Climate Change

The challenge of climate change continues unabated as global emissions continue to rise, increasing the frequency and intensity of extreme weather events over the longer term. While uncertainties remain, it is clear that economic growth and carbon emissions must be decoupled if there is any chance of keeping a global temperature increase to a manageable level. As this change occurs all businesses will need to assess where they are vulnerable and where there is opportunity to be part of the solution to climate change.

At the UN Rio+ Earth Summit in June 2012, the UK Deputy Prime Minister announced that companies listed on the London Stock Exchange would be required to report their greenhouse gas emissions. DCC has already been publicly reporting emissions for a number of years so we are well positioned to meet this mandatory reporting requirement.

Greenhouse Gas Emissions

Details of our energy use and greenhouse gas emissions are set out in the table on page 54 of the Annual Report. The DCC Energy and Carbon Reporting Guidelines, based on the Greenhouse Gas Protocol, set out in detail the scope and sources included in the DCC Group carbon footprint⁴.

Total carbon emissions for the Group increased by 6% from the prior year. The increase in emissions is principally due to three factors:

• acquisitions in the year and full year contributions from acquisitions made in the year ended 31 March 2012 (in particular Butler Fuels and Oakwood Fuels),
• increase in diesel fuel use in the Energy division given the lower winter temperatures, and
• increase in heating fuels (natural gas and heating oils) used in our facilities due to a colder winter compared to the prior year.

The full year impact of reduced activity in Allied Foods resulted in a decrease of 3,220 tonnes CO₂e and challenging trading conditions in the Environmental division reduced emissions by approximately 1,600 tonnes CO₂e.

Subsidiaries continue to identify opportunities to reduce energy usage through greater efficiency in vehicle routing, improving driving techniques, engine monitoring and the use of energy efficient technologies. Through these initiatives, progress is being made towards our targeted reduction in carbon intensity of 15% by 2015 against a 2011 baseline. In 2013 we will be updating our online carbon reporting IT platform to a system which will improve the efficiency of reporting and provide management with more sophisticated tools to monitor performance against out targets.

Transport and heating fuels from non-renewable sources make up the direct sources of primary energy purchased within the Group. In total they represented 1,214,321 Gigajoules (GJ) of energy with road diesel and natural gas accounting for 80% and 10% respectively of the total and other fuels contributing 10%. Indirect energy consumption amounted to 172,402 GJ from electricity purchased. Green tariff electricity accounts for less than 1% of indirect energy purchased.

Scope 3 emissions are indirect emissions outside of our immediate operational or financial control, for example business travel, extraction of raw materials, supplier emissions, consumption of products and waste disposal. While we have not systematically quantified Scope 3 emissions, the use of products sold within the Energy division is a significant source of carbon emissions. The use of oils, LPG and natural gas sold by DCC Energy subsidiaries accounted for approximately 26 Mtonnes of CO₂e emissions, an increase from 21 Mtonnes in the prior year reflecting increased volumes of products sold in the year.

Carbon Disclosure Project

In 2012, DCC maintained its position in the Irish Climate Leaders index which is based on responses to the Carbon Disclosure Project (CDP) investor questionnaire. The CDP is a global initiative, funded by the investment community, which encourages companies to formally report their carbon emissions and the steps they are taking to address the challenge of climate change.

Compliance and spills

No fines for non-compliance with environmental laws and regulations (for example in relation to waste packaging, waste electronic and electrical equipment, pollution or environmental licencing) have been incurred in the reporting period and no environmental cases have been brought through dispute resolution mechanisms. However, across our twenty one sites with waste management licences, four instances of non-compliance were identified by regulators during the year at four locations, resulting in a lower compliance rating being applied by the regulator to those sites. While disappointing, no enforcement action was taken and steps have been taken to strengthen the understanding and controls of licencing conditions and regain our previously excellent site ratings in the current year.

Potential for significant environmental impact from loss of containment of products arises principally in our oil businesses, specifically from sea fed oil terminals. These terminals are regulated under the EU Seveso II Directive and are subject to regular inspection by the regulatory authorities. No significant spills were recorded in the reporting period⁶. Given the potential impact on the environment from even a relatively small quantity of oil, all spills are treated seriously and responded to appropriately in accordance with established emergency procedures.

Carbon Reduction Commitment Energy Efficiency Scheme

Following a consultation review, the UK Government has simplified the CRC Scheme to reduce the reporting requirements on participants. While this is welcome, there is no net impact on the CRC levy payable by DCC’s UK subsidiaries, in the order of Stg£250,000 per annum. All energy efficiency measures taken by subsidiaries to reduce consumption of electricity and natural gas save not only on the cost of the energy itself, but also on the CRC levy of Stg£12/tonne of carbon emissions.

Ozone depleting substances

Very few of our businesses now use ozone depleting substances (ODS) in their refrigeration or cooling systems. As ODS continue to be phased out in accordance with international agreements, fugitive emissions of ODS from DCC subsidiaries continue to decrease to immaterial levels.

In the year, a total of 22 kgs of R22 was lost to the atmosphere. This is equivalent to 0.00121 tonnes of CFC-11 (0.0114 in prior year), the international metric for measuring ODS. Ammonia gas and other refrigerates used (e.g. R404A, R410A, R407C) have an ozone depletion potential of zero.

Notes
⁴ Carbon dioxide emissions make up over 99% of the Group’s greenhouse gas emissions. Other greenhouses gases emissions include fugitive refrigerant gases (198 tonnes CO₂e) and fugitive landfill gas emissions from a closed landfill in Scotland where 80% of the methane is captured to generate renewable energy (832 tonnes CO₂e).
⁵ Including DCC head office emissions (114 tonnes CO₂e).
⁶ Significant is defined as a major environmental event which exceed EC reporting thresholds under Control of Major Accident Hazards (COMAH) regulations.