National Grid has set itself a challenging target of reducing company wide greenhouse gas emissions by 80% by 2050. To help us achieve this goal, we have set ourselves a mid term reduction target of 45% by 2020, and from April 2009 we’re introducing carbon budgets across our UK and US electricity and gas businesses.

FACT: In 2008 National Grid reduced it’s CO2 emissions by more than 60,000 tonnes in the UK using more high efficiency, low-emission gas turbine engines for gas compressors.

Since April 2008, we have been undertaking an audit within each line of business to establish what our emissions are, where they are coming from and how our data is measured as well as looking at what verification measures are or need to be in place.

These emissions have been classified by their source and fall into four areas:

• Stationary combustion (power plants, compressors, electricity consumed)
• Escapes (natural gas, SF6)
• Controlled Venting (gas pipelines and equipment)
• Vehicles

These four areas provide a robust basis for estimating and managing our performance to reduce our emissions, as well as benchmarking our emissions against our industry peers.

The audit gives an indication of the carbon footprint for each line of business (Transmission, Gas Distribution, Non Regulated Businesses, and Electricity, Distribution and Generation) Together these estimations total around 11.5 million tonnes of carbon dioxide equivalent (CO2e) for 2009/10. This has enabled us to implement annual carbon budgets from 1 April 2009, alongside customer service, reliability, safety and financial performance targets, and aligned with executive director compensation.

FACT: Since 1990, National Grid has reduced its greenhouse gas emissions by around 30%.

How will the carbon budgets work?

• For the first year (2009/10), carbon budgets will be based on the 2008/09 emission figures provided by each line of business which will include reduction programmes already planned. This ‘business as usual’ strategy for the first year will provide an opportunity for each line of business to better understand the sources of their emissions, identify reduction opportunities and propose a more ambitious target for 2010/11.
• 5-year rolling budgets will be set based on the Company’s drive to meet the 80% reduction target by 2050.  The 5-year rolling budgets will smooth annual fluctuations in emissions caused by factors such as changing energy demands due to colder or warmer than average winters. 
• Executive compensation will be linked to achieving the agreed carbon budgets.

Through our approach, we are seeking to work closely with our legislators and regulators to reshape energy markets and meet the climate change challenge.

Our internal carbon budgets will play a vital role in helping us manage our greenhouse gas emissions and drive innovative approaches to reach our emission reduction target. As part of this new approach, National Grid will use the £27.60 per tonne ‘shadow price of carbon’ set by the UK government Department for  Environment, Food and Rural Affairs (DEFRA) to determine accurate emissions costs for future design, construction and maintenance of its electricity and gas networks, management of its fleet and facilities, and potential new investments.

As a major international energy company ,we want to set an example to other companies and become a role model of energy conservation and efficiency.

By incorporating carbon budgets appropriately within our lines of business we are setting ourselves specific and measurable targets and goals that keep us focussed and on track to achieve our goals.

• Download this factsheet