Carbon Ready Procurement III C a r b o n R e a d y

Background Carbon Ready is working with a number of different organisations to reduce their carbon footprint. Many organisations have calculated their internal/direct carbon footprint but are becoming aware of the external/ indirect emissions arising through the supply chain. The Carbon Disclosure Project has been highly successful in reporting direct emissions but organisations are struggling to report indirect (‘scope 3’) emissions accurately. ‘Green’ procurement can help reduce emissions in two ways: offering goods that have been manufactured, delivered and can be recycled/disposed of with low environmental impact identifying goods that will reduce emissions in use, this will have a direct affect on costs in terms of energy consumed and associated carbon taxes

C a r b o n R e a d y Key Legislation – the Carbon Reduction Commitment Mandatory emissions trading scheme focusing on large non-energy intensive organisations: – minimum electricity consumption of 6000MWh; equivalent to >~£500k spend – up to 10,000 organisations (and many more sites) – minimum cash outflow will be £38,000 in April 2011 – typical organisations include, universities, local authorities, hotel and retail chains, banks – excludes those covered by the EU ETS and CCAs, (refineries, power stations, steel mills, etc.) Organisation based scheme, including direct and indirect emissions – ultimate UK parent responsible for all subsidiaries emissions; including electricity and other direct fuel use Simple and revenue neutral design – government refer to it as ‘light touch admin’ – auction style, with proceeds recycled to participants Roll out Phase 1: Learning Phase April 2010 – March 2013 Phase 2: First Capped Period with Auction April March 2016

C a r b o n R e a d y Key Dates: 2008 – benchmark year, suppliers monitored how much energy was consumed Up to April 2010 – this is a key time for consumers to ‘get ready’ (inc. purchasing efficient equipment) Then every year: April 2010 – April 2011 – first year of scheme where your consumption will be compared with 2008 April 2011 – consumers pay for allowances for 1 st and 2 nd year of scheme (~ 20% of energy bill) April 2011 – April 2012 second year of scheme July 2011 – consumers report their carbon footprint to the Environment Agency October 2011 – good performers receive rebate and performance reported in national press repeats until April then.... Instead of allowances being fixed at £12/tonne a limited number are issued and consumers trade between themselves. Experts predict allowances could hit £90/tonne (equivalent to double the cost of energy at today’s rates), however current EU trading system collapsed after permits were over issued.

C a r b o n R e a d y Calculating cost and footprint of goods Consumption (given by manufacturer) Typical annual usage (customer decides) Annual Consumption (sometimes typical figures given by manufacturer) Cost (customer inputs cost of energy, say 10p/unit) CO2 (UK electricity 1 unit produces 537g of CO2) Light bulb20W 10 hours per day 3650 hours per year 3650 x 20 = 73 kWh£ kg Soldering Iron 25W5 hours per week 25 x 5 x 52 = 6.5 kWh 65p3.49 kg Fridge 125W (but compressor doesn’t run constantly) All the time 149 kWh per year£ kg PC 10W on standby 200W in use 14 hours on standby 10 hours in use (10 x x 10) x 365 = 781 kWh £ kg These figures are usually given in the technical specification

C a r b o n R e a d y Examples indirectdirect ream of paperManufacturing a ream of paper emits 5.2 kg of CO 2 *. Carbon Ready has found there to be significant variation in this figure according to how and where it was produced and delivered. Producing and transporting using French nuclear electric is much lower than using UK electricity and diesel transportation from Scotland. There is negligible emissions arising from the use of paper. Obviously, it should be recycled and not burned and used on both sides, but these are operational issues. lab fridgeThe manufacture and delivery of fridges is small compared to the emissions associated with the energy they consume. They are made to high-quality standards and mass shipping from Asia is quite efficient. A fridge uses electrical energy which is expensive and creates emissions. There is variation in efficiency and buyers need to make decisions such as ‘2x large fridges or 8x small fridges’ *

C a r b o n R e a d y Developing Useful Carbon Metrics indirectdirect ream of paper5.2 kg CO2 per itemneg lab fridgeneg1.2 kWh per day (typical)

C a r b o n R e a d y Organisation Specific Data Required More data will be required to enable users to compare the emissions and costs of their purchasing decisions: cost per kWh of energy - 10p /kWh CO 2 emissions per kWh of energy – 530g of CO 2 per kWh cost of CO 2 emissions (if they are part of the carbon tax schemes, CRC or EU ETS) - £12 per tonne of CO 2

C a r b o n R e a d y Automating the Lifecycle Calculations for Buyers indirectdirect5 year energy cost 5 year carbon costTotal Cost fridgeneg 1.2 kWh per day = 1.2 x 0.1 x 5 x 365 = £219 = 1.2 x x 5 x 365 = 4100 kg CO2 4.1 x £12 = £49 £268 energy efficient fridge neg 0.8 kWh per day = 0.8 x 0.1 x 5 x 365 = £146 = 0.8 x x 5 x 365 = 2800 kg CO2 2.8 x £12 = £34 £180

C a r b o n R e a d y Reporting Supply Chain Emissions indirectdirectTotal Qty Purchased Carbon emissions ream of paper 5.2 kg CO2 per item neg kg CO2 low carbon ream of paper 4.2 kg CO2 per item neg kg CO2 Total emissions9400 kg CO2

C a r b o n R e a d y Summary Providing carbon and energy data associated with suppliers will: enable buyers to quickly evaluate the lifecycle costs associated with products and make ‘green’ purchasing decisions rapidly will enable a more accurate contribution to ‘scope 3’ emission reporting across the supply chain

C a r b o n R e a d y Further thoughts Although reducing indirect emissions (supply chain) is discretionary large organisations often prefer to buy a low-carbon footprint than change the way they operate Carbon labelling and information is set to become more commonplace: