In its 2012/13 budget, the treasury proposed a 60 percent tax-free threshold on annual emissions for all sectors, including electricity, petroleum, iron, steel and aluminium. All but electricity, where state-owned power utility Eskom dominates, would be able to claim additional relief of at least 10 percent.

Companies have said a carbon tax that places too heavy a burden on the key energy, mining and manufacturing sectors – already under pressure due to rising power and wage costs – will hit profits and wider economic growth.

Government has proposed a carbon tax of 120 rand per ton of CO2e (carbon dioxide equivalent) for emissions above the thresholds. The levy would come into effect in 2013/14, and increase by 10 percent a year until 2020.  A draft policy is expected to be published later this year.

Any carbon tax is designed to create incentives for companies, businesses and individuals to change their behaviors and consumption patterns to reduce the reliance on polluting fossil fuels.  This is simply illustrated in the Carbon Tax Cycle diagram set out below.

Obviously when deciding to become carbon neutral, the first step is to measure your emissions and that is precisely what The Carbon Report can help you achieve. Not only this, once quantified we are able to issue you with certified carbon offsets through our preferred partners.

The carbon offsets we provide are fully traceable through carbon registries and are certified by one of the recognised carbon standards.

The COP adopts decisions and resolutions, published in reports of the COP.  Successive decisions taken by the COP make up a detailed set of rules for practical and effective implementation of the UNFCCC.

The COP also serves as the meeting of the Parties to the Kyoto Protocol, which also adopts decisions and resolutions on the implementation of its provisions.  This annual meeting is referred to as the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP).  However, Parties to the Convention that are not Parties to the Protocol are able to participate in the CMP as observers, but without the right to take decisions.

Sound complicated?  Well it is a bit and one of the reasons why it is very difficult to get the political wills of all of these parties aligned to deliver a binding treaty on climate change.

What was the outcome of COP 17?

The talks resulted in the adoption of the ‘Durban Platform’ – a roadmap to a global legal agreement applicable to all parties. Negotiations for the new agreement, to begin early in 2012, are to conclude as early as possible and not later than 2015. The commitments in the new agreement will take effect from 2020.

The conference explicitly recognised the global gap between countries’ existing emissions reduction pledges out to 2020, and the global goal of limiting average temperature increases to below 2 degrees above pre-industrial levels. It launched a work programme for ratcheting up ambition, a process which will be reinforced by a forthcoming review of the scientific evidence.

The conference also agreed to adopt, in 2012, a second commitment period of the Kyoto Protocol.

Many details remain to be worked out over the coming months, including specific emissions reduction targets, the length of the commitment period, and a process for dealing with surplus emissions allowances. But the headline message is clear. The ‘Kyoto architecture’ – the rules and legal framework for managing emissions – have been preserved and can be built on in the future.

The conference also resolved to establish the Green Climate Fund to support policies and activities in developing countries and to establish a work programme to look at sources of long-term finance for developing countries, with the aim of mobilising at least $100 billion per year by 2020.

Progress was made on several other parts of the international climate regime, including:

• reporting guidelines for developed and developing countries;
• the creation of the Adaptation Committee, which will provide advice and ensure coherent action on adaptation;
• the establishment in 2012 of the Technology Executive Committee, to facilitate the development of low-carbon technologies;
• further details of the framework for reducing emissions from deforestation and forest degradation;
• and a process for establishing new market-based mechanisms to deliver effective reductions in emissions at least cost.

As well as the substantial diplomatic and technical outcomes the Durban conference saw a highly significant political realignment. More than 120 countries formed a ‘coalition of high ambition’ in support of a roadmap to a global legally binding deal. Many African and Latin American states, the group of least developed countries, and the Alliance of Small Island States joined with the EU to argue for the roadmap to a new agreement.

The GHG Protocol is widely regarded as the standard for corporate GHG accounting and company reporting. From a carbon perspective, the protocol is analogous to the generally accepted financial accounting principles (GAAP) for a organisation’s normal accounting and reporting practices.

The GHG Protocol is the basis on which The Carbon Report measures and reports carbon footprints.

The CRC involves a league table that ranks companies according to performance. The UK Government will publish an annual performance league table; the better an organisation performs, the higher it will appear in the league table. Comparative performance of all participants will be shown. Revenue generated from selling allowances will be recycled back to the best performing participants as a bonus; amounts will be determined by positions in the league table, acting as an incentive. Part of the ranking process involved attaining The Carbon Trust Standard which is awarded to organisations that measure, manage and reduce their carbon footprints.

The Carbon Report is based on the same emissions factor criteria required by The Carbon Trust Standard, namely Defra. The output from the report can be used to demonstrate measurement, management and reduction over time and should be used as input into your Carbon Trust Standard application.

Direct Emissions – Scope 1

Emissions are categorised as ‘direct’ when they are generated from activities or sources within the reporting company’s organisational boundary and which the company owns or controls. Under the protocol these are called Scope 1 emissions and are accounted for as such. These largely include fuel burned in company owned assets and refrigerant use.

Indirect Emissions – Scope 2 and Scope 3

‘Indirect’ sources are those emissions related to the company’s activities, but that are emitted from sources owned or controlled by a third party company. These are categorised as either Scope 2 emissions for purchased electricity or as Scope 3 for other non-owned or controlled emissions e.g. rental cars, commercial airlines or paper use.

In most instances, unless legislation or an emissions trading scheme dictates otherwise, companies should choose operational control.

The Carbon Report provides for the following organisational boundaries:

Operational Control

A company has operational control over an operation if it or one of its subsidiaries has the full authority to introduce and implement its operating policies at the operation. This criterion is consistent with the current accounting and reporting practice of many companies that report on emissions from facilities, which they operate (i.e. for which they hold the operating license). It is expected that, except in very rare circumstances, if the company or one of its subsidiaries is the operator of a facility, it will have the full authority to introduce and implement its operating policies and thus has operational control.

Under the operational control approach, a company accounts for 100% of emissions from operations over which it or one of its subsidiaries has operational control.

It is recommended that the operational control approach is chosen unless a company or legislative requirement dictates otherwise. The operational control approach offers the following benefits:

• Provides companies with the most complete accounting and reporting of emissions.
• Enables companies to track performance. This approach is generally better since managers can be held accountable for activities under their control.
• Companies are also more likely to have better access to operational data and therefore, better able to ensure that the information meets minimum quality standards when reporting on the basis of this control.
• It has the advantage that a company takes full ownership of all the GHG emissions that it can directly influence and reduce.

Financial Control

The company has financial control over an operation if it has the ability to direct the financial and operating policies of an operation with a view to gaining economic benefits from its activities. For example, financial control usually exists if the company has the right to the majority of benefits of the operation, however these rights are conveyed. Similarly, a company is considered to financially control an operation if it retains the majority risks and rewards of ownership of the operation’s assets.

Under this approach, the economic substance of the relationship between the company and the operation takes precedence over the legal ownership status, so that the company may have financial control over the operation even if it has less than a 50% interest in that operation.

In assessing the economic substance of the relationship, the impact of potential voting rights, including both those held by the company and those held by other parties, is also taken into account. This criterion is consistent with international financial accounting standards; therefore, a company has financial control over an operation for GHG accounting purposes if the operation is considered as a group company or subsidiary for the purpose of financial consolidation, i.e., if the operation is fully consolidated in financial accounts.

If this criterion is chosen to determine control, emissions from joint ventures where partners have joint financial control are accounted for based on the equity share approach.

Equity

Under the equity share approach, a company accounts for GHG emissions from operations according to its share of equity in the operation.

The equity share reflects economic interest, which is the extent of rights a company has to the risks and rewards flowing from an operation. Typically, the share of economic risks and rewards in an operation is aligned with the company’s percentage ownership of that operation, and equity share will normally be the same as the ownership percentage. Where this is not the case, the economic substance of the relationship the company has with the operation always overrides the legal ownership form to ensure that equity share reflects the percentage of economic interest.

The principle of economic substance taking precedent over legal form is consistent with international financial reporting standards. The resources preparing the inventory may therefore need to consult with the company’s accounting or legal staff to ensure that the appropriate equity share percentage is applied for each joint operation.

The Carbon Report caters for all organisational boundary approaches.

In most instances the only factor that differs between geographies is that of electricity grid emissions which are all available by country.

The Carbon Report, powered by sustainableIT is a useful tool for all business in all geographies. If you do have any country specific requirements, please feel free to contact us to discuss further.

In most instances the only factor that differs between geographies is that of electricity grid emissions which are all available by country.

The Carbon Report, powered by sustainableIT is a useful tool for all business in all geographies. If you do have any country specific requirements, please feel free to contact us to discuss further.

The solution manages the complexity of reporting your carbon emissions and can cater for complex corporate structures as well as equity based and control based reporting, be that operational or financial control. The solution is also ideally geared to doing a footprint based on multiple organisational boundaries to determine how best to report or comply with specific reporting requirements.

Both mandatory and voluntary emissions are covered within the solution and we guide you through the process of what you need to report, what data you require and how to capture you GHG inventory.

Extensive help is available within the tool so whether you are a novice when it comes to carbon footprint, or an experienced consultant, The Carbon Report is suitable for you.

Telephonic support is also available as part of your subscription to guide you through any reporting complexities you may encounter. Webinars and face to face workshops can also be arranged.