Friday, 12 August 2011

The UK government has underestimated the benefits of mandatory greenhouse gas reporting

Several UK NGOs and other organisations have challenged the findings of the UK Department for Environment, Food and Rural Affairs (Defra) on the costs and benefits of mandatory GHG reporting. While Defra’s impact statement estimated the total cost (over a ten year timeframe) of as much as £6,025m and the benefits at no more than £1,355m, the new analysis puts the figures at a maximum cost of £1,417m and a possible benefit of £2,029m.

The study comes from a report by adelphi commissioned by The Aldersgate Group, WWF, The Co-operative Group and Christian Aid. It’s an analysis of the Impact Assessment (AI) published by Defra for consultation on options for mandatory GHG reporting. The AI estimated costs and benefits for four options – the new analysis focuses on option 3, which would introduce mandatory carbon reporting for all large UK companies.

The report maintains that Defra's approach is too narrow. For example, it doesn’t consider the benefits from wider behaviour change, product and service innovation and other advantages. There are also long term intangible benefits for businesses in relation to brand and international reputation.

Net Benefits Option 3 in £m

The report concludes that overall, the new estimates show that the net benefits are significantly higher than the Defra IA and that option 3 provides an opportunity, rather than a burden, for the UK economy.

The report maintains that its new figures are still on the conservative side, because of the lack of reliable data. A number of expected benefits are not included, among them the costs and benefits of reporting international emissions, health benefits from reduced emissions of non-road transport, the positive effects on companies that would not have to report under option 3 and the general international competitive advantages for the UK in the low carbon economy.


Given the clear green incentive inherent in mandatory GHG reporting, the issue is whether it is too much of a financial burden on industry, particularly in an international competitive context. While the cost may be fairly straightforward to measure there are a lot of tangible and intangible benefits, which the report has tried to quantify (for option 3 – reporting for large companies).

From a global warming perspective, mandatory reporting seems like a good idea and likely to create a much greater awareness of the issues within business. Reporting leads to comparisons that lead to action, and green ICT initiatives are likely to be in the front line, so it is very relevant to the ICT market.

© The Green IT Review

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