Britain explores the supply chain as a carbon target
Cath Hart, The Australian, September 29, 2008
WHILE the Australian Government continues its consultations on the proposed emissions trading scheme, companies in Britain have begun looking for creative ways to reduce their carbon footprint by reducing energy use in their supply chains.
Booz & Co Sydney-based consultant Greg Lavery said several British companies had been examining more energy-efficient supply chains as a "hidden source of emissions reductions".
"In a carbon-constrained environment, energy-efficiency measures represent the low-hanging fruit for companies wanting to reduce any direct emissions liability or exposure to rising energy prices," Dr Lavery said.
Supply chains offered "surprising distortions or anomalies that open up the potential for deep cuts in the emissions footprint".
One of the most surprising examples of an energy-saving opportunity arose from a pilot study Booz & Co did for the UK Carbon Trust.
It resulted in a potato chip manufacturer being advised it could reduce its carbon footprint by buying low-moisture spuds.
"Because European potato suppliers were being paid by weight, they had an incentive to produce heavier, moister potatoes by controlling humidification," Dr Lavery said.
"The cooking needed to burn the few extra grams of water in each potato was significant and accounted for an unexpectedly high percentage of the energy consumption per potato chip."
The revelation prompted the Carbon Trust to ask procurement contracts to be modified to favour farmers producing "less moist potatoes".
"This change alone would reduce emissions at the potato-frying stage by 10 per cent and slash the manufacturer's CO2 output by up to 9200 tonnes per year," Dr Lavery said.
"As much as anything this is a win for shareholders as less energy translates to lower costs, and the manufacturer can make a strong pitch to consumers concerned about their impact on the environment."
Dr Lavery said supply chain analysis for carbon abatement was necessary to inform capital investment decisions.
His comments came as JPMorgan released analysis of the impact of the proposed emissions trading scheme on Australia's LNG exporters.
It found that all projects under its coverage would achieve an internal rate of return of 12 per cent or higher "even with a $50/tonne carbon charge".
"The lowest emitting project according to our estimates is the Pluto project, whereas the highest carbon emitting project is the Browse LNG project," analyst Mark Greenwood said.
"We were surprised when we worked through the details that the coal seam methane LNG projects, which contain negligible CO2, do not have the lowest CO2 emissions."
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