Was bedeutet Dekarbonisierung für Unternehmen?

Decarbonisation is the miracle solution that everyone is betting on: from governments implementing "decarbonisation pathways", Wall Street giants and corporate titans pouring "billions of dollars in decarbonisation solutions" to society asking for a rapid transition to a low-carbon economy. On the other side, billionaires and philanthropists are leading the decarbonisation revolution: from Bill Gates promising to cool the earth with solar engineering technology, to Elon Musk obsessed with electric cars (just a heads up: Tesla gained USD $1.4 billion in 2020 selling carbon credits). You will understand it: decarbonisation is everywhere and in everyone's mouth - but truly what does it mean? And is it going to save us from climate doomsday?

Decarbonisation is the key factor in alleviating climate change, the goal is simple: limiting carbon dioxide emissions, around the world, as soon as possible. This process requires both sweeping change and incremental steps: from sector to sector, from industry to industry. Even if the energy sector is the most scrutinized one, with renewable energies being more affordable - other industries shall be focused on: cement, steel, agriculture, and many more. Decarbonisation is not an easy path and will require billions of investments - but with global companies active involvement, we might get there.

What is decarbonisation?

By definition, decarbonisation is the process of removing or reducing all man-made carbon emissions, with the goal to eliminate them altogether - reaching net-zero emissions. According to the Oxford dictionary, "decarbonisation is the process of replacing fossil fuels with fuel that is less harmful to the environment". In that sense, decarbonisation is achieved by implementing low-carbon technologies and energy sources (e.g. renewable energies, regenerative agriculture, electrical grid, hydrogen).

On the other hand, a decarbonised economy or "low-carbon" economy is the conversion to an economy using low-carbon energy sources, reducing the amount of greenhouse gas emissions (GHG) released in the atmosphere. Decarbonisation is often applied to a country's economy and is achieved by targeting the most carbon-intensive industries in this specific country and finding innovative solutions to cut carbon emissions.

The concept of decarbonisation arises from the 2015 Paris Climate Agreement - intending to limit global warming well below 2°C above pre-industrial levels and pursue efforts to limit it to 1.5°C. To reach this ambitious goal, countries have to cut GHG emissions rapidly, to reach carbon-neutrality by 2030, and net-zero emissions by 2050. And, this is where, my dear Watson, decarbonisation comes into play.

We must now agree on a binding review mechanism under international law, so that this century can credibly be called a century of decarbonisation.

Angela Merkel, Chancellor of Germany

With only ten years remaining on the Paris Agreement, it would require an 80 to 90 per cent reduction in global greenhouse gas emissions to meet the Paris target. These targets cannot be reached without decarbonising industrial activities. Decarbonisation is what will enable countries and companies all over the world, to come to net-zero emissions.

Why is decarbonisation important for companies?

Decarbonisation is a global imperative for governments, businesses and society because it plays a crucial role to limit the worst effects of climate change. While many companies declared becoming carbon-neutral by 2050, recent estimates suggest we are not on track to meet the Paris targets - more must be achieved, and at a greater speed.

For companies, decarbonisation means the complete reduction of carbon emissions, on all scopes of carbon emissions. Each company must establish a decarbonisation strategy in line with its industry. Then, it is essential for a company to evaluate the number of emissions it is directly or indirectly responsible for as a result of its business operations, and to then identify the options for reducing them. Further, decarbonisation will require a radically different energy system, by adopting alternative energy sources based on green power and green molecules (such as biofuels and hydrogen).

As stated before, the race to decarbonising companies has begun. The Intergovernmental Group of the International Energy Agency predicts that new patents in key technology like batteries, hydrogen, intelligent grids and carbon capture greatly outweigh the patents in other technologies, including fossil fuels.

How to decarbonise companies?

Decarbonisation = business opportunity

Decarbonising companies must be seen as a business opportunity - by investing in this solution, your business will reap all of the benefits. Rethinking business' operations enable innovation: from reusing carbon as an output for products, reducing raw materials to find alternatives to consumption habits. For example, Impossible Foods - which makes low-carbon alternative protein - is valued at $10bn.

Understand your corporate carbon footprint

Then, it is all about understanding your corporate carbon footprint (CCF). According to the Ellen MacArthur Foundation, by switching to renewable energy we will cut greenhouse gas emissions only by 55%, the remaining 45 % of emissions come from making and using products and how we produce food. By assessing it, companies can identify their largest sources of energy usage, production intensity, transportation needs and waste generated across processes.

Carbon footprint monitoring allows companies to identify sources and opportunities for carbon reduction. Knowing that one's carbon footprint comes from scope 3 (indirect sources), companies will find a sea of opportunities there. For example, World IT leader Atos told us that 50% of its carbon footprint comes from computers - applicable to scope 3. To decarbonise, Atos is engaging actively with its suppliers to reduce its environmental impact and implement change. For that, the company has set up drivers to incentivise its suppliers.

You may then scale up your efforts by measuring your performance using open data sets against your competitors. Our carbon management platform helps many companies in establishing decarbonisation pathways. Book a demo now.

Decarbonise the whole value-chain

Consider how you can include carbon removal into your product strategy, supplier networks, and operations across your whole value chain, as well as create responsibility, particularly around emissions and science-based objectives. A significant part of carbon emissions may be eliminated by converting to renewable energy, electrification systems, and improving efficiency. In terms of energy sources, hydrogen, for example, may be used to decarbonize steel, shipping, bussing, and coal, among other industries.

The challenge is how to reach your goals after you understand your carbon footprint and have measures in place. With a plethora of digital, new material, and decarbonisation technologies at your disposal, you'll need to devise a plan that allows for large-scale impact while achieving maximum value.

For example, carbon-based feedstocks (waste) such as methane, agricultural leftovers may be converted into goods using innovative carbon technology solutions. For example, UBQ transforms landfill waste into goods. For each tonne used and produced, approximately 1.3 tonnes of landfilled waste are diverted and up to 15 tonnes of carbon dioxide equivalent are saved in its current pilot commercial operations.

Evaluate your decarbonisation strategy

Now it is time to evaluate your strategy, and how much carbon you have reduced so far. Improve your decision-making constantly by using the right metrics, and go deeper into decarbonisation.

Note: It is expected that investors will look deeply into companies' efforts in becoming net-zero emissions and climate risks' strategies. It is not out of the realm that businesses might be refuse loans or investments because of their "dirty processes". So, be one of the good girls and guys, start decarbonising your business now.

Decarbonisation is challenging and requires accurate carbon data to ensure sustainable decision-making. We help companies in their decarbonisation journey. Get in touch with us.