Opinion: Facing up to the truth of our carbon footprint

7 Oct, 2020 07:37
source: Tom Gosling

Singularity Financial Hong Kong October 7, 2020 – Facing up to the truth of our carbon footprint

About this author: Tom Gosling is a seasoned board adviser with 20+ years of experience in corporate governance, including 15 years as a Partner at PwC. Tom is unique in being a practitioner who also has deep academic expertise and a rigorous understanding of evidence. He coaches board members and high performers in professional services, and advises investors, companies, and regulators on matters relating to corporate governance and responsible business. This article was originally published on Tom’s personal blog

Measuring our carbon footprint has been a salutary experience, but has increased my confidence that we can halve it by 2025

Our carbon footprint

Earlier this week the UK’s Committee on Climate Change (CCC) published an inspiring report, which makes a compelling case for the UK Government to adopt a net zero emissions target by 2050. The report emphasises the importance of individual action to complement policy development. Only the two working in tandem will make the target achievable. What is so inspiring about the report is the clear evidence provided that the goal is well within our grasp, at reasonable economic cost, if we act decisively.

In my last post I set out the eight steps that would lead our family towards a halving of our carbon footprint by 2025 as part of a personal commitment to support a net-zero goal by 2050. This blog covers Step 1: calculating our footprint. This enables us to set specific targets for future reduction.

I’ve calculated the carbon footprint for our family of five at just under 70 Tonnes CO2 equivalent per annum (13.5 Tonnes per head). The chart below shows how it’s made up, compared with the average footprint per head in the UK and globally. These figures are based on the carbon footprint of our consumption. The UK exports a lot of its carbon footprint, because many of the physical goods we consume are produced overseas. As a result, the average UK footprint on a consumption basis is just over 12 Tonnes per head. This is much higher than the c. 7-8 Tonnes reported by the CCC, which is based only on emissions actually produced in the UK. For similar reasons these figures are higher than produced by many simple on-line calculators.

CC002_Chart1.png

Our footprint is around 1.1x the UK average on this basis and a bit under 3x the global average. The last bar shows the annual carbon budget per head globally. This takes the IPCC’s estimate of our remaining carbon budget to restrict warming to 1.5°C and spreads it evenly across the world’s current population over the period to 2050 (2 Tonnes per head per annum). Our consumption is nearly 7x this amount. These figures are stark, but it is important to face up to the reality of these numbers in order to take responsibility for our actions.

A first reaction is that making the numbers add up at a global level seems a forlorn hope. However, on reflection I’m more optimistic. I believe that if we can get things moving in the right direction quickly, the opportunities to decarbonise our economy are very significant. This view is supported by the CCC report, which increased my confidence in our ability to address this challenge and for the UK to take a leadership position. This report emphasises that individual action will not be enough, but at the same time is absolutely necessary. As consumers we send important signals to governments and companies and so, through our own actions, can be important agents of the change required. I believe those of us with fewer financial constraints face a particular responsibility to decarbonise quicker, as we are better able to bear the costs. We are also likely to be the greater polluters in the first place.

We’re closer to the UK average than I had expected. Our flights footprint and general consumption is higher than average, but this is offset by relatively low home energy. We also benefit from having five people in our home so that our ‘fixed carbon costs’ such as home heating and car usage are spread across more people, and our children (even teenagers!) are probably less polluting than adults. If we instead spread our footprint across the number of adults in the home (three) and compare this with the footprint per adult in the UK, we are at 150% of the average. No approach is perfect. However, in the end I view myself as responsible for the footprint of people living in our home. Ultimately that will be just two of us. Having a lower initial baseline for our per head footprint therefore adds to the challenge of ultimately reducing our footprint to half that level. This is, therefore, the more aggressive approach and the one I have chosen to take here.

Food and diet and flights add up to about half of our footprint and consumption of other ‘stuff’ adds up to over one third. Home energy and transport only make up a bit over 10% – this is relatively low, as we already have a green energy tariff and have implemented a number of environmentally friendly measures such as: keeping the house at 18°C; installing high quality insulation and solar panels; driving a hybrid.

Cutting the carbon footprint that is embedded in our consumption will be tough. But fortunately, we will be helped by the world’s move to decarbonisation. The world economy needs to reduce its carbon intensity by around 3% pa – 20% over seven years – to meet the Paris Agreement, and is already decarbonising at close to that rate. The UK is decarbonising faster. Therefore, even if we keep our consumption at current levels, the related carbon footprint should gradually decline. If we can cut it further – either by just consuming less, or by making more sustainable choices – then all the better.

Yes we can!

The good news is, I think we can do it. The table below shows my first pass at how we could reach the goal of halving our footprint by 2025. Unsurprisingly food and diet, transport (including flying), and home energy have to bear the brunt of the reduction. I’m also assuming a 20% general decarbonisation of consumption in the economy (other than air travel) by 2025, on top of lifestyle changes we make ourselves. This is in line with current trends, particularly as we are based in the UK, which is decarbonising quicker than most.

CC002_Chart2.png

The reductions to home energy and car transport are particularly significant as these are in effect fixed household costs that we are spreading across five people currently in our family. In due course these will be spread across just two of us (once they leave home, our children have to be responsible for their own footprint). Therefore, decisive cuts in our footprint in these areas (by 6.5 Tonnes pa in total) is necessary in order to manage down the per head impact of these items as our household reduces. A crucial assumption, which I’ll go into in a future post, is that electrification of the power source for heating and car travel can reduce our footprint for these items to zero, a topic for further debate in posts to come.

I’ve found it immensely enlightening getting a detailed understanding of our carbon footprint. It’s bigger than I had previously estimated and it’s sobering to compare it with global averages. It was also harder to estimate than I’d thought. There does not yet seem to be a single comprehensive, but easy to use, calculator that allows both a tailored estimate of current footprint and a way easily to test the impact of changed lifestyle and consumption choices. I had to work far too hard to get a detailed picture of our own position. Finding tools to help people really understand the drivers of their footprint and effective choices, but in a user-friendly way, remains a significant challenge.

In future posts I will go into more detail on the actions that will deliver these reductions and how I estimated their impact. I’m sure that my estimates above will not be the last word, and that changes will be required as my understanding improves. In the rest of this post I get into the technicalities of calculating our footprint, the calculators and resources I used, and some of the assumptions I made. You can treat the rest of the post as a technical appendix! If you can’t be bothered with the detail and want to get straight to calculating your footprint, I’d recommend the WWF Calculator. It’s not perfect (you’ll have to read the appendix to find out why!) but in my view is the best single calculator for a UK resident.

A detailed understanding of where we are now is helping me to identify the actions that will have most impact. I do believe we can halve our footprint in seven years, and this knowledge, together with the inspiring CCC report, left me feeling much more optimistic about the future. Now all that remains is to turn good intentions into action!

Technical discussion

Consumption-based accounting is the way to calculate your footprint

Measuring carbon footprint is easier said than done. Estimates from different calculators can easily vary by a factor two, mainly because of what they take into account. My exploration of different calculators has led me into the debate about territory-based versus consumption-based accounting for carbon emissions. In brief:

  • Territory-based accounting, which is the basis of country commitments under the Paris Agreement (an in targets set, for example, by the CCC in the UK), looks at total carbon emissions arising directly from production activity in a particular country.

  • Consumption-based accounting, by contrast, looks at the carbon emissions arising from consumption by citizens in a particular country.

The difference is particularly important for the UK. The Climate Change Act has been quite successful at reducing production-based emissions towards the Government’s target of 80%+ reduction by 2050. The main driver of the improvement has been the growth of renewables in our share of electricity generation. However, we have partly achieved this through our progressive shift to a service economy, which results in us increasingly exporting our carbon footprint to other nations, who manufacture what we consume. The UK is the third largest net exporter of carbon emissions after the US and Japan. Unsurprisingly, China is the largest importer (accounting for almost the entire net exports of the rest of the world – something to be borne in mind when China is criticised for its record on emissions). To its credit, the Government acknowledges this, and DEFRA publishes data on both a production and consumption basis. This shows that our national carbon footprint has not decreased much on a consumption basis in recent years.

Territory-based targets make sense from the point of view of national agreements, as they cover domestic production, which can be regulated by national governments. But from the point of individual responsibility for global warming, the consumption-based methodology must be the way to go. Unfortunately, under DEFRA’s figures, this increases the UK’s emissions from c. 450m Tonnes per annum to 800m Tonnes per annum, meaning the average per head footprint of a UK citizen is around 12 Tonnes, far above the c. 6 to 8 Tonnes that many online calculators would project.

The main problem with a consumption-based approach is the increased uncertainty in calculating the emissions content of consumables. However, for an authentic view of our own carbon footprint it seems the best approach to use.

The best calculators I’ve found

Overall I was disappointed with the quality of carbon calculators available. I could not find a single calculator that met the needs of both user-friendly but comprehensive calculation of current footprint and easy estimation of the impact of lifestyle and consumption changes. I describe below the three calculators I found that came closest to what I wanted. Note that some calculators use country-specific data in their calibration (for example the carbon-intensity of energy generation, typical consumption patterns etc). I am coming from UK perspective, and so there may be better calculators for people in other countries.

I got broadly consistent answers from all three calculators, after a bit of digging, interpretation, and adjustment. However, each of them had different strengths and weaknesses. I have no professional expertise that allows me to recommend one calculator over another, or to validate the basis on which they work. However, these are the ones that I found most convincing after reviewing their operation and methodology descriptions. All of these calculators include information about consumption beyond home energy and transport, which is vital for the reasons outlined above.

A good place to start is the WWF Calculator. Indeed, if you live in the UK and only have the appetite to use one calculator, I’d recommend this one. It’s very user-friendly and has been developed in conjunction with the Stockholm Environment Institute, who developed the REAP Petite calculator discussed below. It has a relatively robust way of estimating, in particular, consumption footprint. However, while it provides a broad split of your footprint across the areas of food, energy usage, travel, and other consumption, it provides a less granular breakdown than some other calculators, and so is not quite as useful if you really want to understand the underlying factors driving your footprint. It is also not so easy to model the impact of potential lifestyle or consumption changes, as in order to so do you need to re-run the entire calculation making different choices, and record the outcomes for yourself for comparison.

My overall favourite  in terms of functionality is the REAP Petite calculator. It was developed by University of York with the Stockholm Environment Institute. The clever thing about this calculator is that it uses UK post-code information to cross-reference to UK consumption surveys, to give a good estimate of consumption in various categories based on where you live. The WWF Calculator is based on a simplified form of the same methodology. The REAP Petite calculator provides user-friendly local averages as a prompt, and against which you can rank your expenditure (as lower, the same, or higher). This therefore provides a good balance between specificity and ease of use. Another nice feature of this calculator is that it allows you to identify various ‘pledges’ for how you will change your lifestyle. This enables you to assess the possible carbon savings from, for example, a change in diet or reduced air travel. This is a great feature, which the WWF Calculator should implement. The REAP Petite calculator includes a separate contribution from public services, such as schools, hospitals, local services etc. Other calculators, including WWF, seem to include a loading for public services implicitly within the consumption portion of your footprint.

There are, however, two problems I found with the REAP Petite calculator. First, the electricity and gas factors seemed at odds with other calculators. I think they may be based on out-of-date carbon intensity for UK electricity generation (which has dropped significantly in recent years). In the end I calculated my energy footprint directly using data from my annual energy statements and converting it using figures provided by the UK Government. The second problem with REAP Petite is that the per head footprint for the UK calculated using their model implies a total UK consumption footprint of 900m to 1,000m Tonnes as opposed to 800m Tonnes reported by DEFRA. I think this is in part because REAP Petite seems to have been calibrated in around 2010, and the carbon intensity of the UK and global economies has reduced significantly since then. The WWF Calculator, which is based on the same methodology, seems to be more regularly updated, and produces an average UK footprint that is 12% below the REAP Petite figures. I therefore scaled back the REAP Petite figures by 12%, which also created consistency with the numbers calculated by other calculators.

The Carbonfootprint.com calculator requires input of detailed information on energy usage and monetary expenditure across a number of dimensions of consumption. It also enables you to pick a particular car model and mileage. It appears to be very comprehensive, taking many dimensions into account. It provides you with a detailed breakdown of the carbon footprint arising from each constituent activity. This is helpful as it allows you to see the inner workings of the model and to make adjustments as appropriate for your circumstances. The main disadvantage of this calculator is that it requires you to input a large amount of expenditure information, which takes time to collate. Also, some of the factors will be based on typical population expenditure and do not scale accurately with consumption – so for example you can get some absurdly high numbers for the carbon impact of financial services, yet the carbon cost of a £100,000 life policy will be no higher than one for £10,000. Also, while using overall food expenditure as a proxy for footprint, it does not allow entry of specific information about dietary mix.

Overall, I found the best approach was to use all three and then to triangulate to get a robust picture, using each calculator to drill into the category where it is strongest. I used Carbonfootprint.com as my primary reference point for home energy, transport and flight impacts, and for my central estimate for consumption and food. I then used WWF and REAP Petite calculators as cross checks, particularly relating to food and diet and other consumption. In this context I found REAP Petite especially useful for estimating the impact of lifestyle changes relating to food and diet choices.

I was comforted that, excluding home energy, which I calculated directly from Government figures based on our electricity and gas consumption, the three calculators gave broadly comparable results for our family’s footprint, within a range of +/-7% (once I had adjusted the REAP Petite figures by 12% as discussed above). This was a reassuringly tight range. The broad category breakdown was also similar, albeit with some variations.

It is a shame that there does not yet seem to be a single footprint calculator that provides good level of specificity and ease of use across travel, home energy, food and diet, and other consumption while at the same time allowing scenario testing for life-style changes. Estimating my footprint took an amount of hacking of the various models that is realistically beyond the likely attention span of most users. Each one of them required some form of adjustment or manipulation to provide a full picture. REAP Petite got the closest to doing what I think is required, but no longer seems to be being maintained directly, although it is comforting that the WWF are still using the methodology, and there may be scope to develop their calculator. I will be feeding this back to them.

Accounting for electricity

Most carbon calculators will convert your annual electricity consumption into a carbon footprint by using a factor of around 0.3kgCO2 per kWH. On our consumption of around 8,000kWH this equates to around 2.5 Tonnes per year. The 0.3 factor is based on the UK’s current energy mix of nuclear, gas, and renewables. It has dropped from around 0.45 five years ago as the UK has phased out remaining coal-fired production – so the UK’s energy production has improved its carbon efficiency by around one third.

Because we are on a 100% renewable energy tariff and also have solar panels (which generate electricity equivalent to around one-third of our annual consumption), I count the carbon cost of our electricity at zero, meaning that our home energy footprint arises purely from our gas central heating. I will go into this in more detail in my next post, as it is not an entirely straightforward conclusion, and the subject of some controversy. I’ll be inviting comments on my rationale, as it’s an important part of how we’re reducing our footprint.

We’ve established the baseline. Now we need to drive the reduction.

(This post is republished with permission from author‘s personal blog. )