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Energy Services - Q&A06/11/2019
Business becoming more sustainable is good for the environment and presents the opportunity to substantially reduce future energy spend and operating costs. However, Alwyn Frank advises that developing and executing a strategy to enable this outcome requires some expert commercial and procurement support.
Why seek to make your estate more sustainable?
Regardless of whether your organisation has a greenhouse gas (GHG) emission target, reducing emissions is consistent with good corporate stewardship. It can also support the case for wider change and improvement in organisations, such as investment in improving the spaces in which people work and live.
Over the next 20 years the move to a zero-carbon economy will require the use of fossil fuels including gas, LPG and heating oil, to be almost completely eradicated. A substantial proportion of energy demand will transfer to electricity, further increasing demand for lectricity and pushing up prices. With electricity prices forecast to increase by approximately 75% in the next ten years(1), and gas by approximately 30%(2), there is a compelling business case for almost every organisation to consume less energy and become more sustainable.
We have a GHG emissions target and we work to that
Many organisations will already have a GHG emissions reduction target and may be on track to achieve this, however we believe that here are two fundamental challenges in only focusing on the current targets. First, as above, the price of energy is going to increase significantly, so neglecting opportunities to reduce emissions below target will end up costing organisations money.
Second, in the next ten years the target will become net zero from grid, requiring further investment in reducing GHG emissions across he economy. This needs to be reflected in current corporate policy and investment decisions to avoid a situation where considerable future expense is needed to upgrade performance to meet future, lower emissions targets. An over-arching strategy to deliver best value for money is crucial for any organisation.
Even where government targets do not apply to your organisation, it is clear that society as a whole is shifting rapidly away from fossil fuels. As investment is re-focused, we are likely to see reductions in the infrastructure to support fossil fuel technologies. With the UK’s fourth carbon budget requiring a 51% reduction in GHG by 2025, this change will be happening sooner than you expect.
What should an organisation do to become more sustainable?
Current and future energy needs vary considerably from organisation to organisation, as do the budgets available for investment in sustainability initiatives. Consequently, objectives and strategies need to be carefully aligned to each organisation’s situation, and funding solutions and contracting models tailored to deliver the outcomes being targeted. Capita Procurement Solutions has specific expertise in developing strategic and commercial approaches that are appropriate for a broad range of organisations. This includes defining strategy, developing funding and commercial models, procuring service providers against these contracts, and in-contract commercial support.
How do I see if this is right for my organisation?
We can conduct an initial assessment of your organisation. To maximise the value provided this will include consideration of energy consumed both directly and within the influence of the organisation, assessment of current and future GHG emission targets and sustainability initiatives, as well as the organisation’s aspirations in this space. This initial assessment will identify strengths and weaknesses of current approaches to sustainability, including opportunities to accelerate towards zero carbon and the likely financial and other benefits to your organisation.