Upload
sitra-ekologinen-kestaevyys
View
1.181
Download
1
Embed Size (px)
Citation preview
15 March 2016
Forward-looking companies set science-based targetsClimate targets based on long-term global trends and science will prepare better for risks and enable to proactively respond to future opportunities
© fl
ickr/t
here
dmiss
ion
© ECOFYS & SITRA | |
SITRA foreword
Climate change and global warming are among the most severe challenges facing humanity. In order to prevent further climate change, greenhouse gas emissions need to be reduced in ways that are economically viable. For this, industry leaders need valid methods to create a long-term vision towards a carbon-neutral future. Sitra wants to help Finnish industries in improving their strategic competitiveness and in finding their path to carbon neutrality. Sitra provides them with facts, methods and models to be used in the transformation. We find that setting company and sectoral emission reduction targets based on science, provides companies an effective tool to show their leadership and to integrate emission reduction into business development. Sitra commissioned Ecofys to describe the science-based targets methodology and to provide information about the process. This report explains why and how companies can set their own science-based emission reduction targets and show the benefits at company level. In connection to this report, two leading Finnish companies have demonstrated, how the process works and what kind of benefits they have gained by setting science-based targets.
215 March 2016 Science-based targets
© ECOFYS & SITRA | |
This report highlights why and how companies can set science-based targets and benefit from the opportunities
Companies with a long-term vision based on global trends
and climate science can prepare better for risks and benefit from
future opportunities
Improving a company’s long-term vision starts with setting
science-based targets by allocating the global carbon
budget in a fair and transparent way to the company
3
• Increase credibility• Demonstrate leadership• Outperform sector peers• Long-term guidance to steer• Save money and increase competitiveness• Insight in required transformations and position for policy regulations
Introduction
New science-based targets methodology
Benefits of science-based targets
Long-term vision and targets
At the COP21 in Paris (2015) 195 countries made the binding agreement to limit global warming well below 2 °C and to pursue efforts to limit the temperature increase to 1.5 °C, which means taking actions sooner, faster and bigger. The Paris Agreement will lead to robust policy frameworks and huge flows of climate finance to drive the massive transformation in all sectors, creating risks and opportunities for companies.
Allocating global carbon budget
Science-based targets are targets to reduce Greenhouse Gas (GHG) emissions in line with the level of decarbonisation required to keep global warming well below 2 °C. This report highlights why and how companies can set science-based targets and is structured according to the following chapters.
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
COP21 raised the sense of urgency
Picture
4
© ii
sd
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
At the COP21, 195 countries made the binding agreement to limit global warming well below 2 °C and pursue efforts towards 1.5 °C
> Global absolute Greenhouse Gas (GHG) emissions are still increasing, more mitigation actions are needed to limit global warming well below 2 °C and to prevent catastrophic impacts of climate change.
> Staying well below 2 °C implies net zero CO2 emissions around 2070. Pursuing efforts towards 1.5 °C even means net zero CO2 emissions around 2050.
> Staying within the 1.5 °C temperature increase implies decisions very similar to the ones needed for a 2 °C pathway, but they need to be taken sooner (early action), achieve their targets faster (net zero by 2050) and scale it bigger (more reductions; more negative emissions after 2050).
5
Source: adapted from Rogelj et al., 2015
Assessment of scientific mitigation scenarios
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
The Paris Agreement will lead to robust policy frameworks and huge flows of climate finance to drive the massive transformation
The massive transformation of all sectors creates risks and opportunities for companies.
6
Risks Opportunities
Companies with a long-term vision based on global trends and climate science can better prepare for risks and benefit from future opportunities.
>Globally fragmented and non-uniform energy and climate policies
>Increasing prices for purchased goods and services
>Increasing production costs>Increasing pressure from
shareholders, value chain partners and NGOs
>Changing demand patterns for materials and products
>Policies supporting the transformation towards a low carbon society
>Increasing financial flows for climate solutions
>Large uptake of low carbon technologies and solutions
>Market growth of products and services in a circular and sharing economy
>Various platforms and events to show leadership
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
Long-term vision and targets
Picture
7
© fl
ickr/l
ee-y
oshi
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
Companies that want to prepare for risks and to benefit from future opportunities, set science-based targets
Current target setting practices Science-based target setting practices
To support companies in setting science-based targets and to make this a common business practice, CDP, UN Global Compact, World Resources Institute (WRI) and WWF have launched:
Science Based Targets initiative www.sciencebasedtargets.org
Current target setting practices Science-based target setting
> 81 percent of the Global 500 companies have targets
> Companies have difficulties setting credible and sustainable emission reduction targets
> Common target setting practices: Bottom-up targets (focus on
incremental change) Targets based on peers Not aligned with science No full coverage of companies’
emissions Short-term
Source: Mindthescience.sciencebasedtargets.org, 2015
> A long-term vision based on global trends and climate science
> Targets aligned with global growth of population and wealth and with the Paris Agreement to keep global warming well below 2 °C
> Targets which allow for decoupling of emissions from economic growth
> Long-term instead of short-term targets
815 March 2016 Science-based targets
© ECOFYS & SITRA | |
Over 100 companies have already committed to setting science-based targets
9
Amongst others:
Americas• Avery Dennison• BanColombia SA• Coca-Cola Ent., Inc.• Colgate Palmolive
Company• Dell Inc.• General Mills Inc.• Hewlett-Packard• Kellogg Company• Mars• Novex Delivery
Solutions• Procter & Gamble Co.• Pfizer• Walmart• Xerox Co.
Europe
• Acciona S.A.• Alpro• Atos SE• AXA Group• BillerudKorsnäs• BT Group• Carrefour• Correos (Grupo Sepi)• Danone• Enel• Energias de Portugal• Intern. Post Co.• Gas Natural Fenosa• GlaxoSmithKline• H&M AB
Asia
• Aditya Birla Chemicals
• ASICS• China Steel Co.• CLP Holdings• Delta electronics• Honda Motor
Company• Konica Minolta• Sony Co.• Toyota Motor Co.• Yingli Solar
Oceania
• Infigen Energy• Bank Australia• Australian Ethical
Investment
Africa
• Pick ‘n Pay Stores• Safaricom Ltd.• Tiger Brands• Woolworths Holdings
• ICA Gruppen• IKEA• Kingfisher• L’Oréal• Nestlé• Novartis• Panalpina• PUMA• Pukka Herbs• Renault• Royal Philips• Sofidel• Stora Enso• TAV Airports• Unilever
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
The remaining global carbon budget needs to be divided in a fair and transparent way
Picture
10
© fl
ickr/c
onan
il
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
Limiting global warming to well below 2 °C corresponds with a remaining global carbon budget of 1,000 GtCO2
11
> According to the IPCC, approximately 1,000 Gigatonnes (Gt) of carbon dioxide (CO2) remain to be emitted in order to keep global warming well below 2 °C (=global carbon budget, the green surface in the graph)2.
> This remaining global carbon budget should be allocated over the companies in a fair and transparent way.
2 The global carbon budget is expressed in only CO2 emissions, since the increase of global CO2 is the main contributor to global GHG emissions rise. However, in determining the global carbon budget the reduction of non-CO2 emissions are taken into account as well.
2010 2020 2030 2040 20500
102030405060708090
100
Non-CO2 emissionsCO2 emissionsBAU
Annu
al g
reen
hous
e ga
s em
issio
ns (G
tCO2
eq/y
r)
Global carbon budget
Non-CO2 emissionsCO2 emissions
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
How to correlate the global carbon budget with corporate carbon accounting and targets
12
Source: Greenhouse Gas Protocol, 2011
According to Greenhous Gas Protocol Corporate Value Chain Accounting and Reporting Standard:• Scope 1 emissions are the direct emissions from sources that are owned or controlled by the company (including emissions from fleet)• Scope 2 emissions are the indirect emissions of a company from the generation of purchased or acquired electricity, steam, heating, or
coolingconsumed by the company
• Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
In the past, two methodologies have been used for allocation of the global carbon budget to a company
13
2010 2015 2020 2025 2030 2035 2040 2045 20500
10
20
30
40
50
60
Global 2 °C scenario
GtCO
2e
ABSOLUTE REDUCTION1 ECONOMIC ALLOCATION2
Target calculation: each company reduces its absolute emissions with the same percentage as in global/regional 2 °C pathway or linear reduction per year (-1.5 percent per year)Name of method: C-Fact and The 3% Solutions Applied by: Mars, Autodesk
2010 2015 2020 2025 2030 2035 2040 2045 20500
10
20
30
40
50
60
0%50%100%150%200%250%300%350%400%
Global 2 °C scenario GHG (GtCO2eq)GHG intensity (GtCO2eq / GDP contri-bution)
GtCO
2e/U
S$ v
alue
add
ed
GDP
grow
th
Target calculation: each company reduces its emission intensity (CO2eq/value added value or gross profit) with the same percentage as the reduction of global/regional emission intensity (-5% per year, expressed in CO2eq/GDP) Name of method: GEVA, CSO, CSIApplied by: BT, Ben & Jerry’s
Main disadvantage of these methodologies is that they do not take into account the differences between sectors/companies in growth and emission reduction potential. Therefore Sectoral Decarbonization Approach has been developed.
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
Sectoral Decarbonization Approach: the new science-based targets methodology
14
© s
xc.h
u
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
The new methodology was developed to translate the global carbon budget to company targets, based on a sectoral approach
For the Science Based Targets initiative a new methodology, called the Sectoral Decarbonization Approach (SDA) was developed.There are several reasons why to use the SDA:> SDA was developed with CDP, WRI and WWF with
technical support from Ecofys, and is the most recent and most detailed method
> SDA is transparent, well documented, reviewed through an extensive stakeholder consultation process and published in Nature Climate Change
> SDA takes into account sectoral differences (i.e. differences in mitigation potential, mitigation costs and growth)
> SDA is the only method that differentiates between Scope 1 and Scope 2
> SDA will be refined and updated on regular basis and more and more sector-specific decarbonization pathways will be added over time (like for agricultural commodities, freight transport etc.)
Source: www.sciencebasedtargets.org, 2014/2015
1515 March 2016 Science-based targets
© ECOFYS & SITRA | |
The SDA methodology is based on a least-cost modelled 2 °C scenario of International Energy Agency (IEA 2DS)
> The SDA methodology combines sectoral emissions pathways with sectoral activity projections from IEA 2DS to construct sectoral intensity pathways for homogeneous sectors, i.e. power, cement, iron and steel, aluminum, pulp and paper, service buildings, and passenger transport.
> For three heterogeneous sectors physical allocation is not possible, and absolute reduction is used to allocate the remainder of the carbon budget. Heterogeneous sectors are chemical and petrochemicals, other industry and other transport.
16
2010 2015 2020 2025 2030 2035 2040 2045 20500
5
10
15
20
25
30
35
Sectoral breakdown of global carbon budget Service buildingsOther transportAviation passenger transportRail passenger transportHeavy road passenger transportLight road passenger transportOther industryPulp and paperChemicals and petrochemicalsAluminiumIron and steelCementPower generation
Dire
ct C
O2 e
miss
ions
(GtC
O2)
(Source: modified by Ecofys based on IEA, 2014)
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
The SDA methodology uses physical allocation for homogeneous sectors and absolute allocation for heterogeneous sectors
17
Homogeneous sectors
Heterogeneous sectors
Physical allocation:The SDA methodology assumes that the carbon intensity for the companies in all homogeneous sectors tends to converge in 2050. The rate of convergence depends on the difference between the carbon intensity of the company and the 2 ºC carbon intensity of the sector in 2050 and the predicted change in market share of the company.
Absolute allocation:For heterogeneous sectors, the SDA methodology is based on the compression of absolute emissions, which means that the absolute emissions of all companies in the sector will be reduced by the same percentages as the sector in the target year.
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
In the SDA, each activity of a company is allocated to one of the SDA sectors to define the intensity and absolute targets
18
Activities and footprint company X3:
A. Offices: … m2
Scope 1+2 … tCO2
B. ManufacturingScope 1+2 … tCO2
SDA sectors:
Service buildings
Other industry
Allocation method and indicators:
Physical allocationCO2/m2
Absolute allocationktCO2
A. Offices
2010 2020 2030 2040 20500
2
4
6
8
10
Company Sector
CO2/
m2
2010 2020 2030 2040 20500
2
4
6
8
10
Company
ktCO
2
B. Manufacturing
2010 Target 2020 Target 2050 - 2 4 6 8
10 12 14 16
Absolute emission targets
Scope 1+2 OfficesScope 1+2 Manufacturing
kton
CO2
e
-20%
-90%
3 According to GHG Protocol: Scope 1 emissions are the direct (on-site) emissions from sources that are owned or controlled by the company (including emissions from own fleet) Scope 2 emissions are the indirect emissions of a company’s from the generation of purchased or acquired electricity, steam, heating, or coolingconsumed by the company
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
Benefits
19
Nokia and KONE have experienced the value of performing the analysis on science-based targets
“Testing this new methodology was interesting. A method that is based on scientific facts and can be applied in various industries helps companies set meaningful long-term reduction targets for greenhouse gas emissions.” Pia Tanskanen, Head of Environment at Nokia
“We are delighted to be among the forerunners of industrial companies in testing this new method. We found SBT provided us with useful insight into the role of climate science in setting long-term carbon reduction targets.” Hanna Uusitalo, Environmental Director at KONE
© n
asa
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
Key benefits of setting science-based targets
20
1. Increase credibility of climate targets, get recognition and exposure by NGOs.
2. Demonstrate leadership and build on a green reputation to increase stakeholder value and attract excellent talents.
3. Outperform sector peers in benchmarks, increase rating scores and attractiveness for investors.
4. Get long-term guidance to steer investments, drive innovation and transform business practices.
5. Save money and increase competitiveness by gaining insight in company performance and improvement potential.
6. Gain insight in the required sector transformations and position for upcoming policy regulations.
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
How to get started in setting science-based targets
21
Adopt a science-
based target and gain the
benefits
Explore the science-based target methodologies and gain insights in 2 °C scenarios
Gather GHG emissions, activity and growth data to perform analysis and get insights in own data limitations and improvement possibilities
Analyse (absolute and/or intensity) targets for company’s activities by using online tools on www.sciencebasedtargets.org or by getting external support
Start internal discussions on outcome of science-based targets analysis and use outcome for guidance in internal target setting process
15 March 2016 Science-based targets
© ECOFYS & SITRA | |
EcofysGiel LinthorstProgramme leader Science-based targetsT: +31 (0)30 662 3322M: +31 (0)6 11 366 935E: [email protected]
22
SitraJaana PelkonenLeading Specialist, Carbon-Neutral IndustryM: +358 (0)40 540 9775E: [email protected]/en/ecology/carbon-neutral-industry
15 March 2016 Science-based targets