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A quick word about the energy markets

Energy prices now

Despite some indication that energy prices may have peaked, we have seen a resurgence in the markets over the past few weeks. Though the UK remains well supplied for its gas needs, issues with imports from Norway and the docking of LNG tankers due to high winds have impacted the short term prices and rising carbon and oil prices in the longer term.

Future view

There remains room for energy prices to increase, but we are approaching the upper levels of historical precedence so for how long prices will continue to rise is questionable. Customers with contracts in 2022 would probably be better waiting to see how prices change over the remainder of the year.

Net Zero – What is it, how do you measure it and why it is important to businesses

It would be almost impossible to avoid references to Net Zero in the media, through supply chains, customers and other stakeholders. However, do we really know what it means? Here is a brief description of what it means from different perspectives, and what it may mean to you.

In its broadest sense Net Zero refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere. When the amount we add is the same as what we take away then ‘we’ have achieved Net Zero. This is important because carbon dioxide is the main greenhouse gas which is contributing to global warming.

Achieving Net Zero will be a different challenge for individuals, businesses and governments. However, in most cases the common factor is that the objective is set with a timescale in mind.

In the UK we have targeted 2050 as our Net Zero target – to achieve this everyone will be expected to take steps to make their own contribution. Businesses will be at the forefront of the race, and though 2050 seems a long way away, achieving Net Zero will take time and so planning for it should start now.

How is it measured

Often referred to as the carbon footprint, emissions are measured in tonnes of carbon dioxide equivalent or tonnes CO2e. A business’s emissions in CO2e can be calculated by applying conversion factors to all the processes that are creating emissions. This will include but not be limited to energy usage, fuel consumption of vehicles etc. However, when considering your carbon footprint emissions are also differentiated into 3 categories.

  • Scope 1 – direct emissions from sources owned or controlled by the business. i.e., process relating to the manufacturing of goods, transport fuel.
  • Scope 2 – indirect emissions – primarily this related to emissions relating to imported services where the actual emissions are created off site i.e., electricity. These are owned or controlled by the business.
  • Scope 3 – indirect emissions are from source not owned or controlled by the business for examples materials bought in to manufacture a product through the value chain.
  • Scope 3 often contributes the lion’s share of a business’s emissions and yet are the hardest to influence.

Why it is important to businesses

For businesses one of the main challenges will be Scope 3. As a result of the requirement of some businesses to report Scope 3, emissions pressure will increasingly be brought to bear on businesses to take action to reduce their own emissions or risk losing the ability to do business with organisations that are not reporting emissions, and taking steps to reduce them.

Also, other stakeholders like capital investors, customers and employees may all bring pressure to bear on businesses to be taking actions.

If you want to know more about how to prepare your business for Net Zero and carbon management let us know.