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Sept. 14, 2016

Green Supply Chain News: Can CO2 Emissions Goals be "Science-Based?"


Relatively New Organization Seeks to Link Company Reduction Levels to Global UN CO2 Targets

By The Green Supply Chain Editorial Staff

The concept of "scienced-based" carbon emissions reduction targets has been getting some traction lately, largely because there is a new organization pushing the concept.

"Science-based Targets" (SBT) is an organization formed by the CDP (Carbon Disclosure Project), the UN Global Compact, WRI (World Resources Institute) and WWF (World Wildlife Fund). It says its mission is to help companies determine how much they must cut emissions to prevent the worst impacts of climate change.

The Green Supply Chain Says:
So there it is: yet another way to approach the Green supply chain and CO2 emissions.

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The thrust of the effort is the SBT's view that despite the UN Climate Summit in Paris last year that led to a near global agreement by countries to reduce their carbon emissions, details and enforcement are weak, and the current path is not likely to deliver the target of limiting rising temperatures to no more than 2 degrees Celsius. Instead, SBT sites estimates that temperatures based on the current CO2 trajectory are more likely to increase 3.7 to 4.8 ºC range by the end of this century - which if accurate many say would bring terrible damage to the environment and people.

So with governments not making much progress, it is up to private companies to take action, SBT says. The "science-based" term then comes from UN calculations about how much CO2 emissions must fall to meet the levels some believe will keep temperatures from rising above that 2 degrees C level, and then transposing that into how much emissions need to be reduced in various industry sectors and then by companies in those sectors to hit those lower CO2 targets.

SBT says there are actually a number of different methodologies that have been developed that can be used for this so-called science-based approach. The SBT has developed its own, which it calls the Sectoral Decarbonization Approach (SDA) method, which we will describe in more detail below.

Other science-based methods include, for example, something called the 3% Solution, which identifies how US-based corporations can set GHG reduction targets that lead to a collective cost-savings of $780 Billion USD between 2010 and 2020, while aligning targets with UN's 2 degree Celsius pathway.

Developed by WWF with CDP, McKinsey & Company, and Point380, these savings are achieved by boosting energy-efficiency measures and transitioning to low-carbon energy sources. The US corporate sector would cut carbon emissions by 3% annually on average, though the methodology caters that overall target to each company using a simple tool called the The Carbon Target Profit Calculator.

The first science-based approach was developed in 2006 by the Center for Sustainable Organization's (CSO) with the support of ice cream company Ben & Jerry's. It is called the "context-based carbon metric."

CSO's carbon metric works by comparing the GHG emissions of organizations to specific targets taken from science-based climate change mitigation/stabilization scenarios. The metric also takes organization-specific circumstances into account (e.g., changes in size over time) and thereby makes it possible to set targets that are both science- and (more broadly) context-based.

Other methods include the Carbon Stabilization Intensity (CSI) target, Autodesk's innovative C-FACT (Corporate Finance Approach to Climate-Stabilizing Targets) methodology, and GEVA (Greenhouse Gas Emissions Per Unit Of Value Added).

Sectoral Decarbonization Approach

SBT's say its Sectoral Decarbonization Approach "is differentiated from other existing methods by virtue of its subsector-level approach and global least=cost mitigation perspective." The SDA is intended to help companies in homogenous, energy intensive sectors align their emissions reduction targets with a global 2ºC pathway. (There is also work underway for defining a 1.5ºC pathway.)

The data that organizations need to calculate their emission reduction targets using the SDA method are:

Activities and sectors: Identify the different activities of the company. Some companies may perform several activities that fall under different sector categories. Include in the target-setting process the most carbon-intensive activities and sectors of the company.

Activity levels: Determine the activity in the base year for each sector where the company operates.
Companies need to identify the specific activity indicator amounts for each sector as proposed in the method.
Commitment period: Define the most appropriate commitment period, taking into consideration the organization's circumstances and the need to establish clear long-term targets aligned with science requirements. The earliest base year that can be selected by the company in the SDA is 2010 and the latest target year is 2050. By defining a base year and a target year, you will have defined the commitment period to which you are committed to follow an emission reduction pathway for your company.

Annual activity growth rate:
Forecast the annual activity levels for the commitment period, for example by calculating the growth rate based on historical data of the company or by using future growth rates as estimated by the company.

Electricity use: Determine electricity use in the base year for each sector selected, expressed in kilowatt-hours and forecast future electricity consumption for the commitment period. Future electricity use is used to disaggregate scope 2 emissions targets.

GHG emissions: Determine corporate base-year scope 1 and scope 2 carbon dioxide emissions and corporate emissions disaggregated by each sector in which the company operates. The SDA emissions pathways are scaled to incorporate the effect of non-CO2 emissions. Emissions off sets are not covered by the SDA.

The SBT has developed tools to then help companies move through this data collection process. However, an on-line tool that had been developed was pulled back from revision, but the SBT web site says it is scheduled to be available again sometime in October.

Company Participation is Increasing

SBT says so far 179 companies so far are participating at one of two levels:

20 firms have joined the "call to action," in which they commit to setting targets for emissions reductions based on the SDA methodology, and those targets are approved by the SBT reviewers. Among those 20 companies are Coca-Cola Enterprises, Dell, General Mills, Kellogg's, Procter & Gamble, Pfizer and Sony.

Another 159 firms are in a category called "We Mean Business" commitments, in which pledges are made but the full approval process has not yet been completed. Both lists are full of firms from across the globe.

In June, SBT announced that it was gaining new members to the program at a rate of about two per week.

So there it is: yet another way to approach the Green supply chain and CO2 emissions. The term "science-based" obviously was chosen to connote goodness and accuracy, though what this is really all about aligning UN climate models in terms of needed CO2 emission reductions with a company's own targets.

What is your take "science-based" CO2 emission approaches, Let us know your thoughts at the Feedback button below.

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