Xia Enyu
Introduction Industrial organizations are already faced with many compliance regulations, such as management system certification, information security, corporate social responsibility compliance, and limiting the content of hazardous substances in products. Now, they can add carbon management to the list. It will benefit industry to proactively understand, prepare and respond to the convergent yet varied requirements for carbon management. Carbon Management and the Greenhouse Effect To fully understand the origin of carbon management, you first need to know about the greenhouse effect. As one of the most fundamental phenomena in nature, the greenhouse effect refers to a natural process by which energy radiating from the planetary surface towards space, and some of the energy from the sun, are absorbed and reflected by atmospheric gases. Like a greenhouse, this process enables the planet to keep a warm climate and sustain life. Excessively-emitted greenhouse gases (GHG) primarily come from the use of organic fossil materials, of which the main type is typically carbon dioxide (CO 2 ). As a result, many commonly-used terms overlap: carbon is used to stand for greenhouse effect, greenhouse gas emission reduction is also called carbon emission reduction, and carbon management is substantially greenhouse gas management. The Politics of Carbon Management Carbon reduction actions among international government agencies started to gain momentum in the early 1980s. The United Nations Framework Convention on Climate Change in 1992 provided a coordinated, cooperative framework for international efforts to manage GHG emissions. The well-known Kyoto Protocol, adopted by the Third Session of the participating countries in 1997, marked a transition to quantifying indexes and specific actions. However, it is obvious that this international cooperation in carbon reduction is coupled with divergence and disputes. Many countries have stopped short of www.intertek.com 1
implementing detailed carbon reduction indexes, so it seems that the reduction objective specified in the Kyoto Protocol may be an impossible task. The divergence and disputes reached a peak at the Copenhagen Climate Conference in late 2009, which could not reach a comprehensive and specific resolution on carbon emission reduction as had been expected. Although these disputes bring hard times to international carbon reduction efforts, all of the participating governments have reached widespread agreement with regards to the importance and urgency of practical action to reduce GHG emissions. Besides, there are feasible carbon reduction objectives and action plans in different administrative areas. For example, the Chinese government has declared that by 2020, China s carbon emissions per unit of GDP will drop by 40% to 45% compared to 2005 levels. This binding requirement is written in the country s long-term plan for national economic and social development, and is therefore used to stipulate corresponding statistics, monitoring, and examination measures. Bringing Carbon Management to Global Supply Chains Along with the development of international governments agreement and action towards carbon reduction, voluntary carbon reduction is also in progress among industrial communities. Since the GHG Protocol was issued by WBCSD and WRI in 1998, there have been many standards and regulations, such as ISO 14064 and PAS 2050, which have directed voluntary industrial carbon reduction towards a systematic, scientific, and open approach. Other standards such as ISO 14067, PAS 2060, and the Product GHG Protocol are still in progress. Businesses are motivated to pursue carbon management by different factors, such as legislative pressure, credits and tariffs for future carbon allowances, and opportunities for voluntary carbon emission trading. But undoubtedly, behind any of these factors are two key issues: the need to establish a public image of good social responsibility, and rigid requirements from major customers or target markets. For the majority of businesses, the latter is surely the most pressing issue. First, let s consider the requirements of major international brands. Wal-Mart is a leading example. The retailer asked each of its tens of thousands of suppliers to establish a carbon www.intertek.com 2
disclosure and reporting system in 2007. In 2009, Wal-Mart launched a sustainability product index, which will be used to establish and rank the environmental factors of their suppliers products. The index consists of 15 questions, including GHG emission amount and GHG reduction goal. Other well-known global brands have come a long way down the road of carbon reduction. TESCO has added carbon labeling to more than 80,000 items in its inventory. Dell, like Wal-Mart, now requires carbon disclosure and carbon management in its supply chain. Unilever, Watson, Apple, Coca-Cola, Nike, and BP are other major brands who have already carried out carbon management initiatives and obtained admirable accomplishments. Next, let s consider the requirements of target consumer markets. In France, ADEME has established policies to require the mandatory disclosure of environmental information (including carbon footprint information) of consumer goods sold within France starting January 1, 2011. It is said that Japan, Australia, and the U.S. (particularly, the state of California) are developing similar regulations. Regardless, many major-brand retailers are presently engaged in establishing carbon indices for the products they sell. Two Ways to Implement Carbon Management In academic circles, low-carbon routes are divided into three stages: the carbon disclosure stage (verification and reporting of current carbon status), the carbon footprint stage (life cycle analysis, or LCA), and the carbon neutral stage (carbon reduction action). Among present and future standards, ISO 14064-1 can be applied to the first stage; PAS 2050, ISO 14067, the Product GHG Protocol, and LCA ISO 14040/14044 to the second stage; and ISO 14064-2 and PAS 2060 to the third stage. I suggest that industrial organizations place the greatest emphasis on ISO 14064-1 and PAS 2050. 1. ISO 14064-1: Greenhouse Gases Part 1 Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals www.intertek.com 3
ISO 14064-1 was released by the International Organization for Standardization (ISO) on March 1, 2006, with the goal of providing a consistent and credible procedure for the quantification and reporting of carbon emissions at the organizational level. ISO 14064-1 brings the most benefit to organizations who investigate and quantify GHG emissions and removal within one year. The basic standard procedure is: define organizational/operational boundaries identify emission sources and removals define base year quantify and calculate GHG levels develop organizational GHG list data quality control and analysis develop organizational GHG report internal audit and assessment The organization may also ask a third-party certification body, such as Intertek, to perform an external audit to ensure the quality and reliability of the report. ISO 14064-1 requires that, besides direct emissions from the organization s own emission sources (direct emissions or Level 1 emissions, e.g. emissions from boiler chimneys or vehicles), the organization pay attention to the emissions created from producing the electricity it uses (indirect emissions or Level 2 emissions), as well as some emissions incurred by everyday business activities (other indirect emissions or Level 3 emissions, e.g. emissions from staff transportation during business trips). GHG emissions from human/animal respiration and biomass combustion are not considered in ISO 14064-1. 2. PAS 2050: Specification for the assessment of the life cycle greenhouse gas emissions of goods and services PAS 2050, a publicly available specification released by the British Standards Institution (BSI) in October 2008, focuses on the GHG emissions of the goods or services an organization provides. A standard LCA method (usually ISO 14040/14044) is used to analyze emission characteristics of GHG in six stages: www.intertek.com 4
raw material production product development manufacturing transportation and distribution use of products disposal/recycling In addition, it is possible to evaluate and consider opportunities for reducing carbon in the whole supply chain. Data from a widely-recognized carbon emission database is used to calculate carbon emission data within the whole life cycle, from cradle to grave. Organizations may calculate the carbon emissions of some products themselves by implementing and seeking third-party certification to PAS 2050. Or, they may provide relevant product data (such as the material statement, place of production of materials, and material utilization) to a third-party certification body and entrust all of the analysis and calculation to them. Based on external certification of PAS 2050, product labeling is granted to the enterprise applicant, and carbon emission amount in the whole life cycle will be marked in the labeling. The labeling may be marked on the product or external packages, which is convenient for consumers to choose low-carbon products and could contribute to delaying greenhouse effect and improving global climate & environment. Conclusion Organizations can make proactive preparations for carbon management by first focusing on the lowest stage carbon disclosure: 1. Actively follow the requirements and movements of upstream brand clients and target consumer markets with regards to carbon management. Research in advance the GHG plans or agreements they may demand. 2. Voluntarily reserve and educate GHG management talents inside your organization. Learn from them and follow relevant requirements. www.intertek.com 5
3. Perform an internal emission investigation to determine emission sources, consider quantification methods, select activity data, and confirm the source of activity data under feasible conditions. 4. Proactively establish the collection flow and storage of activity data. Collect year-byyear activity data of emission sources. 5. Try to carry out quantification and reporting of GHG and reduction plans. Actively participate in various voluntary carbon disclosure plans. 6. Act quickly and avoid hesitation once customers or target markets demonstrate clear requirements. About the Author Xia Enyu (Alex) is the Green Services Manager for Intertek s Systems Certification group in China. Through his education and work experience in automotive and civil engineering, Mr. Xia has gained considerable knowledge of manufacturing processes and climate change issues. Before becoming an auditor, he worked as a quality and production manager for several international firms. Since 2008, he has led a research team to study corporate carbon emission reports, and in particular ISO 14064, ISO 14065, PAS 2050, GHG protocol, and IPCC 2006. Mr. Xia is an IRCA/CCAA registered senior auditor for ISO 9001, ISO 14001, and OHSAS 18001, and is also an IECQ-accredited auditor for QC 080000. He has audited more than 350 companies, and has given over 1,000 hours of training in various subjects to thousands of attendees. www.intertek.com 6
About Intertek As a leading global provider of quality and safety solutions, Intertek is focused on and participating in voluntary carbon management. We are your partner in managing carbon risks and carbon assets. With our network of more than 1,000 laboratories and offices in more than 100 countries around the world, we can provide a complete package of carbon management solutions to our customers, including: guidance on carbon disclosure questionnaires, carbon disclosure plans, carbon management in the supply chain, ISO 14064-1 audits, LCA, calculation of LCA carbon emissions, carbon labeling certification, evaluation of carbon data of materials, and training. Visit our website at www.intertek.com to learn more. www.intertek.com 7