RWE makes Denmark-sized mistake in CO2 emissions

www.environmental-finance.com
5 November

German energy giant RWE overstated its own carbon dioxide emissions by 70 million tonnes – equivalent to the annual greenhouse gas emissions of Denmark – in a report this year because of a classification mistake. The error draws attention to the difficulty of analysing and comparing corporate greenhouse gas (GHG) emissions, said Trucost, the London-based environmental data firm that discovered the slip-up. RWE put the carbon content of the electricity it had purchased in the wholesale markets for reselling to customers into the 'Scope 2' category of its 2009 report to the Carbon Disclosure Project (CDP), according to Stefano Dell'Aringa, senior research analyst at Trucost.

Under the widely used GHG Protocol, an accounting and reporting standard, Scope 2 is meant to record indirect carbon emissions resulting from electricity consumed by an organisation. Dell'Aringa said RWE should have recorded the footprint of its traded electricity under Scope 3, which is reserved for indirect emissions from suppliers or emissions created by the use of products sold. An environmental specialist at RWE apologised for the mistake, telling Environmental Finance that the firm had not kept up to date with changes to GHG reporting methods. "We fully support the attempt to give clear reporting of the carbon dioxide [CO2] profile of companies," he said.

"We will change our internal routines and, independently of the Trucost enquiry, we had already established an internal process to gather this information, with a well-known verification company, to improve the quality of the reporting of our environmental, social and governance data." RWE will update its CDP response next year, but will not re-submit this year's report. "We are already short of manpower," the specialist said. "Most financial directors don't know whether they should be reporting a million or a thousand tonnes," said Trucost managing director Simon Thomas at a seminar on Wednesday.

Thomas cited other examples of inaccurate reporting, such as International Power's website putting its 2005 CO2 emissions at 52 million tonnes (Mt), but reporting 84.4 Mt to the CDP. Following discussions with the company, Trucost decided a figure of 68.3 Mt was accurate. Meanwhile, Air France-KLM reported that it had emitted 6.4 Mt of sulphur dioxide in 2005-6 – a figure roughly equivalent to half of all European sulphur dioxide emissions.

Thomas bemoaned the plethora of reporting standards. "When we talk to companies, there are five or six options" on which they can base their disclosure. "People are using this as a reason not to disclose," he said. "The GHG Protocol is well thought out. It sits behind most of the standards out there. I really don't see the need for local embellishments," Thomas said. He also urged governments to make emissions reporting mandatory.