Carbon Intensity Indicators, A comparison of carbon intensity indicators to benchmark companies within a sector
MetadataShow full item record
Global action is needed to ensure that the global temperature rise is limited to a maximum of 2°C. There is a growing gap between where global emissions are heading and where they need to be (UNEP, 2011). The private sector is responsible - and should take the responsibility - for one wedge of this gap. Benchmarking at company level is a powerful tool to enable target setting and monitor emission reductions. The first part of this study shows the inventory that was created of the current sustainability rankings and the carbon indicators used. From the literature used for this overview, it can be concluded that there are no global company rankings based on quantitative carbon emissions. World-wide, emission intensities across sectors vary in such a way, that a sector specific approach is to be preferred. A target based benchmark, on the basis of which the carbon performance of the largest companies of a sector can be compared, would enable sector wide reduction targets. The aim of this study was to find the carbon intensity indicator that best measures the technical and operational carbon performance at company level, for the electricity sector, the air transport sector and the steel sector. In this study, an emission parameter and an activity parameter were combined to form a carbon intensity indicator. The activity parameter was either a monetary or a physical parameter. For each sector, both monetary and physical carbon intensity indicators were selected. Company data for each of these resources were drawn from publicly available sources. This data was used to rate both the data quality, by means of a quantification model, and the aggregation quality. The aggregation quality was determined by the initial aggregation level of the data and the quality of re-aggregation to company level. At a lower level of aggregation, data was more product specific and structural effects were less, but re-aggregation to company level was required. And in case of multiple product indicators, the way to combine them to one indicator at company level should be researched. In addition to the data and aggregation quality rating, interviews were held with sector stakeholders to obtain feedback on the selected indicators, their benchmark experiences and their opinions. Sector specific indicators with adequate levels of both data and aggregation quality were found for two of the three sectors. The selected indicator for the steel sector was useful for a first estimation, but, for it to be of more use, would require additional data to further disaggregate to primary and secondary steel. The selected indicators employed for the electricity sector, the air transport sector and the steel sector were respectively ‘Scope 1 emissions (with heat allocation) per megawatt hour (MWh) produced electricity’, 'Scope 1 emissions per total passenger kilometres' and ‘tonne CO2-e per tonne crude steel’. As regards the air transport indicator, a suitable way was found to combine cargo tonne kilometres and passenger kilometres by means of a weight translation factor. A volume correction factor was also researched, but the data quality of this factor turned out to be too poor to be used. The main drawback of the quality of this last indicator was the comparability and the availability of high quality data. The stakeholders interviewed in the electricity and the air transport sector approved of the selected physical indicators for their sectors and found the monetary indicator less use full. According to the stakeholder of the steel sector, further disaggregation of the selected physical indicator would be required for it to become functional. The quality of the publicly available data was regarded as the biggest problem by all stakeholders. Company level benchmarking will be most useful for high emitting sectors in which the majority of emissions can be allocated to only a few products or activities; however, it will always entail a certain level of aggregation and is therein different from product specific benchmarking. This higher level of aggregation makes company level benchmarking an excellent tool for target setting and guiding emission reductions in the sector. These overviews can be used by sector organisations, NGO’s and governments. It is recommended to further improve the quality of emission and performance data in all three sectors, by means of clear, internationally accepted reporting guidelines for each one of them. As thorough operational knowledge are essential, it can best be achieved in co-operation with sector organisations and the CDP, and might also be of interest to the Global Reporting Initiative. The guidelines should include consensus on the reporting methodology as well as on the level of aggregation of the benchmark indicator. For the steel industry, more in depth research is needed to obtain an adequate level of aggregation quality, and disaggregation to primary and secondary steel is recommended. For further research it is advisable to perform a similar analysis of other high emitting sectors; data disclosure agreements are highly recommended to improve the quality of research.