By Saad Mannan
The challenge of climate change is ensuring that the shift to a low carbon economy remains high on the agenda for governments and businesses. With increasing government legislation, businesses today must prioritise their climate change initiatives and focus on the energy efficiency projects that deliver quantifiable results. As part of this, the development of potentially groundbreaking low carbon technologies is becoming central to the climate change debate. It has become increasingly apparent that European businesses are challenged with targets to realise a low carbon economy, especially with no easy and consistent way of measuring their impact on the environment. A recent survey of 200 leading companies surveyed across the UK, France, Germany, Netherlands and Sweden highlighted that 92 percent were particularly in need of technology to improve their energy efficiency, 74 percent needed a way to measure their impact on the environment, and 72 percent said they would welcome a technology that helped them manage and monitor noncompliance risks.
Increasing legislation is impacting the UK. The EU Emissions Trading Scheme (ETS), now in its second phase, is used to tackle CO2 emissions from the primary emitters, such as utilities and industrials. Post 2012, allowances are fully expected to be auctioned alongside tightened national allocations. The impact has been observed of the Large Combustion Plant Directive (LCPD), already witnessing the retirement of older inefficient coal-burning power stations. Furthermore, non-ETS sectors such as the water industry and large retail corporations will fall under the UK’s own cap and trade scheme, the Carbon Reduction Commitment (CRC), as well as UK and EU governments moving to mandatory green standards when procuring information technology and communications (ITC). Moving forward, energy efficiency measures for household electricity suppliers have been markedly strengthened through the Carbon Emissions Reduction Target (CERT). This is paralleled by the compulsory inclusion of renewable energy generation through the Renewables Obligations (RO).
However, the pressure is not purely regulatory. The social and corporate responsibility on businesses to proactively support climate change measures is inescapable. Businesses have been signing up to the Bali Communiqué, UN Global Compact, Global Reporting Initiative and Carbon Disclosure Project (CDP) as voluntary commitment is seen as crucial. The final element is cost reduction. If Europe is expected to suffer from the extended period of economic turbulence that the US is currently experiencing – with energy prices rising fast in volatile commodity markets – then effectively managing the level and time of energy consumption directly affects the margins businesses can generate. With all of these targets, the pace of change required for businesses to meet climate change obligations has increased. There has never been a greater need to focus on the development and deployment of a wide range of supporting technologies to achieve the deep cuts in emissions. As a result, emission technologies are becoming central to the climate change debate.
EMISSIONS TECHNOLOGY – WHAT ARE THEY?
One of the first emission technologies to be adopted was green calculators, which have long been used by companies to assess their carbon footprints. Green calculators involve energy usage inputted through calculated spreadsheets to give resultant CO2 emissions. But the simplicity of such software (often just a simple interface on top of a spreadsheet) is now insufficient to meet the in-depth levels of data required for targeted energy efficiency and greenhouse gas (GHG) abatement strategies. Furthermore, governments are increasingly requiring an aggregated national view of performance, with emissions technologies being a key enabler to help achieve this.
From this, companies have begun to develop specialised energy and emissions management software solutions. These have helped assess both supply and demand side management across organisational boundaries, and are not just limited to company operations but can be used on municipal and national scales. As an example, such an energy management system has been deployed in the town of Vaxjo, Sweden. The inhabitants of Vaxjo are able to view the individual energy analysis of households, whether large properties or small apartments, using a front-end web-based portal. This constructive breakdown of demand side information, which increases greater end-user awareness, has also been one of the reasons why smart metering is garnering increased favour.
On the emissions management front, compliance reporting, since the Monitoring and Reporting Guidance (MRG) 2007, has started to see ETS sector companies move away from the liabilities of spreadsheet-based monitoring to IT solutions that can deliver more consistent, complete, transparent and true verification of GHG emissions. This helps to identify how to best tailor abatement strategies. Beyond just compliance reporting, the carbon audit trail for voluntary purposes calls for increased transparency and accountability. The use of specialised IT technologies is now critical, especially if all emissions are to be accounted for, i.e. direct and indirect emissions. Increasingly, these will need to interact with accounting systems across the business to ensure auditability and accountability, as well as sharing common standards to give environmental labels to goods and services (e.g. carbon labelling).
As the tools used to evaluate energy usage and emissions become more sophisticated, more innovative solutions have emerged that can utilise the higher level of data analysis. Although arguably driven by concerns of economic viability, the ‘Green IT’ industry displays a powerful synthesis of creativity and independence in its solutions. Data centres are becoming green through the use of renewable energies, recycling waste heat, and the use of high density servers. Server consolidation and virtualisation slashes IT costs, as well as saving energy. Lower energy consumption is also achieved through the use of thin client hardware, whereby the bulk of processing normally done by desktop PCs is outsourced to centralised servers, leaving behind only the lean or thin hardware like monitors, network modules and keyboards, with the added benefit of increasing flexibility of access to information.
EMISSIONS TECHNOLOGY AND SMART METERING
Smart metering should be viewed as providing the enabling infrastructure that will support measurement of emissions and enable their effective management. It can be regarded as a disruptive technology with the potential to revolutionise the supply of energy and associated services, including emissions reporting, provided by suppliers. It can enable the transformation of the sector through the creation of an infrastructure that supports two-way communication between energy provider and consumer. It will provide the platform that will move energy away from being a commoditised supply product to the provision of energy services in which the consumer will perceive real value.
Smart meters will be transformational in the context of a consumer’s understanding of how and when they use energy and in their relationship with their provider. They will also be a key enabler in solving the pending security of supply and climate change issues that we face in the coming decade.
The cost-effective rollout of smart meters is only one part of the challenge. The integration of meter communications with existing IT architecture while protecting that investment, ensuring that the end-to-end systems operate effectively to ensure that operational effectiveness benefits are realised by the industry, and that the end consumer is able to act on the information smart meters provide, all form part of the task faced.
THE OBSTACLES TO UPTAKE
Yet uptake and development of emissions technologies have been slow. Even with the raft of directives, the regulatory environment is still viewed as pressure that is top down. Regulation tends to drive a compliance response, where people and organisations seek the minimum cost solution and do not commit to the initiatives. Moving forward regulation that is accepted is required so that – rather than businesses seeing it as ‘just another overhead’ – they really understand the value to their organisation and want to commit to action.
Communication also remains an ongoing challenge, as today it is more than just technology development. It is a matter of communication, winning hearts and minds, and gaining peoples’ sustained commitment to act differently. Essentially providing visibility to individuals of how their actions are having a positive impact serves to encourage positive behaviours. While technology is the key enabler for this feedback, trying to anticipate future trends is an inexact art. But with the expected passing of the UK’s Climate Change Bill, and the CRC coming into effect in 2010, the regulatory pressures should be expected to have a positive impact at all levels.
If increased shareholder and stakeholders’ demands are added on businesses to go green, as well as customers pushing down their supply chain for greener products and services, then a more concerted effort at a management level is to be expected, which ensures stronger direction concerning environmental programmes. The key obstacle over the past few years has not been how much organisations have been doing, but the effectiveness of their management of what they do. The resonance this strikes with institutional investors accords a greater need for organisations to increase the visibility of their green operations. The supporting role for environmental technologies becomes increasingly apparent, as the ability to manage environmental impacts is clearly underpinned by the capability to measure the impacts in the first place.
The European Commission gave a clear statement of intent when it launched its plans to achieve a 20 percent reduction in GHG emissions in 2020, by using a 20 percent share in renewables in energy supply and a 20 percent increase in energy efficiency. Though still not a done deal, it provides the best support for an industry looking for, at the least, a level playing field.
With the successful uptake of the EC Directive in mind, a possible future will have energy and environmental evaluation tools that become an intrinsic part of business operations, inclusion into Enterprise Resource Planning (ERP) systems with Service Orientated Architecture (SOA) platforms as standard, and an increase in outsourcing and Software as a Service (SaaS). This is much in the same way that businesses operate their finance, HR and payroll systems, with carbon accounting taking on a greater priority in day-to-day business management. Already in the pipelines are satellite monitoring technologies that can monitor wide areas, building emission profiles from infrared scanning linked to geo-spatial information systems.
It is anticipated that the rollout of smart metering will prompt a stronger consumer ethic for demand side management. This will lead more utilities to develop web-based systems. Electricity tariffs can be more tailored, and microgeneration encouraged. This in turn will necessitate smarter grids, as distributed generation increases in the energy mix. Finally with the focus shifting to the ability of the individual to control his energy demand, we may just see the realisation of the most difficult problem – that of personal carbon trading to put a cost on environment impacts. Ultimately this may take several forms, including editing out the choice of environmentally unfriendly goods and services. Carbon labelling makes possible the connection between the individual’s lifestyle and the impacts these choices have on the environment. Individuals can visualise their impact on the world through the energy they consume, the goods they buy and the homes they live in. This will help give them the choice to make the correct decision for us and our successive generations.