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How We Became Carbon Neutral

How We Became Carbon Neutral

In 2022, Market Lane became 100% Carbon Neutral. The journey was challenging, fascinating and necessary. Now that we’re on the other side, we’re keen to share as much as we can about what was involved in it, and how to go about doing it.

We’ve written this guide for our suppliers, industry peers, wholesale customers and curious business owners (from any industry) who may want to become carbon neutral but don’t know where to start. If this is you, please read on (and then do it)!

Why we became Carbon Neutral

We became carbon neutral so we could reduce our impact on the environment by working out what we were emitting, and then using this information to build a strategy to reduce these emissions, and offset what we couldn’t reduce or eliminate.

 

How we went about it

Initially, we tried to become carbon neutral on our own. We spent about six months deep in spreadsheets and doing a lot of online research. It was challenging! “It was difficult to determine what our organisational boundaries were,” Market Lane co-founder Jason Scheltus says. “The things we should include, the things we didn’t have to include and where to start.” Finally understanding that we needed to engage some experts to help us, we approached Pangolin Associates, carbon and energy management consultants. The team at Pangolin had the expertise and the tools we needed to help us through the process. They were absolutely fantastic. Here are the steps we took with them:

 

Step 1: A carbon assessment

Pangolin first defined two key elements in assessing our carbon emissions: the organisational boundary and our operational control. (Please see our glossary below for term definitions.) Basically, these define what emitting activities our company is responsible for, and where we do and don’t control the direct emissions.

Next, we reviewed every cost in our Profit and Loss statement and tried to quantify our activities – for example, kilograms of waste, litres of water used and kilowatts of electricity.

Pangolin helped us assess all the data; what we had available, what might be difficult to source, and what might not exist. They created a data management plan to help us source the information available now, and devise how to get missing information in future. We inputted all our data and assumptions into a large spreadsheet, with a row for every expense item in our business. 

 

Step 2: Calculating emissions

Pangolin took the data we put into that spreadsheet and calculated how many tonnes of carbon dioxide equivalents (see Glossary) we emitted, using a wide database of calculators and lifecycle assessments to help calculate emissions for each of our activities as accurately as possible.

In some cases, Pangolin used data from what are known as expenditure-based Input-Output databases. These determine dollars spent across an industry, and carbon emissions in that industry, to come up with a per-dollar-spent emissions figure.

Pangolin also leveraged a database of life cycle assessments. These assessments involve a systematic analysis of the potential environmental impacts of a product during its entire life, including the production of raw materials, processing or manufacturing, shipping, use, and disposal. Many organisations in different parts of the world have conducted life cycle assessments on green coffee beans, for example, so we used those results in our own accounting.

One thing that we recognised as we completed this step is that data is not perfect, and the method for calculating the carbon in some cases was too general. But we also recognised that when it comes to urgent action for the environment, we can’t let perfect get in the way of good. So, we treated this first assessment as an important first step, knowing that we can take steps to make the data more accurate every year.  

Once our emissions were calculated, they were divided into Scopes 1, 2 and 3.

  • Scope 1 covers emissions we have direct control over, like the natural gas we use for our coffee roaster, the diesel fuel that runs our delivery van, and refrigerants including the gases that power the condensed units in our fridges.
  • Scope 2 is simple: it includes only purchased electricity.
  • Scope 3 is everything else, quite literally everything we touch: all our upstream suppliers, flights, the food and beverages we serve in our shops, waste disposal, professional services, and staff commuting, to name a few. Our emissions for the financial year 2020/21 were 865.2 tonnes of carbon, and Scope 3 accounted for 707 tonnes of that total.

How Market Lane became Carbon Neutral

Step 3: Offsetting emissions

To reach a net zero output of carbon we had to remove our total emissions from the atmosphere. This is done by buying carbon credits, which are certified instruments representing an emissions reduction of one metric tonne of greenhouse gas.

There are two types of carbon credits. The first represent activities that remove or capture greenhouse gases from the atmosphere and store them in ecosystems on land or in water –for example, planting trees. The second type prevent greenhouse gases from being emitted in areas and contexts they otherwise would.

Once a carbon credit has been purchased, it can be retired, meaning it is no longer possible to sell this credit. Retired credits count as deductions in your own emissions, so purchasing credits to cover the total tonnes of carbon your company has emitted brings you to net zero, or carbon neutral status.

At first we found the process of purchasing credits quite overwhelming.  One thing we hadn't known is that offsets are bought and sold on an open market, so the price of an offset is partly based on the cost of running the project, but also on market demand for those credits. The more demand for an offset, the higher the price. We also learnt that not all offsets are created equal, and there has been a lot of controversy recently about the quality of some projects – especially in Australia, where projects have been criticised for not genuinely removing carbon from the atmosphere or preventing it from being emitted, and rather just giving the appearance of doing so.  

When we initially went to purchase credits we found the choice of projects quite limiting. In some cases, the projects we wanted to support had a minimum volume (that as a company we were too small to purchase); others had sold out or were prohibitively expensive. Thankfully, the Pangolin team were on hand to guide us through this process and helped us select credits that had been developed, monitored and verified under robust global standards. For the 2020/21 financial year (our first year of being carbon neutral) we purchased offsets in two renewable energy projects in India, one hydro and the other wind. These projects provide renewable energy to communities who otherwise would have relied on burning fossil fuels.

For FY21/22 we have a bit more time to plan, research and seek out projects that feel aligned with our business values and goals. So far, we have purchased some credits from the Aboriginal Carbon Foundation, who have a project called Savanna Burning. Controlled burns in the early part of northern Australia’s dry season prevent bushfires that release enormous quantities of carbon into the atmosphere. The Savanna Burning project uses controlled burns to prevent greenhouse gas emissions while providing significant income to First Nations groups.

 

Step 4: Avoid, reduce, reuse

This step is related to step 1 and our ongoing work to reduce emissions. While we’ve been working for many years to limit our impact on the environment, the process of becoming carbon neutral was illuminating, highlighting areas where we can make a much greater impact, and helping us define and prioritise our goals and our strategy.

We were surprised to discover how much of our total emissions are in Scope 3. “When we considered ways to reduce our emissions, we immediately thought of our electricity usage,” Jason says. “In doing a carbon assessment we learned that electricity is only a small part of our emissions. We still plan to reduce our use of fossil fuel generated electricity, but it won’t impact our total emissions greatly.”

In the coming months, we will transfer the remainder of our electricity to renewable sources, and switch from gas to electricity wherever possible. We are also looking closely at our electricity use and where we can cut back. We’ll continue to assess our packaging, considering both the carbon cost of producing the materials, and the end-of-life options for renewable bags and boxes, and soon we’ll make it even easier for customers to recycle and compost our bags and cups.

We will continue to work with Pangolin Associates to improve the quality of the data we are using to calculate our emissions. For example, the emissions for our takeaway coffee cups were calculated based on previous life cycle assessments of standard takeaway cups. However, our cups are made of a biodegradable material, and both our cups and lids are fully compostable; when properly disposed of they emit significantly less greenhouse gas than cups that are sent to landfill. Doing a life cycle assessment on our particular cups will make our carbon assessment more accurate in future.

 

Our results

How Market Lane became carbon neutral

Our largest category for emissions is ‘Equipment’, which includes everything from our office chairs and computers to the pour over cones we sell in our shops. It also includes the milk we serve in our coffee.

‘Third Party Services’ is another big category that includes things like cleaning services, travel expenses (hotels, car hire and rideshares), couriers and postage, printing and advertising, our florist, legal and IT services, and insurance.

‘Food and Drinks’ covers pastries, sandwiches, bottled drinks and packaged sugar. 

It doesn’t account for the coffee we serve because emissions generated by our green beans are covered by our importing partner and sister company, Melbourne Coffee Merchants.

 

Climate Active certification

Now that we are verified carbon neutral (hooray!) we are in the process of applying for Climate Active certification as an organisation, and for our coffee as a product. Climate Active is an Australian-government-backed program, and certification is awarded to organisations that have reached a state of carbon neutrality. In order for Market Lane to become certified, a third party will audit our carbon assessment and we will need to account for the end of life of our coffee, meaning what happens to the coffee grounds and packaging for all the coffee beans we sell.

Having a Climate Active certified product will allow us to sell our coffee to wholesale customers as a carbon neutral product. This means companies who buy coffee from Market Lane do not have to account for the emissions created by growing, processing, shipping, roasting or packaging this coffee in their own carbon assessment. Once certified, our Climate Active status will apply to all coffees sold in the 2021/22 financial year.

 

The real value of a carbon assessment

As you may be able to tell, our first year was a lot of work, but now that we have been through this process, tracking and reducing our emissions will be much easier. While not every company has the resources to hire consultants or buy carbon credits, just completing a carbon assessment will give you vital information about your business, where you can reduce emissions and minimise your company’s impact on the environment.

For example, our carbon assessment revealed how many tonnes of carbon we emit through the services and equipment we need to run our business, so we have begun working with our upstream suppliers to reduce emissions in the future. 

As Jason notes, “It’s a real privilege to own a business and choose the people we work with and how we work. With that comes a moral responsibility to do it in a way that’s right for our staff, our environment, and our communities.”

If you own or work for a small-to-medium business and you’re thinking about reducing your emissions, feel free to get in touch (you can email Jason directly at m.au).

 

Glossary of Terms Used

Carbon neutral/Net-zero

When an organisation’s CO2 emissions are balanced globally by CO2 removal, typically over one year. 


Source: IPCC Special Report: Global Warming of 1.5°C

Carbon offsets

Offset units are used to compensate for emissions a business produces, and to bring their carbon footprint down to zero. Offset units are generated by projects that reduce, remove or capture emissions from the atmosphere, such as reforestation, renewable energy or energy efficiency. 


Source: Climate Active

Carbon Dioxide Equivalents (CO2e)

These are the greenhouse gases covered by the Kyoto Protocol: 

Carbon Dioxide (CO2)
Methane (CH4)
Nitrous Oxide (N₂O)
Perfluorocarbons (PFCs)
Hydrofluorocarbons (HFCs)
Sulphur Hexafluoride (SF6)
Nitrogen Trifluoride (NF3)

Operational Control
This is a more detailed assessment of everything your business has control over, meaning you have the ability to influence its use and set policies in this space. For example, one of our Queen Victoria Market shops is located inside the Dairy Hall, which is a communal retail space. We decide how and when we use electricity within our own space (like when to turn on the lights and the espresso machine). We therefore have operational control over all the electricity consumed by that shop. We don’t, however, decide when to turn on the air conditioning in the building, so that falls into the operational control of Vic Market. If you have operational control, it is your direct emission and you need to account for it.
Organisational Boundary
The operational boundary as typically defined by your ABN. It clarifies what entities are included, how each entity is defined, and the business activities that need to be included. In our case, we applied alongside our sister company, green coffee importers, Melbourne Coffee Merchants. The operational boundaries of each company clarified that Melbourne Coffee Merchants was responsible for all the carbon emitted in the cultivation, processing and shipping of green beans to Melbourne, and that Market Lane Coffee was responsible for every step in the value chain after that.
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