE 3000 equivalent) and the requirements of ISO 14064-1 and ISO 14064-3.  Main Steps: • Approach to the project: discuss the background to the calculations, key assumptions in creating the footprint and any perceived risk areas. • Observations: outline an overview of remarks relating to the existing carbon inventory. • Discussion: organization is likely to have obligations under the emissions trading scheme, which will include collecting data and information to calculate businesses‟ greenhouse gas emissions (regulation en method laid out in the Climate Change Response Act). 17 Carbon Footprint - Methodology & Case Studies

Case Study 2 Review Process 6 – Consolidate into corporate inventory  A core issue in retrieving information from environmental report s until now has been the difficulty of making „corporate sense‟, in part because these non-financial data have never been verified before. It is necessary to apply a certain logic and newly available tools. • Incorporate regional or business unit inventories into one corporate inventory • Follow the reporting format outlined by the ISO 14064-1 • Or, GHG Protocol: Corporate Accounting and Reporting Standard • Ultimately, adopt GRI‟s reporting framework (G3)  The goal is to provide business with information that can be used to build an effective environmental strategy into business as usual operations; 18 Carbon Footprint - Methodology & Case Studies

Case Study 2 Review Process 7 – Implement improvement suggestions  Based on review outcomes  Look to integration of GHG measurement and reporting into business operations  Corporate dashboard allocation and reporting  Offset or intervene and reduce (Emission Management Plan)  Push incentives to contractors and suppliers 19 Carbon Footprint - Methodology & Case Studies

Case Study 2 Review Process Benefits  Whereas there is a certain difficulty in assessing financial impacts of non-financial environmental performance data, managing carbon emissions undeniably leads to valuable benefits:  Intangible benefits • Competitive positioning • Improved shareholder relationship • Brand enhancement • Employee related benefits  Tangible benefits • Cost saving • Legislative drive • Increased revenue • Certification 20 Carbon Footprint - Methodology & Case Studies

Emissions Reductions – Practical steps – Organisation 1 • 4 year reduction plan aligned to Sustainability Plan launched in November 2008 • Target of 15% reduction in total emissions on the current FY08 base year • Actions planed to be undertaken as part of „business as usual‟ expense budgets. • Reducing emissions from vehicle use (new fleet, and fuel efficiency), savings of $2.2m over four years • Other travel savings estimated to be $660,000 p.a.  Challenge need for travel  Encourage video conferences  Air conditioning replacement  Power saving initiatives  Include hybrids and diesels in fleet  Closer monitoring of vehicle fuel usage  Doubled sided printing mandated  Improve monitoring of courier use  Improve branch insulation  Work with suppliers by understanding what they are doing to reduce emissions 21 Carbon Footprint - Methodology & Case Studies

Emissions Reductions – Practical steps – Organisation 2 • Precise plan laid out for the year 2008 along with targets up to 2011 • Objective is to ensure that growth in operations outstrip growth in emissions • Overall target of 7.6% reduction in operational emissions in the plan period. • Initiatives articulated for each emissions targets • Some different practical steps........ Encourage „ride sharing‟   Energy audits for entity premises  Organise energy saving campaigns  Optimize waste and recycling systems  Launch sustainable procurement campaign 22 Carbon Footprint - Methodology & Case Studies

www.exergyconsortium.com Contact: info@exergyconsortium.org +91-9378268349 23 Carbon Footprint - Methodology & Case Studies

Exergy Consortium Carbon Footprint Calculation

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