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Carbon Accounting in Small and Medium Sized Enterprises | Rachel Dunk & Lisa Gibson
1. Carbon Accounting in Small and
Medium Sized Enterprises
Chaired by:
Rachel Dunk Lisa Gibson
Academic Director Research Assistant
Crichton Carbon Centre Crichton Carbon Centre
1
2. Outline/Objective of workshop
Welcome and introductions
Scene setting presentations
– What is a SME?
– Standards and methodologies
Key questions
Wrap up and Close
Lunch
3. About ICARB
ICARB: The Initiative for Carbon Accounting
Sponsored by the Scottish Government
A group of stakeholders (industry
representatives, politicians, academics, consultant
s, public, private and third sector) working
together to create a set of transparent, consistent
and accurate rules for carbon accounting across
the Scottish economy
Resource base at www.icarb.org
4. Objectives...
Form and shape a SME Stakeholder group
Make the first steps in developing the SME carbon
accounting rule book
– SME categories
– Which scope 3 emission sources?
Identify next steps/points for future discussion
7. Definition...
“The category of micro, small and medium-sized
enterprises (SMEs) is made up of enterprises which
employ fewer than 250 persons and which have an
annual turnover not exceeding 50 million
euro, and/or an annual balance sheet total not
exceeding 43 million euro.”
2003/361/EC, Article 2
8. SME categories
OR Annual
Enterprise Annual
Headcount Balance
Category Turnover
Sheet Total
Medium <250 ≤ €50 million ≤ €43 million
Small <50 ≤ €10 million ≤ €10 million
Micro <10 ≤ €2 million ≤ €2 million
9. Why SMEs...?
number of enterprises business-related emissions
15. What…
“The total set of greenhouse gas
emissions caused directly and
indirectly by an
individual, organisation, event or
product”
Carbon Trust
16. The purpose of C accounting in SMEs...
To enable accurate emissions reporting?
If accurate emissions reporting is required, then we need a
rigorous approach that complies with relevant guidelines &
standards.
&/or
To provide information for carbon management?
If for internal carbon management a less rigorous approach that
provides management level information and allows identification
of lowest hanging fruit may prove sufficient.
17. The purpose of C accounting in SMEs...
Provides baseline information that enables:
Reporting of emissions
Mandatory
Voluntary
Comparison to benchmark standards
e.g. Office energy efficiency
Correct identification of emission reduction targets
Savings
No Cost
Low Cost
Level against which future performance is measured
Quantify emissions abatement achieved
Project reporting
18. International Standards
The Greenhouse Gas Protocol
– www.ghgprotocol.org
ISO 14064 Climate Change Standard
– www.iso.org
19. UK Voluntary Reporting
UK Government Recommendation:
Guidance on how to measure and report your greenhouse gas
emissions
In combination with:
Guidelines to Defra/DECC’s GHG Conversion Factors for
Company Reporting
www.defra.gov.uk/environment/business/reporting/index.htm
20. 3 to 5 Step Process
Define the boundaries
1
Collect the activity data
2
Calculate emissions & total footprint
3
Independent verification (optional)
4
Public reporting (optional)
5
21. Boundary setting
ORGANISATIONAL OPERATIONAL
Q: What do you own/control? Q: What are you including?
identify ALL emissions
within organisational
Equity Control boundary & then select
Share Approach which to include
Scope 1 & Scope 2
Financial Operational
This is your consolidation approach
Scope 3 ?
22. Boundary Setting
Within Companies Control
Footprint Assessment
Boundary
Other business Purchased Company Waste disposal
travel electricity vehicles petrol & recycling
Staff Gas Company Water supply &
commuting consumption vehicles diesel treatment
23. The Sources – Scope 1, 2 & 3
Scopes improve transparency & prevent double counting of emissions for GHG programs
The GHG Protocol requires reporting of Scope 1 & Scope 2 as a minimum
Source: GHG Protocol – A Corporate Accounting & Reporting Standard, Revised Edition
24. The Sources – Scope 1, 2 & 3
Scope 1: Direct GHG emissions from sources that are owned or controlled by the
company.
• e.g. emissions from combustion in owned or controlled boilers, furnaces and vehicles (combustion
of biomass is reported separately). Process emissions and fugitive emissions are also Scope 1.
Scope 2: Energy Indirect GHG emissions from purchased electricity, heat steam &
cooling consumed by the company.
Scope 3: Other indirect GHG emissions (optional for the GHG protocol
discretionary in UK Govt guidance)
• arise as a consequence of the activities of the company, but occur from sources not owned or
controlled by the company.
• both the upstream & downstream supply chains
• e.g. extraction, production of purchased materials, transportation of purchased fuels, use of sold
products and services, waste disposal, employee travel to and from work, employee business travel.
Others: Emissions of other GHGs not included in the Kyoto Protocol (optional
for the GHG Protocol, include if material in UK Govt guidance)
• e.g. CFCs (regulated by the Montreal Protocol), NOx
Source: GHG Protocol – A Corporate Accounting & Reporting Standard, Revised Edition
25. The Sources – Scope 1, 2 & 3
An approach often taken is to tackle the easiest
emissions to quantify first (Scope 1 & Scope 2) –
developing a more detailed approach at a later date
(e.g. Scope 3 - examining the supply chain).
HOWEVER – an analysis limited to direct and indirect
energy emissions may account for only a small
fraction of an entities total carbon footprint.
Developing a carbon management plan based on
limited information could be worse than useless.
26. Which Scope 3 Sources? ISO 14064-1
The organization may quantify other indirect GHG emissions based
on requirements of the applicable GHG programme, internal
reporting needs or the intended use for the GHG inventory.
The organization may exclude from quantification direct or indirect
GHG sources or sinks whose contribution to GHG emissions or
removals is not material or whose quantification would not be
technically feasible or cost effective.
The organization shall explain why certain GHG sources or sinks are
excluded from quantification.
Materiality: concept that individual or an aggregate of
errors, omissions and misrepresentations could affect the
greenhouse gas assertion and could influence the intended users’
decisions
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27. Which Scope 3 Sources? Defra/DECC
Small Business User Guide
Water supply/waste water disposal
Waste disposal/recycling
Business travel
Staff commuting
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28. Which Scope 3 Sources? Carbon Trust
Carbon Trust - Baseline Tool for SMEs
pilot – being trialled in 2011/12
Water
Waste (general mixed – no breakdown)
Business Travel
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29. What is a tiered methodology
In the IPCC GPG, there is a hierarchy of
estimation methods – Tier 1, Tier 2 and Tier 3
methods – with Tier 1 being the simplest
(highest uncertainty) and Tier 3 being the most
complex (greater confidence).
This approach is also evident in Defra/DECC
guidance – which provides basic guidance on
how to estimate emissions from some sources
in absence of complete data sets.
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30. What is a tiered methodology
Tier 1: simplest - equations and default
parameters provided - e.g. Scotland specific...
Tier 2: as Tier 1 but higher temporal and spatial
resolution – more disaggregated data – e.g.
Region specific...
Tier 3: higher order methods – based on high
quality activity data (in combination with
modelling) – e.g. Enterprise specific...
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32. Discussion Groups
Neil Kitching Osbert Lancaster Andrew Millson
Matthew Aitken Rob Carlow John Crawford
Samuel Chapman George Foster Norman Hutcheson
David Crawford Lowellyne James Reza Kouhy
Ahmad Foruzan Iain McMickan Matthew Lawson
Mary Goodman Jim Robinson Hiroyuki Murakami
Dave Gunn Jessica Russell Sue Roaf
Sheila Scott
33. Q1: Boundaries and sub-categories
1. Size and turn-over based classification systems
– Are different guidelines needed for different sized enterprises? If
so, what are the appropriate size classifications?
2. Organisation type (SME or SMO?)
– Can the same rules be applied to for profit/not-for-profit/charitable/
social enterprises/organisations?
3. Can a single rule set be applied to all 18 SME
sectors, or will different guidance (e.g. which scope
3’s to include) be required?
– Please group the 18 SME sectors into the number of sub-groups that
you think most appropriate (anywhere from 1 to 18...)
34. Q2: Scope 3 Sources
1. For the sub-categories formulated by your group
– Identify the significant scope 3 sources
– Do you think inclusion of these sources should be recommended or
required (shall/may)?
– Can you identify any standard data sets/methodologies/tools used in
estimating emissions from these sources (e.g. the ICE database for
embodied C of building materials)
– What other data sets/tools would it be essential/useful to have in
order to enable a tier 1 type method to be developed/applied?
2. Do you think it would it be better to provide tiered
methodologies and leave it to each SME to decide
which tier to use, or to set out the minimum tier that
should be used by SME sub-category?