Carbon Credentials insight: European businesses need science-based climate change targets
Richard Tarboton, Director of Strategic Services at Carbon Credentials, a data savvy carbon and energy management company, discusses the need for concrete scientific targets among business leaders and the impact such targets are already having on brands like Unilever, Diageo and Tesco.
The recent and most comprehensive study to date into climate change by the Intergovernmental Panel on Climate Change (IPCC) made headlines around the world.
The IPCC report was the most extensive warning yet on the risks of rising global temperatures, with leading international scientists saying it was the final call to save the world from climate catastrophe.
Indeed, we only had to look at the past summer to see just how temperatures are rising as a result of climate change. Along with the UK’s record-breaking summer there were record temperatures across four continents, including Japan recording its warmest day ever at 41.1°C and northern Africa's Sahara Desert seeing a record high with 51.3°C, the highest temperature ever reliably recorded on the African continent.
In 2015 the Paris Agreement was pledged by nearly 200 countries on tackling climate change and a commitment to keep global warming below 2°C. The IPCC was also invited to report in 2018 on the impact of global warming of 1.5°C and of the related emissions. The report, which drew on over 6,000 references, was clear: if we allow temperatures to rise above 1.5° the risk of catastrophic disasters will further increase. The next five to 10 years will be critical to avoid the worst effects of climate change and prevent environmental, social and economic damage. Could this be the last time to act, before it’s too late?
If businesses ignore the consequences of global warming and don’t recognise their contribution, future European and international business operations are likely to pay the price with more extreme weather affecting the entire supply chain.
Global businesses have a key role in helping to transition to a low carbon economy and to align targets with countries’ commitments to prevent world temperatures rising dangerously above 1.5°C. If each and every business commits to reduce their emissions to the level required to keep the world’s temperatures to within the maximum warming limit then we can avoid catastrophic impacts from climate.
However, if your business cannot commit to reduce its emissions in line with IPCC recommendations, then you are effectively saying that other businesses must make up for your shortfall. How will you perform versus your competitors and how will your customers and shareholders view this? Could this be a source of future competitive differentiation?
As in the words of Kene Umeasiegbu, Head of Environment at Tesco: “the release of the IPCC’s Special Report on 1.5°C reinforces the importance for all companies to align their efforts and raise their ambition to help avoid dangerous climate change and create a sustainable future.”
The good news is that nearly 500 businesses across the world have now committed to set Science Based Targets (SBTs). SBTs clearly demonstrate a company’s commitment to a low carbon future and reflect the level of action needed globally to help the world align with the Paris Agreement commitments. They provide businesses with a roadmap to make the necessary cuts in greenhouse gases and transition to a low-carbon economy.
With global brands such as Unilever, Diageo and Tesco committing to SBTs, these organisations are being regarded as responsible leaders, innovators and influencers who are also gaining the benefits of improved brand reputation and competitive advantage, including potentially reduced energy costs, better office and working environments and improved staff motivation and wellbeing.
Setting a science-based target involves understanding how much a business must reduce its emissions to deliver its contribution to limiting the increase in the world’s temperatures to within 1.5°C or 2°C.
Our client, Tesco, became the first corporate worldwide to align science-based targets with an ambitious 1.5°C target to become zero carbon by 2050. Within 12 months the supermarket giant revealed that it had already reduced emissions by 13% in 2017 against its 2016 baseline.
This work comprised a combination of methodologies to model absolute and intensity targets under both 1.5°C and 2°C scenarios in comparison to Tesco’s previous 2050 zero carbon ambition. By using rigorous assessment, robust analytics and practical recommendations, Tesco understood the costs, benefits and feasibility of setting its SBTs which enabled it to set credible, realistic and achievable targets.
The best practice approach at Carbon Credentials is to work with our clients to set more ambitious targets to do better than a 2°C limit and to reduce their emissions to limit temperatures to within a 1.5°C increase. This elevated ambition is to reduce the risk of reaching 2°C, and to account for the fact that unfortunately not all businesses will achieve the required target reduction – but these companies’ lack of action potentially puts climate change at greater risk.
This expertise involves calculating the level of emissions reductions that a business needs to achieve and then developing and implementing a plan to source renewable energy, introduce efficient technologies, and create a shift in employee behaviour.
To kick start the process, business chiefs need to debate at board level the rate of emissions needed across an organisation relative to its sector, understand what its competitors are doing and align future targets to fit within the business purpose. Develop a clear business case of the benefits and risks of setting a SBT versus not setting one, and ensure all areas can be supported by experts in carbon energy performance and management.
Achieving SBTs requires participation from all areas of the business, so early input and buy-in from key stakeholders needs to be across the board. Work closely with colleagues, senior decision-makers, suppliers, investors and customers from the outset and consider how SBTs align with company values.
The role a business plays in the supply chain is critical too as no single business will achieve its target in isolation. It has to be a joint, collaborative effort, but the sooner a business leader starts this journey the more competitive a business can become in driving the efficiencies and transformation that will be required.
Being visionary and setting long-range science-based targets could help your organisation to adapt to future business changes and mitigate business risk. As all too clear from IPCC’s report, setting ambitious targets will not only be good for the planet, but will also be good for your employees, your brand and bottom line.
Carbon dioxide removal revenues worth £2bn a year by 2030
Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission.
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.
The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.
The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture.
It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.
The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020.
Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.
The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.
While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.
Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.
Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse.
"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.
“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.”
The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets.
Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.
Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."
McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:
- Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
- Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
- Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
- Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
- The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere