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Energy and carbon managements are the continuous processes of measuring, understanding and optimising energy consumption and greenhouse gas (GHG) emissions, primarily carbon dioxide (CO2), respectively within an organisation.

The processes are inherently linked, as GHGs emissions from energy use constitute a significant part of the total emissions for most organisations. Hence, this guide embraces a combined approach and uses a term “energy and carbon management”, highlighting distinctive characteristics of each of the processes when relevant.

Both energy and carbon managements are key components of an even broader environmental Environmental management consist of decisions and actions concerning policy and practice regarding how resources and the environment are appraised protected, allocated, developed, used, rehabilitated, remediated, and restored. Source: I. Petrosillo, R. Aretano, G. Zurlini, Socioecological Systems, in: Encyclopedia of Ecology, Volume 4, 2015, Pages 419-425. and sustainability managementSustainability embraces simultaneously economic, social and environmental objectives and impacts. It involves a very wide range of issues, including food and water availability, resources use and depletion, poverty, economic growth, social cohesion, community engagement, production and consumption, climate change, population growth, and international security. Source: The Energy Hierarchy: Supporting policy making for 'net zero', Institution for Mechanical Engineers..

circle management

Energy and carbon management is a part of an organisation’s response to climate change, energy prices, and security of supply. It involves elements of engineering, business and project managements, accountancy, marketing, psychology and other disciplines. It requires an understanding of how to manage different activities causing GHG emissions and knowledge about advantages and disadvantages of different energy supply sources. Fundamentally, it is about understanding and incorporating energy and carbon data into strategic business decision-making.

role of carbon image

Energy management enables an organisation to improve its energy use systematically, rather than via ad-hoc projects. It should involve all interactions with energy, from procurement and purchasing strategies to equipment upgrades and behavioural changes.

At the heart of energy management is energy efficiency: using less energy to produce the same – or greater – economic output. For many organisations energy efficiency has become the first tool to reduce energy demand and lower business costs.

Importantly, optimising energy use is recognised as the first step to reducing carbon emissions and helping reduce the effect of global climate change. When the energy comes from fossil fuels, successful energy management will directly reduce GHGs emissions.  Small changes can lead to big savings: for example, in 2017, global use of LED lights in place of older technology reduced carbon emissions by 570 million tonnes, nearly 2% of total emissions. Investments in building fabric improvements, efficient heating, ventilation and air conditioning (HVAC) systems or boilers could lead to carbon emission reductions on a similar or even greater scale.

Guiding principles for energy and carbon management

Here are some of the principles and practices which can help organisations fulfil regulatory obligations, observe environmental standards, and meet the expectations of investors:

Energy hierarchy

The main routes to reducing energy demand and GHG emissions can be considered as a hierarchy of measures. First, energy demand reduction and efficiency improvement measures; where possible, switching to low-carbon energy sources such as renewable electricity, hydrogen or nuclear; and lastly where the energy source cannot be made low-carbon, carbon abatement and offsetting.

The energy hierarchy offers an effective approach to guide sustainable energy decision-making. The cheapest and greenest energy is that which we don’t use. Typical energy and carbon management starts by considering energy demand reduction and improving energy efficiency before different types of energy supply are considered. The optimum energy and carbon reduction pathway for each organisation will be different depending on emissions sources, location, and other individual factors.

energy hierarchy

Energy management system: International Standard (ISO) 50001

A framework to support efficient use of energy within an organisation is provided by the International Standard (ISO) 50001. It specifies how to establish, implement, maintain and improve an Energy Management System (EnMS) to holistically and systematically improve an organisation’s energy performance.

The EnMS is based on the ‘Plan-Do-Check-Act’ cycle, the backbone of many management practices:

Example Activities
  • To better understand an organisation’s energy use
  • To form a plan based on this information to improve energy performance
  • Conduct an energy review, which will provide past and present energy consumption (data collection)
  • Establish an organisation’s baseline energy use A benchmark against which an entity’s emissions are compared over time. The reporting company’s base-year emission is called baseline. A base year can be the earliest reporting year the company submits a complete emission report or a historical year when the company submits complete data or all subsequent years; it could be a calendar year or a fiscal year.
  • Identify Energy Performance Indicators (EnPIs)The overall performance of a building or site can be expressed as a performance indicator, usually measured as kilograms of carbon dioxide per square metre (kg CO2/m2) per year or separately for fossil fuel and electricity measured in kiloWatt hours per square metre (kWh/m2) per year. The analysis is normally performed on annual data, allowing for comparison with published benchmarks to give an indication of efficiency. Benchmarks are published for different types of buildings, some energy use applications, e.g. office lighting, and some processes.
  • Define targets and objectives
  • Identify opportunities for improving energy performance
  • To implement measures identified in the ‘Plan’ stage
  • Reduce energy use, increase energy efficiency, and reduce energy-related carbon emissions
  • Make changes to processes and behaviours
  • Procure low carbon When the CO2 emissions related to a process or activity are small relative to the amount emitted when fossil fuel are the source of energy. For example, a low-carbon economy is one where a high fraction of the energy used is from renewable or nuclear power. energy services and products
  • Install new energy efficient equipment
  • Develop/use effective internal communication channels to ensure staff engagement
  • To compare actual performance with the targets and objectives
  • Assess the management process to confirm the system is effective
  • Develop a Measurement & Verification (M&V) process, i.e. methods and tools designed to estimate actual energy savings
  • Evaluate performance and provide feedback on the improvements made
  • Test for compliance with legal requirements
  • Post project reviews
  • Report the results to senior management
  • To review the overall performance and the results of EnMS
  • Take all the necessary actions to ensure the system’s effectiveness and adequacy
  • Incorporate lessons learned through a project life cycle as well as into new projects and initiatives

Greenhouse gas reporting: International Standard ISO14064

The international GHGs emissions accounting standard ISO 14064 provides governments, local administrations, businesses, and other organisations with a guidance on how they can account for their emissions, including setting up a system to track, monitor, report and verify their emissions.

Greenhouse Gas (GHG) Protocol

The Greenhouse Gas Protocol Corporate Accounting and Reporting Standard is the internationally recognised guide to accounting for, managing and reporting organisational GHG emissions, as well as identifying emission reduction projects. It establishes important concepts regarding the boundaries and sources of carbon management. Learn more about the categories of emissions in How to collect energy and carbon data.

Science-Based Targets

The Science-Based Targets initiative support organisations committed to reduce emissions in line with the Paris Agreement goals – limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C. For example, the Energy Institute’s science-based targets are to reduce its emissions by almost 68% by 2030.

Want to know more? More detailed information is available in our online training course, Level 1, Certificate in Energy Management Essentials. To learn more, visit Energy Management Training | Energy Institute