It’s time for countries, industries and corporations to put their money where their decarbonisation goals are
As nations gather in December in Lima, Peru, for the United Nations Framework on Climate Change (UNFCC), 17 developed countries are being assessed on their progress in meeting economy-wide emissions-reduction benchmarks by 2020.
Countries being multilaterally assessed received one or more questions regarding their quantified economy-wide emission reduction targets. Submitted by 1 October, the questions related to at least one topic – providing an outline of all emissions and removals related to the country’s quantified economy-wide emission reduction target; a description of assumptions, conditions and methodologies related to meeting the emission reduction target and an explanation of the progress it made toward meeting its goal.
Perhaps in preparation for the meeting, some countries and corporations have been making major decisions about emissions reductions over the past month. Following a November visit by US President Barack Obama to China, the US announced it is planning for its 2025 carbon emissions to be at least 26% lower than they were in 2005. China said it would increase its use of renewables and said for the first time that it plans to begin reducing total emissions by 2030.
According to the WWF, the largest 500 global companies generate more than 2.5 gigatonnes of greenhouse gas emissions annually, more than any single country except the US and China. More than 75% of these emissions are generated by just 38 of the most carbon-intensive companies in the Fortune 500 list.
Energy switch
A growing number of companies, though, are implementing programmes based on the levels scientists say are critical. Among the industries showing progress in decarbonisation is electrical generation, in part because some nations are transitioning from coal to gas, according to David G Victor, a professor of international relations and director of the Laboratory on International Law and Regulation at the University of California at San Diego. Victor studies highly regulated industries, such as power generation, and how regulation affects the operation of major energy markets.
“In Europe, power companies that are decarbonising are primarily using renewables,” Victor says. China is slowly turning away from burning coal and using more renewable forms of energy, nuclear power and gas, he says. Japan, though, is back to relying more on coal, because of the meltdown at the Fukushima nuclear power plant following the tsunami of March 2011, says Victor.
CDP, the British non-profit group formerly known as the Carbon Disclosure Project, ranks companies by their success in decarbonising. In its Climate Performance Leadership Index 2014, CDP says few companies in the energy sector are able to claim “leadership”. TransCanada is one of three leaders in the energy sector that have set absolute targets for emissions reductions and has the most ambitious ones, according to CDP.
But while those efforts have been recognised, the company also is a major supporter of the Keystone XL pipeline, a pipeline system to transfer oil from western Canada to parts of the west and mid-west US. While the first three phases of the project have been completed, the final phase has been delayed by opposition from environmental groups and members of the US Congress, who have raised concerns about the impact of any spills and greenhouse gas emissions from extraction of oil sands.
Major US power generator NRG Energy announced in November new long-term sustainability targets, which include dropping carbon-dioxide emissions from 2014 levels by 50% by 2030 and 90% by 2050. These carbon reduction goals are estimated to avoid about 3bn tonnes of CO2 emissions by 2050, according to the company. The announcement was made on the same day NRG executives broke ground for a new “ultra green” corporate headquarters, scheduled for completion in 2016. To meet the goals, NRG plans to continue developing and operating renewable generation, cost-effective carbon capture and sequestration (CCS), energy storage and low carbon distributed energy resources.
NRG currently ranks among the power generation sector’s biggest producers of greenhouse gases, according to Greenbiz. The New Jersey-based company owns and operates one of the largest groups of fossil fuel power plants in the US. A 2014 report from the Natural Resources Defense Council ranked NRG as the seventh-largest coal generation company in the US and the fourth-largest CO2 emitter in the US electric power sector.
Another energy-related area gaining attention is forest management, according to Victor. Oil produced from palm tree seeds has become very popular in Europe for making synthetic diesel fuel, but to grow the trees, farmers in Indonesia have been burning peat to clear land. Now the Indonesian government and growers are working to prevent deforestation, Victor says.
Forward thinkers
In other industries, Konica Minolta, ranks highly in the information technology sector for having long-term carbon reduction targets to 2050. “The company’s goal is to carry out initiatives in line with the Green Factory Certification System so that all business units achieve Level 2 in fiscal 2015,” says Konica Minolta’s website. In the 2013 fiscal year, company efforts produced a reduction of CO2 emissions of about 57,000 tonnes and a reduction in the volume of external emissions of about 10,000 tonnes from the base year of fiscal 2005, the company says.
Over the next 10 years, Konica Minolta also is concentrating on developing and commercialising energy-saving lighting that outperforms existing lighting. Currently it is focusing on Organic Light Emitting Diode (OLED) lighting and in 2013 was able to increase efficiency levels. It also has leveraged its proprietary technical capabilities to create ultra-thin and flexible OLED lighting panels. The bendable panels will have multiple uses in construction projects, according to the company website. OLEDs have a low environmental impact because they don’t contain mercury. Konica Minolta has invested about ¥10bn (£54m) to build the world’s first mass production plant for the flexible OLED lighting panels, which has the capacity to turn out about 1m panels a month.
In working with governments and companies to make their operations more sustainable, CDP has identified 187 companies worldwide as carbon performance leaders (CPLs), based on their goals and degree of measurable progress. The giant bottling company Coca-Cola HBC, for example, a CPL and member of WWF’s Climate Savers Program, has saved $20m and reduced its emissions by 30,000 tonnes through product design, without decreasing profits.
In the area of telecommunications, BT Group and Royal KPN have achieved large reductions in Scope 2 emissions over the past three years, according to CDP’s report.
“In June 2013 BT Group launched our Net Good programme with a straightforward vision: to help our customers reduce emissions by at least three times the end-to-end carbon impact of our business,” the company says in its statement for the CDP CPL Index. “We’re proud of our achievements so far, which include developing and sharing our emission measurement methodology, identifying 15 ways in which our portfolio helps our customers avoid carbon emissions and reducing our operational carbon emissions by over 25%.” BT says 78% of its employees are involved in energy saving initiatives.
Keeping up with science
But even as pressure mounts for nations and businesses to set realistic carbon reduction goals, the level of emissions has been rising over the past year, says Alberto Carrillo Pineda, head of climate business engagement at the Global Climate & Energy Initiative, WWF International. Based on scientific data, emissions should be decreasing by 10-18% per decade to prevent further affects on the climate, he says.
“While more than 80% of large companies have emission reduction plans of some sort, they do not seem ambitious enough for most companies,” Pineda says. “The targets are not in line with climate science.” Pineda explains that in the past companies often decided to take modest steps to reduce emissions – without checking to see if they actually made a measurable impact.
In contrast to Victor’s view on the decline in coal usage, a May report from the International Energy Agency said that coal use has been increasing. Because of that, the cost of reducing carbon emissions from power generation enough to bring global warming down to safe levels is rising, since the expanded use of renewable resources is not keeping pace with the increased use of coal. Spending of about $44tn through 2050 is needed to decarbonise the energy sector, according to the agency, up 22% from the figure it settled on two years ago. That level of spending would ensure the average temperature rise since the industrial revolution is kept to the 2C target agreed upon by world leaders.
The WWF has launched a project to help companies set targets that are connected to the reduction levels scientists have identified. “Right now, we’re trying to create awareness about this level of ambition,” Pineda says. A lot of companies will be revising their emissions targets next year, because of the international negotiations and the fact that, for many companies, their targets will be expiring in 2015. “Next year we’ll have a report analyzing company performance against climate science,” says Pineda. Companies that are taking emission reduction more seriously are changing their energy supplies, altering the way products are designed and transforming business models, he adds.
3% Solution
A WWF and CDP initiative developed for U.S. companies called ‘The 3% Solution Driving Profits through Carbon Reduction’ is designed to show CEOs that reducing carbon emissions is not just cost effective but profitable, generating savings of up to US $190 billion in 2020 for the US corporate sector, excluding utilities. “Between 2010 and 2020, that amount grows up to $780 billion in potential savings,” according to the 3% Solution site.
The campaign calls for the US corporate sector to cut carbon emissions by 3% annually to achieve the 2020 carbon reductions scientists say are needed. By improving energy efficiency through behavioral or management changes, technology improvements and deployment of low-carbon energy, such as rooftop solar power, companies can achieve these cost savings, maintains the 3% Solution.
“We’re trying to show where the level of ambition needs to be and ways for companies to adopt that level of sustainability,” Carrillo said. “What resonates well with companies is talking about numbers.” Looking ahead, companies will be more focused on setting their new reduction goals for the 2015 conference in Paris than they are on defending themselves in Lima, according to Victor of the University of California at San Diego.
“I think the governments are going to go [to Lima], talk and go home,” Victor said. “Peru is a way station for Paris. There is a lot more attention on Paris.” At the Paris conference in 2015, more countries will be setting goals for carbon reduction, he predicts. “You will see a bunch of firms and industries making pledges.”
Oil and gas companies are going to be under continued pressure to address issues such as venting and flaring, Victor predicts, and the use of carbon capture and storage for energy, is going to expand. “I think there is a better than even chance we will see pivotal statements around this technology,” he adds. Efforts to protect forests will be ongoing he adds. “Industry by industry, folks are going to be chipping away at the problem.”
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