New initiative to link carbon budgets with employee performance

National Grid are adopting a ground-breaking initiative to link carbon budgets with performance management, placing carbon reductions at the core of their operational decision-making and challenging the energy industry's traditional way of working.

The international energy giant announced today that it is increasing its target of reducing company-wide greenhouse gas emissions against its 1990 base rate, from 60% to 80% by 2050. It also unveiled its intention to adopt new carbon budgets across its UK and US electricity and gas businesses from April 2009 and integrate them in the management of its day-to-day business operations to encourage 'bottom-up' employee involvement to help identify new ways to achieve the challenging 80% target.

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Over the next 12 months, National Grid will undertake a detailed review of its operations following a protocol used by The Climate Registry, which is based on World Resource Institute (WRI) methodology.

This review will provide a detailed assessment of the carbon footprint for each National Grid business and enable managers to determine the most effective and economic ways of reducing emissions. Annual and 5-year emissions targets, measured in tonnes of carbon dioxide equivalent, will then be established for each business and integrated into the company's performance management process alongside customer service, reliability, operational and financial targets.

National Grid's Chief Executive, Steve Holliday, said: National Grid has already reduced its greenhouse gas emissions by 35% against our 1990 base rate, but we need to do more. Adopting carbon budgets and aligning them to our performance management process will encourage our employees to identify new ways to achieve our challenging 80% reduction target, and ensure emissions remain at the heart of our operational decision-making.

Adopting carbon budgets will also help National Grid minimise the life-time costs of assets by enabling the company to calculate a 'shadow price' of carbon and determine emissions costs for future design, construction and maintenance of its electricity and gas networks, management of its fleet and facilities, and any potential new investments.

Secretary of State for Environment, Food & Rural Affairs, Hilary Benn MP, said:

Today's announcement by National Grid shows that we can fight climate change at the same time as delivering secure, reliable energy to businesses and families. I congratulate the National Grid on its success to date and its clear ambition in cutting emissions in Britain and abroad. I particularly welcome its decision to adopt carbon budgets. This mirrors our approach for Britain as laid out in the Climate Change Bill, which is currently before Parliament.

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