Tackling embedded carbon emissions – what it means for water companies and their suppliers

Steve Morris: It’s interesting to see that the first discussion paper the water sector regulator Ofwat has published in 2022 is focussed on an issue which looks set to dominate and permeate every aspect of the water companies' operational activities and their decision making processes – net zero carbon.

While Ofwat has welcomed the publication of Water UK‘s Net Zero Routemap 2030, this new paper makes it absolutely clear that it expects the water companies to go much further to cut their carbon emissions. However, the regulator has highlighted the fact that the Routemap does not address emissions from the use of chemicals, embedded emissions, or disposal of sludge to land.

And the regulator is looking for the water companies to step up their efforts in an area which undoubtedly has implications for hundreds of companies in the supply chain.

In addition to cutting their operational carbon activities, Ofwat now wants the utilities to tackle both operational and embedded emissions in parallel and reduce the embedded carbon emissions from upcoming infrastructure projects i.e. the carbon that is emitted while infrastructure is being built.

Introducing the paper, Ofwat says:

“The paper is intended to inform water companies' net zero planning and stimulate discussion with us on how we can support the sector in reaching net zero targets.”

“It is important that we are clear on these key issues so that companies can plan appropriately for their net zero strategies, particularly as they develop their plans for PR24.”

Ofwat wants to see clear evidence of practical actions by the water companies to deliver embedded carbon reductions. So the proposals Ofwat is putting forward are not simply arcane policy aims – the regulator wants to see clear evidence that this is translated into practical actions by the water companies to deliver meaningful results.

With the publication of Ofwat’s draft methodology for PR24 on the horizon later this year which includes the introduction of a common operational GHG emissions performance commitment (PC) at PR24, the regulator is now also looking at the practicality of introducing a common PC for embedded GHG emissions.

According to Ofwat, in order for the water sector to achieve net zero, it must also deliver reductions in embedded emissions, including:

• emissions associated with the building and/or installation of a built asset
• emissions caused by the extraction of materials
• the manufacture/processing, transportation and assembly of every product and element in the asset

Ofwat wants to avoid the risk that a purely operational focus could lead not only to embedded emissions being neglected, but also the risk that actions taken to reduce operational emissions could lead to an increase in embedded emissions.

In the regulator’s view, a parallel approach to reducing both operational and embedded emissions will help to safeguard against decisions being taken in isolation avoiding the risk that operational emissions are prioritised ahead of action on embedded emissions – which would risk “the unnecessary early replacement of assets to reduce operational emissions.”

 
How can suppliers help the water companies achieve the outcomes Ofwat will be looking for?

So what could this shift in approach mean for the supply chain – and how can suppliers help the water companies achieve the outcomes Ofwat will be looking for?

I’m confident that the UK supply chain stands ready to step up to the plate on the issue. Like many companies in the water sector, HUBER has already taken steps to measure and quantify the carbon emissions associated with the goods and services we supply to customers.

The ability to do this is already playing a key role in helping the water companies meet Ofwat’s requirements for standardised mandatory reporting of operational emissions for 2021-22 onwards. Going forwards to PR24, it will now also help with meeting Ofwat’s plan to introduce a form of mandatory standardised reporting on their embedded GHG emissions for 2022-23.

So what are the implications for hundreds of suppliers? Whatever goes into new infrastructure projects, especially when you consider all the major RAPID infrastructure projects coming down the line – the water companies will have to demonstrate how they are working to deliver real reductions in embedded carbon.

So does this mean that going forward, on every project the water companies will scrutinise the supply chain inputs and look at carbon footprint?

It’s possible to look at how the introduction of requiring reductions in embedding carbon impacts on the water companies’ investment plans in a number of ways.

For instance, Ofwat will presumably not want to see it resulting in the unintended consequence simply deciding to build less, thereby enabling them to report that they are keeping the level of their embedded carbon emissions down.

The last decade or so has seen a downward trend of less concrete-intensive infrastructure projects, favouring off- site build, accompanied by a greater focus on maintaining the health of existing assets, rather than simply stripping them out and replacing them.

 
Energy-intensive UK water sector played active part in COP26 conference

The energy-intensive UK water sector also played an active part in the COP26 conference in November – and its net zero carbon ambition is now firmly embedded at both company and sector-wide level.

In this context it is already keenly aware of the key drivers underpinning which Ofwat flags up in its discussion paper. As a sector, it consumes 3% of the electricity the country produces and is responsible for about 1% of UK GHG emissions, which in turn represents nearly a third of UK industrial and waste process emissions.

So Ofwat is undoubtedly pushing at an already wide open door in its effort to help the water companies contribute towards the Government’s longer term goal of net zero for the UK as a whole by 2050.

As a supplier, we very much have carbon in mind in this context –we are likewise aware of the requirements now placed on the water companies to reduce their emissions, including embedded carbon.

 
CarbonWin® approach to sludge treatment

To flag up just one aspect of our work in this area, our HUBER CarbonWin® solution to sludge treatment is specifically focussed on this issue. The innovative system for carbon removal is already established in Europe and following recent UK trials is gaining traction here.

At the heart of the process is the HUBER Drum Screen LIQUID ( DSL). The DSL is an alternative to primary settlement tanks and is designed for new or existing sewage treatment works which need additional capacity.

The screen can do a lot of the separation which would normally be done in a primary settlement tank. With ever-increasing energy costs, the DSL’s fine screen technology provides an energy efficient, low footprint, way to reduce SS and COD and optimise the energy balance of the sewage treatment plant. Typically combined with the HUBER Disc Thickener S-DISC - the second stage of the CarbonWin® process can then thicken sludge for use in an AD plant.

Whether it’s an existing site that needs to expand but hasn’t got the footprint for additional built infrastructure, or a brand new site with a very tight footprint - the DSL has some unique advantages to offer in terms of common emission reductions.

The equipment used in the HUBER CarbonWin® Process has a footprint 1/10th that of conventional primary tanks - thus allowing cost-effective works expansion and improved sludge removal volumes for gas generation, without the need for increased secondary capacity and the associated aeration demand. 
 

In terms of the ability to deliver significant reductions in embedded carbon, we know our technology has massive potential to help the water companies, and we are seeing real interest across the country.

Other companies at all points in the wider water sector supply chain – from SMEs to large corporates – will no doubt be adopting similar approaches on a wide range of other services and equipment needed for water and wastewater treatment.

 
Supply chain has net zero solutions which water companies could rapidly implement

The supply chain has solutions which the water companies could implement today which will start delivering carbon reductions in weeks or months – and they would welcome the opportunity to demonstrate how they can contribute.

The Water UK Routemap to 2030, which was drawn up by water industry experts from Ricardo and Mott MacDonald with support from all the water companies, highlighted collaboration as key to achieving net zero in the water sector between now and 2050.

Aptly summed up by Mike Haigh, Mott Macdonald’s executive chairman, who commented:

“Net zero isn’t something that any one water or wastewater company can achieve alone. Every single organization will have to work with its peers, with the whole of its supply chain, with landowners and with its customers. Government and regulators have pivotal roles in setting the policy and legislative frameworks to enable and incentivise the transition. Net zero by 2030 will be a huge team effort.”

 
Interview by Elaine Coles at Waterbriefing