Energy and carbon

We are beginning to understand which parts of our value chain create the most emissions, helping to target our reduction programmes

In November last year, the Intergovernmental Panel on Climate Change released its Fourth Assessment Report stating that climate change is indisputable and that human activity is a key contributing factor. It is predicted that this will lead to impacts on weather patterns, water availability and crop yields around the world.

To cut our operational carbon emissions, we are working both to reduce our energy consumption and to improve our energy mix. This year we have set guidelines for all new capital projects with all new breweries aiming to be within 10% of current best practice within the group. We also want to understand more about the energy used in our supply chain.

Energy and carbon dioxide

The majority of our carbon dioxide emissions come from our use of electricity and the burning of fossil fuels in boilers at our breweries. Most of our electricity comes from public supplies, though we use some on-site generators where these supplies are unreliable. In 2007/08 we consumed 150 megajoules of energy per hectolitre of beer, a slight improvement on the previous year. This amounted to emissions of 2.3 million tonnes of carbon dioxide, equivalent to 13.7kg of carbon dioxide per hectolitre of clear beer. Emissions per hectolitre have increased partially as a result of increased consumption in South Africa, which uses a greater proportion of coal than the average for the group.

Aside from the use of energy in our breweries and bottling operations, the other significant source of carbon emissions comes from the transportation of our products. During the year we have collected data on distances travelled by vans, lorries and trains in our US and European regions. Together this amounted to nearly 335 million kilometres. Over the coming year we will be working to extend coverage to the remaining regions. Other emissions come from the point-of-sale chillers used in merchandising our products – we will be looking at this area in more detail in the coming year.

Improved plant efficiency and reduced energy use makes sound financial sense and not only through lower energy bills. Many of our plants in Europe are subject to the EU Emissions Trading Scheme. By continuing to reduce their energy consumption our operations are able to generate carbon credits which can then be sold to other businesses to help them meet their targets.

In other parts of the world, the need to preserve energy is even more acute. For example, in South Africa SAB Ltd has signed up to a voluntary agreement with the Department of Minerals and Energy to reduce electricity consumption by 15% between 2000 and 2015. In response to the recent energy crisis SAB Ltd is separately targetting a 10% saving by September this year.

One way we are reducing greenhouse gas emissions is through greater use of renewable energy. The amounts involved are small but growing: during 2007/08, our use of renewables increased to 1.5% of total plant energy use, up from 0.9% reported last year. Much of this comes from burning biogas produced by water treatment processes in our breweries. We now have biogas recovery plants in place in the USA, Italy, the Canary Islands, Hungary, the Czech Republic, Poland and Honduras which contribute up to 15% of individual breweries’ energy use.

Another example of energy reduction was evident during the expansion of Rochees Brewery. SABMiller India took the opportunity to upgrade the boiler, with the objective of decreasing thermal energy demand by 42%. It also switched to renewable rice husks for fuel, a move that is expected to save some 4,000 tonnes of carbon dioxide per year. In Honduras, meanwhile, the sugar mill in Azunosa is now partly fuelled by waste from the sugar cane itself and in South Africa we are commissioning a study into the potential of using spent grains to generate electricity.

Carbon footprinting

Last year we set a target of developing a carbon footprint methodology to help us understand and manage the impacts of our extended supply chain. Working with specialist consultancy ERM, we have explored the greenhouse gas emissions associated with raw material production, transport, processing, product manufacture and the disposal of packaging, as they relate to our Peroni brand, imported from Italy into the UK. This showed that our facilities accounted for around 24% of the carbon footprint, while packaging materials constituted nearly half the total figure. We have subsequently expanded the scope of the project to cover all our European operations to allow us to compare carbon footprints according to brand, transport type, packaging choice and final destination amongst other variables.

Providing information on carbon emissions to our customers

Growing numbers of retailers are taking an interest in carbon labelling. In the last 12 months several of our customers in Europe and the USA have been investigating the issue. For example, Miller in the USA has taken part in a carbon footprinting exercise with Wal-Mart, providing detailed information on the carbon footprint of beer supplied to the retailer. It will now be engaging with other suppliers and sharing information to stimulate discussion on the opportunities for savings.