Facebook icon LinkedIn icon Twitter icon

Iron Ore Mining

The Missing Wedge: Energy Consumption Up, CO2 Emissions Down

Tuesday, 12 July 2011

The media is awash with pledges from blue-chip firms to cut their CO2 emissions. Despite the backwards slide in carbon regulations around the world, even US firms continue to make voluntary commitments without any prospect of mandatory reduction targets. The fact that global CO2 emissions increased to 30.6 gigatonnes (Gt) in 2010 compared to 29.3 Gt in 2008 adds fuel to the fire. From the Carbon War Room to the recent exhortation from lobby groups for the EU to sign up to a 30% reduction goal by 2020, CEOs still show commitment to the concept of fighting climate change through lower GHG emissions. But how are these reductions being achieved?

Our recent carbon strategy benchmark for the IT services sector reveals an interesting pattern. Overall firms in the IT services sector such as Accenture, Fujitsu, IBM and Wipro show a mature approach to CO2 emissions data collection, disclosure and assurance. Among 14 firms analyzed we found that 12 target reductions in CO2 emissions ranging from 5% to 100%. But only 6 have a target to reduce energy consumption. From a 1997 baseline, BT targets an 80% reduction in CO2 emissions, reports a 51% reduction since 1997 and a 6.9% increase in energy consumption. How?

Many – but not all firms – with CO2 reduction targets buy green tariff electricity and renewable energy certificates. And its no secret. The benefits of this strategy are clear: 1) Win praise from stakeholders for delivering on CO2 reductions and supporting renewable energy; 2) Guarantee the ability to meet CO2 targets with year-end certificate purchases; 3) Reduce reliance on messy energy efficiency projects which may require additional capex, a stronger energy management team and deliver unpredictable results. Is a CO2 reduction strategy based on green tariff electricity a case of “sustainability leakage”?