Carbon reporting metrics

There are number of ratios or metrics that can be applied in order to measure energy efficiency and manage a company’s operations in a low-carbon economy. There is a variety of analysis to understand how company can best reduce their emissions, whether it is reducing operational output, buying carbon offsets or investing in clean development mechanism (CDM) projects.

 

Improving insight

Carbon reporting can greatly improve and deliver more insight into energy consumption, production and electricity usage; relative to carbon emissions, cost of carbon and financial earnings. This is particularly evident with periodic reporting of a company’s energy and emissions.

A basic example is the computation of an electricity generator’s heat rate, which is energy consumption divided by energy produced. In the following example, excluding the two renewable hydro sources of electricity, the Western Lake Generator achieved the greatest electricity generation efficiency (relative energy consumed) in February 2012.

In a general sense the above signals the Western Lake Generator is more energy and carbon efficient than XRT Generator.

 

Effective sense-check

The carbon report will represent an effective sense-check, which will validate not just calculated outputs, but serve to ensure the reported and analysed energy and carbon numbers are fully correct. A prime example would be the computed carbon emissions/energy produced ratio of a gas-fired electricity generator, which assuming the generator is operating as per normal, will exhibit consistent and uniform emissions intensities across a time series.

As highlighted earlier in this blog, the Western Lake Generator is proved to be more energy and carbon efficient than XRT Generator.

 

Reporting conduit between financial and sustainability reporting

The implementation of a monthly or periodic energy and carbon reporting routine will, like a company’s disciplined and structured financial reporting disciple, help to bridge the gap between operational, commercial and executive management stakeholders. In terms of delivering a report that produces a variety of different and hybrid metrics, such as Greenhouse Gas Emissions/Energy Consumed, or Earnings before Interest Tax (EBIT)/Carbon Liability ($).

Naturally the above renewable hydro assets will derive a healthier EBIT/Carbon Liability ($) – Scope 1 (Direct Emissions), because of their minimal carbon liability compared to the fossil-fuel powered Western Lake Generator and XRT Generator.

 

Final word on Carbon reporting metrics

One must consider the reasons and benefits derived by a company in measuring energy and carbon efficiency of its operations. The carbon reporting will give more insight into energy consumed and produced, relative to emissions and financial earnings. Subsequent application of ratios and efficiency calculations will serve as a sense-check.  Finally, the carbon metrics will also represent a conduit between financial and sustainability reporting.