Energy prices still on the up

The average monthly price Businesses are paying for their Energy still shows prices have been increasing albeit at a slower rate. However, the average view hides the level of volatility we have seen in the past month with prices rising and falling week on week. At the end of January, we saw a significant spike, only for the prices to drop back in early February.

The volatility we are seeing reflects market anxiety over coronavirus. Falling global oil inventories have helped push oil prices up further and the cost of carbon has shot up, all of which should filter through into the longer-term energy prices. However, there remains concerns about the impact of new strains of the virus and the effectiveness of vaccines against these, which seems to be dampening optimism.

Future view

We may be approaching a tipping point in energy prices. The energy market is not responding directly to the pricing signals coming from oil and carbon. This could be related to concerns over the impact of the pandemic, or it could mean that the market believes that price increases can no longer be sustained.

There remains room for increases based on historic precedence, so the scenario of continued increases into the summer and towards autumn remains a valid one, but the rate of change may be subdued.

Zero Carbon – What should you be thinking about for your route map to net zero?

Many organisations are becoming increasingly aware of the need to consider their impact on the environment. This may be a consideration driven by the supply chain, investors, regulation or customers. However, knowing where to start can be overwhelming and finding the expertise and resource to address this can be a problem.

Below is a basic framework to help customers develop a 3-step route map to better managing their impact on the environment and achieving net zero.

1. Where are they?

Measure – what are your direct and indirect impacts on the environment – this involves assessing how much energy you use, how much fuel you use, what your waste footprint is, what resources the business needs and where they come from.

These can be expressed as measurable units with real value such as tonnes of carbon emitted, for you and also for your supply chain. It is usual now to consider the carbon in two ways. The carbon you generate as part of your operations (e.g., lighting) AND the carbon ‘embodied’ in the product or service provided (e.g., packaging, raw materials, and transport).

2. Where are they going?

Set targets – it is critical to set realistic targets which set out how you will achieve your aspirations. These are usually in the form of % reductions in the base line measure, with an end goal which could be zero carbon by 2050 or it may be more ambitious.

3. The best way to get there?

Take action – reduce your impact in line with your targets. This can be a whole range of options, but normally aim for the low-hanging fruit – improve energy efficiency, generate energy onsite, recycle and reuse, responsible procurement and finally where you can no longer make a direct impact, consider offset schemes.

All of these are areas that Auditel are willing and able to help customers with. If you would like to know more, contact Adrian Taylor at Auditel ([email protected]) who will detail further advice for you from our Carbon Strategy Team.