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Some businesses waste more than £1m a year on excess energy, carbon trading trial finds
A PIONEERING carbon trading programme in Yorkshire has revealed some businesses are wasting more than a £1m a year on excess energy and would face six figure fines under future legislation.
The carbon trading trial is being co-ordinated by CO2Sense, a subsidiary of regional development agency Yorkshire Forward, to prepare both the private and public sectors for the Carbon Reduction Commitment which, from April next year, will offer incentives to organisations to reduce their emissions.
Organisations will eventually have to buy their annual carbon emissions. They will be placed in a league table and will receive financial incentives or penalties depending on where they are in that table at the end of 12
months.
If they are producing less carbon than they paid for, they can sell the excess to other companies who are producing more than they predicted and want to avoid the fines for finishing at the bottom of the table.
The simulation being run in Yorkshire – the only one in the country to involve the public sector alongside the private sector – involves 44 organisations and has revealed potential major financial benefits, not only in terms of energy savings and incentive payments but also in the secondary market of trading excess carbon.
Pete Stevens, of CO2Sense, believes that reputation will also be a powerful incentive for certain companies – for example supermarkets competing with each other – and said they are carrying out research on how green issues and image effects share prices in major firms.
"The carbon trading legislation is coming in April next year as part of the climate change bill and it is the first type of this legislation in the world," he said.
"We introduced carbon trading Yorkshire as a risk free introduction and it is an opportunity for business – it is not just about reducing carbon, it is about presenting business with a range of business opportunities.
"The company that is shortest of carbon would meet a penalty cost of about 113,000 and the cost of providing the extra energy that they could have saved is around 1m.
"The company that is doing the best would net an income of 34,000 and save around 333,000 in electricity."
Mr Stevens said five key lessons had been learned from the trial, that trading carbon was an alien concept to many of the businesses involved and they took an overly cautious approach, that providing quality data was a problem as was carrying out strategic forecasting.
They also found that trading and league table positions need to have separate strategies and that as an administrator they ran into issues such as measuring on-site fuel use.
Nigel Larkman, environmental programme director at Yorkshire Bank, said: "The event was a steep learning curve in terms of what the Carbon Reduction Commitment will mean to large organisations like ours.
"Achieving carbon neutrality is a huge priority for Yorkshire Bank and so it was particularly interesting to see so many of the region's business leaders getting to grips with carbon management and trading with leaders from local government and the NHS."
The scheme, due to finish in February, is described as "revenue neutral" in that there is one pot of carbon shared out among organisations and at the end of the year who has used it best will benefit.
Concerns have been raised, however, that should public sector organisations struggle with the new legislation they could end up buying more carbon from private sector companies in their league – taking away funds that could be used in frontline services.
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Saturday 26 May 2012
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