Thursday, 5 June 2008

BT's Climate Commitment

You may have seen news coverage earlier this week about UK telecom/IT services company BT's plans to cut carbon emissions. The headline was that the company plans to reduce emissions worldwide by 80% from 1996 levels by 2020. I was at a BT analyst meeting on Tuesday to talk about what the company is doing. There was an interesting discussion about the plans.

The new target appears to be a re-working of previous objectives, mainly to fit in with the company's expanding overseas operations. In it's last response to the Carbon Disclosure Project BT had included a target of reducing its emissions by 80% by 2016 (which is what we have reported in 'Playing the Green IT Card' - our latest report on the market), but it seems that was for the UK only.

It transpires that the company's emissions from overseas operations have grown from just 1ktonne in 1996/7 to 220ktonnes in 2007/8 (the company's non-UK revenue grew by 28% last year alone). In the light of this growth BT has declared that it is impractical to extend the UK emissions target to cover the whole company. Whilst the UK target will be maintained, a new measure - emissions intensity - and new target will be used for the group as a whole.

Emissions intensity measures the emissions per unit contribution to GDP (or value-added business). Basically it relates emissions to business growth, but it also means that it can generate targets based on expected future CO2/GDP.

I've been rude about emissions intensity targets in the past. It is an oft-quoted method used in the States (the Bush administration has favoured it) but has the inherent problem that targets using the measure do not guarantee any absolute reduction in CO2 emissions. As I understand it, the BT model differs in the fact that they have created targets based on economic estimates of what the market as a whole needs to achieve. The problem is that this is an average, so there will be anomalies along the way.

I only mention it to point out how hard it is to set measures and targets. I'm sure that BT has the best of intentions in doing it this way and it does appear to have some very authoritative support, but I suspect there will be further debate.

Just to give BT its due, the company plans to achieve the target through energy efficiency, on-site renewable generation (aiming for 20% by 2016) and purchasing low-carbon electricity. They did also talk about offsets at the meeting, but that now seems to be a last resort.

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