DR1. Detailed Reference 1 Guide to Calculating the Carbon Footprint

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1 1 Detailed Reference 1 Guide to Calculating the Carbon Footprint Knowing the extent of the environmental impact of an organization s business travel activities will support informed decision making, drive awareness for campaigns and can be used as a baseline to track progress. A widely used indicator is the carbon footprint. Adapted to travel management, the carbon footprint illustrates how much carbon dioxide (CO2, carbon) emissions are caused by business travel via aircraft, hotel, car or rail. It can even expand into taxis, public transportation and other areas related to corporate travel. The general focus is on greenhouse gases like carbon dioxide. However, the environmental impact of noise, waste, water consumption or ground sealing is important. For an initial criterion and to start the discussion, the environmental footprint limited to carbon (i.e., the carbon footprint) is sufficient as it can be estimated with current available data. Case Studies Calculating the Carbon Footprint Demand Management It would be complicated to calculate greenhouse gas emissions in a precise fashion for each means of transport there are additional effects that would need to be considered and the impact or various factors is still debated in the scientific community. For that reason all carbon emission calculators used for business travel (e.g., those by carbon offset companies, airlines and travel agencies) use proxies and provide different results. Awards and Recognitions Responsible Travel Management Responsible Procurement The aim of this part of the GBTA CSR Toolkit is to introduce travel executives to the topic, explore approaches that can be implemented, as well as raise awareness of the factors and limitations of emission calculations. Whatever approach is implemented, the benefit to corporate social responsibility remains highly positive when a process for measuring and understanding the impact corporate travel has on the environment is established. Risk Management Offsetting Emissions Technology Solutions Groups and Meetings Return to index

2 2 A baseline for analysis and subsequent actions Due to a lack of standards for calculating and reporting a carbon footprint on travel, a carbon footprint analysis requires a decision around the right calculation method that fits the company s goals and data availability. Once established, a baseline and subsequent reports provide the facts to engage other stakeholders in the effort to achieve behavioral change. (See Table 1) Define Calculator Method Supplier Define Available Data Sources and Key Elements Define Internal Methodologies and Processes Establish baseline and target goals Implement Employee Education, Social Networking and Change Management Table 1 Establishing a baseline (Source: A.T. Kearney, Inc.) Align with supplier based on key criteria that aligns with company objectives (e.g., atmosfair, TRX) Understand that the process continues to evolve Define key data elements necessary for scientificrequired calculations Define richest and most accurate data sources (actual miles vs. ranges) Develop internal methodologies to calculate at the global, unit, and traveler levels across all markets Create a matrix that aligns with the entire business Make available information to employees on their impact Define strategic examples in which carbon emissions can be reduced Publish tracking and reporting for awareness Engage business leaders The initial aim of the carbon footprint analysis is to identify how business travel activities compare against the total footprint of a company s activities (especially their core operations) and to identify the key contributors in the travel program. (See sample footprint in Figure 1)

3 3 42% 23% 7% Business Travel Facilities Other Core Operations 28% 86.0% 7.4% 0.8% 5.8% Rail Car Flight Calculating carbon emissions for air travel Aircraft engines emit a variety of substances that directly or indirectly cause climate change. The most significant emissions are carbon dioxide (CO2, carbon), nitrogen oxide (NOx) and several articles made from unburned carbon and sulfur. 1 CO2 is considered a key parameter in climate science and is used as a reference figure between the impact of other greenhouse gases; hence, the focus on carbon in the ecological footprint analysis. The emission of carbon can be described easily in terms of cause and effect as it is directly related to the consumption of jet fuel. The consumption of jet fuel (and for that matter the carbon emission per passenger) in return depends on various factors, e.g., the aircraft type and age, the number of seats on the plane, load factor, transported cargo, and the distance traveled. Different calculation models have been created that differ in depth and complexity to provide a proxy calculation. While some are more sophisticated based on several parameters, others reduce the model to a simple multiplication of distance traveled and average emissions for the trip length. 2 (See Table 2) Hotel Distance x 1000 Distance x 1000 KM as % of total CO2 metric tons Rail % % Car % % CO2 as % of total Flight % % Hotel % Total % % Figure 1 Sample of travel as share of a company s carbon footprint (Source: Advito 2009 based on atmosfair methodology) 1 The climate impact of these substances has been documented in detail by the Intergovernmental Panel on Climate Change (IPCC). In 2007, the IPCC was awarded the Nobel Peace Prize (together with Al Gore) and is seen as the world s leading authority on climate change ( 2 In principle the absolute consumption is higher the longer the distance. On short-haul flights, though, the relative consumption per 100 miles is higher than for mid-haul flights. This is because the start and climb phase requires particularly more energy and is more significant in averages on short-haul flights

4 4 Simple Comprehensive Examples DEFRA Greenhouse Gas Protocol atmosfair Sabre TRX Who is behind this? How are emissions calculated? U.K. Government Department for Environment, Food and Rural Affairs Distance * Multiplier (differentiates short- and long-haul) Joint venture project of World Resources Institute and World Business Council for Sustainable Development Distance * Multiplier (differentiates short-, medium-, and long-haul) German not-for-profit organization that provides carbon offset services Distance * Algorithm (includes various parameters, e.g., route, type of aircraft, typical load factor, cargo) Global distribution and technology solutions provider for the travel industry Distance * Algorithm (includes various parameters, e.g., route, type of aircraft, seating configuration, cargo) Global data processing company with special focus on travel data Distance * Algorithm (includes various parameters, e.g., route, type of aircraft, typical load factor, cargo) More information Table 2 Models for carbon emission calculations So far, there is no international standard for emission calculation 3, so an organization needs to pick the model that best fits their needs. Organizations that have already been calculating carbon emissions in other departments or report emissions externally tend to use a consistent calculator throughout the company. It is recommended that you determine the best approach for your company and create the baseline for future measurements as to the progress and effect of change within your company. (See Figure 2) Some multinational companies that are members of the World Business Council for Sustainable Development (WBCSD) opt for the method developed by Greenhouse Gas Protocol (ghgprotocol), their partnership organization with the World Resources Institute. Others prefer more comprehensive models that are praised by academics but require more data as input (such as the calculators by atmosfair, TRX and Sabre). 3 There is some movement though: On June 18, 2008, the International Civil Aviation Organization (ICAO), a specialized agency of the United Nations, launched its carbon emission calculation methodology and calculator methodology and calculator (see ). Supported by the International Air Transport Association (IATA) and UN World Tourism Organization, a future version has the potential to become a standard provided they can convince their members, academia and environmental NGOs.

5 5 TerraPass Climate Care Carbonfund atmosfair CO2 in metric tons Figure 2 Sample calculation of carbon emissions for specific flights based on different models 4 As always, the benefits of accuracy need to outweigh the costs and efforts of the analysis. A simple model is typically good enough for a rough baseline or as an index. Without a single standard, transparency is paramount: organizations should double-check that the tool or service they plan to apply for carbon emission calculations provides sufficient information about the method of calculation and the underlying scientific assumptions. If the organization has its own department for environmental affairs, it should be brought into the selection process as early as possible Boston (BOS) - San Francisco (SFO) New York (EWR) - Orlando (MCO) Detroit (DTW) - Chicago (ORD) Detroit (DTW) - Chicago (ORD) The related decision whether or not to include the climate impact of emissions in higher altitudes is of significant importance It is generally accepted science that aircraft emissions depend on the altitude flown and with the exception of CO2 have a bigger environmental impact in higher altitudes than emissions on the ground. Organizations need to make a conscious decision whether they want to include this climate impact, and if so which factor, into their diagnosis. Using the Radiative Forcing Index (RFI) one can convert the climate impact of air travel into equivalent carbon emissions on the ground. The multiplier provided by the Intergovernmental Panel on Climate Change (IPCC) as the best estimate is 2.7 (with a range of 1.9 to 4.0); while more recent studies estimate a factor of Scientific uncertainties (outlined in the IPCC report itself) have led to recommendations to not use radiative forcing and simplified multipliers in climate policy design and emission trading schemes. 6 Both ICAO (International Civil Aviation Organization) and IATA (International Air Travel Association) recommend calculations without radiative forcing in carbon footprint analysis until science on climate impact of aircraft emissions in high altitudes is clearer. 7 The subjective decision of companies to base their diagnosis on the carbon equivalent of the overall climate impact of the emissions produced instead of only the amount of actual carbon emissions is significant: the total footprint can be significantly higher than the actual carbon emissions. See example in Figure 3. 4 Based on the results of the standard emission calculator available on the public Website of the provider (return flight, one passenger using standard configuration with Radiative Forcing where available, i.e., atmosfair, Carbonfund and Climate Care) as of June 16, Jardine, C. (2005), Calculating the Environmental Impact of Aviation Emissions, Oxford University Centre for the Environment. In the same text, Dr. Jardine suggests the Global Temperature Potential as alternative metric to replace the Global Warming Potential but (to our knowledge) this is not yet deployed in commercial carbon calculators 6 For more background see Wit, Ron et al (2005), Giving wings to emission trading - Inclusion of aviation under the European emission trading system (ETS): design and impacts, CE, Delft (a Report for the European Commission, DG Environment) 7 See e.g., Aviation carbon offset programmes, IATA guidelines and toolkit Version 1 (2008), International Air Transport Association ( For an overview of research since the 1999 IPCC report see Miake-Lye, R.C. Advancing the understanding of aviation s global impact (2005), Partnership for Air Transportation and Emission Reduction (a research organization sponsored by FAA, NASA and Transport Canada)

6 6 Metric tons CO2 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Class of Service First Class Business Class Emissions per Mile CO2 [tons] CO2 CO2 in RFI altitudes (>9km) CO2 + RFI 2 CO2 + RFI 2.7 CO2 + RFI 4 Economy Class Figure 3 Example to demonstrate importance of decision whether or not to include Radiative Forcing (and with what factor) in a carbon footprint analysis 8 In addition to the number of flights some models also include the class of service as parameter to determine the carbon footprint given the difference in how many passengers fit into the available space of any given aircraft. (See Figure 4) Figure 4 Effect of class of service (Source: A.T. Kearney, Inc.) Companies can determine their environmental footprint effectively, despite the apparent lack of undisputed science Travel management executives who want to understand their carbon footprint can do this fairly easily despite an apparent lack of standards. As a first step, companies need to decide if they want to focus on air only or include other travel components and means of transport. The company-specific travel pattern determines the relevance of broadening the emission calculation to other travel components: e.g., if a company has mainly international long-haul travel the analysis of air emissions may be sufficient as a start; while a carbon footprint analysis for a company that travels a lot nationally by car, air and rail or has a large car fleet should cover more components. 8 Source: Calculation on behalf of Advito for a specific client using the atmosfair model

7 7 As with air, there are no international standards in calculating emissions for other trip components but good estimates can be obtained for most of them. 9 Car: The calculation requires car type (or at least the category) and the distance traveled this can be applied to all types of car travel, e.g., rental cars, company cars, taxi and chauffeur/executive cars Rail: The minimum information required is the distance traveled per country Hotel: The number of nights per destination and hotel category is the basis for a rough estimate The level of data available determines the depth of a carbon footprint analysis the more information a company has, the better and more meaningful the analysis. Even relatively rough information is good enough for an initial estimate. (See Table 3) Airline Hotel Car Rental Rail Number of trips per route Miles or kilometers flown Cabin class of service Country of occupancy Number of nights Hotel tiers Economy/ moderate Upper class Luxury Meetings Number of rental days Miles / kilometers driven Selection of car type Subcompact & Mini Hybrid Compact & Standard Full, Intermediate, Midsize Luxury, Premium Distance Number of trips Type of train (e.g., high speed, commuter) As with any other travel program analysis, organizations have a choice of different data sources for their carbon footprint analysis. (See Figure 5) Expense System & General Ledger E xp e n se d Credit Card C harg ed d ata S up p lier utilizatio n Travel Agency B o o k ed d ata (b es t d ata s o urc e) Inc lud es O nline Supplier Partners K ey s up p lier rep o rting d ata and s tatis tic s C arbon e m issions should b e treated like a irline, hotel, r ental car, g round, m eetings: M easure and r espond a s appropriate t o business o bjectives So urc e: A.T. Kearn ey, In c. All rights res erv ed Figure 5 Identifying key data sources for measurements and reporting For a baseline it is often enough to calculate the carbon footprint on an aggregated level based on trip information only. Over time, further granularity and a link to the actual business, e.g., the ability to identify emissions per business unit, by region etc., will emerge as requirements for strategic management. (See Table 4) Origination and destination city pairs along with travel dates are valid for all categories Table 3 Basic input required for emission calculation (Source: A.T. Kearney, Inc.) 9 Not all emission calculators are useful for a business travel carbon footprint analysis. Some can only calculate on a trip-by-trip basis; others are limited to emissions from air travel and exclude the rail, car and hotel components

8 8 Required data fields for CO2 calculations Travel Start Date Ticket # Invoice # Invoice Date Country Point of Sale Origin Airport Code Origin Airport Name Destination Airport Code Destination Airport Name Class Type Net ID Flight Count Flight Miles/kilometers Desired data fields for strategic management Passenger Name Exchange Refund Vendor Type Domestic / International Code Carrier Code Carrier Name Travel End Date Flight Prorated Fare Credit Card # Credit Card Type DK/Account # Airline Aircraft Type 2Q09 Hierarchy (e.g. unique to each company) Unit Region Group Rank Office Location C arbon r eduction target s etting and o ffsetting plan S ta rtin g fro m a b a se lin e.. m a ke s ig n ifica n t ca rb o n em issio n re d u ctio n e ffo rt an d o ffse t th e re m a in in g b a la n ce o f u n a vo id a b le e m issio n s So urce: A.T. Kearn ey, In c. All rights reserved Global baseline Q4/2006-Q3/2007 Baseline C O 2 e m is s io n s [t] X X X X X C O 2 em issions per revenues/sales [t/m $ ] XX.X Targets Em ission reduction targets to baseline [% ] -5 % -10% -20% Target CO 2 em issions per revenues /sales [ t/m $ ] XX.X XX.X XX.X Figure 6 Setting reduction goals over defined period Measuring Approach. Emission forecast Ta rg e t CO 2 em is s io n [t] (plan) X X,X X X X X,X X X X X,X X X Actual / rem aining CO 2 em ission [t] (plan) XX,XXX Frequency e.g. quarterly Illu s tra tiv e Offsettin g to become carbon - n e u tra l S ta rt o ffs e ttin g Illu s tra tiv e Table 4 Data requirements for matching emission with strategic management (Source: A.T. Kearney, Inc.) Setting a baseline and goals is fundamental It is important to note that for most corporations the absolute amount of emissions is less important than the year-on-year development relative to the baseline period. As long as the model is consistently applied for the calculations over time one can track the effectiveness of the initiatives. Once a data structure is defined it is recommended that a baseline is established along with target-setting goals. (See Figure 6) 1 E m issio n ca lcu la tio n 2 3rd p arty p ro v id er Global Travel Travel E m issio ns IT IT E m is s io ns Manufacturing Global Real Estate Of f ice Inf rastructure Emissions O f f ic es C o n so lid a tion K P Is & R e p o rtin g Global Finance C o ns o lid atio n B o ard s ets PC targets Qtr 1 Qtr 2 Qtr C o ns o lid ate Q1 rep o rt Ja n M a r A p r M a y Ju n Ju l C o n- s o lid ate Q2 rep o rt Measuring and Reporting Approach So urce: A.T. Kearn ey, In c. All rights reserved Figure 7 Sample approach on an enterprise-approach to carbon emission reporting

9 Reporting and management of carbon emissions can be treated like any other travel category managed by the company to understand trend, cost and impact In order for employees to respond and make more informed decisions, it is important to generate ideas and reporting tools. One approach is to track a carbon footprint not only on a corporate or business unit level but also to provide a personalized carbon footprint per traveler. This might contain a basic analysis with recommendation about the options available to make better purchasing decisions at the user level, for example: $450 $400 $350 $300 $250 $200 $150 9 Illu s tra tiv e Number of trips Class of service Rail versus airline Mileage/Kilometers for top 100 city pairs Aircraft or carrier differences by city pair Hotel nights top markets Car rental days and type Some companies even calculate the carbon footprint for specific meetings: for that purpose all trip components and on-site activities for each attendee are included including accommodation, meals and transfers. $100 $50 $0 D U S M U C D U S TX L F R A M U C M U C TX L H A J M U C C G N TX L F R A TX L C G N M U C D U S H A M D U S F R A A IR A S C C o st Ra il AS C C o st A IR C O2 (to n s) p e r S e g m e n t RA IL C O2 (to n s) p e r S e g m e n t * C o st ra il is 1 st c la ss, a ir m ix of b u sin e ss a n d eco n o m y So urce: A.T. Kearn ey, In c. All rights reserved. Figure 8 CO2 per segment and average segment cost air vs rail on top-10 routes A carbon footprint analysis allows quantifying the cost reduction potential of sustainable travel In reporting you can illustrate the impact on carbon emissions and most often the economic benefits through cost reductions. There is a golden opportunity in this global economic turndown that will add further support for efforts that both reduce carbon emissions and drive savings. Examples of comparing the cost of rail to airline usage or the differences on the cabin class of service is outlined in Figure 8.

10 10 The analysis itself is quite simple with the right data and the right tools For the carbon footprint analysis of business travel management activities a consolidated overview of a certain period (e.g., 12 calendar months) is generally sufficient. The components of a carbon footprint analysis and carbon reporting are: Decision on the aim of the analysis (e.g., basis for assessment of options, trend analysis and/or basis for offsetting) and the scope of the analysis (e.g., only air or also car, train and hotel as well as time horizon) Selection of the emission calculator (criteria can be the link to affiliated association, depth of calculation and acceptance of underlying science) 10 Preparation of available data, i.e., selection of the master source for specific data (e.g., travel agency, credit card company, airline, car rental company, internal expense management system) for the period in question Analysis of the results, e.g., Where do we cause the majority of emissions? ; For which routes could we switch means of transport? ; What extra costs would we incur for carbon neutrality through offsetting? Ongoing tracking and reporting (see Figure 7) The carbon footprint analysis is an important component of a diagnostic but is only the beginning It is appropriate to stress that a carbon footprint analysis is only a means to an end. Only acting upon the findings from the analysis will lead to actual reduction of carbon emissions (either in absolute terms or at least in relation to core business activities). Implemented correctly, responsible travel management can enable mobility while maintaining competitiveness and limiting the negative impact for the environment, employees and the wider community. 10 To get a feeling for the carbon calculators available, one can start with the designated travel management companies, specialist consultants, and offset agencies (see Detailed Reference Guide 6: Offsetting Emissions for an overview)

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