The importance of decarbonisation for companies
In the global fight against climate change, many nations are already committed to reducing energy consumption and have set ambitious goals to minimise carbon emissions. This includes the Paris Agreement (COP21), the Renewable Energy Directive (RED I, RED II) and the European Green Deal .
The Paris Agreement sets out a global framework to avoid dangerous climate change by limiting global warming to well below 2°C, while focusing efforts to limit it to 1.5°C. Countries must therefore cut greenhouse gas emissions rapidly to achieve carbon-neutrality by 2030 and net-zero emissions by 2050. However, industry continues to be the largest emitting sector [1] and a significant change is therefore required to meet global decarbonisation targets.
The road to net-zero
According to the Collins English Dictionary, decarbonisation is: “the process of?reducing?and removing?carbon?dioxide (CO2)?output?from a country's?economy”. To achieve this, the emissions from fossil fuels must be reduced and the energy mix transition to low carbon energy sources accelerated. The ultimate goal is to eliminate CO2 emissions altogether and achieve net-zero .
This makes decarbonisation a global imperative for governments, businesses and society, as it is crucial for limiting climate change and supporting environmental protection. Significant decarbonisation, alongside a substantial change in the way energy is generated, stored, transported and consumed is essential. Sustainability has therefore become one of the most pressing global issues, as we seek ways to reduce our impact on the environment.
Why is decarbonisation important for businesses?
If the world is to meet 2050 targets, decarbonisation necessitates the complete reduction of carbon emissions. Businesses must therefore take action to make emissions targets part of business planning. A corporate sustainability strategy ensures that a business operates in a manner that uses environmentally sustainable methods, while supporting financial growth. Decarbonisation should therefore be viewed as a business opportunity and an innovation enabler, rather than a cost centre.
A business’s carbon footprint can be reduced by switching to renewable energy, electrifying systems and making efficiency improvements. For example, hydrogen is an energy source that has the potential to decarbonise steel, shipping, transport and other industries. Businesses must therefore establish a decarbonisation strategy that is appropriate to their industry. An essential element of this process is to evaluate the emissions levels that business operations are directly or indirectly responsible for, and then to identify the process for reducing those emissions.
Global CO2 emissions per sector
According to the International Energy Agency (IEA) [2], Power-coal is the largest emitter of energy-related CO2 (29%), followed by Industry (23%), Transport (23%), Buildings (10%), Power-gas (9%) and Power-oil (2%).
The race to decarbonise industry has begun, but we have a long way to go as. The IEA’s report of 2021 [3] shows that the Covid-19 pandemic impacted energy demand in 2020, reducing global CO2?emissions by 5.2%. However, since then the world has experienced rapid economic growth, with the IEA’s report revealing that overall greenhouse gas emissions from energy rose, with global CO2 emissions being at their highest ever level in 2021.
The biggest increase was in the electricity and heat production sector, which accounted for 46% of the global increase in emissions. Despite a small decline in electricity and heat sector emissions between 2019 and 2021 in the rest of the world, this was insufficient to offset the increase in China, which accounted for almost all of the global increase.
领英推荐
The IEA report also shows that the global building and industry sectors’ CO2 emissions returned to 2019 levels. Transport was the only sector in which global CO2 emissions remained well below 2019 levels. Also, despite record electric car sales in 2021, the corresponding emissions reduction was cancelled out by a parallel increase global SUV sales. Renewable energy sources and nuclear power was also shown to provide a higher share of global electricity generation than coal in 2021.
How do you decarbonise a business?
There are many challenges which industry must overcome, not least the ability to monitor progress. A business therefore needs a detailed overview of its emission sources, so that a baseline can be developed to make highly effective decisions about actions that will help to reduce carbon emissions. This will help you to completely understand the carbon footprint of your entire business by identifying sources of energy usage, as well as production and transportation requirements, alongside calculating what waste is generated.
Effective verification and validation of a business’s carbon inventory therefore enables it to realise the potential for cutting emissions by identifying and measuring their sources. It also supports any regulatory requirements. For example, European Union taxation regulations require the verification of the carbon footprint of certain industries by an independent third party such as TüV SüD .
To help organisations manage their carbon?footprint and achieve decarbonisation goals, industry must address three core phases during their journey
Beyond your own business operations
You can then use this information to identify key opportunities to save on cost and reduce carbon output, with the potential for going beyond your own operations to include your supply chain. This will help you to realise even more significant carbon and cost reduction opportunities.
It is therefore imperative that your business proactively reviews how carbon removal can be incorporated into product development, as well as operations across the entire value chain. This should include your wider supply chain, which will ultimately create a global culture of accountability for carbon emissions. A process of continual improvement that regularly evaluates your decarbonisation strategy, and that of your supply chain, should also be introduced. This will regularly appraise efforts to reduce carbon emissions, as well as enable you to identify future development opportunities.
Sources:
[3] IEA report