Appendix B - Details of BAU carbon and financial model
What is Business as Usual (BAU)
Business as Usual is the normal execution of standard operations within an organisation, particularly in contrast to a project or programme which would introduce change. In the context of carbon management, this means that BAU represents an estimate of what the overall carbon footprint of the Scottish Government (based on the current footprint boundary) is likely to be in future years in the absence of the Carbon Management Plan.
This BAU scenario needs to take into account internal and external growth factors that are likely to affect the carbon footprint over time. Although an overall carbon footprint is a single figure, in reality it is a complex underlying calculation, with different emission sources affected by these factors in different ways. Table 9 shows a sample of some of the key factors identified that affect BAU.
Table E.1: Examples of key internal and external factors impacting on BAU.
|External factors||Internal factors|
|Electricity grid carbon factor -the factor applied to convert units of kWh of electricity consumed to a figure of carbon dioxide equivalents emitted.||The grid factor changes year on year due to a variety of external factors outside of the organisation's control including relative prices of different fuels for power generation. Over a longer period of time, the grid factor will change due to energy policy and the relative contribution of different generating capacity e.g. increased percentage of renewables. The aim of energy policy is to reduce the carbon intensity of the grid and this can therefore have a large effect on the overall footprint of an organisation||Energy intensity of service provision||The energy used per staff member is likely to change over time, due to efficiency of equipment, nature of services delivered and energy intensity of IT use. This is one of the areas that are particularly difficult to model at this point in time and it is likely that this will require further studies to effectively model|
|Estate changes||Over time organisations increase or decommission their estate in order to meet the requirements of population served. The more this can be modelled with real data e.g. known floor areas or energy efficiency data, the more accurate this forecast can be.|
Why is it important to model BAU?
Previous carbon management programmes have used a single annual percentage growth figure of 0.7% for the carbon footprint to represent BAU, usually indicating an underlying growth in energy consumption of organisations over time. However, as carbon management has become more sophisticated, organisations have become aware that this is not necessarily accurate. Furthermore, by failing to model BAU, carbon managers cannot clearly demonstrate progress against targets and value for money for the carbon management programme, which in turn has a knock-on effect on internal investment.
If an organisation's BAU carbon footprint is actually increasing faster than anticipated, the efforts of the carbon management team would be underestimated. Conversely if the BAU is actually decreasing, the organisation might under-invest because the footprint is already reducing, causing the organisation to miss out on possible cost and carbon savings that are achievable. An accurate model of the BAU can help the Carbon Management Team explain the impacts of the CM plan and better identify the most effective carbon reduction measures. Sophisticated models of BAU also provide a more critical look at which parts of the footprint are increasing and decreasing over time and this, along with financial models of the costs of fuels and services such as waste and water, can help organisations make better strategic decisions for future investment.
How was BAU modelled for the Scottish Government?
In order to more accurately model BAU, an Excel spreadsheet was developed and used. The starting point was the most accurate and up-to-date carbon footprint for the organisation (2011/12 footprint of 19,343 tCO 2e). This footprint was classified down to the building level and the fuel source. A set of key BAU growth factors was developed with the Carbon Management Team and these factors were applied to the relevant sources within the footprint ( e.g. anticipated changes to the UK grid electricity factor are applied only to electricity consumption).
The following growth factors were applied:
1) A conservative estimate of the UK grid electricity factor, which was based on a linear regression of the historic Defra/ DECC figures from 2002 (which was after a large reduction in the emission factor from the switch from coal to gas) to 2010. The conversion factor for grid electricity includes both generation and transmission and distribution losses.
2) Estate changes based on discussion with the Carbon Management Team. The modelled changes included complete or partial closure of buildings and consequent movement of staff to other buildings in the SG estate.
3) Annual increases in electricity demand through increasing IT/equipment consumption were estimated at 1% per year increase for electricity in staffed buildings.
The spreadsheet thus calculates the overall estimated carbon footprint for the organisation in future years. This information was used in the CMP to forecast 'Value at Stake', confirm targets, and determine the scale of carbon saving projects required to be implemented.
Future modelling of BAU
BAU models are likely to change over time as the Scottish Government understands and incorporates more internal factors in its BAU model, especially in terms of in-depth understanding of future estate/staff/delivery model changes. There is also likely to be better information available about external factors, especially the carbon conversion factor of grid electricity which could be a key contribution to future carbon reductions. Therefore, it is recommended that BAU forecasts are updated on a yearly basis to help understand where best to allocate resources and effort in future.
Financial modelling and VAS
To get a more accurate picture of how the Scottish Government's utility and expenditure costs are likely to change over time, the BAU footprint is used to estimate consumption (converting from carbon back to units of consumption). These are then used along with forecasts of future unit prices ( DECC, 2013)  to calculate total spend on utilities and other expenditure. Where available, actual known unit prices are incorporated into the near-term forecast.
|Utility/expenditure||Unit||Current estimated unit price (2013/14)||Estimated unit price in 2019/20||% change|
|Business travel - air||£/tonne CO 2||748||894||+20%|
|Business travel - rail||£/tonne CO 2||2614||3121||+19%|
|Business travel - car||£/tonne CO 2||571||683||+20%|
|Business travel - other||£/tonne CO 2||1,584||1,892||+19%|
As with the BAU, it is recommended that financial forecasting is repeated on an annual basis so that more accurate unit prices and future forecast emissions can be incorporated. Accurate financial forecasting will ensure that the Scottish Government can make strategic investment decisions based on the best available information.
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