National Grid to Adopt Carbon Budgets

National Grid of London on April 18 announced its plan to increase company-wide greenhouse gas emissions reductions from 60 percent to 80 percent by 2050.

It also unveiled its intention to adopt new carbon budgets across its U.K. and U.S. electricity and gas businesses from April 2009, integrating them into the management of its day-to-day business operations and company performance process, to help achieve this target.

"Minimizing our impact on the environment while delivering safe, secure, and economic supplies of energy to customers is not an option, it is a must," said Steve Holliday, the company's chief executive. "And the two have to be tackled together. We have already reduced our greenhouse gas emissions by 35 percent, but we need to do more. Adopting carbon budgets and integrating them into our business performance process will encourage our employees to identify new ways to achieve the challenging 80 percent reduction target, and ensure emissions reductions remain at the heart of our operational decision-making."

Under its U.K. regulatory price controls and U.S. rate plans, National Grid already has a variety of features that enhance environmental performance. These include regulatory incentives schemes targeted to reduce emissions associated with gas and electricity assets, gas distribution mains replacement programs in the United Kingdom and United States, and replacement of certain gas transmission compressor units in the United Kingdom with more efficient electric compressors. Ongoing emissions reductions and the use of more energy efficient plant and equipment are, in the longer term, expected to drive down the life-cycle costs of assets.

Over the next 12 months, National Grid will undertake a review of its operations following a protocol used by The Climate Registry, based on World Resource Institute (WRI) methodology. This will provide a detailed assessment of the carbon footprint for each National Grid business and enable managers to determine the most effective and economic ways of reducing emissions. Annual and five-year emissions targets, measured in tons of carbon dioxide equivalent, will then be established for each business and integrated into the company's performance process alongside customer service, reliability, safety, operational and financial targets.

Adopting carbon budgets will allow National Grid to calculate a "shadow price" of carbon and determine emissions costs for future design, construction, and maintenance of its electricity and gas networks, management of its fleet and facilities, and any potential new investments. This will ensure the company is prepared for future legislation by properly accounting for the potential cost of emissions under a carbon tax or mandatory cap-and-trade scheme.

National Grid is an international electricity and gas company and one of the largest investor-owned energy companies in the world.

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