Every organization and industry produce carbon emissions through regular operations and business activities. As regulators enforce stricter sustainability requirements and investors seek to build sustainable portfolios, companies need to develop tangible plans for reducing and eliminating emissions.
Whether a business has had sustainability goals for years or they’re just getting started, stakeholders increasingly want to see the specific steps an organization is taking toward decarbonization, and how their strategy aligns with organizational priorities.
Reducing carbon emissions can be a simple matter of optimization and using energy more efficiently. But to eliminate them entirely, organizations need to implement several decarbonization methods in conjunction.
In this article, we’ll cover:
- What a decarbonization strategy is
- Specific strategies for decarbonization
- How to implement a decarbonization strategy
What is a decarbonization strategy?
A decarbonization strategy is a plan for reducing or eliminating carbon emissions. This typically involves a combination of methods to modify processes, energy sources, and operations in ways that reduce or remove the carbon emissions associated with an organization’s activity. While an organization may have significant control over their operations, decarbonization requires them to consider emissions produced throughout the supply chain. (Including Scope 3 emissions.) An organization’s decarbonization strategy may include ongoing processes, and long-term decisions like changing materials used in production, decreasing reliance on fossil fuels, increasing energy efficiency, and
Decarbonization vs. carbon neutrality
Decarbonization is highly related to carbon neutrality, and reducing or eliminating emissions can even be part of the process of reaching neutrality, but there’s a major difference. Carbon neutrality also allows for offsetting emissions through methods like carbon credits.
An organization can achieve carbon neutrality while increasing emissions, whereas decarbonization specifically refers to reducing or removing emissions.
Decarbonization strategies for sustainable organizations
The specific decarbonization methods and strategies that make sense for a business depend on its industry, operations, scale, and primary sources of carbon emissions. A financial firm, for example, will have a very different focus than a manufacturer, retailer, or shipping company. And even in instances where these organizations pursue the same overarching decarbonization strategy—such as becoming more energy efficient—a software company will implement that strategy differently than a fast-food enterprise.
Here are seven decarbonization strategies an organization may use to operate more sustainably.
1. Improving energy efficiency
Using resources more efficiently is a straightforward decarbonization strategy that can take two primary forms:
- Replacing inefficient assets and infrastructure
- Optimizing energy consumption
At scale, even small changes like switching to more efficient light bulbs can make a noticeable impact on carbon emissions. But organizations that engage in large industrial processes or transportation tend to have more glaring inefficiencies from outdated equipment and vehicles. In these instances, the most significant way to improve energy efficiency and reduce carbon emissions is by replacing these assets or retrofitting them with more efficient components, such as exhaust filters or engine modifications.
Besides replacing or modifying assets, organizations can improve efficiency by optimizing their use of resources—typically through automation. For example, occupancy monitoring allows employers to automate building infrastructure operations and adjust lights, heating, and cooling when spaces are unoccupied.
2. Investing in electrification
Electrification is the process of converting machinery or processes to electrical alternatives, which produce significantly fewer emissions. In an office, this might look like installing heat pumps throughout the building instead of using natural gas-powered heating and cooling.
Switching to electric vehicles is another common type of electrification. Many industrial processes and equipment that use fossil fuels have electrical alternatives, but these often come at greater upfront and ongoing energy costs, and companies are often resistant to trade those costs for reduced emissions. McKinsey estimates that up to 50% of fossil fuels used for energy in industrial processes could be replaced by electricity.
3. Switching to renewable energy
While electricity consumption doesn’t necessarily produce carbon emissions, producing it with fossil fuels does. Renewable energy sources like hydro, solar, and wind produce electricity while creating almost no CO2 emissions, so using it can dramatically reduce the emissions generated through business activities and industrial processes.
Companies can switch to renewables by purchasing energy directly from a renewable provider through power purchase agreements (PPAs) or generating their own electricity through solar panels and other renewable energy production systems. Green power purchase agreements can partially source power from renewable sources, but it’s worth noting that there’s no universal definition of how much power needs to be “green,” which can make it difficult to understand its impact.
4. Relying on low-carbon fuel
While electrification can remove fossil fuels from a process altogether, companies can also work toward decarbonization by switching to low-carbon alternatives like biodiesel, hydrogen, and synthetic fuels. These fuels either produce fewer emissions when consumed, when they’re produced, or both.
In many cases, it’s easier and more cost effective to retrofit existing assets with low-carbon fuel adaptors than to replace the entire asset with an electric version.
5. Implementing carbon capture
Carbon capture is the process of extracting carbon exhaust, either directly from the industrial activities that produce it, or directly from the atmosphere. This is usually done after fuel is burned (post-combustion), as it allows businesses to modify existing infrastructure to retrieve carbon from exhaust, rather than using pre-combustion or oxyfuel combustion methods, which have to be part of the system’s original design.
Once the carbon is captured, there are two options: store it, or use it.
Carbon capture and storage (CCS)
Carbon capture and storage takes captured CO2 emissions and pipes or transports them to an underground site, such as a depleted oil reservoir, where the emissions are injected into gaps in the rock, so they can’t reach the atmosphere and contribute to global warming.
Carbon capture utilization and storage (CCUS)
Carbon capture utilization is when captured carbon emissions are either used in applications that require CO2 (like fertilizer production), or converted into new materials, such as plastic, synthetic fuels, or even concrete.
6. Operating in climates that require less energy
An organization’s geographic location can easily impact how much energy their operations consume throughout the year. As businesses relocate or select new sites, they should consider how various climates could impact their carbon emissions.
By building datacenters in cooler climates, for example, Microsoft is eliminating the need for water cooling, so they won’t need to spend energy pumping water throughout these power-hungry facilities. Industrial processes that rely on evaporation or need heat to produce chemicals or power can also benefit from operating in warmer climates. And even office-based organizations can reduce carbon emissions by operating in more temperate climates, where extreme heat or cold are less likely to require significant heating or cooling to create a comfortable work environment.
7. Establishing sustainable partnerships
Decarbonization requires organizations to examine their entire supply chain. And while a company may not have much influence over the emissions of their current suppliers, distributors, couriers, and other partners throughout the supply chain, they do have some control over which partners they choose.
It’s difficult to make progress in reducing emissions when your partners aren’t aligned with your efforts—and some partners may even undermine your efforts as they pursue their own goals. Organizations that want to be sustainable need to critically evaluate the partnerships they’re building, and consider how their choices will impact their emissions.
How to implement a decarbonization strategy
Executing a decarbonization strategy requires significant internal alignment, a well-documented and clearly articulated plan, and the coordination of a wide range of stakeholders and business operations. Some components of a decarbonization strategy may be as simple as purchasing materials or equipment and scheduling services or work orders. But other parts of an organization’s strategy may involve significant long-term investments. Here are the steps to implementing a decarbonization strategy.
Collect and analyze emissions data
Before your organization starts its journey toward decarbonization, you need to understand where you’re starting from, and where your greatest opportunities are to reduce emissions. Which locations, processes, and assets produce the most CO2? What times of year or days of the week represent your peak?
Emissions data is key to setting decarbonization targets, selecting the right methods, and monitoring and reporting on your progress. Unfortunately, most organizations don’t have the visibility they need to understand and analyze their emissions data. Each location may have a completely different utility provider with a distinct billing format, making it difficult to compare the underlying data. The larger the portfolio, the more problematic this lack of standardization becomes.
You can’t execute a decarbonization strategy without assembling an accurate, reliable database of your energy consumption and emissions. Major firms spend significant time manually reformatting energy data and then pay auditors to ensure its accuracy. The process can be so tedious and time-consuming that simply trying to understand your data can interfere with making actual progress toward decarbonization. But with a holistic sustainability management solution like Tango Energy & Sustainability Management, software can automatically intake utility bills, standardize your data, and audit it for common errors, making it easy to compare and analyze individual locations, regions, and your entire portfolio.
Set decarbonization goals
Once you have visibility into your emissions data (especially Scope 1 and 2 emissions), you can start setting decarbonization goals based on your current emissions. Whatever your goals, it’s vital that organizations set reasonable timelines and outcomes, especially if you intend to publicly share your decarbonization goal or disclose your plan to investors.
Overly ambitious, unachievable sustainability goals put companies in danger of greenwashing accusations, which can lead to lawsuits, penalties, and loss of trust (from investors, regulators, employees, and the general public). To avoid this, it’ll be important to set decarbonization targets based on your actual data, level of commitment, and available resources.
Select relevant decarbonization methods
Part of what determines how reasonable your goals are will be the actual methods you plan to use. Setting a goal will directly affect which decarbonization methods your strategy will need to incorporate, and how heavily you’ll need to invest in them.
Perhaps you need to replace a certain percentage of a specific asset—such as your fleet of aging construction vehicles—within a specific timeframe. Maybe you’ll need to schedule and roll out renovations across a particular type of location.
If you can’t utilize the necessary decarbonization methods at the scale required to achieve your goals, you’ll need to adjust your goals to fit with what you’re capable of. Since there’s such a close relationship between your decarbonization goals and methodology, you may instead want to work backward from methods to goals.
Working toward sustainability often involves performing a materiality assessment, which allows you to consider a range of pathways to becoming a more sustainable organization, comparing each option’s business impact and importance to stakeholders. With a more narrow focus on decarbonization specifically, a materiality assessment could be useful for prioritizing methods and setting realistic goals.
Make the business case for decarbonization
Decarbonization is a major long-term commitment for your organization. Whatever your strategy, you need to evaluate and communicate exactly how it will impact your business operations and your financial position, as well as the risks it creates and mitigates, and which stakeholders need to be involved (and how). Presenting a clear business case for decarbonization is essential for establishing buy-in from leadership and relevant stakeholders, and it will be an important reference for your future decarbonization efforts.
Establish organizational alignment
After you have your goals and methods and you’ve communicated the implications decarbonization has for your business, you’ll need to consider how various initiatives, policies, roles, and processes will support or inhibit your efforts. Decarbonization must be connected to long-term business goals, or it can easily fall by the wayside in pursuit of growth.
How will new locations, acquisitions, and asset purchases fit into your decarbonization strategy? What does growth look like within the context of your decarbonization targets and timeline? Establishing alignment has to happen from the outset, but it will also be an ongoing process as new organizational needs and challenges arise.
Generate sustainability reports
Sustainability reporting helps track, demonstrate, and record your progress toward decarbonization, laying out both the quantitative and qualitative data necessary to see where your organization stands.
While decarbonization is widely considered a requirement to achieving global sustainability goals, reporting standards are intended to create a very specific snapshot of your organization’s sustainability. So you’ll likely want to supplement your reports with additional information that more comprehensively explains your decarbonization strategy and progress toward it.
Monitor progress toward decarbonization with Tango
Whatever your decarbonization strategy, Tango Sustainability & Energy Management by WatchWire can help you track it. With dedicated carbon accounting capabilities like Scope 1, 2, and 3 emissions calculations, renewable tracking, and energy data auditing, Tango ensures you’re equipped to accurately monitor and report on your work toward decarbonization.
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