The world is awash in net-zero emissions targets. A growing number of countries, regions, cities, and companies have announced that they will adjust their growth strategies to align with the Paris climate agreement’s goal of keeping global temperatures within 1.5° Celsius of pre-industrial levels. By the end of 2021, roughly 90% of global GDP was covered by some type of net-zero pledge, including those made by more than 680 of the world’s largest corporations.
Yet despite this boom in new commitments, real action from businesses is lagging, because we have long lacked a common, science-based understanding of what a corporate net-zero strategy entails. Far too many corporate net-zero pledges fail to account properly for all the relevant greenhouse gases (GHGs). Many also lack a clear mid-century target date, do not encompass their products’ full value chain, and do not reflect the urgency of cutting emissions significantly by 2030. Worse, many rely far too heavily on offsetting their emissions by purchasing credits generated from carbon-abatement and -removal projects elsewhere.
No wonder UN Secretary-General António Guterres thinks there is “a deficit of credibility and a surplus of confusion over emissions reductions and net-zero targets.” Fortunately, with the recent launch of the Science Based Targets initiative’s (SBTi) Corporate Net-Zero Standard, we now have a framework to show companies how to align their climate plans with the science.
The new standard shows that there are no shortcuts. Credible net-zero targets must include all relevant GHGs and cover a company’s full value chain. They also must aim to cut emissions in half by 2030 in order to reach net zero by 2050 or earlier. Most importantly, a company’s plan must reduce emissions by 90-95% before using offsets to “net” itself the rest of the way to zero.
Closing the corporate credibility gap means moving past the era when many companies could simply counterbalance their emissions with offsets to prolong their ability to pollute. The private sector now has an opportunity and an obligation to align itself with science. Recognizing this, we at Ørsted piloted a long-term decarbonization plan under the SBTi’s new standard last year and became the world’s first energy company with a validated, science-based net-zero target.
We have already learned valuable lessons from this process, including the need to map the full set of emissions across energy generation and operations, purchased electricity, and the upstream supply chain and downstream use of products sold. Only with proper mapping could we identify and address emissions hotspots across our value chain. Listening to our strategic suppliers has also proven critical. Now that we know about their own decarbonization pain points, we can work together to alleviate them.
Another important lesson is that companies must develop and draw on the right skills from within their own ranks. Given the wide-ranging impact of the net-zero transition on different business areas, managing it properly requires a diverse range of knowledge and skills. And while we know the direction and destination of our decarbonization trajectory, we have learned to accept that we don’t yet know every step required to complete it. In piloting a decarbonization pathway, we have found the SBTi’s guidance and criteria to be crucial.
These lessons may not be applicable to all companies, but the foundation of credible corporate climate action remains largely the same: green energy solutions. With over 70% of all GHG emissions stemming from the energy sector, a rapid transition to renewable energy is the key to decarbonization globally. As major energy consumers, corporations can make a significant contribution by deploying or purchasing green energy, including through renewable-power purchase agreements. They can also take direct action to reduce emissions within all their own operations and across their supply chains.
This is a big opportunity for companies, which is why Ørsted will have completely phased out coal generation by the end of 2023. By continuing to expand our renewable-energy portfolio and reducing our direct carbon emissions, we are on pace to achieve at least a 98% reduction in carbon intensity by 2025 (from 2006 levels), and to reach carbon neutrality in our own energy generation and operations the same year. To address upstream and downstream emissions in our value chain, we will gradually phase out natural-gas sales and cut emissions from the steel in our wind-turbine foundations and the shipping fuels used in offshore logistics. These comprehensive decarbonization efforts, together with offsetting less than 10% of residual emissions, will enable us to reach net-zero emissions across our full value chain by 2040.
Nonetheless, government signals are needed to help reinforce credible corporate climate action more broadly. Current national policies leave us on track for 2.7°C of warming by the end of this century. That is unacceptable. Country climate pledges (“nationally determined contributions”) must be strengthened ahead of the United Nations Climate Change Conference (COP27) in Sharm el-Sheikh later this year. At a minimum, stronger national commitments would create a positive feedback loop with the private sector by eliminating some of the policy uncertainties.
But governments also can do many other things to bolster corporate climate efforts. A crucial first step is to set higher renewable-energy targets and establish more transparent market frameworks to accelerate renewables deployment. Governments can mandate more robust emissions disclosures as well, so that investors can properly assess business climate risks and pursue full value-chain decarbonization. Genuine progress in combating climate change requires genuine transparency.
Moreover, public procurement, which represents 13-20% of global GDP, can be a powerful tool for accelerating emissions reductions. This is especially true in the energy sector. By integrating climate criteria in public tenders, governments can create strong incentives for companies to put themselves on a meaningful decarbonization pathway.
COP26 in Glasgow last year gave us a clear mission: to make net-zero targets fit for purpose. As 2022 gets underway, corporations have a fresh opportunity to establish their climate credibility. That is what the science demands – and, ultimately, so does the bottom line.
Mads Nipper is CEO of Ørsted, which is the largest energy company in Denmark. It has converted from selling natural gas, to now where 90% of their energy is from renewable sources. Copyright: Project Syndicate, 2022, published here with permission.
11 Comments
Yes there are lots of words but not much meaningful planing and direction. It is good to see a scientific and facts based approach for individual companies but we all have to act within a country wide context and individual companies can only do so much..
In government, there is an enormous lack of scientifically and facts based strategic planning on how we are going to get there. The world faces the battle of it's life and we are floundering.
There is a hell of a lot of arm waving, rhetoric, band wagon jumping and generally running round in noisy circles like headless chooks.
Some examples.
"Hydrogen powered cars are the answer" so lets rush down that direction. Ignoring the fact that the two largest car makers in the world and authoritative scientific bodies say they are not, and a very inefficient waste of electricity. Toyota who have been making the hydrogen powered Mira, say that Hydrogen power is unlikely to be worth considering until at least 2050.
"electric cars are the answer" so lets rush off in that direction. Well they might be eventually, but two major hurdles need to be addressed before they can be produced in sufficient numbers, or do anything other than make matters worse. Problem is that there is simply not enough lithium mined and it takes a lot of time to get these operations up and running properly. Lithium is in such short supply now that it's spot price has increased almost 10 fold in the last year and we are only now just starting scratch the surface when it comes to making EVs.. Secondly a large proportion of the worlds electricity is generated by fossil fuel (mostly coal for goodness sake) and all of this needs to be replaced with green energy before any extra load is added to the networks. At present extra load can only ultimately be supplied by increasing fossil fuel use, (taking power out of the hydro power storage "battery" now just leaves a hole that later must be filled by fossil fuel) The first and most important priority is to eliminate all fossil fuel sourced electricity. The lithium that we have access to is best directed into hybrid cars which are far more fuel efficient than turning fossil fuel into power to drive electric cars. Similar comments for producing hydrogen from electricity on top of the hydrogen power cycle's fundamental inefficiency.
I know of cases in New Zealand where government pressure is encouraging companies to replace natural gas fired process heating systems with electricity. So in effect, as a country we will be burning extra fossil fuel at an efficiency of about 37% distributing the power at an efficiency of 90% so that we can eliminate a source of heat that uses gas at an efficiency of 81-85%. Totally and mind numbingly brainless.
We have a fractionated and directionless electricity industry that is pursuing their own profit driven goals in ways that will not help us reduce carbon emissions. For example Contact and Meridian want to build or supply a hydrogen for export generation plant with the surplus power when Tiwai Point closes. This power would be far better directed toward shutting down fossil fuel generation. It would go a long way toward eliminating our present reliance on fossil fuels. Similarly there is a geothermal plant being set up that will also be dedicated to the hopelessly inefficient hydrogen cycle.
And finally the size of our population is the biggest single contributor the global warming but politicians refuse to even talk about that and actually carry on doing all that they can to increase the size of our population.
The government needs to show some clear planing direction and goals. e.g.
1 Population - Immigration only to a level that is consistent with a population reduction of 0.2% per year say.
2 Totally renewable power generation. - Remove the freedom of power generators to market power either by a Chorus/Telecom type split with strong controls on how the Nations energy assets are deployed and how the power is marketed. The government has 50% control now. This needs to be increased and the government needs to be more directive because there is no motivation for a free market to pursue a 0 carbon approach. We are witnessing this.
- Do not renew Tiwai Point smelter contract and with similar direction facilitate the complete closure of fossil fuel power stations except from our 55% efficient standby combined cycle plants
- Change the power distribution and marketing systems so that solar power is encouraged. eg the network can act as a battery for home generators and home owners can buy back their own power later at a more reasonable small margin
- dust off plans for more hydro generation
- set a date to achieve 100% renewable power and when we achieve that build pump storage capacity to manage the variation in supply and demand
3 Cars - subsidize hybrid cars but not EVs at this point.
- when we have 100% renewable generation with sufficient surplus, progressively subsidize the introduction of EVs
4 Process Heat
- subsidize conversion of fossil fueled heat to bio waste from forestry. and put an environmental tax on forestry waste to encourage foresters to buy into the use of their polluting harvest waste.
OK those are just 20 minutes of my off the cuff ramblings. What I would expect to see from government is something far better with scientific and engineering reasoning, the required sequence of steps to achieve the objectives, and a realistic timeline. Hopefully something so solidly based that there can be little argument and get cross party support.
I have only touched population, electricity and transport and process heat. It would obviously need to cover a whole lot more.
For goodness sake can we please have some clear authoritative scientifically and realistic engineering based leadership
Good post. I think if The Science actually laid out the nuts and bolts of how to achieve zero carbon worldwide we wouldn't like it. People don't want that level of disruption to BAU.
Maybe it's more possible in NZ simply because of our lower population, but it would still come as a hell of a shock. And it's obviously a still global problem.
"a scientific and facts based approach" - that relies on modelled projections and ignores the satellite observation record.
"The global temperature departure from average in January fell from December to what is essentially zero, at +0.03 °C (+0.05 °F)"
https://www.nsstc.uah.edu/climate/2022/January2022/GTR_202201Jan_1.docx
"We show a persistent and widespread increase of growing season integrated LAI (greening) over 25% to 50% of the global vegetated area, whereas less than 4% of the globe shows decreasing LAI (browning). Factorial simulations with multiple global ecosystem models suggest that CO2 fertilization effects explain 70% of the observed greening trend, followed by nitrogen deposition (9%), climate change (8%) and land cover change (LCC) (4%)."
https://www.nature.com/articles/nclimate3004
"The Antarctic continent has not warmed in the last seven decades, despite a monotonic increase in the atmospheric concentration of greenhouse gases."
You stick to models Chicken Little, and I'll stick to observations. These chaps sum it up quite well.
"...Fearing a climate emergency without this being supported by data, means altering the framework of priorities with negative effects that could prove deleterious to our ability to face the challenges of the future, squandering natural and human resources in an economically difficult context, even more negative following the COVID emergency. This does not mean we should do nothing about climate change: we should work to minimize our impact on the planet and to minimize air and water pollution.
...The analysis is then extended to some global response indicators of extreme meteorological events, namely natural disasters, floods, droughts, ecosystem productivity and yields of the four main crops (maize, rice, soybean and wheat). None of these response indicators show a clear positive trend of extreme events. In conclusion on the basis of observational data, the climate crisis that, according to many sources, we are experiencing today, is not evident yet. It would be nevertheless extremely important to define mitigation and adaptation strategies that take into account current trends."
A critical assessment of extreme events trends in times of global warming (springer.com)
I first became interested after reading the end of nature in 1989. He summarised the climate change thinking then , and it has largely come true . It is important to distinquish the difference between weather and climate .
I would also point to the cause and effect of CFC's on the ozone layer. The link was not 100% proven back then , but the world largely acted on it , and minimised the effect.
Wasn't it 97% at one stage. Must have been a few who pulled out.
In any event this figure was concocted by some dubious means, and pounced upon by MSM. Quite a few climate alarmists on this website have probably fallen for the 97%.
There was also another article and named list off all those scientists who supported man made climate warming. Professor Mickey Mouse was on the list. The article was puled in a few hours once someone had been through the list.
NZ government has a long history (and recently the climate commission) in favouring overseas large scale polluting companies rather than local less polluting alternatives. NZ has a massive blind side to the backend infrastructure and maintenance issues. It also favours companies that critically depend on more polluting operations overseas. It supports certain tech companies yet fails to see the tech manufacture and operating power requirements worldwide. It favors manufacture and production from NZ resources shipped to overseas factories using coal power while the factories in NZ running using mostly renewable power are forced by government climate policies to close (renewable except even backup generators often need fuel e.g. medical labs, health & safety and critical services, and transport services certainly require fuel but so too would overseas ones). We could cut so many emissions by encouraging and ensuring NZ production, manufacture and reduce the reliance of consumerism of overseas imports. But nah the NZ govt and climate commission has been steadily increasing the reliance on coal power & dumping toxic waste all the way just NIMBY. Even if we explain the simple elements that go into the production and service provision for an average home the NZ govt and climate commission would still be encouraging the most wasteful and polluting ways to go about manufacture of resources and parts and then completely ignoring the maintenance requirements and long term service provision.
From what I can see wealthy countries continue to outsource their emissions to lower income countries. In fact governments are likely accelerated by wealthy countries importing people from low income countries so taking population from low carbon per capita countries to high carbon per capita countries.
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