Taking steps to limit liabilities

18 December, 2009

In 2008, the UK Government made a commitment to reduce 80% of greenhouse gas (GHG) emissions by 2050. Large greenhouse gas emitters, such as the cement, glass and oil refinement industries already fall under the European Union Emissions Trading Scheme (EU ETS). However, for the UK to hit this target and ease the transition towards a low carbon economy, the Government is introducing other emission reduction programmes and initiatives, such as the Carbon Reduction Commitment (CRC).

This scheme will annually rank companies in a publicly accessible league table; companies will then receive a bonus or penalty dependent on its position in this table. As a result, if a company does not start to address its internal emissions, it could suffer financial penalties.

A poor league table position could also be detrimental to a company’s reputation. Companies appearing at the lower end of the league table may be publicly criticised for not actively fighting climate change. They could also face losing clients to competitors that appear higher up the table or even fail to retain sponsorship or partnership deals.

Climate change isn’t going away, and as well as the impending regulations and subsequent risks to a company’s reputation, there is also the threat of weather warnings, rising sea levels and natural disasters. These events will only increase liabilities such as the price of already costly insurance premiums or damage caused to company premises due to flooding or erosion.

To overcome these issues a company needs to implement a robust carbon management strategy that effectively reduces internal emissions. The good news is that there are many options available to help. So, where can industrial companies reduce their emissions, and how can they optimise their results?

Almost any aspect of a company’s operations can lend itself to being more efficient, but in order to optimise these efficiencies it’s important to establish a ‘carbon footprint’ strategy. A good understanding and accurate inventory of a company’s GHG emissions will help identify and target ‘hotspots’ throughout the operations, and allows a company to benchmark its progress in reducing these emissions.

Some abatement measures are deceptively simple and cost little to implement, such as placing timers on all lighting and heating appliances, making sure doors to refrigerated areas are kept closed and even keeping tyres on freight vehicles well inflated. Under-inflated tyres reduce gas mileage by 3%, which translates to an extra 20 pounds of CO2 per gallon. Additional savings can be made by upgrading to energy efficient compact fluorescent lighting, more efficient boilers and variable rather than fixed speed motors. It’s also worth examining the packaging requirements; optimal utilisation of space within packaging and boxes made from eco-materials can reduce warehouse packaging usage by up to 20%. Averaged across the supply chain, a reduction of one pound of cardboard can equal one less pound of CO2.

On a larger scale, electronic facilities systems can control electricity usage throughout their premises. For example, Paul Fabrications, a manufacturer of precision components for aerospace, defence and power generating industries, has invested in a new business management system that automatically controls lights, process lines and robot welders, bringing an approximate 45% reduction in electricity consumption. It has also invested in purchasing more efficient machinery, which consumes 50% less electricity in comparison to its older machines, as well as having a higher product yield.

For companies who want to go a step further, on-site power generation through renewable energy technologies (RETs), e.g. wind turbines, photovoltaic solar panels or biomass boilers, should also be considered. Recycled production waste such as waste heat or biomass can provide a free and sustainable fuel source.

It is also worth remembering that many of these measures will only provide optimal savings if other, non-technical, measures are implemented such as educating colleagues and employees on the need to conserve energy by turning off lights, computers and machinery when not in use. BT has engaged staff by setting up a climate change taskforce supported by senior directors, as well as establishing a number of employee-run ‘Carbon Clubs’ which work to engage employees in reducing their personal environmental footprints.

Climate change risks can be mitigated by assessing a company’s internal emissions and ensuring a robust carbon management strategy is implemented. This provide opportunities, not only from government bonuses and public recognition, but also from creating initiatives that offer internal rates of return leading to long-term benefits in reduced operational expenditure and energy costs.

EcoSecurities is currently developing over 400 projects around the world, which use a variety of emission reducing technologies, including renewable energy, agriculture and urban waste management, industrial efficiency and waste gas capture.