Memorandum submitted by the National Physical
Laboratory
EXECUTIVE SUMMARY
The National Physical Laboratory is a global
leader in measurement science (metrology).
A necessary condition for stability in any market
is a consistent means to quantify the commodity being traded that
is accepted by all market players. At present this condition is
far from being met for the Carbon market.
Multiple and inconsistent measurements, calculations
and estimation protocols for GHG emission and avoidance are a
fragile basis for the present and an inadequate basis for the
future carbon market—and a burden for business.
NPL would like to see the Government invest
in metrology research and development to produce the necessary
technology and standards required for the operation of a robust
global carbon market and post-Kyoto geo-political agreement.
Taking a lead in the development of international
carbon measurement standards would significantly advance the goal
of making the UK the best place the world to locate or build a
low-carbon business and help secure its position as the centre
of the global carbon market
ABOUT NPL
The National Physical Laboratory (NPL) is one
of the UK's leading science and research facilities. It is a world-leading
centre of excellence in developing and applying the most accurate
standards, science and technology. At its heart, NPL is the UK's
National Measurement Institute—developing and maintaining
the national measurement standards, and supporting infrastructures
required to ensure quality of life and economic benefit.
For example:
— We developed science and technology to
enable accurate and consistent measurement of the calorific value
and flow of natural gas—which has become increasing important
for facilitating international trade and underpinning the market,
as the price has risen so dramatically in the past 10 years.
— NPL, with the Environment Agency, devised
the concept and delivery mechanism for the UK wide Monitoring
Certification Scheme for Air Pollution Control (MCERTS). NPL also
developed a dedicated suite of test and calibration facilities
to ensure instruments carrying out these tests can conform to
the requirements of the scheme.
— Following on from the Royal Commission
report (2006) into nanotechnology, NPL started work on nanoparticle
measurement and characterisation. This will address the current
and future measurement and characterisation requirements for toxicologists,
eco-toxicologists and environmental scientists both in the laboratory
and in the field. NPL led the first internationally recognised
standard in Nanotechnology on definitions—critical for underpinning
the growing market for this emerging technology.
CARBON MARKETS:
MEASUREMENT UNCERTAINTY—MARKET
INSTABILITY
The importance of measurement
Measurement is like running water or street
lighting—largely taken for granted until it stops working.
To develop new products and processes companies need to measure
performance, and in order to trade companies must have a system
of defined measurements with which to exchange goods or services.
Measurement touches almost every part of our everyday
life; for example:
— Monitoring the quality of the air we
breathe and developing technologies that will reduce pollution.
— Ensuring an international time standard
so we can communicate and travel throughout the world.
What does the carbon economy need?
Responding to the threat of global climate change
is clearly a national and international priority and requires
a range of coordinated activities, including the establishment
of an explicit price for "carbon", with trading schemes
such as the EU Emissions Trading Scheme (ETS) at the heart of
such activity.
"The European carbon trading system is a
`failure' and will not help the UK to meet its emission reduction
targets, electricity generator EDF warns a committee of UK MPs
Asked by MPs on the committee whether the European
scheme was insufficient to meet these targets, Humphrey Cadoux-Hudson,
managing director of new nuclear build at EDF, agreed. `As currently
framed today that is the case. What is needed are rules that will
create a market that will allow us to create low-carbon technology.'
`The thing that drives the price of something is
certainty. The recording and verification of emissions creates
uncertainty, as does the entry of new countries into the system.'"
guardian.co.uk, Wednesday 29 April 2009
Carbon trading is a rapidly growing business.
Despite the slide into global recession, the value of the market
grew by more than 80% to $118 billion in 2008, with approximately
half of the growth coming from volume and half from price. The
EU ETS makes up the majority of the market—accounting for
~70% of the volume and ~80% of the value of trade in 2008. In
2009 recessionary and other pressures are likely to see a reduced
growth rate. However, it is predicted that the global market will
still exceed $150 billion.[18]
But are the conditions in place to ensure this rapidly growing
new market is robust and stable?
One necessary condition for stability in any
market is a consistent means to quantify the commodity being traded
that is accepted by all market players. At present this condition
is far from being met in the national and international markets
for Green House Gases. In the case of this "Carbon"
market multiple and inconsistent measurements, calculations and
estimation protocols for GHG emission and avoidance are a fragile
basis for the present and are likely to be an inadequate basis
for the future carbon market—and a burden for business.
As the market grows and the price rises, differences
in techniques for quantifying emissions and the uncertainty in
the actual magnitude of a "tonne" of CO2 will start
to prompt a very difficult question—is the marketplace fair?
The CBI
In the UK, a report published in May 2009 by
the CBI[19]
highlights the fact that "with businesses facing growing
regulatory pressure to reduce their emissions footprint, measurement
and reporting are increasingly becoming major business issues".
The report calls for a single, common standard on how businesses
report their greenhouse gas emissions. They identify a number
of regulatory and voluntary frameworks covering emissions reporting
and argue that the use of competing standards could undermine
corporate efforts to slash carbon emissions.
A clear and more consistent carbon reporting
standard for all businesses is essential if UK businesses are
going to successfully reduce emissions. "Transparent measurement
and reporting of corporate emissions data is likely to become
an important factor in driving corporate change and creating corporate
advantage, so it's vital we get it right,"
Richard Lambert, Director General CBI, May 2009
Measurement Challenges
There is a lot of research going on in emission
measurement, but agreement has not been reached on issues such
as:
— What measurement techniques should be
used and with what frequency?
— What level of measurement uncertainty
is appropriate?
— How to demonstrate consistency between
emission and emissions avoidance?
— How to validate the "low-carbon"
or "carbon-neutral" claims of new technology?
Until there is an internationally accepted framework
for quantifying "carbon", based on sound measurement
science and technology, embodied in standards, protocols and legislation,
carbon trading will remain largely unregulated and the market
will be unstable and, potentially, fatally flawed.
Variability Of Emissions
"Average emissions differ significantly from
source to source and, therefore, emission factors frequently may
not provide adequate estimates of the average emissions for a
specific source. The extent of between-source variability that
exists, even among similar individual sources, can be large depending
on process, control system, and pollutant. Although the causes
of this variability are considered in emission factor development,
this type of information is seldom included in emission test reports
used to develop AP-42 factors. As a result, some emission factors
are derived from tests that may vary by an order of magnitude
or more. Even when the major process variables are accounted for,
the emission factors developed may be the result of averaging
source tests that differ by factors of five or more. Whilst this
information does not include CO2, the US intends that CO2 now
be considered as a pollutant and therefore one can expect efforts
now to reduce the variability of emissions data."
Extract from the US Environment Agency Handbook
Such issues are not only a threat to the stability
of the market. Lack of trust between nations over the basis on
which national GHG inventories are calculated could also potentially
de-rail a global agreement on climate change post-Kyoto.
The role of NPL
NPL is already playing a key role in this area.
It is leading the development of international standards for some
of this work and has recently proposed setting up a "Centre
for Carbon Metrology" in conjunction with other organisations
such as the BSI Group to focus on three areas:
— Establishing a measurement and standards
infrastructure that can provide a solid foundation for carbon
trading/pricing.
— Providing independent performance assessment,
calibration and validation of low-carbon technologies.
— Bring measurement expertise to climate
data, particularly where it is an input to modeling—reducing
the uncertainty in climate projections and enabling policy for
climate change mitigation and adaptation to be placed on a firmer
footing.
The Centre for Carbon Metrology is an opportunity
to continue to demonstrate the UK's leadership in the area of
climate change, to contribute to making the UK the best place
the world to locate or build a low-carbon business and to retain
a role as the centre of the global carbon market.
12 June 2009
18 Source: New Carbon Finance. Back
19
"All together now: a common business approach for greenhouse
gas emissions reporting". CBI, May 2009. Back
| 
