Carbon Management And Best Practice Guide

Funded by: Organizers: Carbon Management And Best Practice Guide Chapter 1 Introduction Chapter 3 Examples of Strategies to Reduce Carbon Emissions Chapter 2 Carbon Management Chapter 4 Financial and Technical
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Funded by: Organizers: Carbon Management And Best Practice Guide Chapter 1 Introduction Chapter 3 Examples of Strategies to Reduce Carbon Emissions Chapter 2 Carbon Management Chapter 4 Financial and Technical Support for Businesses Carbon + _ Disclaimer Download Full Report (pdf) Chapter 1 Introduction What is Climate Change? The Earth s climate is influenced by two main factors: energy from the Sun and atmospheric conditions on Earth. Human activities have been altering the Earth s atmospheric composition by rapidly increasing the amount of greenhouse gases in the atmosphere. The result of this increase is climate change, which is leading to changes in the Earth s weather patterns. A steady rise in temperature, often referred to as global warming has been occurring since the early 20th century. In recent years, this trend has become more rapid. According to the United States National Oceanic and Atmospheric Administration (NOAA), nine of the ten warmest years on record have occurred since the year 2000, with 2011 being the hottest year on record. Scientists around the world agree that increasing the global average temperature by more than two degrees Centigrade above pre-industrial levels will cross a threshold, beyond which climate change will cause irreversible and dangerous impacts across the planet. Temperature anomalyu ( C) relative to Figure 1 Observed globally averaged combined land and ocean surface temperature anomaly [source: IPCC, 2013] 0.6 Annual average Decadal average Year 2000 Chapter 1 Cause of Climate Change When greenhouse gases (GHGs) in the atmosphere absorb and retain heat, the result is the greenhouse effect. Beginning with the industrial revolution in the mid 1800s, excessive amounts of GHGs, which include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydroflurocarbons (HFCs), perflurocarbons (PFCs) and sulfur hexafluoride (SF6) have been produced by human activities mainly through the combustion of fossil fuels and changes in land use. These extra GHGs have enhanced the greenhouse effect and led to an increase in global average surface temperatures since the 20th century, a phenomenon which is now producing climate change. How Does Climate Change Affect Us? Direct impacts More frequent occurrences of extreme weather conditions (e.g. heat waves and extreme cold weather, super-storms) Melting of polar icecaps Rise of sea levels Increase in pest and diseases Destruction of ecosystems Chapter 1 How Does Climate Change Affect Us? Indirect impacts Loss of agricultural productivity Unstable food and commodity prices Flooding Famine Drought Increasing risks to business growth, productivity and supply chains Significant social and economic losses and damage 1. According to the estimation in the Copenhagen Climate Congress, most of the islands in Maldives will be submerged before 2100 due to rising sea levels. 2. The United Nations Intergovernmental Panel on Climate Change (UN-IPCC) estimates that 22 million people in Bangladesh will be forced from their homes by 2050 because of the extreme weather, rising sea levels and river erosion. 3. In 2012, Super Hurricane Sandy directly killed 147 people in United States, Haiti and other countries along its path. 4. A cold wave attacked the Eurasian continent in 2012 and over 650 people died. This was the worst winter in at least 26 years in Central and Eastern Europe. To avert further and more severe effects of climate change, GHG concentrations in the Earth s atmosphere have to be limited. In pursuit of this goal, today, international, regional, national and local initiatives are being coordinated and implemented to reduce carbon dioxide emissions. Hong Kong is determined to work with the international community and rise to this challenge. Chapter 1 Hong Kong s Carbon Footprint In 2010, Hong Kong s total GHG emissions were about 43 million tonnes of CO2 equivalent. These GHGs were mainly emitted through electricity generation, which accounted for about 66 percent of this figure, while the transport sector accounted for 18 percent and waste for about five percent. Most of this electricity generated (65 percent) was consumed by the commercial sector. If this sector pursues better electricity consumption management and improves energy efficiency, this will not only cut its energy costs, but significantly reduce Hong Kong s overall carbon emissions. Alongside 20 other Asia-Pacific Economic Co-operation (APEC) economies, Hong Kong has set a target to achieve a reduction in energy intensity of at least 25 percent by 2030 (using 2005 as the base year). Greenhouse Gas Emissions in Hong Kong by Sector in 2010 [source: EPD, 2013] 0.1% Electricity Consumption by Sector in 2010 [source: EMSD, 2012] 3.9% 5.3% 7% Electricity Generation Transport Other End Use of Fuel 1.7% 7.3% 26.1% Residential Commercial Industrial 17.8% Waste Transport 65.9% Industrial Processes and Product Use Agriculture, Forestry and Other Land Use 64.9% Government Initiatives to Reduce Carbon Emissions To encourage better energy and carbon management, the Hong Kong SAR Government has launched a string of initiatives, which include: Legislation Building Energy Code and Energy Audit Code under the Buildings Energy Efficiency Ordinance (BEEO) (CAP 610) Building (Energy Efficiency) Regulation (CAP 123M) Community education Code of Practice for Water-cooled Air Conditioning Systems encouraging the public to set the standard household air-conditioning temperature at 25.5 C Energy Efficiency (Labelling of Products) Ordinance (CAP 598) Partnership and award schemes Green Hong Kong Carbon Audit Carbon Reduction Certificates of the Hong Kong Awards for Environmental Excellence (HKAEE) Chapter 1 Did You Know? Examples of Other Government Initiatives: According to China s 12th Five Year Plan, China will explore and develop standards, labeling and certification systems for low carbon products in order to establish a statistical auditing system for GHG emissions and the carbon trading market. Seven pilot cities and provinces in China, including Shenzhen, have launched carbon markets in order to trade carbon-linked financial products. [source: China Climate Change Info-Net] In Singapore, the Energy Conservation Act was introduced in April 2013, which promotes energy conservation and carbon reduction among heavy users (those who consume more than 15GWh per year). These users have to appoint an energy manager, report energy usage and submit plans to improve their energy efficiency [source: NEA, 2013]. Carbon/energy taxation: Numerous countries and states have implemented carbon or energy taxation measures, such as Denmark, Finland, Germany, the Netherlands, Norway, Sweden, Switzerland, the US (California), and others. Energy Consumption and Reduction Potential As mentioned earlier, the majority of electricity used in Hong Kong is consumed by the commercial sector. According to Hong Kong Energy End-use Data 2012, produced by the Electrical and Mechanical Service Department (EMSD); the catering, retail and office segments consumed 20.6 percent, 13.6 percent and 10.5 percent of the overall energy used by the commercial sector respectively. Other segments including hotel, education, health, storage and other commercial or public services, accounted for the remainder of the energy consumption. As the three principal energy users are the catering, retail and office segments; these segments can thus become important drivers for change, and can potentially help significantly reduce Hong Kong s carbon footprint. These three segments will be the primary focus of this guidebook, with low carbon best practices for each segment highlighted in Chapter 3 Examples of Strategies to Reduce Carbon Emissions Energy Consumption by Commercial Segment in 2010 [source: EMSD, 2012] 55.3% 20.6% 10.5% 13.6% Chapter 1 The potential to reduce carbon emissions varies by sector and by operating entity within each sector. The EMSD has developed energy consumption indicators which allow businesses to benchmark their energy consumption performance and compare it with other businesses that have similar operational and physical characteristics. The energy consumption indicators related to the catering, retail and office sectors are shown below: Annual Energy Consumption per Area (MJ / m² /annum) 6,622 5,729 4,636 4,060 1,536 1,057 1, ,778 1, Chapter 2 Carbon Management Carbon Management Managing and reducing a business carbon footprint can bring about many advantages. Organizations that manage their carbon emissions effectively can raise their brand value and differentiate their services from their competitors. Reducing carbon emissions also makes business sense, as it reduces the costs associated with energy and resource consumption. The carbon management process normally consists of: Monitoring Communicating Developing a Management Policy Establishing a Reduction Programme Measuring the Carbon Footprint Setting Reduction Targets Chapter 2 Carbon Management Developing a Management Policy A carbon or energy policy is a written document used to communicate the commitment of senior management to carbon/energy management and what targets the policy intends to achieve. A policy is an effective way to demonstrate the organization s commitment to carbon/energy management to its key stakeholders. Measuring the Carbon Footprint By actively measuring their carbon footprint, companies can gain a full understanding of their current carbon footprint, as well as how resources such as electricity, water, fuel, and paper are being consumed and managed over time. Cost-effective carbon reduction solutions can be identified and specific improvement measures adopted to reduce carbon emissions and enhance operational and energy efficiency. Establishing a Reduction Programme In order to ensure that reduction targets are met, a reduction programme needs to be formulated and implemented. This programme may involve developing new low-carbon operating procedures and instructions, hardware improvements and maintenance plans, implementing low-carbon best practices and setting up mechanisms for collecting feedback from different stakeholders.for detailed suggestions on initiatives that can help companies in particular sectors reduce their carbon footprints, please refer to Examples of Strategies to Reduce Carbon Emissions Monitoring Systematic procedures for controlling and monitoring carbon emissions from operations throughout the year need to be established. Communicating An organization may want to consider reporting its carbon reduction performance to its various stakeholders, including its staff, customers and investors. The measurement scope and boundaries, carbon emissions breakdown and progress against reduction targets are often some of the major elements involved in this communication exercise. Setting Reduction Targets Once the carbon footprint has been measured, an organization can set general or specific reduction targets, taking into consideration customer and stakeholder expectations, the commitment of their competitors to setting targets, the availability of resources, and their capability to achieve the targets. What is Carbon Auditing? Effective carbon management begins with the proper measurement of an organization s carbon footprint. Carbon auditing allows companies to get a full picture of their current carbon footprint. It is a systematic and scientific approach which allows an organization to quantify, monitor and report on the carbon footprint of all its activities, including GHG emissions and removals. Areas of improvement can then be identified and appropriate action taken to effectively manage and reduce carbon emissions. Carbon auditing also enables companies to establish a management strategy to reduce emissions and create new business opportunities by addressing climate change. Businesses have started to tackle emissions and efficiency in their products, services and supply chains; together, these factors will help yield greater returns on investment and reputational benefits. Carbon Auditing Although corporate carbon reporting has yet to become mandatory in Hong Kong as it has in other developed cities, it is clear that its importance is rapidly increasing. In August, 2012, Hong Kong Exchanges and Clearing Limited published the Consultation Conclusions on its Environmental, Social and Governance (ESG) Reporting Guide; revealing a plan to implement the reporting guide as recommended practice, with a view to moving to a comply or explain basis by Carbon emissions produced by a company and its operations is to become one of the key ESG indicators. In view of this development, businesses need to be better prepared for the upcoming regulatory challenges associated with this change. Chapter 2 Carbon Auditing Methodology A reporting entity usually follows the steps below to conduct a carbon audit and prepare an audit report. Step 1 Define the physical/ organizational boundaries Step 5 Improvement Step 2 Define the operational boundary and emissions sources Step 4 Calculation and reporting Step 3 Data collection Carbon Auditing Methodology Step 1: Define the physical/organizational boundaries The physical/organizational boundaries refer to the business unit(s) that will be included in the carbon audit s scope, e.g. the site boundary of the reporting entity. Information about the organization s areas, facilities, locations and services should be included in this definition. If an organization is comprised of more than one facility, or if a facility is jointly owned by several organizations, the GHG emissions and removals can be consolidated through either the control approach or the equity share approach. Control Approach The organization accounts for all quantified GHG emissions and removals from facilities over which it has financial or operational control Equity Share Approach The organization accounts for the portion of quantified GHG emissions and removals according to its equity share or ownership percentage Chapter 2 Carbon Auditing Methodology Step 2: Define the operational boundary and emissions sources The reporting entity identifies and documents all the direct and indirect GHG emissions and removals associated with its operations. With reference to the international reporting framework of ISO and the Greenhouse Gas Protocol, these GHG emissions and removals are classified into three different scopes: Scope 1 Direct Emissions and Removals GHG directly emitted or removed by facilities within the physical boundary of an organization, for example: Combustion of fuels in stationary sources used to generate electricity, heat or steam; Combustion of fuels in mobile sources; Intentional or unintentional GHG release from equipment and systems; Assimilation of carbon into biomass; and Any other physical and chemical processing within the operational boundary which will emit or remove GHGs. Scope 2 Energy Indirect Emissions GHG emissions emitted by the generation of electricity and/or Towngas that is consumed by equipment or operational activities of an organization, for example: Electricity purchased; and Towngas purchased. Scope 3 Other Indirect Emissions reporting entity may wish to quantify and include other indirect GHG emissions related to the company s operational activities. While Scope 3 reporting is optional, reporting entities are encouraged to account GHG emissions generated from paper waste disposal; GHG emissions from electricity used for fresh water processing; GHG emissions from electricity used for sewage processing. Other Scope 3 emissions may include: Extraction and production of purchased materials and fuels for sources covered in Scope 1 and Scope 2; Transportation of purchased materials or goods, products and employees to and from the organization; Emissions from outsourced activities; Use of packaging materials, sold products or services; and Waste disposal other than paper waste and sewage. Chapter 2 Carbon Auditing Methodology Step 3: Data collection Once the physical and operational boundaries have been defined, the reporting entity will then need to calculate the GHG emissions and removals for each activity covered in Scope 1, 2 and 3 (Scope 3 being optional). Generally, the reporting period is one year in length and the reporting entity will normally compare the carbon emissions of the reporting year with those of the baseline year to identify whether any carbon reductions have been achieved. The table below shows the common types of activity data which need to be collected to quantify GHG emissions under the different scopes. Organizations may contact a qualified carbon audit service provider to obtain further details. Table 2.1 Examples of data which need to be collected Operational boundaries Suggested list of data required (non-exhaustive) Scope 1: Direct emissions from sources and removals by sinks Stationary source combustion; (e.g. boilers, burners, emergency electricity generators, engines, furnaces, gas stoves, ovens, and turbines) Mobile source combustion; (e.g. road, air and water transportation under the reporting entity s operational or financial control) Release from equipment and systems (e.g. refrigeration / air conditioning systems / fire extinguishers) Assimilation of CO2 into biomass (e.g. newly-planted trees that are able to reach at least 5 metres in height) Scope 2: Energy Indirect Emissions Purchased electricity Purchased Towngas Scope 3: Other Indirect Emissions (optional) Paper waste disposal (i.e. paper consumption and recycling) Use of fresh water (i.e. water consumption) Sewage discharge (i.e. water consumption) Fuel consumption receipts / records (e.g. charcoal, diesel oil, kerosene, LPG, Towngas) Fuel consumption receipts / records (e.g. diesel oil, LPG or unleaded petrol for company vehicles, marine fuel for water transport, kerosene for air transport) Refrigeration equipment and fire extinguisher purchase, storage and disposal records Number of trees planted within the physical boundary of the site Electricity bills Towngas bills Paper purchase and recycling records Water supply bills Water supply bills 10 Transportation of purchased materials, goods or products to and from the organization; applicable to all sectors but particularly important to the Hotel, Retail and Catering sectors Vehicle fuel consumption receipts/ records of suppliers employed for transportation services Chapter 2 Carbon Auditing Methodology Step 4: Calculation and reporting After the activity data has been collected, the reporting entity then quantifies the GHG emissions and removals by referencing the emissions data provided and the methodology in the Guidelines to Account for and Report on Greenhouse Gas Emissions and Removals for Buildings (Commercials, Residential or Institutional Purposes) in Hong Kong, published by the Environmental Protection Department (EPD) and the Electrical and Mechanical Services Department (EMSD). Other well-documented and scientific quantification methodologies can be adopted, as long as the results produced are both accurate and consistent. Any changes made to methodologies should be stated and explained as necessary. Guiidelliines ttoaccountt ffor and Reportt on Greenhouse Gas Emiissiions and Removalls ffor Buiilldiings ((Commerciiall,, Resiidenttiiall or Insttiittuttiionall Purposes)) iin Hong Kong 2010 Edition A ratio indicator is employed to provide the fairest possible comparison of GHG emissions over the years, especially when there have been changes in the entity s operational scale. A ratio indicator refers to quantified emissions and removals normalized to a certain operational measuring unit. Examples include the following: emissions per gross floor area emissions per employee emissions per unit of production other acceptable indicators justified by the verification organization The reporting entity then lists the GHG emissions and removals in the audit report, which
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