Upon surveying the landscape of organizational climate commitments, it is not uncommon to hear about attention-grabbing goals like committing to 100% renewable energy, setting a science-based target, going carbon neutral or even climate positive. You might be wondering: how do these organizations get started? Looking around your own organization, it may be difficult to imagine how the fragmented efforts that are taking place within different business units and on different timelines can come together to form a coherent story about the opportunity for impact and risk mitigation.
The key to getting started is to establish a carbon baseline.
A carbon baseline is an inventory of sources of carbon emissions from business activities. This is typically a one (or more) year(s’) snapshot that serves as a reference point for organizations to understand and track their changing emissions over time. Building a multi-year emissions baseline not only enables an organization to have a better understanding of its recent historical GHG emissions trends but also enables an organization to grasp the business trajectory and associated potential future emissions. A carbon baseline includes both direct and indirect emissions, also known as Scope 1, Scope 2, and Scope 3 emissions (see image below for detailed categories).
Scope 1: Direct carbon emissions from owned or controlled sources (e.g. fuel)
Scope 2: Indirect carbon emissions from consumed purchased electricity, heat or steam
Scope 3: Indirect carbon emissions from all other business activities (e.g. purchased goods and services, capital goods, production of purchase materials, transport-related activities not owned or controlled by an organization, waste disposal, business travel, use of sold products, etc.)
Source: GHG Protocol
Why establish a carbon baseline?
Just as companies take stock of other types of resources or supplies, it is important for organizations to assess their carbon budget in order to understand which areas of business activities have the greatest opportunities for impact. We’ve discussed the importance of data quality in a previous blog when establishing carbon inventories. Establishing a detailed carbon baseline provides management with the ability to understand carbon emissions across different business units and make data-informed decisions, for example, by having specific fuel type information according to projected business growth, or understanding how carbon-intensive specific regions’ electric grids are going to behave in the future where the company operates. Given the likely volume of data collection and calculations, the baseline inventory data can be much easier to visualize, analyze and synthesize if it is established in a centralized software system.
A secondary benefit to establishing a baseline carbon inventory is for tracking change over time. Since a baseline carbon inventory is only a snapshot in time, organizations need to build their processes for ongoing data collection to evaluate the effectiveness of operational changes. Having a baseline carbon inventory also supports companies in conducting peer benchmarking and evaluating their market position.
So you’ve built your baseline… what’s next?
Establishing a carbon inventory baseline is only the first step to managing organizational GHG emissions. Once an organization undertakes the effort to put together this emissions approach to understanding its impact, the organization can extend the same approach to thinking about risks and opportunities in business decision-making processes. For example, when evaluating capital investments into a new facility, a company can inquire and collect data about the historical operational costs—including energy data—for existing facilities it is considering for acquisition, and/or factor in how “dirty” the electric grid is in the potential regions where a new facility may be sited. Because an organization already has a baseline understanding of its existing portfolio of facilities, the organization can evaluate potential facilities against their own portfolio’s average emissions as well as compare potential acquisitions against each other from a carbon impact standpoint. Siting new facilities in a region with a cleaner electrical grid, or with easier access to cleaner alternative fuels, can be considered alongside other performance and market factors in the capital investment decision-making processes.
Beyond singular business decisions, having an established carbon inventory baseline can facilitate an organization’s goal setting and scenario planning. Companies that have a target year and an established emissions target can draw a line from their established carbon baseline to their designated emissions target to understand the necessary change in their carbon budget over time compared to business as usual (see purple and green lines in the graph below).
Source: SINAI Technologies
Forecasting different projections of possible futures based on the current carbon baseline provides a data-driven approach to stacking individual or decentralized business decisions together to get a comprehensive understanding of the planned emissions reductions, which aggregates the approved project pipeline. The planned emissions reductions can then be compared to the planned emissions gap or the targeted emissions reduction that has yet to be accounted for based on existing company mitigation strategies. Finally, for companies thinking about supporting a 1.5-degree climate scenario, modeling the path from their carbon baseline to the company’s current goal versus what the target emissions would need to be to achieve the 1.5-degree scenario can facilitate an internal discussion around the target emissions gap (shown as the steepest emissions pathway in the graph above).
To understand how SINAI Technologies can support your organization to build carbon baselines, visualize scenario planning and risk analysis, and enable meaningful progress towards your decarbonization journey, contact us for a demo.
In Texas, the energy industry plays an important role, particularly when it comes to green energy. Because of the prominence coal, oil, and renewable energy play in the Lone Star State, concerns over CO2 emission levels are equally important.
Burning fossil fuels and producing cement account for about two-thirds of all carbon dioxide (CO2) and industrial methane released into the atmosphere since 1854. Although the U.S. has cut more CO2 emissions than any other nation and is on pace to meet a 2009 pledge to reduce CO2 emissions by 17% (from 2005 levels) this year, global carbon dioxide emissions have still reached the highest point in human history.
The Trump administration dismantled Obama-era regulations that would have required power producers to slash CO2 emissions 32 percent below 2005 levels by 2030. China is the biggest contributor to greenhouse gases (by a large margin). The United States comes in second.
The impact on energy use and CO2 emissions due to the coronavirus pandemic has had major implications on global economies. In the first quarter of 2020, while many countries remained in full or partial lockdown, energy demand declined by 3.8 percent.
The hardest-hit industries include:
Coal. Global demand for coal fell by almost eight percent, compared to the same time in 2019. Low-priced gas and the continued growth in renewables globally, as well as mild weather across the U.S., capped coal use.
Oil. The demand for oil was down almost five percent in the first quarter of 2020. This was mainly due to shelter-in-place orders and reduced air travel due to COVID-19. Since air travel accounts for nearly 60 percent of oil demand globally, the impact on the demand for oil was significant.
Gas. Although not impacted to the same degree as coal or oil, gas still saw a two percent reduction in demand in the first quarter of 2020.
Electricity. Experts estimate the demand for electricity since the COVID-19 lockdown has decreased by about 20 percent. However, residential demand for electricity actually saw an increase and far outweighed the reduction in commercial and industrial operations as businesses remained closed.
Renewables. This is the only energy source that saw an uptick in demand.
Energy companies step up to address climate change
Every year the Center for Climate and Energy Solutions (C2ES) addresses how the industry impacts changing weather patterns and greenhouse gas emissions. An increase in droughts, wildfires, and hurricanes, climbing temperatures, and rising sea levels have energy companies scrambling to address the consequences of climate change on weather patterns and the environment.
However, in the past six months, climate change has taken a backseat to the COVID-19-related conversation. Even so, according to the Oil and Gas Climate Initiative, nearly a dozen energy companies worldwide have agreed to cut the output of emissions by 36 million to 52 million tonnes (a metric unit of mass equal to 1,000 kilograms) per year by 2025.
Industries produce products and raw materials for use every day. The greenhouse gas emissions that industries emit are split into two categories, direct emissions, and indirect emissions. The emissions come from the use of machines, computers, processing raw materials, heating and cooling buildings, use of petroleum in production, chemical reactions, and more.
Direct emissions are produced on-site at the facility
Indirect emissions are produced off-site and result from a facility using energy.
It’s difficult to weigh the cost to reduce greenhouse gasses for companies over time. Obviously, the long-term gains to the environment will far outweigh short-term expenses. There is no economy-wide tax on carbon. Instead, greenhouse gas mitigation policies provide subsidies aimed at certain technologies, like solar and wind generation and biofuels.
The role of renewable energy
Although all sources of energy have an impact on the environment, renewable energy – solar, wind, hydroelectric, geothermal, and biomass – has substantially less. However, that’s not to say that renewable energy has no environmental impact.
Wind. Wind power produces no global warming emissions or toxic pollutants. However, wind power can impact wildlife, birds, and natural habitats. Land use and copper consumption can also cause issues for the environment.
Solar.Solar power produces electricity from the sun, which is cost-effective and leaves little impact on the environment. However, it can have an impact on greenhouse emissions with the use of hazardous materials during manufacture.
Geothermal.Geothermal plants use technology to convert resources from deep within the earth’s crust to electricity. Depending on the technology used, it can affect emission levels in the air.
Biomass. Both biomass power plants and fossil fuel power plants use the combustion of feedstock, like agricultural waste, forest products, and manure to generate electricity. How the biomass is generated and harvested can affect land use and add to global warming.
What can you do?
While you may not be able to influence large companies to change manufacturing processes, there are a few things you can do to stamp out even a small portion of greenhouse gases and CO2 emissions.
Use your own reusable bottle or cup for water or coffee.
Replace efficient bulbs in your home.
Keep your thermostat a few degrees warmer or cooler.
Kathryn Pomroy is a freelance journalist from Minnesota who has written for dozens of major publications, magazines, and many well-known person finance companies. She is also knowledgeable in energy-related topics like renewable energy, climate change, and greenhouse emissions. Kathryn holds a BA in Journalism.
Energy is the lifeblood of all societies. But the production of energy from the burning of fossil fuels produces carbon emissions that are released into the atmosphere on a grand scale. The energy sector accounts for more than 70% of these emissions, which are driving climate change worldwide.
Reducing carbon emissions from the energy sector has a direct and positive impact on climate protection. So there needs to be a transition from the current energy system that relies heavily on fossil fuels to a system that uses renewable energy sources that do not emit carbon, such as wind and solar.
We also need to look at things like the electrification of transport and embrace a circular economy that seeks to reduce waste and the demand for energy. This process has already begun, but we need to speed it up – we’ve been dragging our heels for too long and now things are critical.
This will not happen by itself; it requires policy choices. These must be global, involving all states. It’s no good changing the energies sector of just one country. Energy has long been considered to fall within the domain of domestic policy. Yet international climate action is driving the transition to a low-carbon energy economy, on the basis of scientific evidence that highlights the importance of reducing energy consumption for the climate.
This must be done as quickly as possible. Some countries are more committed than others, but the extent of how much is actually being achieved (or not) must be monitored. This can only happen through the cooperation of all states under international law. Cooperative regulation of energy demands innovative, flexible organization and law-making at the international and the regional level.
Energy action = climate action
The United Nations (UN) is at the forefront of this international cooperation. In 2015, the General Assembly adopted Sustainable Development Goals (SDGs) that set out the progress the global community wants to make by 2030 on the most pressing challenges, from poverty reduction to climate change and energy transition.
SDG 7 relates to ensuring access to clean and affordable energy for all. It contains indicators of progress on renewables, access to electricity, and energy efficiency. SDG 13 relates to urgent action to combat climate change and its impacts. These two goals work in tandem to encourage all states – developed and developing – to collaborate to make energy sustainable (meaning low-carbon), while ensuring access for all in every country by 2030.
That means international climate action equals energy action. The UN High-Level Political Forum is the place states get together to discuss progress on the SGDs, and where consensus is being (re)affirmed continuously.
SGDs 7 and 13 have been established and reinforced through the 2015 Paris Agreement on Climate Change. This is a binding treaty under international law adopted through the UN Framework Convention on Climate Change, by which the UN first addressed climate change in 1992. The agreement is the key international legal framework through which states aim to keep the increase in the temperature of the Earth’s atmosphere to well below 2℃, and ideally limiting it to 1.5℃ by the end of the century.
Signing up to cooperation
Almost all states have ratified the Paris Agreement and so must abide by it. If any intend to withdraw from it, they must abide by the legal rules of the agreement. So the US would only be able to withdraw – as Donald Trump insists – after the next presidential election. In the meantime, his administration continues to abide by the Paris Agreement rules and actually takes a very active role in the negotiations.
Domestic action is necessary to implement the promises of the Paris Agreement. Every state is obliged to submit “nationally determined contributions” that set the scene for the most ambitious climate protection plan at the national level.
These national plans on climate protection have a strong influence on energies regulation at the domestic level. The “Katowice package” (the Paris rule book), adopted in 2018, provides further guidance. For developed countries, the Paris Agreement stipulates that they adopt economy-wide greenhouse gas emission targets. These targets can only be achieved if the entire economy, including the energy sector, is “decarbonized”. That means that the use of fossil fuels has to end and be replaced by sustainable (renewable) energy.
Developing countries receive support under the Paris Agreement so that they too can move over time to economy-wide reduction targets. Only by acting together will the international community achieve the temperature goal of the Paris Agreement.
The 1994 Energy Charter Treaty, driven by the European Union and like-minded states, is emerging as the basis of transcontinental energy governance in Europe, Asia, and Africa. This treaty covers energy investments, trade, freedom of energy transit, efficiency, and resolution of disputes. It is now modernizing to support the energy transition.
Cooperative energy regulation also occurs on a regional level, and that is the case in Europe as well as Asia and Africa. The EU has adopted a frontrunner position with a strategy precisely based on the Paris Agreement till 2080, driving the transition of the continent’s energy system. Called the Clean Energy Package, it will create a transboundary, continent-wide energy system that better integrates renewables, improves efficiency, and empowers consumer choice. Even after Brexit, the UK will likely remain connected to this market, as both the EU and the UK share the objective of achieving net-zero carbon by 2050
If humanity is to achieve its goal of fully and speedily transitioning to low-carbon energy while ensuring affordable access for all, then we must stay focused and committed and continue to cooperate internationally. The future of the generations that follow depends on it.
Volker Roeben is Professor of Energy Law, International Law, and Global Regulation at the University of Dundee, as well as a visiting Professor at the China University of Political Science and Law, Beijing, a docent at the University of Turku, and adjunct Professor at the University of Houston.
Prior to coming to Dundee, he was a Professor at Swansea University and a Senior Research Fellow at the Max Planck Institute for Comparative Public Law and International Law. He has held visiting professorships inter alia at the University of Chicago School of Law, has served as a clerk to Justice Di Fabio of the German Constitutional Court, and advised the Energy Charter, the European Parliament, international organizations, and national parliaments.
Volker’s research combines energy law with public international law, European Union law, and the theory of global law, with several books and numerous articles published and a research monograph on the EE Union in press with Cambridge University Press. He also serves on the board of the Max Planck Encyclopedia of Comparative Constitutional Law.