Logistics Carbon Reduction Scheme

Logistics Carbon Reduction Scheme
First Annual Report
Recording, reporting and reducing CO2 emissions
from the logistics sector
LCRS managed by FTA
Printed on 100% recycled paper
Dear Colleague
I am pleased to present the first Annual Report of the
Logistics Carbon Reduction Scheme, covering activity
and data from 2005 to 2009.
Working through the Freight Transport Association,
operators have launched the scheme to pool their
emissions of logistics-related greenhouse gas emissions
and work towards an agreed voluntary reduction target
over the medium term. This report establishes the
baseline for the scheme against which future progress
and reductions will be measured.
Carbon emissions from logistics account for almost a
third of total domestic transport emissions in the UK
but without the services that the sector provides the
economy and essential services would grind to a halt. We need to start making intelligent decisions if we
want to make a meaningful reduction in our carbon output without doing irreparable damage to British
business along the way. But before we can do this, we need to know precisely how many tonnes of CO2
we are responsible for as an industry.
I wrote to Government in December 2009, to state our commitment to develop this innovative initiative
with the support of 12 founding members. I felt that we as an industry were far too reactive to policies
being set by Government and that it should be us setting the agenda. In doing so, this scheme provides
the roadmap for future transport-related carbon reduction policy in the UK and beyond.
Since 2009, we have moved quickly and decisively to establish a voluntary carbon reporting scheme for
the logistics industry. The scheme has been open for all operators of commercial vehicles to join from
the beginning of 2010. Members provide readily available information on vehicle numbers and simple
fuel usage data that is converted into carbon dioxide emissions using Government approved conversion
factors. The figures are then analysed in aggregate form. From this we have built an accurate picture
of the logistics sector’s total carbon emissions, something that has, until now, been sadly lacking. I am
delighted with the progress that has been made so far.
I would also like to take this opportunity to thank Professor Alan McKinnon and Dr Maja Piecyk of the
Logistics Research Centre at Heriot-Watt University for their contribution to this work and their support
with the development of the Logistics Carbon Reduction Scheme.
We are now entering a period of evolution as we aim to increase the membership of the scheme and its
footprint in the logistics sector, to cover modes in addition to road transport and provide businesses with
the tools that they need to cut and continue to reduce their carbon emissions.
I am confident that with the support of industry and the hard work of the Logistics Carbon Reduction
Scheme team, we will be able to see it go from strength to strength.
Stewart Oades
FTA President
LCRS First Annual Report
3
Executive summary
FTA announced its plan to introduce the Logistics Carbon Reduction Scheme (LCRS) in December 2009
as a voluntary, industry-led response to the climate change challenge evident at the intergovernmental
meeting on climate change in Copenhagen. The principle behind the scheme is that in the case of
freight transport, industry is best placed to make and implement these actions, rather than Government
imposing additional cost and red-tape on companies through regulation, tax and artificial targets. For the
logistics sector, where fuel represents the biggest single input cost, reducing carbon dioxide emissions
often makes business sense as well.
The scheme is a pioneering one for FTA, which manages the LCRS, and for the scheme’s participants. The
commitment at a senior level within 45 businesses, operating in excess of 39,000 commercial vehicles,
to join the scheme in its first year underlines the collective will of the sector to make progress, and to
dedicate time and effort to getting a credible mechanism for industry-level reporting in place.
This first annual report of the scheme highlights the early progress that has been made.
• A robust set of data requirements from scheme participants has been put in place. This quantifies
the carbon dioxide emissions created from fuel used in commercial vehicles (which represent over
90 per cent of all domestic freight transport emissions), as well as introducing a series of generic
normalisers through which carbon efficiency can be measured in the light of changing business
conditions
• Historic trends in carbon dioxide emissions from commercial vehicles operated by scheme
participants between 2005 and 2009 have been established to test the proof of the concept of the
emissions datasets and normalisers
• A series of five logistics efficiency indicators have been established to create a framework around
which carbon reduction initiatives can be identified and on which a target for the scheme can be
based
• An activity-based reduction target for the scheme has been set where participants are collectively
committed to reducing emissions by eight per cent by 2015 compared to a 2010 baseline
The scheme has also reinforced the value of a disciplined mechanism of collecting and reporting fuel
data within businesses. Such an approach creates awareness of fuel use and opportunities to reduce it
throughout the business, from board level corporate social responsibility objectives to the targeting of
individual vehicle and driver fuel efficiency performance.
Whilst significant progress has been made in establishing the scheme within the industry and with
Government there is still much to do, particularly in terms of building the scheme’s membership so that
it can influence future Government thinking on sector contributions to national climate change targets.
The scheme remains open for all businesses moving freight within the UK to join, details of which are
contained in the final section of this report on page 35.
4
FTA LCRS Annual Report 2010
Contents
The purpose and rationale for the scheme
6
Companies in membership of the Logistics Carbon Reduction Scheme
10
Climate change policy development
12
How the scheme works
16
LCRS emissions levels and trends 2005–2009
20
Setting a carbon reduction target for the logistics industry
23
The next steps
26
Appendices
Appendix A
List of the founding members of the Logistics Carbon Reduction Scheme
28
Appendix B
List of members of the Logistics Carbon Working Group (LCRS steering group)
29
Appendix C
Letter to Rt Hon Philip Hammond MP, Secretary of State for Transport, July 2010
30
Appendix D
Logistics Carbon Reduction Scheme rules
31
Appendix E
Alternative approaches to carbon reduction target setting
33
How to join the Logistics Carbon Reduction Scheme
35
LCRS First Annual Report
5
The purpose and rationale
for the scheme
Origins and purpose of the Logistics
Carbon Reduction Scheme
Since the publication of the Stern Report in 20061
and the passing of the Climate Change Act in 2008,
decisive and binding Government action to reduce
greenhouse gas emissions has gained momentum.
The logistics industry has recognised that with freight
accounting for around a third of transport emissions
in the UK, pressure to reduce them would almost
certainly impinge on the way that it operated in
future. There is a realisation that without action on
the part of industry to record and report progress
in reducing carbon emissions from freight operations,
Government might regulate to cut emissions, either
through legislation or tax.
The Logistics Carbon Reduction Scheme (LCRS)
is a voluntary, industry-led approach to recording,
reporting and reducing carbon emissions from freight
transport. Industry announced its intention to develop
the scheme in a letter from FTA to Government ministers in December 2009; this letter was co-signed
by the chief executives and senior managers of the
scheme’s 12 founding members (Appendix A, page
28).
The scheme has since been developed by a steering group of 20 FTA members: companies ranging
from retailers and third party logistics providers to
utility companies and builders’ merchants (Appendix
B, page 29). Scheme members provide vehicle numbers and simple fuel usage data to FTA that is then
converted into carbon dioxide emissions using conversion factors (approved by the Department for
Environment, Food and Rural Affairs (Defra)2). FTA
then aggregates data from scheme members, reports
totals and tracks improvements in carbon emissions
and fuel efficiency over time. Aggregated data from
the scheme allows the UK logistics sector to publicly
report, for the first time, its contribution towards
national targets to cut greenhouse gas emissions.
LCRS captures the progress that industry is making in
reducing transport-related emissions through fuel efficiency improvements, better commercial vehicle fleet
utilisation, use of alternative low carbon modes and
less carbon intensive supply chains. Changes in carbon dioxide emissions from freight over time are now
being reported publicly in absolute terms and relative
terms, using a series of generic carbon intensity factors to take account of changing business conditions.
Initially, the scheme is focusing on fuel used in commercial vehicles (vans and lorries/trucks); in time, its
scope will be expanded to cover other modes. In the
first instance, it was judged to be most effective and
in the interests of the scheme’s simplicity, to focus on
the source of the majority (99 per cent) of industry’s
2 Guidance on how to measure and report your greenhouse gas
emissions, Department for Environment Food and Rural Affairs and
Department of Energy and Climate Change, September 2009
www.defra.gov.uk/environment/business/reporting/pdf/ghg-guidance.pdf
1 The Economics of Climate Change – The Stern Review, Nicholas Stern,
Cabinet Office – HM Treasury, January 2007, Cambridge University Press
6
LCRS First Annual Report
Guidance on measuring and reporting Greenhouse Gas (GHG) emissions from freight transport operations, Department for Environment
Food and Rural Affairs, December 2010
www.defra.gov.uk/environment/business/reporting/pdf/ghg-freight-guide.pdf
CO2 emissions, namely the combustion of hydrocarbon fuels in vehicles.
On 12 October 2010, Transport Minister, Mike
Penning, announced that the Government would not
make eco-driving a mandatory part of the Driver
Certificate of Professional Competence at that time.
He said, “I will … respond to industry assurances that
they have the will to increase uptake of eco-driving
training without direct Government intervention, and
will encourage and support industry-led initiatives to
improve fuel efficiency and tackle carbon emissions,
of which a number have emerged as a result of this
consultation.” This was a welcome acknowledgement
of the value and contribution made by schemes such
as the LCRS.
It is clear that the role and choices available to
Government and the influences that decisions may
have on the logistics sector are not straightforward
ones. In essence, three options are available; Figure 1
(overleaf) shows that Government policies can:
•‘Tax
and constrain’, using measures that work
against carbon reduction and business efficiency
(highlighted in red). For example, by promoting
Perry Watts
Table 1
LCRS milestones in 2009/10: from launch to the
first Annual Report
December 2009
FTA President writes to Government
outlining the Association’s proposal to set
up a scheme, supported by 12 founding
businesses
February 2010
FTA receives a letter from Lord Adonis, then
Secretary of State for Transport, giving his
backing for the scheme
April 2010
FTA Logistics Carbon Working Group agrees
the scheme rules
July 2010
The scheme is officially launched with 37
members covering 37,278 commercial vehicles.
PricewaterhouseCoopers verify the scheme
rules
September 2010
FTA develops an initial start-up review to
check its understanding of the data received
from members and undertakes one-to-one
reviews at members’ sites
October 2010
Transport Minister, Mike Penning, opts to
back industry-led measures, such as the
LCRS, to reduce carbon emissions from
freight rather than making eco-driver training
mandatory
The role of Government
The scheme has been designed to dovetail into a UK
agenda for carbon dioxide reduction which is supported by legislation, national policies and initiatives
by a number of Government departments. However,
to achieve the carbon reduction targets that are
planned, industry’s efforts need to be complemented
by Government action in the areas of vehicle design,
technology and supporting the development and
uptake of alternative fuels.
CEO UK & Ireland for DHL Supply Chain
“DHL is pleased to be amongst the founder members of the FTA LCRS and
fully supports its intent.We hope that this positive initiative from the industry
will demonstrate to Government that we are committed to improving our
environmental impact and we urge more operators to join the scheme to
increase momentum and have their say in defining future transport strategy.”
The Department for Transport commences
review of initial start-up reviews.
December 2010
March 2011
By the close of 2010, the scheme had 43
members, covering in excess of 39,000
commercial vehicles
Carbon reduction target published in LCRS
first Annual Report
technological solutions that increase industry’s
costs, changes to vehicle design that erode efficiency and through increased taxation
•‘Burden
and boss’, by introducing policies that
achieve a carbon reduction with marginal business benefit (highlighted in yellow). For example,
pushing for modal switch, introducing mandatory
LCRS First Annual Report
7
greenhouse gas reporting and environmental
objectives such as local air quality initiatives which
may be incompatible with a decarbonisation
agenda
In developing LCRS, the logistics sector believes
•‘Promote and encourage’ by using interventions
that it is demonstrating to Government that greater
that benefit both business efficiency and carbon
reduction (highlighted in green). For example,
allowing increased night time deliveries, improvements in vehicle capacity such as allowing
longer semi-trailers and encouraging voluntary
greenhouse gas reporting
progress will be made towards reducing logistics
• ‘Pump prime and enable’, there are also measures
(shown in blue) which will need Government support if they are to become mainstream business
decarbonisation measures that make commercial
sense. These include renewable fuel usage tar-
contributing to national carbon reduction targets
gets, promotion of alternative fuels and the CRC
Energy Efficiency Scheme
carbon emissions by it working with and supporting
businesses, rather than by burdening it with restrictive legislation and increased taxation. FTA wrote to
Philip Hammond, Secretary of State for Transport in
July 2010 to confirm the scheme’s commitment to
(Appendix C, page 30).
Figure 2 shows how the logistics sector is performing
in terms of the five key low carbon indicators.
Figure 1
Government influences on freight’s carbon dioxide emissions
Carbon benefit
Longer semi-trailers
Renewable targets
Voluntary ghg reporting
Alternative fuels
Modal switch
CRC
Local air quality initiatives
Mandatory ghg reporting
Business +
Business –
Euro 6
4m max vehicle and trailer height
Fuel duty increases
8
LCRS First Annual Report
Night time deliveries
Carbon penalty
Figure 2
Low carbon indicators for the logistics industry
Indicator
Freight modal spilt
Percentage of UK inland freight moved by rail
Empty running
Percentage empty running by hgvs
Average vehicle payload
Average payload of hgv fleet
Fuel efficiency
Average hgv fuel consumption
Carbon intensity/use of alternative fuels/hybrid technologies
Commercial vehicle stock which is alternatively fuelled (hgvs and vans)
Performance
in 2009
Martin Johnson
National Environment Manager, Kuehne + Nagel
“Kuehne + Nagel is delighted to be a founder member
of this innovative and practical project to reduce
road freight carbon emissions. Kuehne + Nagel is
committed to minimising the impact of our activities
on the environment.”
Change
on 2005
11.7%
+1.2%
28.3%
+3.3%
13.9 tonnes
+4.6%
8.4mpg
–7.7%
13,000
+18%
Sources: Transport Statistics Great Britain 2010
LCRS First Annual Report
9
Companies in membership of the
Logistics Carbon Reduction Scheme
The following companies are now in membership of the LCRS.
10
LCRS First Annual Report
In addition to the members of the scheme listed above some 100 companies
have expressed interest in joining and requested and received information packs.
SITA UK Ltd and
Wolseley UK are also
members of the Logistics
Carbon Reduction Scheme
LCRS First Annual Report
11
Climate change policy development
In December 2009, world leaders gathered in
Copenhagen to try and secure a political deal to
reduce world carbon emissions. In the event, discussions at the summit fell short of securing the sort
of political consensus that would lead to a treaty on
climate change. Instead, the Copenhagen Accord, as
it was named, made reference to the need to keep
temperature rises to no more than 2°C but set no
targets. Furthermore, in December 2010 global talks
at Cancun again made little progress.
Despite the lack of progress made in Copenhagen
and Cancun, the UK and, albeit with a less challenging
goal, the European Union, have remained committed
to achieving ambitious carbon reduction targets. It is
clear that if a substantial absolute reduction in carbon
emissions is to be achieved, all sectors of the economy will need to achieve meaningful cuts.
Under the terms of the Climate Change Act 2008,
the UK must reduce greenhouse gas emissions by
34 per cent by 2020 against 1990 levels. An 80
per cent reduction in greenhouse gas emissions by
2050 is also required against the 1990 baseline. The
Committee on Climate Change (CCC) was set up
to independently advise the Government on emission target, greenhouse gases and carbon budgets. In
its most recent report, the Fourth Carbon Budget1, it
advocated that a further target should be set for 2030
to reduce emissions by 60 per cent compared to 1990
levels in order to meet the 80 per cent reduction target by 2050 as set out in the Climate Change Act.
In July 2009, the Government published its Low
Carbon Strategy which outlined the steps that will
be taken to meet the UK target for 20202. The carbon reduction strategy for transport has since been
published by the Department for Transport (DfT).
‘Low Carbon Transport: A Greener Future’3 sets out
the actions already taken, and the building blocks that
need to be put in place, for longer term changes in
transport emissions up to 2050.
Defra has jointly published voluntary guidelines for business on how to record and report greenhouse gas
emissions with the Department for Energy and Climate
Change (DECC)4. FTA has met with Defra officials to
update them on LCRS and they have indicated that the
scheme is suitably matched to the voluntary guidelines
and in accordance with Scope 1 of the Greenhouse
Gas Protocol5 (a global accounting and reporting standard from the World Resources Institute and the World
Business Council for Sustainable Development). Defra
has since published voluntary guidance on reporting greenhouse gas emissions in the freight sector
(December 2010). This guidance was produced in conjunction with DfT and key freight industry organisations
1 The Fourth Carbon Budget – Reducing emissions through the 2020s,
The Committee on Climate Change, December 2010
www.theccc.org.uk/reports/fourth-carbon-budget
2 The UK Low Carbon Transition Plan – National strategy for climate and
energy, HM Government, July 2009
www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/lc_trans_plan/
lc_trans_plan.aspx
3 Low Carbon Transport: A Greener Future – A Carbon Reduction
Strategy for Transport, Department for Transport, July 2009
http://webarchive.nationalarchives.gov.uk/20091002205238/http://dft.gov.
uk/pgr/sustainable/carbonreduction/low-carbon.pdf
4 Guidelines to Defra/DECC’s GHG Conversion Factors for Company
Reporting, Department for Environment Food and Rural Affairs and
Department of Energy and Climate Change, Annual updates
www.defra.gov.uk/environment/business/reporting/conversion-factors.htm
5 The Greenhouse Gas Protocol: A Corporate Accounting and Reporting
Standard, World Resources Institute (WRI) and the World Business
Council for Sustainable Development (WBCSD)
www.ghgprotocol.org
12
LCRS First Annual Report
and businesses that are part of DfT’s Low Carbon Supply
Chain Steering Group, of which FTA is a member.
to be made by early 2011. However, FTA has voiced
concern that it is too soon to decide on mandatory
reporting, given that Defra’s voluntary greenhouse gas
reporting guidelines were only introduced in October
2009 and that voluntary schemes, such as LCRS,
should be given a chance to work first. A decision was
still awaited at the time this report went to print.
Under the current legislative framework there is no
mandatory requirement to record and report carbon
emissions from business. Defra published a review
in late 2010 on the value of recording and reporting greenhouse gas emissions in significantly helping
UK businesses to contribute to UK reduction targets.
The review found that greenhouse gas measurement
and reporting are important initial steps in emission
reduction and target setting, to allow targets to be
communicated and abatement effort targeted.
David Morton
Strategic Development Director, Menzies Distribution
“Menzies Distribution Ltd has been addressing environmental
issues for around 10 years.We have focused in particular on carbon
emissions reduction as this equates directly to our operational costs.
This has had a significant, positive impact on our business.We remain
committed to action, and to both supporting and learning from others.”
Decarbonising logistics
The transport sector accounts for around 21 per cent
of UK domestic greenhouse gas emissions with freight
transport by all modes accounting for around 30 per
cent of these emissions. Transport predominantly produces CO2 rather than other greenhouse gases, hence
the focus on carbon.
The Climate Change Act requires that a decision on
mandatory reporting should be made by 2012, or an
explanation be made to Parliament explaining why it
has not been put in place. The decision is expected
Figure 3
Sources of carbon dioxide emissions, 1990–2009 (Mt)
600
500
Agriculture
400
Residential
300
Public
200
Transport
100
Business
Energy supply
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
1990
Carbon dioxide emissions (Mt)
700
Source: DECC
LCRS First Annual Report
13
The transport sector has already made progress in reducing these emissions. According to DfT, UK domestic transport greenhouse gas emissions in 2008 (the latest confirmed data) were three per cent lower than in 2007, the
largest reduction in transport emissions since 1990. Cars
remain the single largest emitter with hgvs considered
significant contributors, yet these modes have shown the
most progress in reducing emissions since 1990. Aviation
and vans, and to a lesser extent shipping and rail, have
shown growth in their emissions since 1990, although
their share of transport emissions remains relatively small.
Decarbonising freight is seen as a key part of DfT’s longterm carbon strategy.
•Emissions from hgvs accounted for almost 51 per
cent of carbon dioxide emissions from freight
transport in the UK in 2004 and emissions from
vans a further 28 per cent
Key recommendations from the report of specific
interest to the transport sector include:
•international
shipping and aviation should be
included in future carbon budgets
•emissions
from surface transport will remain a
large share (22 per cent) of total emissions in 2030
but they would expect them to fall afterwards
with the increase in use of electric vehicles
•In the UK, carbon dioxide emissions from trans-
The Committee suggests the following abatement
possibilities for freight:
port sources increased by 6.3 per cent between
1990 and 2008
•Modal shift – from high emitting road travel to
•123
million tonnes of carbon dioxide in 2008
were from road transport, accounting for
19.3 per cent of emissions
•In 2008, hgvs contributed 20 per cent of transport emissions, cars made up 59 per cent, and
light duty vehicles, which includes vans up to
3.5 tonnes, contributed 11 per cent
Figure 4
Breakdown of transport CO2 emissions by mode in 2008
Hgvs
20%
Light duty vehicles
Buses
11%
Rail
Domestic shipping
59%
2%
2%
4%
Passenger cars
Source: Department for Transport, Transport Statistics 2009
LCRS First Annual Report
rail or water
•Supply chain rationalisation – optimising distribution centre locations, sourcing produce locally
and greater use of consolidation centres
• Vehicle
utilisation – increasing load sharing, backloading initiatives and software for routeing and
load consolidation (Evidence suggests that backloading vehicles can achieve 4–20 per cent vehicle-km
savings)
To this should be added:
•increased use of more fuel efficient conventional
vehicles, through the introduction of electric/plugin hybrids and increased penetration of biofuels
•increases in eco-driving to encourage more fuel
efficient driving behaviour
Domestic aviation
2%
14
Two years after its initial report, the Climate Change
Committee (CCC) turned its attention to freight. In
December 2010, it published its recommendations
to the Government on the Fourth Carbon Budget.
The report considers the scope for further cuts in
emissions from buildings, industry, the power sector,
agriculture and transport in the 2020s.
These scenarios for freight emissions identified
by CCC suggest scope for significant reduction.
However, the Committee believed further evidence
was required on:
• long-term potential for transfer of freight from road
question, and is a strong baseline position from which
awareness will grow in the future.
to rail and water transport and cost-effectiveness
of further network/infrastructure investment
However, as early as April 2007, FTA asked members
about their response to climate change in the way they
moved freight and operated their vehicles. Almost all
survey respondents reported making at least some
operational changes which would reduce their organisation’s carbon footprint. Ninety per cent of those who
had reported taking action were actively monitoring fuel
efficiency and nearly 80 per cent regularly reviewed the
deployment of vehicles to minimise empty running.
• availability of backhauls and load sharing opportunities
which could be taken up by hauliers in the 2020s
• abatement potential from changes in business practice such as just in time delivery, vendor managed
inventories and supply chain event management.
Industry response to climate change
It is from this established commitment by FTA members to respond to the challenge of climate change
that FTA felt able to develop a positive and proactive
policy that was adopted by its National Council in
July 2009 and develop LCRS during 2010 as the lead
initiative in the sector to record, report and reduce
carbon emissions.
The need to reduce carbon from freight transport is
recognised in the majority of FTA members’ boardrooms. In FTA’s 2011 Logistics Survey, undertaken in
December 2010, 59 per cent of respondents reported
that reducing carbon dioxide was a high boardroom
priority. This is the first year that FTA has asked this
Figure 5
Action taken in 2007 by QTAS respondents as a percentage of total who have implemented measures to reduce their
carbon footprint
Regular review of alternative modes
Use of biodiesel
Reporting environmental performance at board level
Use of night time deliveries
Driver fuel efficiency training
Reviews of vehicle specification to maximise vehicle fill
Review vehicle spec to maximise fuel efficiency
Regular review of vehicle deployment to minimise empty running
Ongoing monitoring of vehicle fuel efficiency
0
20
40
60
80
100
Source: FTA Quarterly Transport Activity Survey, April 2007
LCRS First Annual Report
15
How the scheme works
Data requested of LCRS participants
Logistics Carbon Reduction Scheme participants are
asked to provide a series of data sets in order for
FTA to aggregate and report the overall carbon emissions from scheme members over time and to assess
the footprint of the scheme relative to the industry
as a whole. The scheme seeks to track annual emissions data going back to 2005. Many participants
have not been able to go back this far. In some cases
this has been due to mergers and acquisitions which
has meant like for like time data through the period
is unavailable. In other cases, businesses have only
introduced the IT systems needed to consolidate
fuel use data and provide visibility across their businesses in the past two or three years.
The datasets used are intended to draw on operational or management data which businesses are
measuring and regularly using in a business context,
so as not to add an onerous new level of data capture
and reporting. The reliance on the datasets within the
business for reporting and decision making also gives
a level of assurance that the data sources are robust.
The data sets cover three elements.
Fuel used in the road transport operations of the business
The basic premise for data collection is that the
organisation responsible for the purchase of fuel
used in its road transport operations, is also responsible for the fuel’s carbon emissions. Details of all
fuel purchased for road transport operations
(including vehicle-based ancillary equipment) are
requested relating to hgvs, vans, works buses and car
16
LCRS First Annual Report
Table 2
Fuel data components
Fuel
Units
Conventional diesel
Litres
Biodiesel (when used in concentrations
above standard diesel)
Litres
Petrol
Litres
Bio-ethanol (when used in concentrations
above standard petrol)
Litres
Road fuel gas
Kilogrammes
Gas oil
Litres
Electricity used in vehicles
KiloWatt Hours
fleet (where available). From the fuel use data, FTA
applies a series of carbon dioxide conversion factors
to establish an absolute carbon footprint for businesses covered by the scheme.
Business activity data covering vehicle kilometres,
company turnover and full time equivalent employees
Business activity, and therefore transport activity, of
individual scheme participants constantly changes
over time reflecting growth and contraction linked to
the wider economy, business acquisitions and divestments, and contracts won and lost. The scheme seeks
to report carbon efficiency changes over time by
expressing emissions in units of activity, rather than
just absolute amounts.
The choice of normaliser datasets has been heavily influenced by measures of activity which can
be repor ted by all scheme par ticipants, no matter what the nature of the business operation. In
the first year of the scheme, data on freight specific normalisers such as tonnes lifted, volume carried, and tonne kilometres have therefore not been
captured. In par t this decision reflects the different
operational KPIs chosen by businesses depending on the nature of the goods carried. In addition, commercial vehicles are used in applications
which go well beyond the movement of freight, for
example, acting as items of mobile plant, or as a
place to keep tools, where tonnes or cube-based
operational kpis would not be relevant.
Iain Speak
Chief Executive Officer, Bibby Distribution
“To reduce the impact our activities have on the environment, it is
essential to continually monitor our fuel and energy use across the
business.This scheme allows us to work collaboratively with other
leading players in the industry to proactively reduce CO2 emissions and
gain a more accurate picture of the road freight sector as a whole.”
Table 3
Normaliser dataset
Turnover (£ million)
Full time equivalent employees
Vehicle kilometres to which fuel usage relates
Turnover figures submitted must be FTE figures submitted must be based on a Vehicle kilometres submitted by the company must relate
based on a UK business unit
UK business unit
to the fuel usage figures submitted for each year
Fleet numbers
The scheme captures the size and structure of fleets
operated by participants to which the fuel usage information relates. Commercial vehicles are categorised
by gross vehicle weight based on the weight bands
used by the DfT in its Continuing Survey of Road
Goods Transport. Where it is not possible to disaggregate company cars and other vehicles (such as lift
trucks) from the fuel usage data, fleet details of these
are provided as well.
Based on fleet data for 2009, the footprint of the
scheme in relation to the overall size of the industry
can be monitored over time.
Table 4
Vehicle fleet dataset
Vehicle type
Articulated hgv
Gross vehicle weight
Over
Not
Initially, scheme members were asked for fleet data
only for year ending 2009. Fleet data will be provided
on an ongoing basis from 2010. This will allow a ‘CO2/
tonne freight carried’ normaliser to be applied using
the number of vehicles in different weight ranges.
Data integrity
The steering group for LCRS, the Logistics Carbon
Working Group, has developed a set of rules for the
scheme which must be adhered to by all scheme
members (Appendix D, page 31).
All companies joining LCRS are subject to an initial
start-up review. In the course of this review a standard data review form is completed, verified with the member and held on file by FTA. As such, it will form
part of the data-related evidence base which will, in due
course, be made available to the, still to be appointed,
external assurance provider for the scheme.
33t
33t
Articulated hgv
Rigid hgv
3.5t
7.5t
Rigid over 7.5t to 17t
7.5t
17t
Rigid over 17t to 25t
17t
25t
Vans and light commercial vehicles
3.5t
Company cars
n/a
n/a
Other vehicles
n/a
n/a
The purpose of the data review is to ensure that
scheme members’ understanding of the data they
have provided us is consistent with FTA’s understanding of it as the co-ordinating body for LCRS.The startup review also enables the extent to which the data
that is provided is relied on, or audited elsewhere in
the business concerned, to be established. It is part
of the control process to assess and mitigate risk
LCRS First Annual Report
17
Figure 6
Logistics Carbon Reduction Scheme: data provision and
verification process
Data sheet covering
retrospective fuel use,
normalisers and
fleet breakdown sent
to scheme participant
Declaration of
Intent completed
Data sheet
returned to FTA
On-site initial start-up
data review meeting
takes place
LCRS participants
subject to periodic
data spot checks
FTA and LCRS
participant sign off review
LCRS participants
complete data sheets
for future years
associated with the scheme’s integrity. However, it is
not intended to be a detailed assessment of companies’ collection and collation processes.
The main elements of the data provision and verification process are shown in Figure 6.
Analysis and aggregation
methodology
The Logistics Carbon Working Group has adopted
the following methodology for recording and reporting carbon emissions under the LCRS.
Conversion factors
Carbon dioxide emissions were calculated from the
volumes of fuel used, as reported by scheme participants, using conversion factors recommended by
Defra and DECC. New greenhouse gas emission conversion factors are published each year for emissions
produced in the preceding year. The purpose of the
conversion factors is to help UK businesses convert
existing data sources (eg fuel usage) consistently into
carbon dioxide equivalent emissions by applying a relevant conversion factor.
For biofuels, the Government significantly altered the
conversion factors in the 2010 guidelines for 2009
emissions and confirmed that direct emissions of carbon should be set to 0 for biofuels, as the same amount
of carbon is absorbed in the growth of the feedstock
from which the biofuel is produced. It should be noted
that there are a range of conversion factors available
for biofuels which take cultivation of the feedstock and
wider greenhouse gas emissions into account. Given
18
LCRS First Annual Report
Start up reviews cover:
• Company structure and governance
• Current carbon footprint
• How the company keeps track of vehicle numbers
• How the company keeps track of fuel data
• Recording vehicle kilometre data
• Turnover and Full Time Equivalent (FTE) information
• Extent of eco-driver training
• Carbon reduction strategies
the scheme’s focus on carbon dioxide emissions from
burning road transport fuel, FTA has applied a conversion factor of 0 to biofuels used by LCRS members.
Absolute and relative emissions
Absolute emissions of carbon dioxide are reported as
it is recognised that real reductions in carbon dioxide
emissions are being sought by the Government as a
contribution to national carbon reduction targets.
However, it is recognised that the activity level of businesses changes over time. Normalisers have therefore
also been applied to the data to show that reductions
in carbon dioxide emissions are being achieved per
unit of activity. The normalisers selected are recognised as appropriate normalisers to be used in business
reporting in Defra’s Voluntary Reporting Guidelines.
Greenhouse Gas Protocol
In accordance with the World Resources Institute,
which sets the Greenhouse Gas Protocol, a global
reporting standard for greenhouse gas emissions,
the Logistics Carbon Reduction Scheme covers
Scope 1 (direct emissions) and Scope 2 (electricity
emissions where electricity from the national grid is
used to provide vehicle power). This approach is also
recommended by Defra in its Voluntary Reporting
Guidelines. The scheme does not cover Scope 3
(indirect emissions), which would be produced, for
example, by a sub-contractor working for a customer.
If Scope 3 emissions were included in the scheme,
this would lead to double counting. Instead only fuel
that is purchased by a scheme participant is reported
within the footprint results.
Structure of scheme membership
and size of scheme in relation to
industry
As at the end of February 2011, the Logistics Carbon
Reduction Scheme covered 45 companies operating
39,063 commercial vehicles, 7,390 cars and 312 other
vehicles such as tugs and shunt vehicles.
This report on the scheme in 2009 relates to the
verified returns of 34 companies operating 35,590
commercial vehicles. The scheme is constantly growing and the difference between scheme membership and verified contributions reflects the time lag
between the initial, director-level ‘Declaration of
Intent’ to the data review undertaken by FTA staff
once fuel, normaliser and vehicle fleet information
has been submitted.
The fleet make-up of the scheme membership is
heavily predominated by heavy goods vehicles, which
account for 54 per cent of all vehicles covered by the
scheme. By contrast, numbers of vans and company
cars are relatively small, particularly bearing in mind
the significant numbers of these vehicles in the overall
GB vehicle stock (see Figure 7).
Figure 7
Percentage split of vehicles
Figure 8
Comparison of trend in LCRS’s absolute emissions
compared to industry’s emissions as a whole
Articulated up to 33t
1%
15%
Articulated over 33t
6%
Rigid over 3.5t to 7.5t
19%
As a result, the penetration of the scheme in terms of
absolute levels of emissions is modest, but growing.
2009 data is not yet available for industry as a whole
(due in April 2011)
Rigid over 7.5 to 17t
45
Rigid over 17t to 25t
9%
28%
Light cvs 3.5t or less
9%
4%
Company cars
9%
Other vehicles
40
Tonnes of CO2 (million)
Rigid over 25t
35
30
25
20
15
10
Table 5
Vehicle fleet dataset
Vehicle type
5
Number covered
by scheme as at
February 2011
Percentage of GB
parc for vehicle
category in 2009
Hgvs
25,200
6.1
Vans
13,900
1.3*
7,390
0.3
Company cars
*Fleet vans
0
2005
2006
2007
2008
2009
Total tonnes CO2 from LCRS participants
Total tonnes CO2 by source from
road transport (hgv + light vans)
Source: Transport Statistics Great Britain 2010:
Energy and the Environment, table env0201
LCRS First Annual Report
19
LCRS emissions levels and trends
2005–2009
The analysis of the scheme focuses on both absolute
and relative levels of emissions over time. As previously recognised, Government targets are focused on
absolute levels of reduction. However, in practice the
scheme needs to reflect the dynamic nature of businesses whose emissions will change in line with business activity.
In recognition of the commercially sensitive nature of
the data provided by individual companies the results
are presented in an anonymised form. The scheme
rules (Appendix D, page 31) require that material
changes to scheme members which have a substantial impact on the aggregated datasets are declared
as part of the public reporting process. No such distortions are reportable in the period covered by this
report.
Trends in emissions among scheme
members
Total carbon dioxide emissions among scheme
members
Emissions reported by scheme participants are building over time as the number of companies in a position to provide retrospective data increases in later
years. In 2005, 13 members were able to provide fuel
data.This grew to 25 by 2007 and 34 by 2009. In practice most companies started measuring data on fuel
use as part of their green agenda in 2007 following
the publication of the Stern Report in October 2006
and carbon emissions becoming a boardroom metric
and operational KPI (see Figure 9).
The proportion of biofuels (in concentrations exceeding standard grades of fuel) and alternative fuels used
relative to conventional diesel and petrol is in the region
of four per cent when based on volume. Factors holding back the uptake of alternative fuels include:
• cost and limited availability of refuelling infrastructure
•higher cost of alternative fuels following the loss
of fuel duty incentives (removal of the 20ppl
incentive for biodiesel in April 2010)
• unproven technology resulting in increased downtime
•uncertainty over vehicle warranties
• high and uncertain whole-life operating costs
(higher vehicle capital costs, uncertain vehicle
residual values)
Figure 9
Aggregated absolute CO2 emissions by year and by fuel
type
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
2005
LCRS First Annual Report
2007
2008
2009
Diesel
Electricity
Petrol
Biodiesel (in concentrations over 5%)
Road fuel gas
Bioethanol (in concentrations over 5%)
Gas oil
20
2006
Normalised carbon emissions among
scheme members
Figure 11
Aggregated relative CO2 emissions by year using
normalisers – vehicle kilometres
Emissions per vehicle kilometre
Catherine Crouch
1.2
1.0
Kilograms
When total carbon emissions are related to total vehicle kilometres (where members are able to provide
both datasets), the overall carbon intensity of scheme
participants has improved over time. Scheme participants have been able to get better visibility of vehicle
kilometres over time and, as a result, the sample size
for the vehicle kilometre-normalised dataset has grown
from 11 in 2005 to 15 in 2007 and to 24 in 2009.
Director of Tenens Environmental, Howard Tenens
“The LCRS plays an important role in benchmarking
the sector’s emissions; this is fundamental if we are to
demonstrate the improvements we are making.”
0.8
0.6
0.4
0.2
When compared to the industry as a whole, scheme
participants are making better progress in reducing
emissions.
0.0
2005
2006
2007
2008
2009
Emissions per £ turnover
The level of carbon dioxide emissions per £ of turnover has increased among scheme members during
Figure 10
Proportion of biofuels/alternative fuels used compared to
conventional fuels
0.1% 0.3%
0.2%
Conventional fuels
(diesel/petrol/gas oil)
Electricity
Road fuel gas
Biodiesel (in
concentrations
over 5%)
99.4%
Kg of carbon per vehicle km for
Freight industry vs LCRS participants
Figure 12
Trends in vehicle kilometre-normalised emissions relative
to industry as a whole
0.95
0.90
0.85
0.80
0.75
0.70
2005
2006
2007
2008
2009
Kg of carbon per vehicle km by LCRS participants
Kg of carbon per vehicle km by freight industry
Source: Road freight statistics 2009; TSGB; Vans & the economy – report of the
Commission for Integrated Transport, July 2010 (Table 10)
LCRS First Annual Report
21
2008 after falling in earlier years. Again, the number
of businesses contributing to the indicator rose in the
later years, with 10 members providing data in 2005,
17 in 2007 and 24 in 2009.
The rise in the indicator reflects in part the sharp
increase in vehicle operating costs in 2008 resulting
from rising world oil prices which peaked at $147 per
barrel in July – the turnover figures have not been
adjusted to constant prices. The rise in the indicator also coincides with the start of the recession in
the second half of 2008, which continued to depress
business levels throughout 2009. Operators will have
made retrospective realignments of fleet resource to
reflect falling business levels, resulting in higher emissions per £ turnover during the business contraction
process.
The sharp rise in the indicator in 2007 may reflect a
picture of the industry before the recession operating
on the edge of capacity. As business levels began to
fall operators took early action to reduce staff costs
through redundancies in 2008.The fall in 2009 reflects
an industry with activity still falling and opportunities
for redundancies lower.
Figure 14
Aggregated relative CO2 emissions by year using
normalisers – full time equivalent employees
0.08
9,000
0.07
8,000
0.06
0.05
0.04
0.03
0.02
0.01
0.00
22
The recent trend in emissions relative to numbers of
full time staff has seen a fall, following several years
in which the indicator rose (2005–2008). Again the
base of members providing both sets of data has risen
since the 2005 base year. From nine members in 2009
the contributor base grew to 16 by 2007 and to 24
in 2009.
Kilograms of carbon per FTE
Kilograms of carbon per £
Figure 13
Aggregated relative CO2 emissions by year using
normalisers – business turnover
Emissions per full time equivalent employee
LCRS First Annual Report
7,000
6,000
5,000
4,000
3,000
2,000
1,000
2005
2006
2007
2008
2009
0
2005
2006
2007
2008
2009
Setting a carbon reduction target
for the logistics industry
A core objective for the Logistics Carbon Reduction
Scheme is to set a voluntary carbon reduction target for the first time for the logistics sector. The three
components of the scheme’s carbon reduction target
are: a baseline year, the percentage change in emissions
and the target period. In the case of the percentage
change, the approach taken to target setting necessitated the adoption of a relative target, rather than an
absolute cut in emissions. This also takes into account
business growth as the economy recovers from the
recession. The decision to focus on three normalisers,
rather than just one, means that the targets reflect a
broad range of business influences.
The role of the target is to provide a focus to future
decarbonisation measures by scheme participants and
to demonstrate the contribution the logistics sector
will make towards national carbon reduction targets.
It will also allow LCRS members to demonstrate to
shareholders, contractors and customers their commitment to carbon reduction.
Target time horizon
During 2010, work was undertaken by the Logistics
Carbon Working Group to develop and agree a carbon reduction target and deadline that would be
stretching, yet workable, for industry. At an early stage
it was concluded that the target’s time frame needed
to reflect business planning horizons.
Such an approach reflects Committee on Climate
Change recommendations on use of interim targets and budgets in order to meet the UK’s 80 per
cent greenhouse gas reduction target. Using a short
timescale carbon reduction target for the scheme
would give a much greater chance of success as the
Government continues to map out opportunities for
carbon dioxide reduction across the economy.
The group concluded that the target should initially
be for five years and would set an emissions
reduction trajectory to 2015, using 2010 as a
baseline.
Approach to setting a target:
Logistics Efficiency Indicators
Several possible pathways to setting a carbon dioxide reduction target were considered by the scheme’s
working group (Appendix E, page 33, describes all the
options that were reviewed). However, the Logistics
Carbon Working Group recognised at an early stage
that the options available to businesses to materially
reduce carbon dioxide emissions from logistics centre
around improving the efficiency of transport operations. In practice, these can be summarised under five
operational parameters that are within the scope and
budgetary authority of most logistics managers to
control.
• Freight modal split: proportion of freight moved
by low carbon transport modes (rail and water)
• Empty
running: proportion of lorry–kilometres
run empty
• Average payload weight: average weights of loads
carried on laden trips
• Fuel
efficiency: ratio of fuel consumed to total
distance travelled
LCRS First Annual Report
23
• Carbon
intensity: proportion of low carbon
fuels/energy sources used in the freight transport
operation
These parameters were first developed by HeriotWatt University (HWU) and adopted by the Logistics
Carbon Working Group as the Logistics Efficiency
Indicators in 2010. The changes in these indicators,
anticipated by business over the next five years,
were aggregated to develop a target using a ‘Carbon
Reduction Scenario’ model, developed by HWU.
Such an approach had the advantage that it focused
on practical measures that individual businesses could
take over the scheme’s target time horizon of 2015.
In establishing a target for the scheme, the approach
would need to reflect both the views of existing
scheme participants, and the expectations of businesses not currently covered by the scheme but who
conceivably could join the scheme over the duration
of the target period.
The principal drawback of the approach is that it is
experimental. Whilst the five indicators are widely
used by businesses as operational KPI’s, their use in
projecting efficiencies in the future was new. As a
result, businesses may be aspirational in reporting
anticipated changes in the indicators. The inter-relationship of the five logistics efficiency indicators is
not fully understood; whether these be sympathetic
influences, where a change in one indicator reinforces
a change in another, or indicators that run counter
to each other, for example vehicle payload and fuel
efficiency.
For the purposes of setting a carbon reduction target for the scheme, the logistic efficiency indicator
approach was chosen by the working group.
Methodology used in target setting
All LCRS participants and Logistics Carbon Working
Group members were surveyed on how their company’s carbon emissions would change between 2010
and 2015 based on the five logistics efficiency indicators. Alongside, the LCRS Carbon Reduction Target
Survey, FTA also surveyed the wider industry as part
of its Logistics Industry Survey 2011 on the likely level
of carbon dioxide reduction from freight transport
between now and 2015. This gave a wider base of
contributions to the target setting process.
Heriot Watt University used its model developed
for ‘Moving Freight by Road in a Very Low Carbon
World’1 to aggregate individual company returns
from both samples to provide an industry view of
the likely level of carbon dioxide reductions from
its logistics activities. Returns from the scheme participants and working group, and wider industry survey (covering over 100 responses) were analysed
separately. The initial results of the analysis showed
a broadly consistent expectation of the extent of
1 ‘Logistics 2050: Moving Goods by Road in a Very Low Carbon World’
McKinnon, AC and Piecyk, M (2009) in Sweeney, E (ed) ‘Supply Chain
Management in a Volatile World’ Blackrock Publishing, Dublin
24
LCRS First Annual Report
reductions in carbon dioxide emissions between the
two data samples.
Members of the scheme and working group were
then asked to review these results. In the light of this
review, it was found that the average values were
being skewed by some exceptionally high estimates
returned by a small minority of companies. The
majority of respondents anticipated more modest,
and arguably more realistic, reductions. To reflect this
the analysis excluded the top quartile of responses
to each indicator. In effect, the target reflects an
average of the Quartile 1–3 of the samples for each
indicator.
This second phase of analysis work revealed an anticipated eight per cent reduction from scheme participants, and five per cent from the wider Logistics
Industry Survey. Having reviewed the survey returns
and aggregation approach taken, it was concluded that
the less refined nature of the the Logistics Industry
Survey meant that the scheme participant survey
offered a more realistic reduction trajectory. A further
argument for using the scheme member survey as the
basis of the target is that it contains a level of ‘stretch’
(rather than business as normal for operators), as
the repsondents represent a self-selecting group of
organisations where carbon reduction is a high priority in their business.
The results of the two surveys were also tested against
the results of the original Delphi modelling2 – which in
effect acted as an independent benchmark.
The results of this analysis suggest that when the
changes to all five logistics efficiency indicators are
brought together, the anticipated reduction in carbon
emissions is 8 per cent by 2015, compared to the
2010 baseline.
Paul Lloyd
Vice-President Supply Chain Operations, Arla Foods UK
“In the UK, Arla is responsible for the operation of more than 370
commercial vehicles. By monitoring and rigorously targeting efficiency
actions we are confident we can make improvements in current efficiencies
and reduce our CO2 emissions while growing our logistics business.”
The target represents an intensity-based cut in emissions, as survey respondents had no way of factoring
changes to their business into their returns. It will be
tracked against all the normalised emission datasets
reported on by the scheme, recognising that some
normalisers are directly related to transport (vehicle
kilometres) whereas the correlation of others (turnover/full-time equivalent employees) to fuel use by
transport will be less strong.
It is a collective, industry target and is not binding on
individual companies. Instead, all LCRS participants
will be expected to make a contribution.
Future reviews of the target
It is recognised that the experimental nature of the
model and the limited experience that respondents
have previously had in forecasting changes in the five
logistics efficiency indicators means that the target
should be reviewed in the light of experience.
The first review of the Logistics Carbon Reduction
Scheme target will take place in April 2012.
2 Delphi modelling – use of a structured group to devise a forecast based
on perspective after reaching a collectively agreed view
LCRS First Annual Report
25
The next steps
The report’s findings show the commitment that the
logistics sector can make in 2011 to respond to the
climate change challenge. With a strong list of core
objectives, there is a clear plan for the scheme to
evolve in its second year of operation.
Objectives for 2011
To increase membership of the scheme
A key objective is to significantly grow the number of
companies participating in the scheme. The scheme
has been designed to be accessible to any logistics
company of any size and from any sector. Operators,
whether they are members of FTA or not, are encouraged to join the scheme to show their commitment to
recording, reporting and reducing carbon emissions.
To confirm a voluntary carbon reduction
target to 2015
The first year of the scheme has allowed data to
be captured to show the progress that industry has
already made to reduce carbon emissions. However,
more is needed, and the voluntary carbon reduction
target to 2015 will allow industry to direct its efforts
to continue reducing carbon emissions.
To obtain formal recognition of the scheme
from Government
During 2010, FTA has engaged with DfT about ways in
which the logistics industry can contribute to national
carbon reduction targets. The scheme provides a way
of aggregating the carbon emissions of industry to
show the progress that industry is making to reduce
its climate change impact in a sensible and straightforward way. By offering this scheme to Government,
the sector can present a strong case that it is committed to playing its part to meet carbon reduction
targets rather than Government having to use legislation or tax to coerce us into action. The objective is
to receive formal endorsement from Government in
recognition that initiatives such as LCRS can offer a
way for the logistics industry to make crucial emissions reductions.
To offer a way of effectively reporting
emissions without the need for mandatory
reporting obligations to be introduced
Initiatives such as LCRS offer a better approach to
reducing carbon emissions from industry rather
than Government seeking to introduce mandatory
reporting obligations for businesses. As the scheme is
aggregating carbon emissions from freight companies
and engaging participants in committing to a carbon
reduction target and strategies, it can provide the
opportunity to track real progress in reducing carbon
emissions rather than trying to quantify emissions on
a company by company basis.
To widen the scope of the scheme to embrace
rail freight
During the first year of the scheme, it has initially
measured the carbon emissions produced from the
combustion of fuels used in road transport. However,
the scope of the scheme needs to be widened to
embrace other modes of transport in order to monitor an even larger proportion of the supply chain’s
carbon emissions. In the first instance, steps will be
taken to develop the scheme to incorporate rail.
To launch the LCRS knowledge bank
Whilst LCRS provides the ideal way for operators
to contribute to recording and reporting freight
26
LCRS First Annual Report
Mark Sutcliffe
Group Transport Manager,Warburtons
“The Logistics Carbon Reduction Scheme is an important part of our
corporate and social responsibility programme that we are now building into
every area of our business. It allows us to focus on, and measure, initiatives
that will help reduce the carbon impact from our logistics operation.”
emissions, operators also need to incorporate carbon reduction actions into their businesses. The LCRS
knowledge bank has been launched to provide best
practice advice on how operators can reduce carbon emissions; input from LCRS participants covers
alternative fuels, driver training and vehicle specification. During 2011, the knowledge bank will be further
developed.
The longer term
To dovetail the UK Logistics Carbon Reduction
Scheme into international supply chains
Many scheme members’ supply chains extend across
the World and embrace short sea shipping, deep sea
and air freight. The principles of the scheme and the
ownership of the emissions apply equally to these
other modes.
To encourage adoption of the scheme
principles as standard practice for logistics
carbon reporting across Europe
A number of scheme members operate commercial
vehicles across Europe. While the LCRS is an initiative
that originated in the UK, the management disciplines
and operational practices underpinning it have a relevance to logistics’ contribution to European Union
climate change targets.
LCRS First Annual Report
27
Appendix A
List of the founding members of the
Logistics Carbon Reduction Scheme
Fred Barnes
Chief Executive
3663 First for Foodservice
Paul Lloyd
Vice President – Logistics
Arla Foods
Glenn Lindfield
Managing Director – Contract Logistics North
West Europe
Kuehne + Nagel
Steve Macdonald
Managing Director
Norbert Dentressangle Transport Ltd
Alex Gourlay
Chief Executive
Boots UK Limited
Leigh Pomlett
EVP UK & Ireland
Ceva Logistics
Perry Watts
CEO UK & Ireland
DHL Supply Chain
Laurent Ferrari
Networks Managing Director
EDF Energy
Charlie Mayfield
Chairman
John Lewis Partnership
28
LCRS First Annual Report
Malcolm Wilson
Managing Director
Norbert Dentressangle Logistics Ltd
Bas Belder
Managing Director
P&O Ferrymasters Ltd
Robert Higginson
Managing Director
Warburtons
Derek Robb
Supply Chain Director
Wolseley UK
Appendix B
List of members of the Logistics Carbon
Working Group (LCRS steering group)
In developing LCRS FTA has sought views from a wide range of logistics operators on the development of the
scheme, rather than just those who are members of it at the present time.
FTA would like to thank the following for their contribution to the evolution of the scheme.
Ian Barnes
Boots UK Ltd
Dave Carter
Saint Gobain
Peter Chivers
P&O Ferrymasters Ltd
Catherine Crouch
Howard Tenens
Robin Dearden
Arla Foods
Yvonne Furness
Ceva Logistics
Richard George
BT Fleet
Martin Johnson
Kuehne + Nagel
Justin Laney
John Lewis Partnership
John Leader
Travis Perkins
Roy McCrudden
Wolseley UK
Professor Alan McKinnon
Heriot-Watt University
Jason Monckton
3663
David Morton
Menzies Distribution Ltd
Dave Parkes
Pepsico International
Chris Pascall
UK Power Networks (Transport) Ltd
Steve Rowland
Bibby Distribution
Paul Sawko
TDG UK Ltd
Phil Shepherd
Norbert Dentressangle
Rob Stubbs
Veolia Environmental Services plc
Mark Sutcliffe
Warburtons
Steve Tainton
Wincanton
Suzanne Westlake
DHL Express UK & Ireland
Morag White
Sainsburys
Jim York
DHL Supply Chain
LCRS First Annual Report
29
Appendix C
Letter to The Rt Hon Philip Hammond, MP
– Secretary of State for Transport
TdP/DC/4
11
13 July 20
10
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hi
Secretary lip Hammond MP
of
Departmen State for Transpo
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Great Min t for Transport
ster House
76 Marsh
am Street
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30
LCRS First Annual Report
Appendix D
Logistics Carbon Reduction
Scheme rules
Scheme rules
The objective of the scheme rules is to ensure that
Logistics Carbon Reduction Scheme participants
report data to a common framework consistently and
transparently. The rules also define the audit process
that will need to be in place for the scheme to have
credibility with Government.
1
for the period January–March would therefore be
reported by end of September.
1e Changes in business
Where changes in data components of the defined
business occurs that results in more than a five per
cent upward or downward movement, the reason for
this change needs to be declared to FTA. Examples of
reasons could include:
• impact of gaining sites/losing sites
• major contract secured/lost
General rules
Where a change in a company affects the industry
dataset by more than two per cent, this change will be
declared by FTA as part of the reporting process.
1a Scope of data
Data provided by a scheme participant should apply
to a defined UK business unit, for example UK Group,
which is agreed with FTA through an initial start-up
data review upon the business joining the scheme
and providing data. Data should relate to commercial
vehicle use.
1b Period covered by dataset
Core activity data will be collected annually from
April each year. In addition, participants can opt to
provide data quarterly, ie January–March, April–June,
July–September, October–December.
1c Reporting point in time data
Data must apply to the year or quarter under review;
the timing within a specific year or quarter is not
important – only that it is consistently reported at the
same point in time every year or quarter.
1f Changes in scheme membership
Changes in scheme membership which create a
change in the industry dataset of more than two per
cent will be declared by FTA as part of the reporting
process
1g Confidentiality
All data provided by individual scheme members will
be treated as confidential. The reporting process will
present aggregated figures ensuring that returns by
specific scheme members cannot be attributed.
1h Failure to return data
Where scheme participants cease to provide data, FTA
will remove those companies from the list of scheme
participants. Data previously provided will continue to
be reported within historic trends.
1d Data collection and validation process
Annual data
Data will be requested in April each year and should
be provided by scheme members by the end of July.
Annual data will then be aggregated and reported in
the annual LCRS report in January each year.
Quarterly data
Data will be requested after three months of the end
of the quarter to which the data relates. Data will then
be aggregated and reported six months following the
quarter to which the data relates. For example, data
2
Data components
2a Fuel
Scheme members will record and report the quantity
of fuel used by company’s commercial vehicle fleet for
each quarterly period defined under 1b. Each type of
fuel will be reported separately.
Where it is not possible to disaggregate fuel used by
commercial vehicles from that used in company cars
and private cars, this should be highlighted and an
estimate of the proportion of fuel being used by this
LCRS First Annual Report
31
group will be established as part of the initial start-up
data review.
Where scheme members do not record agency staff
within their full time equivalent figures, the percentage
agency staff compared to full time equivalents will be
established by FTA as part of the initial start-up data
review.
If biofuel is used in blends above that of conventional diesel (seven per cent), biofuel used should be
recorded separately.
For each fuel type reported, FTA will apply the relevant
Defra carbon dioxide emission conversion factor.
2b Vehicle stock
Data should apply to commercial vehicle fleet operated by the participants. Contractor vehicles should
be excluded.
Temporary vehicles which are used for more than one
week should be recorded. Short-term leased or hire
vehicles of less than one week should be excluded.
2c Vehicle kilometres
Data should apply to those kilometres undertaken by
the scheme participant’s own fleet, including temporary vehicles which are used for more than one week.
The fuel and mileage impact of vehicles operated for
less than a week is not deemed to be significant.
Activity should include mileage on public roads and
off public roads.
2d Turnover
Turnover figures should apply at an externally auditable level, such as UK Group.
Participants are free to determine the scope of the
business activities which the turnover data relates to.
The approach used must be consistent over time. The
basis of the turnover figure will be established as part
of the initial start-up data review.
Annual and quarterly turnover figures should not be
subject to significant subsequent change. Any subsequent adjustments of more than five per cent should
be advised to FTA. Where an adjustment to the quarterly turnover of an individual scheme member affects
the aggregated total by more than 0.2 per cent, FTA
will adjust the previous annual or quarterly aggregated
figures and detail the reason for the change in the
next LCRS annual report.
2e Full time equivalent employees
The full time equivalent (FTE) figure should cover permanent staff, temporary staff employed for more than
one week and agency staff.
Participants are free to determine the scope of the
business activities which the FTE data relates to. The
approach used must be consistent over time.The basis
of the FTE figure will be established as part of the
initial start-up data review.
32
LCRS First Annual Report
3
Auditing of data
3a Initial start-up data review
All new scheme members will be subject to an initial
start-up data review by FTA. The review will establish:
• company structure and governance
• company’s current carbon footprint and general
breakdown of emissions (where available)
• the nature of the defined UK business unit and the
treatment of exceptional activity
• mechanism for recording vehicle mileage and fuel
usage
• treatment of company cars and private vehicles
for the purposes of fuel recording
• basis for turnover figures
• basis for full time equivalent figures and treatment
of agency staff within the reporting process
• the extent to which the company undertakes
carbon reduction strategies within its transport
activities
Data provided by participants will not be reported
with the scheme until a satisfactory initial start-up data
review has been completed.
3b Stratified spot checks
FTA will undertake an ongoing programme of audits
of established scheme participants to ensure that the
data reported within the scheme continues to reflect
the approach agreed as part of the initial start-up data
review and that:
• data can be sourced back to fuel drawing records
and vehicle activity data
• vehicle fleet and mileage data has decision making
status or is relied on within the business
• there is a mechanism for verifying the integrity of
the data, for example spot checks on depot reporting procedure/exception reporting follow-up
3c External auditing
FTA will engage an external auditor to review FTA’s
data collection and verification process and the methodology used to aggregate individual company returns
into the mandatory datasets published in the scheme’s
annual report.
Appendix E
Alternative approaches to carbon
reduction target setting
It was concluded that the ‘Logistics Efficiency Indicators’
approach, outlined on page 23, offered the most suitable methodology in setting the carbon reduction target for the scheme. However, the Logistics Carbon
Working Group considered a number of alternative
approaches.
Aligning LCRS target to UK national
reduction targets
Long-term targets for absolute reductions in UK carbon
dioxide emissions to 2020 and beyond are set out in
the Climate Change Act 2008, together with interim
four-year carbon budgets. Consideration was given
to setting a target for the scheme in line with these
national targets (see Table 6).
Table 6
UK carbon dioxide reduction targets to 2022
Vehicle type
First
Carbon
Budget
2008–12
Second
Carbon
Budget
2013–17
Third
Carbon
Budget
2018–22
Percentage reduction
in carbon dioxide
compared to 1990
levels
22
28
34
It was concluded that matching a freight carbon
reduction target to UK’s national targets would be
difficult as, to date, the Government has not itself set
any sector specific reduction targets. Attempting to
make the same reductions as those agreed nationally
for the UK as a whole would not take into account
the extent to which carbon dioxide reduction measures are practical for the freight transport sector.
Furthermore, the national reduction target takes no
account of carbon intensity, only overall emission levels. The group considered that linking a scheme target
to an absolute target would mean that the principal
influence on whether a scheme target was achieved
would be business growth, rather than initiatives to
improve logistics efficiency or reduce fuel use.
Extrapolate historical emissions data
from the logistics industry
Historic carbon dioxide emissions data for the freight
sector is recorded by source (direct emissions by mode
and in the case of road by vehicle category) and by
industry (economic sector) within the UK’s National
Atmospheric Emissions Inventory. These absolute
emissions values could be used on their own as the
basis of extrapolation, or combined with activity data
(such as commercial vehicle kilometres) to create a
carbon intensity measure.
Using historical carbon dioxide emission trends has
the advantage of reflecting the sector’s past experience of tackling emissions. However, such an approach
would fail to reflect the one-off nature of many low
carbon measures introduced by businesses, the focus
the sector now has on reducing emissions, or the
range of carbon dioxide abatement measures that are
likely to be available to operators over the time horizon of the scheme’s target.
Work undertaken by Professor Alan McKinnon for
the Commission for Integrated Transport’s report
‘CO2 Emissions from Freight Transport in the UK’ in
2008 highlighted that trends in emissions over time
also vary widely depending on the source data.
LCRS First Annual Report
33
Carbon dioxide reduction under a
business as usual scenario
Extrapolation of Logistics Carbon
Reduction Scheme data
As part of the background research to Logistics
2050, ‘Moving Freight by road in a Very Low Carbon
World’, published earlier in 2010, Dr Maja Piecyk and
Professor Alan McKinnon undertook a Delphi study
of 100 logistics specialists. This study suggested that
on a business as usual scenario, there would be a net
reduction of 10 per cent in carbon dioxide emissions
from UK road freight transport between 2006 and
2020.1
Scheme participants are asked to provide historical
fuel usage data and normaliser datasets going back to
2005. Returns from individual businesses could have
been aggregated, normalised and extrapolated to a
given future time horizon.
This scenario is narrower than the scope of the Logistics
Carbon Reduction Scheme as it is limited to hgvs and
mode split. As a result it would not capture trends in
the use of vans. Its time horizon of 2020 was also too
far into the future, and the carbon dioxide reduction
projection would need to be brought back to 2015.
However, there was no clear mechanism to establish
at what point in time the low carbon measures anticipated by respondents would become effective.
1 Piecyk, MI and McKinnon, AC (2010) ‘Forecasting the Carbon Footprint
of Road Freight Transport in 2020’ International Journal of Production
Economics, vol 128, no 1, pp 31–42
34
LCRS First Annual Report
Such an approach would have the advantage that it
relates specifically to scheme members. The disadvantage is that the extrapolation is based on a limited period of actual data (maximum four years, with
a significant proportion of members only able to
go back two or three years) which covers a period
of economic recession. In addition, similar to other
extrapolation approaches it does not take account
of future low-carbon operational and technology
developments.
How to join the Logistics Carbon
Reduction Scheme
New participants are still welcome to join the Logistics Carbon Reduction Scheme. The scheme is open to any
operator with at least one commercial vehicle and is free to join.
Benefits of joining the LCRS
•Demonstrate your commitment to recording, reporting and reducing carbon emissions
•Contribute to a voluntary carbon reduction target for industry whether you already have a carbon
reduction strategy in place or are just beginning to tackle your carbon emissions
•Share best practice with like-minded companies on how to reduce your carbon emissions
•Receive a quarterly LCRS newsletter updating you on the progress of the scheme and the latest
Government climate change policy affecting freight
You can find out more information about the scheme by the following ways.
To find out more:
Visit www.fta.co.uk/carbonreduction to download an information pack
Call 08717 11 22 22* to request an information pack
Email [email protected] to request an information pack
Write to Amanda Cooper, Freight Transport Association, St John’s Road, Tunbridge Wells, Kent TN4 9UZ
to request an information pack
To join the scheme now:
Visit www.fta.co.uk/carbonreduction to download a Declaration of Intent, complete and return as
instructed at the bottom of the form
Email [email protected] to request a Declaration of Intent
LCRS First Annual Report
35
Freight Transport Association Limited
Hermes House
St John’s Road
Tunbridge Wells
Kent
TN4 9UZ
Telephone: 01892 526171
Fax: 01892 534989
Website: www.fta.co.uk
Registered in England Number 391957
©FTA 03.11/SC