Lcrs Annual Report

8/10/2019 Lcrs Annual Report

1/36

First Annual Report

Recording, reporting and reducing CO2

emissions

from the logistics sector

Logistics Carbon Reduction Scheme

LCRS managed by FTA


2/36

Printed on 100% recycled paper


3/36LCRSFirst Annual Report 3

Dear Colleague

I am pleased to present the first Annual Report of theLogistics Carbon Reduction Scheme, covering activity

and data from 2005 to 2009.

Working through the Freight Transpor t Association,

operators have launched the scheme to pool their

emissions of logistics-related greenhouse gas emissions

and work towards an agreed voluntary reduction target

over the medium term. This report establishes the

baseline for the scheme against which future progress

and reductions will be measured.

Carbon emissions from logistics account for almost a

third of total domestic transpor t emissions in the UK

but without the services that the sector provides the

economy and essential services would grind to a halt. We need to start making intelligent decisions if we

want to make a meaningful reduction in our carbon output without doing irreparable damage to British

business along the way. But before we can do this, we need to know precisely how many tonnes of CO2

we are responsible for as an industr y.

I wrote to Government in December 2009, to state our commitment to develop this innovative initiative

with the support of 12 founding members. I felt that we as an industry were far too reactive to policies

being set by Government and that it should be us setting the agenda. In doing so, this scheme provides

the roadmap for future transpor t-related carbon reduction policy in the UK and beyond.

Since 2009, we have moved quickly and decisively to establish a voluntary carbon reporting scheme for

the logistics industry. The scheme has been open for all operators of commercial vehicles to join from

the beginning of 2010. Members provide readily available information on vehicle numbers and simple

fuel usage data that is converted into carbon dioxide emissions using Government approved conversion

factors. The figures are then analysed in aggregate form. From this we have built an accurate picture

of the logistics sectors total carbon emissions, something that has, until now, been sadly lacking. I am

delighted with the progress that has been made so far.

I would also like to take this opportunity to thank Professor Alan McKinnon and Dr Maja Piecyk of the

Logistics Research Centre at Heriot-Watt University for their contribution to this work and their support

with the development of the Logistics Carbon Reduction Scheme.

We are now entering a period of evolution as we aim to increase the membership of the scheme and its

footprint in the logistics sector, to cover modes in addition to road transpor t and provide businesses with

the tools that they need to cut and continue to reduce their carbon emissions.

I am confident that with the support of industry and the hard work of the Logistics Carbon Reduction

Scheme team, we will be able to see it go from strength to strength.

Stewart Oades

FTA President


4/364 FTA LCRSAnnual Report 2010

Executive summaryFTA announced its plan to introduce the Logistics Carbon Reduction Scheme (LCRS) in December 2009

as a voluntary, industry-led response to the climate change challenge evident at the intergovernmental

meeting on climate change in Copenhagen. The principle behind the scheme is that in the case of

freight transport, industry is best placed to make and implement these actions, rather than Government

imposing additional cost and red-tape on companies through regulation, tax and artificial targets. For the

logistics sector, where fuel represents the biggest single input cost, reducing carbon dioxide emissions

often makes business sense as well.

The scheme is a pioneering one for FTA, which manages the LCRS, and for the schemes par ticipants. The

commitment at a senior level within 45 businesses, operating in excess of 39,000 commercial vehicles,

to join the scheme in its first year under lines the collective will of the sector to make progress, and to

dedicate time and effort to getting a credible mechanism for industry-level reporting in place.

This first annual report of the scheme highlights the early progress that has been made.

A robust set of data requirements from scheme participants has been put in place. This quantifiesthe carbon dioxide emissions created from fuel used in commercial vehicles (which represent over

90 per cent of all domestic freight transport emissions), as well as introducing a series of generic

normalisers through which carbon efficiency can be measured in the light of changing business

conditions

Historic trends in carbon dioxide emissions from commercial vehicles operated by schemeparticipants between 2005 and 2009 have been established to test the proof of the concept of the

emissions datasets and normalisers

A series of five logistics efficiency indicators have been established to create a framework aroundwhich carbon reduction initiatives can be identified and on which a target for the scheme can be

based

An activity-based reduction target for the scheme has been set where participants are collectivelycommitted to reducing emissions by eight per cent by 2015 compared to a 2010 baseline

The scheme has also reinforced the value of a disciplined mechanism of collecting and reporting fuel

data within businesses. Such an approach creates awareness of fuel use and opportunities to reduce it

throughout the business, from board level corporate social responsibility objectives to the targeting ofindividual vehicle and driver fuel efficiency performance.

Whilst significant progress has been made in establishing the scheme within the industry and with

Government there is still much to do, particularly in terms of building the schemes membership so that

it can influence future Government thinking on sector contributions to national climate change targets.

The scheme remains open for all businesses moving freight within the UK to join, details of which are

contained in the final section of this report on page 35.



The purpose and rationale for the scheme 6

Companies in membership of the Logistics Carbon Reduction Scheme 10

Climate change policy development 12

How the scheme works 16

LCRS emissions levels and trends 20052009 20

Setting a carbon reduction target for the logistics industry 23

The next steps 26

Appendices

Appendix A

List of the founding members of the Logistics Carbon Reduction Scheme 28

Appendix BList of members of the Logistics Carbon Working Group (LCRS steering group) 29

Appendix C

Letter to Rt Hon Philip Hammond MP, Secretary of State for Transport, July 2010 30

Appendix D

Logistics Carbon Reduction Scheme rules 31

Appendix E

Alternative approaches to carbon reduction target setting 33

How to join the Logistics Carbon Reduction Scheme 35

Contents


6/36LCRSFirst Annual Report6

Origins and purpose of the Logistics

Carbon Reduction Scheme

Since the publication of the Stern Report in 20061

and the passing of the Climate Change Act in 2008,

decisive and binding Government action to reduce

greenhouse gas emissions has gained momentum.

The logistics industry has recognised that with freight

accounting for around a third of transport emissions

in the UK, pressure to reduce them would almost

certainly impinge on the way that it operated in

future. There is a realisation that without action on

the part of industry to record and repor t progress

in reducing carbon emissions from freight operations,

Government might regulate to cut emissions, either

through legislation or tax.

The Logistics Carbon Reduction Scheme (LCRS)

is a voluntary, industry-led approach to recording,

reporting and reducing carbon emissions from freight

1 The Economics of Climate Change The Stern Review, Nicholas Stern,

Cabinet Office HM Treasury, January 2007, Cambridge Univer sity Press

transpor t. Industry announced its intention to develop

the scheme in a letter from FTA to Government min-

isters in December 2009; this letter was co-signed

by the chief executives and senior managers of the

schemes 12 founding members (Appendix A, page

28).

The scheme has since been developed by a steer-

ing group of 20 FTA members: companies ranging

from retailers and third party logistics providers to

utility companies and builders merchants (Appendix

B, page 29). Scheme members provide vehicle num-

bers and simple fuel usage data to FTA that is then

converted into carbon dioxide emissions using con-

version factors (approved by the Department for

Environment, Food and Rural Affairs (Defra)2). FTA

then aggregates data from scheme members, repor ts

totals and tracks improvements in carbon emissions

and fuel efficiency over time. Aggregated data from

the scheme al lows the UK logistics sector to publicly

report, for the first time, its contribution towardsnational targets to cut greenhouse gas emissions.

LCRS captures the progress that industry is making in

reducing transport-related emissions through fuel effi-

ciency improvements, better commercial vehicle fleet

utilisation, use of alternative low carbon modes and

less carbon intensive supply chains. Changes in car-

bon dioxide emissions from freight over time are now

being reported publicly in absolute terms and relative

terms, using a series of generic carbon intensity fac-

tors to take account of changing business conditions.

Initially, the scheme is focusing on fuel used in com-

mercial vehicles (vans and lorries/trucks); in time, its

scope will be expanded to cover other modes. In the

first instance, it was judged to be most effective and

in the interests of the schemes simplicity, to focus on

the source of the majority (99 per cent) of industrys

2 Guidance on how to measure and report your greenhouse gas

emissions, Department for Environment Food and Rural Affairs and

Department of Energy and Climate Change, September 2009

www.defra.gov.uk/environment/business/reporting/pdf/ghg-guidance.pdf

Guidance on measuring and reporting Greenhouse Gas (GHG) emis-

sions from freight transport operations, Department for Environment

Food and Rural Affairs, December 2010

www.defra.gov.uk/environment/business/reporting/pdf/ghg-freight-guide.pdf

The purpose and rationale

for the scheme



DHL is pleased to be amongst the founder members of the FTA LCRS and

fully supports its intent. We hope that this positive initiative from the industry

will demonstrate to Government that we are committed to improving our

environmental impact and we urge more operators to join the scheme to

increase momentum and have their say in defining future transport strategy.

CO2emissions, namely the combustion of hydrocar-

bon fuels in vehicles.

On 12 October 2010, Transport Minister, Mike

Penning, announced that the Government would not

make eco-driving a mandatory part of the Driver

Certificate of Professional Competence at that time.

He said, I will respond to industry assurances that

they have the will to increase uptake of eco-driving

training without direct Government intervention, and

will encourage and support industry-led initiatives to

improve fuel efficiency and tackle carbon emissions,

of which a number have emerged as a result of this

consultation. This was a welcome acknowledgement

of the value and contribution made by schemes such

as the LCRS.

The role of Government

The scheme has been designed to dovetail into a UK

agenda for carbon dioxide reduction which is sup-

ported by legislation, national policies and initiatives

by a number of Government departments. However,

to achieve the carbon reduction targets that are

planned, industrys efforts need to be complemented

by Government action in the areas of vehicle design,

technology and supporting the development and

uptake of alternative fuels.

It is clear that the role and choices available to

Government and the influences that decisions may

have on the logistics sector are not straightforwardones. In essence, three options are available; Figure 1

(overleaf) shows that Government policies can:

Tax and constrain, using measures that workagainst carbon reduction and business efficiency

(highlighted in red). For example, by promoting

technological solutions that increase industrys

costs, changes to vehicle design that erode effi-

ciency and through increased taxation

Burden and boss, by introducing policies thatachieve a carbon reduction with marginal busi-

ness benefit (highlighted in yellow). For example,

pushing for modal switch, introducing mandatory

PerryWatts

CEOUK&IrelandforDHLSupplyChain

Table 1

LCRS milestones in 2009/10: from launch to the

first Annual Report

December 2009

FTA President writes to Government

outlining the Associations proposal to set

up a scheme, supported by 12 founding

businesses

February 2010

FTA receives a letter from Lord Adonis, then

Secretary of State for Transpor t, giving his

backing for the scheme

April 2010FTA Logistics Carbon Working Group agrees

the scheme rules

July 2010

The scheme is officially launched with 37

members covering 37,278 commercial vehicles.

PricewaterhouseCoopers verify the scheme

rules

September 2010

FTA develops an initial start-up review to

check its understanding of the data received

from members and undertakes one-to-one

reviews at members sites

October 2010

Transpor t Minister, Mike Penning, opts to

back industry-led measures, such as the

LCRS, to reduce carbon emissions fromfreight rather than making eco-driver training

mandatory

December 2010

The Department for Transpor t commences

review of initial start-up reviews.

By the close of 2010, the scheme had 43

members, covering in excess of 39,000

commercial vehicles

March 2011Carbon reduction target published in LCRS

first Annual Report



greenhouse gas reporting and environmental

objectives such as local air quality initiatives which

may be incompatible with a decarbonisation

agenda

Promote and encourage by using interventionsthat benefit both business efficiency and carbon

reduction (highlighted in green). For example,

allowing increased night time deliver ies, improve-ments in vehicle capacity such as allowing

longer semi-trailers and encouraging voluntary

greenhouse gas reporting

Pump prime and enable, there are also measures(shown in blue) which will need Government sup-

port if they are to become mainstream business

decarbonisation measures that make commercial

sense. These include renewable fuel usage tar-

gets, promotion of alternative fuels and the CRC

Energy Efficiency Scheme

In developing LCRS, the logistics sector believes

that it is demonstrating to Government that greater

progress will be made towards reducing logistics

carbon emissions by it working with and supporting

businesses, rather than by burdening it with restric-tive legislation and increased taxation. FTA wrote to

Philip Hammond, Secretary of State for Transport in

July 2010 to confirm the schemes commitment to

contributing to national carbon reduction targets

(Appendix C, page 30).

Figure 2 shows how the logistics sector is performing

in terms of the five key low carbon indicators.

Figure 1Government influences on freights carbon dioxide emissions

Carbon benefit

Business Business +

Carbon penalty

Renewable targets

Alternative fuels

CRC

Euro 6

4m max vehicle and trailer height

Fuel duty increases

Modal switch

Mandatory ghg reportingLocal air quality initiatives

Night time deliveries

Longer semi-trailers

Voluntary ghg reporting



Kuehne + Nagel is delighted to be a founder member

of this innovative and practical project to reduce

road freight carbon emissions. Kuehne + Nagel is

committed to minimising the impact of our activities

on the environment.

MartinJohnson

NationalEnvironmentManager,Kuehne+Nagel

Figure 2

Low carbon indicators for the logistics industry

Indicator Performance

in 2009

Change

on 2005

Freight modal spilt

Percentage of UK inland freight moved by rail

11.7% +1.2%

Empty runningPercentage empty running by hgvs

28.3% +3.3%

Average vehicle payloadAverage payload of hgv fleet

13.9 tonnes +4.6%

Fuel efficiencyAverage hgv fuel consumption

8.4mpg 7.7%

Carbon intensity/use of alternative fuels/hybrid technologiesCommercial vehicle stock which is alternatively fuelled (hgvs and vans)

13,000 +18%

Sources: Transport Statistics Great Britain 2010



The following companies are now in membership of the LCRS.

Companies in membership of the

Logistics Carbon Reduction Scheme



In addition to the members of the scheme listed above some 100 companies

have expressed interest in joining and requested and received information packs.

SITA UK Ltd andWolseley UK are alsomembers of the LogisticsCarbon Reduction Scheme



In December 2009, world leaders gathered in

Copenhagen to try and secure a political deal to

reduce world carbon emissions. In the event, discus-

sions at the summit fell short of securing the sort

of political consensus that would lead to a treaty on

climate change. Instead, the Copenhagen Accord, as

it was named, made reference to the need to keep

temperature rises to no more than 2C but set no

targets. Fur thermore, in December 2010 global talksat Cancun again made little progress.

Despite the lack of progress made in Copenhagen

and Cancun, the UK and, albeit with a less challenging

goal, the European Union, have remained committed

to achieving ambitious carbon reduction targets. It is

clear that if a substantial absolute reduction in carbon

emissions is to be achieved, all sectors of the econ-

omy will need to achieve meaningful cuts.

Under the terms of the Climate Change Act 2008,

the UK must reduce greenhouse gas emissions by34 per cent by 2020 against 1990 levels. An 80

per cent reduction in greenhouse gas emissions by

2050 is also required against the 1990 baseline. The

Committee on Climate Change (CCC) was set up

to independently advise the Government on emis-

sion target, greenhouse gases and carbon budgets. In

its most recent report, the Fourth Carbon Budget1, it

advocated that a fur ther target should be set for 2030

to reduce emissions by 60 per cent compared to 1990

levels in order to meet the 80 per cent reduction tar-

get by 2050 as set out in the Climate Change Act.

In July 2009, the Government published its Low

Carbon Strategy which outlined the steps that will

be taken to meet the UK target for 20202. The car-

bon reduction strategy for transport has since been

published by the Department for Transport (DfT).

Low Carbon Transport: A Greener Future3sets out

the actions already taken, and the building blocks that

need to be put in place, for longer term changes in

transpor t emissions up to 2050.

Defra has jointly published voluntary guidelines for busi-

ness on how to record and report greenhouse gas

emissions with the Department for Energy and Climate

Change (DECC)4. FTA has met with Defra officials to

update them on LCRS and they have indicated that thescheme is suitably matched to the voluntary guidelines

and in accordance with Scope 1 of the Greenhouse

Gas Protocol5(a global accounting and reporting stan-

dard from the World Resources Institute and the World

Business Council for Sustainable Development). Defra

has since published voluntary guidance on report-

ing greenhouse gas emissions in the freight sector

(December 2010). This guidance was produced in con-

junction with DfT and key freight industry organisations

1 The Fourth Carbon Budget Reducing emissions through the 2020s,The Committee on Climate Change, December 2010

www.theccc.org.uk/reports/fourth-carbon-budget

2 The UK Low Carbon Transition Plan National strategy for climate and

energy, HM Government, July 2009

www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/lc_trans_plan/

lc_trans_plan.aspx

3 Low Carbon Transport: A Greener Future A Carbon Reduction

Strategy for Transpor t, Department for Transpor t, July 2009

http://webarchive.nationalarchives.gov.uk/20091002205238/http://dft.gov.

uk/pgr/sustainable/carbonreduction/low-carbon.pdf

4 Guidelines to Defra/DECCs GHG Conversion Factors for Company

Reporting, Department for Environment Food and Rural Affairs and

Department of Energy and Climate Change, Annual updates

www.defra.gov.uk/environment/business/reporting/conversion-factors.htm

5 The Greenhouse Gas Protocol: A Corporate Accounting and Reporting

Standard, World Resources Institute (WRI) and the World Business

Council for Sustainable Development (WBCSD)

www.ghgprotocol.org

Climate change policy development



DavidMorton

StrategicDevelopmentDirector,MenziesDistribution

and businesses that are part of DfTs Low Carbon Supply

Chain Steering Group, of which FTA is a member.

Under the current legislative framework there is no

mandatory requirement to record and report carbon

emissions from business. Defra published a review

in late 2010 on the value of recording and report-

ing greenhouse gas emissions in significantly helping

UK businesses to contribute to UK reduction targets.

The review found that greenhouse gas measurement

and reporting are important initial steps in emission

reduction and target setting, to allow targets to be

communicated and abatement effort targeted.

The Climate Change Act requires that a decision on

mandatory reporting should be made by 2012, or an

explanation be made to Parliament explaining why it

has not been put in place. The decision is expected

to be made by ear ly 2011. However, FTA has voiced

concern that it is too soon to decide on mandatory

reporting, given that Defras voluntary greenhouse gas

reporting guidelines were only introduced in October

2009 and that voluntary schemes, such as LCRS,

should be given a chance to work first. A decision was

still awaited at the time this report went to print.

Decarbonising logistics

The transport sector accounts for around 21 per cent

of UK domestic greenhouse gas emissions with freight

transport by all modes accounting for around 30 per

cent of these emissions. Transport predominantly pro-

duces CO2rather than other greenhouse gases, hence

the focus on carbon.

Menzies Distribution Ltd has been addressing environmental

issues for around 10 years. We have focused in particular on carbon

emissions reduction as this equates directly to our operational costs.

This has had a significant, positive impact on our business. We remain

committed to action, and to both supporting and learning from others.

Figure 3

Sources of carbon dioxide emissions, 19902009 (Mt)

Carbondioxideemissions(Mt)

0

100

200

300

400

500

600

700

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Agriculture

Residential

Public

Transport

Business

Energy supply

Source: DECC



The transport sector has already made progress in reduc-

ing these emissions. According to DfT, UK domestic trans-

port greenhouse gas emissions in 2008 (the latest con-

firmed data) were three per cent lower than in 2007, the

largest reduction in transport emissions since 1990. Cars

remain the single largest emitter with hgvs considered

significant contributors, yet these modes have shown the

most progress in reducing emissions since 1990. Aviation

and vans, and to a lesser extent shipping and rail, have

shown growth in their emissions since 1990, although

their share of transport emissions remains relatively small.

Decarbonising freight is seen as a key part of DfTs long-

term carbon strategy.

Emissions from hgvs accounted for almost 51 percent of carbon dioxide emissions from freight

transpor t in the UK in 2004 and emissions from

vans a further 28 per cent

In the UK, carbon dioxide emissions from trans-port sources increased by 6.3 per cent between

1990 and 2008

123 million tonnes of carbon dioxide in 2008were from road transport, accounting for

19.3 per cent of emissions

In 2008, hgvs contributed 20 per cent of trans-port emissions, cars made up 59 per cent, and

light duty vehicles, which includes vans up to

3.5 tonnes, contributed 11 per cent

Two years after its initial report, the Climate Change

Committee (CCC) turned its attention to freight. In

December 2010, it published its recommendations

to the Government on the Four th Carbon Budget.

The report considers the scope for further cuts in

emissions from buildings, industry, the power sector,

agriculture and transport in the 2020s.

Key recommendations from the report of specificinterest to the transport sector include:

international shipping and aviation should beincluded in future carbon budgets

emissions from surface transport will remain alarge share (22 per cent) of total emissions in 2030

but they would expect them to fall afterwards

with the increase in use of electric vehicles

The Committee suggests the following abatement

possibilities for freight:

Modal shift from high emitting road travel torail or water

Supply chain rationalisation optimising distribu-tion centre locations, sourcing produce locally

and greater use of consolidation centres

Vehicle utilisation increasing load sharing, back-loading initiatives and software for routeing and

load consolidation (Evidence suggests that backload-

ing vehicles can achieve 420 per cent vehicle-km

savings)

To this should be added:

increased use of more fuel efficient conventionalvehicles, through the introduction of electric/plug-

in hybrids and increased penetration of biofuels

increases in eco-driving to encourage more fuelefficient driving behaviour

These scenarios for freight emissions identified

by CCC suggest scope for significant reduction.

However, the Committee believed further evidence

was required on:

Figure 4

Breakdown of transport CO2emissions by mode in 2008

2%

2%

4%

2%

Hgvs

Light duty vehicles

Buses

Rail

Domestic shipping

Domestic aviation

Passenger cars

20%

11%

59%

Source: Department for Transport, Transport Statistic s 2009



long-term potential for transfer of freight from roadto rail and water transport and cost-effectiveness

of further network/infrastructure investment

availability of backhauls and load sharing opportunitieswhich could be taken up by hauliers in the 2020s

abatement potential from changes in business prac-tice such as just in time delivery, vendor managed

inventories and supply chain event management.

Industry response to climate change

The need to reduce carbon from freight transport is

recognised in the majority of FTA members board-

rooms. In FTAs 2011 Logistics Survey, undertaken in

December 2010, 59 per cent of respondents reported

that reducing carbon dioxide was a high boardroom

priority. This is the first year that FTA has asked this

question, and is a strong baseline position from which

awareness will grow in the future.

However, as early as April 2007, FTA asked members

about their response to climate change in the way they

moved freight and operated their vehicles. Almost all

survey respondents reported making at least some

operational changes which would reduce their organi-

sations carbon footprint. Ninety per cent of those who

had reported taking action were actively monitoring fuel

efficiency and nearly 80 per cent regularly reviewed the

deployment of vehicles to minimise empty running.

It is from this established commitment by FTA mem-

bers to respond to the challenge of climate change

that FTA felt able to develop a positive and proactive

policy that was adopted by its National Council in

July 2009 and develop LCRS during 2010 as the lead

initiative in the sector to record, report and reduce

carbon emissions.

Figure 5

Action taken in 2007 by QTAS respondents as a percentage of total who have implemented measures to reduce their

carbon footprint

0 20 40 60 80 100

Ongoing monitoring of vehicle fuel efficiency

Regular review of vehicle deployment to minimise empty running

Review vehicle spec to maximise fuel efficiency

Reviews of vehicle specification to maximise vehicle fill

Driver fuel efficiency training

Use of night time deliveries

Reporting environmental performance at board level

Use of biodiesel

Regular review of alternative modes

Source: FTA Quarterly Transport Activity Survey, April 2007



Data requested of LCRS participants

Logistics Carbon Reduction Scheme participants are

asked to provide a series of data sets in order for

FTA to aggregate and repor t the overall carbon emis-

sions from scheme members over time and to assess

the footpr int of the scheme relative to the industry

as a whole. The scheme seeks to track annual emis-

sions data going back to 2005. Many participants

have not been able to go back this far. In some cases

this has been due to mergers and acquisit ions which

has meant like for like time data through the period

is unavailable. In other cases, businesses have only

introduced the IT systems needed to consolidate

fuel use data and provide visibility across their busi-

nesses in the past two or three years.

The datasets used are intended to draw on opera-

tional or management data which businesses are

measuring and regularly using in a business context,

so as not to add an onerous new level of data captureand reporting. The reliance on the datasets within the

business for reporting and decision making also gives

a level of assurance that the data sources are robust.

The data sets cover three elements.

Fuel used in the road transport operations of the business

The basic premise for data collection is that the

organisation responsible for the purchase of fuel

used in its road transport operations, is also respon-

sible for the fuels carbon emissions. Details of all

fuel purchased for road transport operations(including vehicle-based ancillary equipment) are

requested relating to hgvs, vans, works buses and car

fleet (where available). From the fuel use data, FTA

applies a series of carbon dioxide conversion factors

to establ ish an absolute carbon footpr int for busi-

nesses covered by the scheme.

Business activity data covering vehicle kilometres,company turnover and full time equivalent employees

Business activity, and therefore transport activity, of

individual scheme participants constantly changes

over time reflecting growth and contraction linked to

the wider economy, business acquisitions and divest-

ments, and contracts won and lost. The scheme seeks

to report carbon efficiency changes over time by

expressing emissions in units of activity, rather than

just absolute amounts.

The choice of normaliser datasets has been heav-

ily influenced by measures of activity which canbe reported by all scheme participants, no mat-

ter what the nature of the business operation. In

the fir st year of the scheme, data on freight spe-

cific normalisers such as tonnes lifted, volume car-

ried, and tonne kilometres have therefore not been

captured. In part this decision reflects the different

operational KPIs chosen by businesses depend-

ing on the nature of the goods carried. In addi-

tion, commercial vehicles are used in appl ications

which go well beyond the movement of freight, for

example, acting as items of mobile plant, or as a

place to keep tools, where tonnes or cube-based

operational KPIs would not be relevant.

How the scheme worksTable 2

Fuel data components

Fuel Units

Conventional diesel Litres

Biodiesel (when used in concentrations

above standard diesel)

Litres

Petrol Litres

Bio-ethanol (when used in concentrations

above standard petrol)

Litres

Road fuel gas Kilogrammes

Gas oil Litres

Electricity used in vehicles KiloWatt Hours



IainSpeak

ChiefExe

cutiveOfficer,BibbyDistribution

Fleet numbers

The scheme captures the size and structure of fleetsoperated by par ticipants to which the fuel usage infor-

mation relates. Commercial vehicles are categorised

by gross vehicle weight based on the weight bands

used by the DfT in its Continuing Survey of Road

Goods Transport. Where it is not possible to disag-

gregate company cars and other vehicles (such as lift

trucks) from the fuel usage data, fleet details of these

are provided as well.

Based on fleet data for 2009, the footprint of the

scheme in relation to the overall size of the industry

can be monitored over time.

Initially, scheme members were asked for fleet data

onlyfor year ending 2009. Fleet data will be provided

on an ongoing basis from 2010. This will allow a CO2/

tonne freight carried normaliser to be applied using

the number of vehicles in different weight ranges.

Data integrity

The steering group for LCRS, the Logistics Carbon

Working Group, has developed a set of rules for the

scheme which must be adhered to by all scheme

members (Appendix D, page 31).

All companies joining LCRS are subject to an initial

start-up review. In the course of this review a stan-

dard data review form is completed, verified with the

member and held on file by FTA. As such, it will form

part of the data-related evidence base which will, in due

course, be made available to the, still to be appointed,

external assurance provider for the scheme.

The purpose of the data review is to ensure that

scheme members understanding of the data they

have provided us is consistent with FTAs understand-

ing of it as the co-ordinating body for LCRS. The star t-

up review also enables the extent to which the data

that is provided is relied on, or audited elsewhere in

the business concerned, to be established. It is par t

of the control process to assess and mitigate risk

To reduce the impact our activities have on the environment, it is

essential to continually monitor our fuel and energy use across the

business. This scheme allows us to work collaboratively with other

leading players in the industry to proactively reduce CO2emissions and

gain a more accurate picture of the road freight sector as a whole.

Table 4

Vehicle fleet dataset

Vehicle typeGross vehicle weight

Over Not

Articulated hgv 33t

Articulated hgv 33t

Rigid hgv 3.5t 7.5t

Rigid over 7.5t to 17t 7.5t 17t

Rigid over 17t to 25t 17t 25t

Vans and light commercial vehicles 3.5t

Company cars n/a n/a

Other vehicles n/a n/a

Table 3

Normaliser dataset

Turnover ( million) Full time equivalent employees Vehicle kilometres to which fuel usage relates

Turnover figures submitted must be

based on a UK business unit

FTE figures submitted must be based on a

UK business unit

Vehicle kilometres submitted by the company must relate

to the fuel usage figures submitted for each year



associated with the schemes integrity. However, it is

not intended to be a detailed assessment of compa-

nies collection and collation processes.

The main elements of the data provision and verifica-

tion process are shown in Figure 6.

Analysis and aggregation

methodologyThe Logistics Carbon Working Group has adopted

the following methodology for recording and report-

ing carbon emissions under the LCRS.

Conversion factors

Carbon dioxide emissions were calculated from the

volumes of fuel used, as reported by scheme par-

ticipants, using conversion factors recommended by

Defra and DECC. New greenhouse gas emission con-

version factors are published each year for emissions

produced in the preceding year. The purpose of theconversion factors is to help UK businesses convert

existing data sources (eg fuel usage) consistently into

carbon dioxide equivalent emissions by applying a rel-

evant conversion factor.

For biofuels, the Government significantly altered the

conversion factors in the 2010 guidelines for 2009

emissions and confirmed that direct emissions of car-

bon should be set to 0 for biofuels, as the same amount

of carbon is absorbed in the growth of the feedstock

from which the biofuel is produced. It should be noted

that there are a range of conversion factors available

for biofuels which take cultivation of the feedstock and

wider greenhouse gas emissions into account. Given

the schemes focus on carbon dioxide emissions from

burning road transport fuel, FTA has applied a conver-

sion factor of 0 to biofuels used by LCRS members.

Absolute and relative emissions

Absolute emissions of carbon dioxide are reported as

it is recognised that real reductions in carbon dioxide

emissions are being sought by the Government as a

contribution to national carbon reduction targets.

However, it is recognised that the activity level of busi-

nesses changes over time. Normalisers have therefore

also been applied to the data to show that reductions

in carbon dioxide emissions are being achieved per

unit of activity. The normalisers selected are recogn-

ised as appropriate normalisers to be used in business

reporting in Defras Voluntary Reporting Guidelines.

Greenhouse Gas Protocol

In accordance with the World Resources Institute,which sets the Greenhouse Gas Protocol, a global

reporting standard for greenhouse gas emissions,

the Logistics Carbon Reduction Scheme covers

Scope 1 (direct emissions) and Scope 2 (electricity

emissions where electricity from the national grid is

used to provide vehicle power). This approach is also

recommended by Defra in its Voluntary Reporting

Guidelines. The scheme does not cover Scope 3

(indirect emissions), which would be produced, for

example, by a sub-contractor working for a customer.

If Scope 3 emissions were included in the scheme,this would lead to double counting. Instead only fuel

that is purchased by a scheme participant is repor ted

within the footprint results.

Structure of scheme membership

and size of scheme in relation to

industry

As at the end of February 2011, the Logistics Carbon

Reduction Scheme covered 45 companies operating

39,063 commercial vehicles, 7,390 cars and 312 other

vehicles such as tugs and shunt vehicles.

Figure 6

Logistics Carbon Reduction Scheme: data provision and

verification process

Declaration ofIntent completed

Data sheetreturned to FTA

On-site initial start-updata review meeting

takes place

FTA and LCRSparticipant sign off review

LCRS participantssubject to periodicdata spot checks

LCRS participantscomplete data sheets

for future years

Data sheet coveringretrospective fuel use,

normalisers and

fleet breakdown sentto scheme participant

Start up reviews cover:

Company structure and governance

Current carbon footprint

How the company keeps track of vehicle numbers

How the company keeps track of fuel data

Recording vehicle kilometre data

Turnover and Full Time Equivalent (FTE) information

Extent of eco-driver training

Carbon reduction strategies



This report on the scheme in 2009 relates to the

verified returns of 34 companies operating 35,590

commercial vehicles. The scheme is constantly grow-

ing and the difference between scheme member-

ship and verified contributions reflects the time lag

between the initial, director-level Declaration of

Intent to the data review undertaken by FTA staff

once fuel, normaliser and vehicle fleet information

has been submitted.

The fleet make-up of the scheme membership is

heavily predominated by heavy goods vehicles, which

account for 54 per cent of all vehicles covered by the

scheme. By contrast, numbers of vans and company

cars are relatively small, particularly bearing in mind

the significant numbers of these vehicles in the overall

GB vehicle stock (see Figure 7).

As a result, the penetration of the scheme in terms of

absolute levels of emissions is modest, but growing.

Figure 8

Comparison of trend in LCRSs absolute emissions

compared to industrys emissions as a whole

2009 data is not yet available for industry as a whole

(due in April 2011)

0

5

10

15

20

25

30

35

40

45

Total tonnes CO2by source fromroad transport (hgv + light vans)

Total tonnes CO2from LCRS participants

20092008200720062005

TonnesofCO

2(million)

Source: Transport Statistics Great Britain 2010:

Energy and the Environment, table env0201

Figure 7

Percentage split of vehicles

Articulated up to 33t

Articulated over 33t

Rigid over 3.5t to 7.5t

Rigid over 7.5 to 17t

Rigid over 17t to 25t

Rigid over 25t

Light cvs 3.5t or less

Company cars

Other vehicles

1%

6%

19%

9%

9%

9%4%

28%

15%

Table 5

Vehicle fleet dataset

Vehicle type

Number covered

by scheme as atFebruary 2011

Percentage of GB

parc for vehiclecategory in 2009

Hgvs 25,200 6.1

Vans 13,900 1.3*

Company cars 7,390 0.3

*Fleet vans



LCRS emissions levels and trends

20052009The analysis of the scheme focuses on both absolute

and relative levels of emissions over time. As previ-

ously recognised, Government targets are focused on

absolute levels of reduction. However, in practice the

scheme needs to reflect the dynamic nature of busi-

nesses whose emissions will change in line with busi-

ness activity.

In recognition of the commercially sensitive nature of

the data provided by individual companies the results

are presented in an anonymised form. The scheme

rules (Appendix D, page 31) require that material

changes to scheme members which have a substan-

tial impact on the aggregated datasets are declared

as part of the public reporting process. No such dis-

tortions are repor table in the period covered by this

report.

Trends in emissions among scheme

members

Total carbon dioxide emissions among scheme

members

Emissions reported by scheme par ticipants are build-

ing over time as the number of companies in a posi-

tion to provide retrospective data increases in later

years. In 2005, 13 members were able to provide fuel

data. This grew to 25 by 2007 and 34 by 2009. In prac-

tice most companies star ted measuring data on fuel

use as part of their green agenda in 2007 following

the publication of the Stern Report in October 2006

and carbon emissions becoming a boardroom metric

and operational KPI (see Figure 9).

The proportion of biofuels (in concentrations exceed-

ing standard grades of fuel) and alternative fuels used

relative to conventional diesel and petrol is in the region

of four per cent when based on volume. Factors hold-

ing back the uptake of alternative fuels include:

cost and limited availability of refuelling infrastructurehigher cost of alternative fuels following the lossof fuel duty incentives (removal of the 20ppl

incentive for biodiesel in April 2010)

unproven technology resulting in increased downtimeuncertainty over vehicle warrantieshigh and uncertain whole-life operating costs(higher vehicle capital costs, uncertain vehicle

residual values)

Figure 9

Aggregated absolute CO2emissions by year and by fuel

type

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

Bioethanol (in concentrations over 5%)

Biodiesel (in concentrations over 5%)

Electricity

Gas oil

Road fuel gas

Petrol

Diesel

20092008200720062005



CatherineCrouch

DirectorofTenensEnvironmental,HowardTenens

Normalised carbon emissions among

scheme members

Emissions per vehicle kilometreWhen total carbon emissions are related to total vehi-

cle kilometres (where members are able to provide

both datasets), the overall carbon intensity of scheme

participants has improved over time. Scheme partici-

pants have been able to get better visibility of vehiclekilometres over time and, as a result, the sample size

for the vehicle kilometre-normalised dataset has grown

from 11 in 2005 to 15 in 2007 and to 24 in 2009.

When compared to the industry as a whole, scheme

participants are making better progress in reducing

emissions.

Emissions per turnoverThe level of carbon dioxide emissions per of turn-

over has increased among scheme members during

The LCRS plays an important role in benchmarking

the sectors emissions; this is fundamental if we are to

demonstrate the improvements we are making.

Figure 11

Aggregated relative CO2emissions by year using

normalisers vehicle kilometres

0.0

0.2

0.4

0.6

0.8

1.0

1.2

20092008200720062005

Kilog

rams

Figure 10

Proportion of biofuels/alternative fuels used compared to

conventional fuels

Biodiesel (inconcentrationsover 5%)

Electricity

Road fuel gas

Conventional fuels(diesel/petrol/gas oil)

99.4%

0.2%

0.3%0.1%

Figure 12Trends in vehicle kilometre-normalised emissions relative

to industry as a whole

Kg of carbon per vehicle km by LCRS participants

Kg of carbon per vehicle km by freight industry

20092008200720062005Kg

ofcarbonpervehiclekmf

or

Freig

htindustryvsLCRSparticipants

0.70

0.75

0.80

0.85

0.90

0.95

Source: Road freight statistics 2009; TSGB; Vans & the economy report of the

Commission for Integrated Transport, July 2010 (Table 10)



2008 after falling in earlier years. Again, the number

of businesses contributing to the indicator rose in the

later years, with 10 members providing data in 2005,

17 in 2007 and 24 in 2009.

The rise in the indicator reflects in part the sharp

increase in vehicle operating costs in 2008 resulting

from rising world oil prices which peaked at $147 per

barrel in July the turnover figures have not been

adjusted to constant prices. The rise in the indica-

tor also coincides with the star t of the recession in

the second half of 2008, which continued to depress

business levels throughout 2009. Operators will have

made retrospective realignments of fleet resource to

reflect falling business levels, resulting in higher emis-

sions per turnover during the business contraction

process.

Emissions per full time equivalent employeeThe recent trend in emissions relative to numbers of

full time staff has seen a fall, following several years

in which the indicator rose (20052008). Again the

base of members providing both sets of data has r isen

since the 2005 base year. From nine members in 2009

the contributor base grew to 16 by 2007 and to 24

in 2009.

The sharp rise in the indicator in 2007 may reflect a

picture of the industry before the recession operating

on the edge of capacity. As business levels began to

fall operators took early action to reduce staff costs

through redundancies in 2008. The fall in 2009 reflects

an industry with activity still falling and opportunities

for redundancies lower.

Figure 13


normalisers business turnover

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

20092008200720062005

K

ilogramsofcarbonper

Figure 14


normalisers full time equivalent employees

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

20092008200720062005

K

ilogramsofcarbonperFTE



A core objective for the Logistics Carbon Reduction

Scheme is to set a voluntary carbon reduction tar-

get for the first time for the logistics sector. The three

components of the schemes carbon reduction target

are: a baseline year, the percentage change in emissions

and the target period. In the case of the percentage

change, the approach taken to target setting necessi-

tated the adoption of a relative target, rather than an

absolute cut in emissions. This also takes into accountbusiness growth as the economy recovers from the

recession. The decision to focus on three normalisers,

rather than just one, means that the targets reflect a

broad range of business influences.

The role of the target is to provide a focus to future

decarbonisation measures by scheme par ticipants and

to demonstrate the contribution the logistics sector

will make towards national carbon reduction targets.

It will also allow LCRS members to demonstrate to

shareholders, contractors and customers their com-

mitment to carbon reduction.

Target time horizon

During 2010, work was undertaken by the Logistics

Carbon Working Group to develop and agree a car-

bon reduction target and deadline that would be

stretching, yet workable, for industry. At an early stage

it was concluded that the targets time frame needed

to reflect business planning horizons.

Such an approach reflects Committee on Climate

Change recommendations on use of interim tar-

gets and budgets in order to meet the UKs 80 per

cent greenhouse gas reduction target. Using a short

timescale carbon reduction target for the scheme

would give a much greater chance of success as the

Government continues to map out opportunities for

carbon dioxide reduction across the economy.

The group concluded that the target should initially

be for five years and would set an emissions

reduction trajectory to 2015, using 2010 as a

baseline.

Approach to setting a target:

Logistics Efficiency Indicators

Several possible pathways to setting a carbon diox-

ide reduction target were considered by the schemes

working group (Appendix E, page 33, describes all the

options that were reviewed). However, the Logistics

Carbon Working Group recognised at an early stage

that the options available to businesses to materially

reduce carbon dioxide emissions from logistics centre

around improving the efficiency of transport opera-

tions. In practice, these can be summarised under five

operational parameters that are within the scope and

budgetary authority of most logistics managers to

control.

Freight modal split : proportion of freight moved

by low carbon transport modes (rail and water)

Empty running : proportion of lorrykilometres

run emptyAverage payload weight : average weights of loads

carried on laden trips

Fuel efficiency : ratio of fuel consumed to total

distance travelled

Setting a carbon reduction target

for the logistics industry



Carbon intensity: proportion of low carbon

fuels/energy sources used in the freight transport

operation

These parameters were first developed by Heriot-

Watt University (HWU) and adopted by the Logistics

Carbon Working Group as the Logistics Efficiency

Indicators in 2010. The changes in these indicators,

anticipated by business over the next five years,

were aggregated to develop a target using a Carbon

Reduction Scenario model, developed by HWU.

Such an approach had the advantage that it focused

on practical measures that individual businesses could

take over the schemes target time horizon of 2015.

In establishing a target for the scheme, the approach

would need to reflect both the views of existing

scheme participants, and the expectations of busi-

nesses not currently covered by the scheme but whoconceivably could join the scheme over the duration

of the target period.

The principal drawback of the approach is that it is

experimental. Whilst the five indicators are widely

used by businesses as operational KPIs, their use in

projecting efficiencies in the future was new. As a

result, businesses may be aspirational in reporting

anticipated changes in the indicators. The inter-rela-

tionship of the five logistics efficiency indicators is

not fully understood; whether these be sympathetic

influences, where a change in one indicator reinforcesa change in another, or indicators that run counter

to each other, for example vehicle payload and fuel

efficiency.

For the purposes of setting a carbon reduction tar-

get for the scheme, the logistic efficiency indicator

approach was chosen by the working group.

Methodology used in target settingAll LCRS participants and Logistics Carbon Working

Group members were surveyed on how their com-

panys carbon emissions would change between 2010

and 2015 based on the five logistics efficiency indi-

cators. Alongside, the LCRS Carbon Reduction Target

Survey, FTA also surveyed the wider industry as part

of its Logistics Industry Survey 2011 on the likely level

of carbon dioxide reduction from freight transport

between now and 2015. This gave a wider base of

contributions to the target setting process.

Heriot Watt University used its model developed

for Moving Freight by Road in a Very Low Carbon

World1 to aggregate individual company returns

from both samples to provide an industry view of

the likely level of carbon dioxide reductions from

its logistics activities. Returns from the scheme par-

ticipants and working group, and wider industry sur-

vey (covering over 100 responses) were analysed

separately. The initial results of the analysis showed

a broadly consistent expectation of the extent of

1 Logistics 2050: Moving Goods by Road in a Very Low Carbon World

McKinnon, AC and Piecyk, M (2009) in Sweeney, E (ed) Supply Chain

Management in a Volatile World Blackrock Publishing, Dublin



PaulL

loyd

Vice-PresidentSupplyChainOperations,ArlaFoodsUK

reductions in carbon dioxide emissions between the

two data samples.

Members of the scheme and working group were

then asked to review these results. In the light of th is

review, it was found that the average values were

being skewed by some exceptionally high estimates

returned by a small minority of companies. The

majority of respondents anticipated more modest,

and arguably more realistic, reductions. To reflect this

the analysis excluded the top quar tile of responses

to each indicator. In effect , the target reflects an

average of the Quartile 13 of the samples for each

indicator.

This second phase of analysis work revealed an antici-

pated eight per cent reduction from scheme par-

ticipants, and five per cent from the wider Logistics

Industry Survey. Having reviewed the survey returns

and aggregation approach taken, it was concluded that

the less refined nature of the the Logistics IndustrySurvey meant that the scheme participant survey

offered a more realistic reduction trajectory. A further

argument for using the scheme member survey as the

basis of the target is that it contains a level of stretch

(rather than business as normal for operators), as

the repsondents represent a self-selecting group of

organisations where carbon reduction is a high prior-

ity in their business.

The results of the two surveys were also tested against

the results of the original Delphi modelling2 which in

effect acted as an independent benchmark.

2 Delphi modelling use of a structured group to devise a forecast based

on perspective after reaching a collectively agreed view

The results of this analysis suggest that when the

changes to all five logistics efficiency indicators are

brought together, the anticipated reduction in carbon

emissions is 8 per cent by 2015, compared to the

2010 baseline.

The target represents an intensity-based cut in emis-

sions, as survey respondents had no way of factoring

changes to their business into their returns. It will be

tracked against all the normalised emission datasets

reported on by the scheme, recognising that some

normalisers are directly related to transport (vehicle

kilometres) whereas the correlation of others (turn-

over/full-time equivalent employees) to fuel use by

transport will be less strong.

It is a collective, industry target and is not binding on

individual companies. Instead, all LCRS participants

will be expected to make a contribution.

Future reviews of the target

It is recognised that the experimental nature of the

model and the limited experience that respondents

have previously had in forecasting changes in the five

logistics efficiency indicators means that the target

should be reviewed in the light of experience.

The first review of the Logistics Carbon Reduction

Scheme target will take place in April 2012.

In the UK, Arla is responsible for the operation of more than 370

commercial vehicles. By monitoring and rigorously targeting efficiency

actions we are confident we can make improvements in current efficiencies

and reduce our CO2emissions while growing our logistics business.



The reports findings show the commitment that the

logistics sector can make in 2011 to respond to the

climate change challenge. With a strong list of core

objectives, there is a clear plan for the scheme to

evolve in its second year of operation.

Objectives for 2011

To increase membership of the scheme

A key objective is to significantly grow the number of

companies participating in the scheme. The scheme

has been designed to be accessible to any logistics

company of any size and from any sector. Operators,

whether they are members of FTA or not, are encour-

aged to join the scheme to show their commitment to

recording, reporting and reducing carbon emissions.

To confirm a voluntary carbon reduction

target to 2015The first year of the scheme has allowed data to

be captured to show the progress that industry has

already made to reduce carbon emissions. However,

more is needed, and the voluntary carbon reduction

target to 2015 will allow industr y to direct its effor ts

to continue reducing carbon emissions.

To obtain formal recognition of the scheme

from Government

During 2010, FTA has engaged with DfT about ways in

which the logistics industry can contribute to national

carbon reduction targets. The scheme provides a way

of aggregating the carbon emissions of industry to

show the progress that industry is making to reduce

its climate change impact in a sensible and straight-

forward way. By offering this scheme to Government,the sector can present a strong case that it is com-

mitted to playing its part to meet carbon reduction

targets rather than Government having to use legisla-

tion or tax to coerce us into action. The objective is

to receive formal endorsement from Government in

recognition that initiatives such as LCRS can offer a

way for the logistics industry to make crucial emis-

sions reductions.

To offer a way of effectively reporting

emissions without the need for mandatory

reporting obligations to be introducedInitiatives such as LCRS offer a better approach to

reducing carbon emissions from industry rather

than Government seeking to introduce mandatory

reporting obligations for businesses. As the scheme is

aggregating carbon emissions from freight companies

and engaging participants in committing to a carbon

reduction target and strategies, it can provide the

opportunity to track real progress in reducing carbon

emissions rather than trying to quantify emissions on

a company by company basis.

To widen the scope of the scheme to embrace

rail freight

During the first year of the scheme, it has initially

measured the carbon emissions produced from the

combustion of fuels used in road transport. However,

the scope of the scheme needs to be widened to

embrace other modes of transport in order to moni-

tor an even larger propor tion of the supply chains

carbon emissions. In the first instance, steps will be

taken to develop the scheme to incorporate rai l.

To launch the LCRS knowledge bank

Whilst LCRS provides the ideal way for operators

to contribute to recording and repor ting freight

The next steps



emissions, operators also need to incorporate car-

bon reduction actions into their businesses. The LCRS

knowledge bank has been launched to provide best

practice advice on how operators can reduce car-

bon emissions; input from LCRS participants covers

alternative fuels, driver training and vehicle specifica-

tion. During 2011, the knowledge bank will be further

developed.

The longer term

To dovetail the UK Logistics Carbon Reduction

Scheme into international supply chainsMany scheme members supply chains extend across

the World and embrace shor t sea shipping, deep sea

and air freight. The principles of the scheme and the

ownership of the emissions apply equally to these

other modes.

To encourage adoption of the scheme

principles as standard practice for logistics

carbon reporting across EuropeA number of scheme members operate commercial

vehicles across Europe. While the LCRS is an initiative

that originated in the UK, the management disciplines

and operational practices underpinning it have a rel-

evance to logistics contribution to European Union

climate change targets.

MarkSutcliffe

Group

TransportManager,Warburtons

The Logistics Carbon Reduction Scheme is an important part of our

corporate and social responsibility programme that we are now building into

every area of our business. It allows us to focus on, and measure, initiatives

that will help reduce the carbon impact from our logistics operation.



Appendix A

List of the founding members of the

Logistics Carbon Reduction SchemeFred Barnes

Chief Executive

3663 First for Foodservice

Paul Lloyd

Vice President Logistics

Arla Foods

Alex GourlayChief Executive

Boots UK Limited

Leigh PomlettEVP UK & Ireland

Ceva Logistics

Perry Watts

CEO UK & Ireland

DHL Supply Chain

Laurent Ferrari

Networks Managing Director

EDF Energy

Charlie Mayfield

Chairman

John Lewis Par tnership

Glenn Lindfield

Managing Director Contract Logistics Nor th

West Europe

Kuehne + Nagel

Steve Macdonald

Managing Director

Norbert Dentressangle Transport Ltd

Malcolm Wilson

Managing Director

Norbert Dentressangle Logistics Ltd

Bas Belder

Managing Director

P&O Ferrymasters Ltd

Robert Higginson

Managing DirectorWarburtons

Derek Robb

Supply Chain Director

Wolseley UK



In developing LCRS FTA has sought views from a wide range of logistics operators on the development of the

scheme, rather than just those who are members of it at the present time.

FTA would like to thank the following for their contribution to the evolution of the scheme.

Ian Barnes Boots UK Ltd

Dave Carter Saint Gobain

Peter Chivers P&O Ferrymasters Ltd

Catherine Crouch Howard TenensRobin Dearden Arla Foods

Yvonne Furness Ceva Logistics

Richard George BT Fleet

Martin Johnson Kuehne + Nagel

Justin Laney John Lewis Par tnership

John Leader Travis Perkins

Roy McCrudden Wolseley UK

Professor Alan McKinnon Heriot-Watt University

Jason Monckton 3663

David Morton Menzies Distribution Ltd

Dave Parkes Pepsico International

Chris Pascall UK Power Networks (Transpor t) Ltd

Steve Rowland Bibby Distribution

Paul Sawko TDG UK Ltd

Phil Shepherd Norbert Dentressangle

Rob Stubbs Veolia Environmental Services plc

Mark Sutcliffe Warburtons

Steve Tainton Wincanton

Suzanne Westlake DHL Express UK & Ireland

Morag White Sainsburys

Jim York DHL Supply Chain

Appendix B

List of members of the Logistics Carbon

Working Group (LCRS steering group)


30/36


31/36



group will be established as part of the initial start-up

data review.

If biofuel is used in blends above that of conven-

tional diesel (seven per cent), biofuel used should be

recorded separately.

For each fuel type repor ted, FTA will apply the relevant

Defra carbon dioxide emission conversion factor.

2b Vehicle stock

Data should apply to commercial vehicle fleet oper-ated by the participants. Contractor vehicles should

be excluded.

Temporar y vehicles which are used for more than one

week should be recorded. Short-term leased or hire

vehicles of less than one week should be excluded.

2c Vehicle kilometresData should apply to those kilometres undertaken by

the scheme participants own fleet, including tempo-

rary vehicles which are used for more than one week.

The fuel and mileage impact of vehicles operated for

less than a week is not deemed to be significant.

Activity should include mileage on public roads andoff public roads.

2d TurnoverTurnover figures should apply at an externally audit-

able level, such as UK Group.

Participants are free to determine the scope of the

business activities which the turnover data relates to.

The approach used must be consistent over time. The

basis of the turnover figure will be established as part

of the initial start-up data review.

Annual and quarterly turnover figures should not be

subject to significant subsequent change. Any subse-

quent adjustments of more than five per cent should

be advised to FTA. Where an adjustment to the quar-

terly turnover of an individual scheme member affects

the aggregated total by more than 0.2 per cent, FTA

will adjust the previous annual or quarterly aggregated

figures and detail the reason for the change in the

next LCRS annual report.

2e Full time equivalent employeesThe full time equivalent (FTE) figure should cover per-

manent staff, temporary staff employed for more than

one week and agency staff.

Participants are free to determine the scope of the

business activities which the FTE data relates to. Theapproach used must be consistent over time. The basis

of the FTE figure will be established as part of the

initial start-up data review.

Where scheme members do not record agency staff

within their full time equivalent figures, the percentage

agency staff compared to full time equivalents will be

established by FTA as part of the initial start-up data

review.

3 Auditing of data

3a Initial start-up data review

All new scheme members will be subject to an initialstart-up data review by FTA. The review will establish:

company structure and governance

companys current carbon footprint and general

breakdown of emissions (where available)

the nature of the dened UK business unit and the

treatment of exceptional activity

mechanism for recording vehicle mileage and fuel

usage

treatment of company cars and private vehicles

for the purposes of fuel recording

basis for turnover gures

basis for full time equivalent gures and treatmentof agency staff within the reporting process

the extent to which the company undertakes

carbon reduction strategies within its transport

activities

Data provided by participants will not be reported

with the scheme until a satisfactory initial start-up data

review has been completed.

3b Stratified spot checksFTA will undertake an ongoing programme of audits

of established scheme participants to ensure that the

data reported within the scheme continues to reflect

the approach agreed as part of the initial start-up data

review and that:

data can be sourced back to fuel drawing records

and vehicle activity data

vehicle eet and mileage data has decision making

status or is relied on within the business

there is a mechanism for verifying the integrity of

the data, for example spot checks on depot report-

ing procedure/exception reporting follow-up

3c External auditingFTA will engage an external auditor to review FTAs

data collection and verification process and the meth-odology used to aggregate individual company returns

into the mandatory datasets published in the schemes

annual report.



Appendix E

Alternative approaches to carbon

reduction target settingIt was concluded that the Logistics Efficiency Indicators

approach, outlined on page 23, offered the most suit-

able methodology in setting the carbon reduction tar-

get for the scheme. However, the Logistics Carbon

Working Group considered a number of alternative

approaches.

Aligning LCRS target to UK nationalreduction targets

Long-term targets for absolute reductions in UK carbon

dioxide emissions to 2020 and beyond are set out in

the Climate Change Act 2008, together with interim

four-year carbon budgets. Consideration was given

to setting a target for the scheme in line with these

national targets (see Table 6).

It was concluded that matching a freight carbon

reduction target to UKs national targets would bedifficult as, to date, the Government has not itself set

any sector specific reduction targets. Attempting to

make the same reductions as those agreed nationally

for the UK as a whole would not take into account

the extent to which carbon dioxide reduction mea-

sures are practical for the freight transport sector.

Furthermore, the national reduction target takes no

account of carbon intensity, only overall emission lev-

els. The group considered that linking a scheme target

to an absolute target would mean that the principal

influence on whether a scheme target was achieved

would be business growth, rather than initiatives to

improve logistics efficiency or reduce fuel use.

Extrapolate historical emissions data

from the logistics industry

Historic carbon dioxide emissions data for the freight

sector is recorded by source (direct emissions by mode

and in the case of road by vehicle category) and by

industry (economic sector) within the UKs National

Atmospheric Emissions Inventory. These absolute

emissions values could be used on their own as the

basis of extrapolation, or combined with activity data

(such as commercial vehicle kilometres) to create acarbon intensity measure.

Using historical carbon dioxide emission trends has

the advantage of reflecting the sectors past experi-

ence of tackl ing emissions. However, such an approach

would fail to reflect the one-off nature of many low

carbon measures introduced by businesses, the focus

the sector now has on reducing emissions, or the

range of carbon dioxide abatement measures that are

likely to be available to operators over the time hori-

zon of the schemes target.

Work undertaken by Professor Alan McKinnon for

the Commission for Integrated Transpor ts repor t

CO2Emissions from Freight Transport in the UK in

2008 highlighted that trends in emissions over time

also vary widely depending on the source data.

Table 6

UK carbon dioxide reduction targets to 2022

Vehicle type

First

Carbon

Budget

200812

Second

Carbon

Budget

201317

Third

Carbon

Budget

201822

Percentage reduction

in carbon dioxide

compared to 1990

levels

22 28 34



Carbon dioxide reduction under a

business as usual scenario

As part of the background research to Logistics

2050, Moving Freight by road in a Very Low Carbon

World, published earlier in 2010, Dr Maja Piecyk and

Professor Alan McKinnon undertook a Delphi study

of 100 logistics specialists. This study suggested that

on a business as usual scenario, there would be a netreduction of 10 per cent in carbon dioxide emissions

from UK road freight transport between 2006 and

2020.1

This scenario is narrower than the scope of the Logistics

Carbon Reduction Scheme as it is limited to hgvs and

mode split. As a result it would not capture trends in

the use of vans. Its time horizon of 2020 was also too

far into the future, and the carbon dioxide reduction

projection would need to be brought back to 2015.

However, there was no clear mechanism to establish

at what point in time the low carbon measures antici-pated by respondents would become effective.

1 Piecyk, MI and McKinnon, AC (2010) Forecasting the Carbon Footprint

of Road Fre ight Transpor t in 2020 International Journal of Production

Economics, vol 128, no 1, pp 3142

Extrapolation of Logistics Carbon

Reduction Scheme data

Scheme participants are asked to provide historical

fuel usage data and normaliser datasets going back to

2005. Returns from individual businesses could have

been aggregated, normalised and extrapolated to a

given future time horizon.

Such an approach would have the advantage that it

relates specifically to scheme members. The disad-

vantage is that the extrapolation is based on a lim-

ited period of actual data (maximum four years, with

a significant proportion of members only able to

go back two or three years) which covers a period

of economic recession. In addition, similar to other

extrapolation approaches it does not take account

of future low-carbon operational and technology

developments.



How to join the Logistics Carbon

Reduction Scheme

New participants are still welcome to join the Logistics Carbon Reduction Scheme. The scheme is open to any

operator with at least one commercial vehicle and is free to join.

Benefits of joining the LCRS

Demonstrate your commitment to recording, reporting and reducing carbon emissionsContribute to a voluntary carbon reduction target for industry whether you already have a carbonreduction strategy in place or are just beginning to tackle your carbon emissions

Share best practice with like-minded companies on how to reduce your carbon emissionsReceive a quarter ly LCRS newsletter updating you on the progress of the scheme and the latestGovernment climate change policy affecting freight

You can find out more information about the scheme by the following ways.

To find out more:

Visit www.fta.co.uk/carbonreduction to download an information pack

Call 08717 11 22 22* to request an information pack

Email [email protected] to request an information pack

Write to Amanda Cooper, Freight Transpor t Association, St Johns Road, Tunbridge Wells, Kent TN4 9UZ

to request an information pack

To join the scheme now:

Visit www.fta.co.uk/carbonreduction to download a Declaration of Intent, complete and return as

instructed at the bottom of the form

Email [email protected] to request a Declaration of Intent


36/36

Freight Transport Association Limited

Hermes House

St Johns RoadT b id W ll

Telephone: 01892 526171

Fax: 01892 534989

Website: www.fta.co.uk

Documents

Lcrs Annual Report