Batch: II (FIN+HR)

SUBJECT: Environment Management

Carbon Footprint: Corporate India

A carbon footprint is "the total set of greenhouse gas (GHG) emissions caused by an
organization, event, product or person". For simplicity of reporting, it is often expressed in
terms of the amount of carbon dioxide, or its equivalent of other GHGs, emitted. An
individual's, nation's, or organization's carbon footprint can be measured by undertaking a
GHG emissions assessment. Once the size of a carbon footprint is known, a strategy can be
devised to reduce it, e.g. by technological developments, better process and product
management, changed Green Public or Private Procurement (GPP), carbon capture,
consumption strategies, and others. The mitigation of carbon footprints through the
development of alternative projects, such as solar or wind energy or reforestation, represents
one way of reducing a carbon footprint and is often known as Carbon offsetting.
Carbon footprints consideration is done on the basis of the following parameters:
On basis of products:
Several organizations have calculated carbon footprints of products; The US Environmental
Protection Agency has addressed paper, plastic (candy wrappers), glass, cans, computers,
carpet and tires. Australia has addressed lumber and other building materials. Companies,
nonprofits and academics have addressed manufacture and operation of cars, buses, trains,
airplanes, ships and pipelines. The US Postal Service has addressed mailing letters and
packages.
On basis of electricity consumption:
The hydroelectric, wind, and nuclear power always produced the least CO2 per kilowatt-
hour of any other electricity sources. Some relatively new green renewable electricity
generation methods, wind power for example, emit no carbon during operation, but do leave
a minor footprint during construction phase using the cradle-to-grave approach of the
complete production life cycle. Carbon dioxide emissions into the atmosphere, and the
emissions of other GHGs, are often associated with the burning of fossil fuels, like natural
gas, crude oil and coal.
The Kyoto Protocol defines legally binding targets and timetables for cutting the GHG
emissions of industrialized countries that ratified the Kyoto Protocol. Accordingly, from an
economic or market perspective, one has to distinguish between a mandatory market and a
voluntary market. Typical for both markets is the trade with emission certificates:

Mandatory market mechanisms

The Kyoto Protocol to the United Nations Framework Convention on Climate Change
(UNFCCC) established a cap-and-trade system that imposes national caps on the greenhouse
gas emissions of developed countries that have ratified the Protocol. Each participating
country is assigned an emissions target and the corresponding number of allowances – called
Assigned Amount Units, or AAUs. On average, this cap requires participating countries to
reduce their emissions 5.2% below their 1990 baseline between 2008 and 2012. Countries
must meet their targets within a designated period of time by:
• reducing their own emissions; and/or
• trading emissions allowances with countries that have a surplus of allowances; and/or
• meeting their targets by purchasing carbon credits.
This ensures that the overall costs of reducing emissions are kept as low as possible. To
further increase cost-effectiveness of emissions reductions, the Kyoto Protocol also
established so-called Flexible Mechanisms: the Clean Development Mechanism (CDM) and
Joint Implementation (JI).
Voluntary market mechanisms
The voluntary carbon markets function outside of the compliance market. They enable
businesses, governments, NGOs, and individuals to offset their emissions by purchasing
offsets that were created either through CDM or in the voluntary market. The latter are called
VERs (Verified or Voluntary Emissions Reductions). On the positive side, voluntary markets
can serve as a testing field for new procedures, methodologies and technologies that may
later be included in regulatory schemes. Voluntary markets allow for experimentation and
innovation because projects can be implemented with fewer transaction costs than CDM or
other compliance market projects.

A CASE on Voluntary mechanism:

Companies in energy-intensive sectors are under special scrutiny, and have a particular
incentive to reduce their carbon footprint wherever they can, and make better use of natural
resources. ArcelorMittal USA, one of the largest steel producers in the world, has set a goal
to reduce energy intensity in its U.S. operations by 6 percent over a 3 year period. Strong
goals and leadership, starting with the company’s owners and extending through all layers of
management, contribute to the success of the company’s energy management program.
ArcelorMittal’s specialty rolling mill plant in Conshohocken has implemented efficiency
improvements such as automated systems that idle electrical machinery during production
delays, saving the plant more than $200,000 a year on energy bills while reducing carbon
emissions. More than half of the $200,000 in savings was the result of improvements in the
plant’s descaling operation, which removes impurities from the steel slabs during the heating
and rolling process with blasts of high-pressure water. The company replaced the high energy
consumption 3,500-horsepower motor that powers the descaling pumps with a $300,000
variable-frequency drive that allows the motor to idle when the pumps are not in use.
Although descaling occurs only about 2 percent of the time, the 3,500-hp motor was running
constantly before the upgrade. The plant also identified other equipments those consuming
electricity during production delays and developed software that automatically idles and
restarts the devices, saving about $1,300 per week.