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Blog
Honouring National Day for Truth and Reconciliation
Dan Carter
President, Decarbonisation
Since the , nations across the globe have embraced targeted carbon legislation in a united effort to incentivise decarbonisation road mapping across all industries.
However, despite this sharp increase in efforts being made to reduce emissions on a macro level; time after time companies fall short of making effective deep cuts to their carbon footprint. Ineffective emissions tracking is most likely the reason for this, with many mappings out decarbonisation strategies which see them running before they can walk. Ultimately, you cannot manage what you can’t measure, and with countless numbers of stakeholders involved throughout the industrial value chain, it can become easy to lose oversight of how much carbon is truly being emitted.
The pathway to successfully decarbonising is not linear and will vary from one company to the next, therefore taking early action will be key to implementing a sustainable strategy and not falling at the first hurdle.
How can a carbon market encourage decarbonisation?
The World Bank estimates that . Designed as aninstrument that captures the external costs of greenhouse gas (GHG) emissions—the costs of emissions that the public pays for—and ties them to their sources through a price, usually in the form of a price on the carbon dioxide (CO2) emitted.
Emissions do and will continue to increasingly impact the balance sheet with the growing development of carbon pricing, whether through emissions trading systems or carbon taxes. The objective here is to shift the burden onto emitting operators and developers. A carbon price also stimulates clean technology and market innovation, fuelling new, low-carbon drivers of economic growth.
Therefore, carbon markets, designed as systems for buying and selling carbon credits or permits, are expected to play a critical role in creating economic incentives for reducing emissions and promoting the adoption of low-carbon technologies. The global landscape of policy development supporting carbon reduction and storage technologies such as carbon capture utilisation and storage (CCUS) is as diverse as it is complex. Initiatives such as the Inflation Reduction Act (IRA) in the United States and the European Union Emissions Trading System (EUETS) are beginning to offer tax incentives and generate carbon credits that broadly incentivise decarbonisation investments. These policies are crucial as they set the stage for a more proactive approach to decarbonisation.
What do we mean by ‘tracking emissions’?
The Greenhouse Gas (GHG) Protocol provides the most widely recognised accounting standards for greenhouse gas emissions and categorises GHG emissions into three scopes. Scopes 1, 2 and 3 are the accounting standards most companies and governmental bodies use to measure direct and indirect carbon emissions. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from purchasing and using electricity, steam, heating and cooling. Scope 3 includes all other indirect emissions that occur in the upstream and downstream activities of an organisation. Accurately reporting these emissions has become a legal requirement in some countries such as the UK, where the largest companies must include data for Scopes 1 and 2 in their annual reports.
Scope 3 emissions are typically when most organisations lose track of their carbon impact, however, accurately tracking this data is critical for precisely measuring your carbon footprint. Despite the complexity of cutting Scope 3 emissions, more companies are promising to do so. Nearly 240 companies have signed up for the – an independent organization promoting climate action in the private sector. However, despite the enthusiasm of these companies to keep track of scope 3 emissions, this task is easier said than done. Ensuring that you have the correct mechanisms in place to collate this data is crucial, and once an accurate prediction of baseline emissions is in hand, it still doesn’t mean that mapping out a decarbonisation strategy will be an easy feat.
Could a single carbon accounting system be the answer?
Currently, the global carbon accounting mechanism sits as a patchwork of different standards and protocols, each stitched together with no cohesive design. Discovering how you can work these policies to your advantage and ultimately gain better oversight of your carbon footprint will require a proactive approach to decarbonisation.
In the EU, the CBAM legislation came into effect this year, covering the import of certain cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen products. Effectively setting a price on the GHG emitted from the production of these products, aligning it with EU GHG reduction goals, preventing ‘carbon leakage’ and levelling the playing field for EU and non-EU producers. Targeting direct and indirect emissions associated with the production of EU-imported goods, the legislation has been hailed by many as a shining example of how to pressure producers into taking immediate action to decarbonise. However, we must also produce a standardised form of measuring carbon intensity to ensure that these policies remain effective. Today, there is no single means or measure to account for carbon globally.
To remedy this, we can apply actual accounting principles. Much like a ledger item, you could transfer your “carbon item” from one company’s books to another as the carbon makes its way through the full value chain – from source to usage. This method would also enable industry to address and bring transparency to scope 3 emissions, arguably the most difficult to measure because it encompasses the broader supply chain of any organisation.
Where does 糖心Vlog fit in?
The journey to decarbonisation is complex and knowing where to start can be difficult. To simplify this complex process, 糖心Vlog created the Decarbonisation SCORE methodology which provides a roadmap to setting and delivering emissions reduction targets. This approach allows our team to assess where clients are in their journey and then devise an actionable and implementable plan to meet individual company objectives.
Across five stages, we work alongside clients to consider how they can effectively update their practices to implement sustainable carbon abatement strategies. Starting with substitutions, considering how these companies fuel their operations. Beyond this, we explore the option of capturing the CO2 produced through the organisation's operations. Carbon capture technologies are an often-overlooked way of controlling emissions. By employing CCS/CCUS models in production and manufacturing sites, companies can substantially reduce or eliminate harmful emissions from leaking into the atmosphere. We have seen greater adoption of this approach towards decarbonisation as the technology associated with carbon capture continues to mature.
The journey to decarbonisation is complex and knowing where to start can be difficult. It is important to apply a structured process to be able to map out how your goals will be achieved and ultimately realise them. This rings particularly true for those companies who aren’t currently tracking their emissions.
Our recently announced contract with Saudi Aramco exemplifies this, as we have completed the first phase of work needed to launch its Accelerated Carbon Capture and Sequestration (ACCS) project, expected to be the world’s largest CCS facility once completed. With Aramco’s ambition to further reduce carbon emissions from its upstream operations, this approach enables 糖心Vlog to ensure the sustainability of Aramco's core oil and gas operations, a core driver for the Saudi economy, while simultaneously introducing cutting-edge technologies. The first phase of the ACCS project intends to capture carbon emissions from Aramco gas plant facilities near Jubail, on the east coast of Saudi Arabia, as well as from third-party emitters.
Offsetting and reducing emissions can also be impactful routes to decarbonisation for many companies. We have already seen success through implementing Through utilising the natural wetlands surrounding a treatment facility, we uncovered a potential route for the developer to save 4000 tonnes of CO2. This low-cost approach to decarbonising can often be overlooked, but when used correctly can be key for bolstering a wide range of socio-environmental benefits.
Beyond implementing the SCORE methodology, we have worked alongside our clients who currently struggle to keep track of their emissions outputs to develop ENVision. This real-time emissions data tracking system provides governance and insight around emissions and carbon releases by streamlining and automating diverse data sets to provide a clear, auditable and accurate view of emissions from any asset, organisation or city. Through providing a clear process for manual data provision, or connected systems data collation, ENVision automates environmental reporting and, with Microsoft Azure, unlocks the value of data for an asset or portfolio of assets.
Conclusion
Much must still be done to regulate carbon emissions tracking on a global scale if we are to witness widespread successful decarbonisation.
While policy introduction is moving in the right direction, the lack of consistency across different countries and industries will stunt the effectiveness of this legislation. Through early engagement with carbon and technical advisors, organisations can understand how to feasibly introduce practical and impactful pathways to carbon reduction. While this immediate action is a key first step towards effectively decarbonising, failure to track these emissions means there is only so much that these solutions can achieve. Maintaining a united approach towards data tracking will therefore be key.
Emissions data tracking solutions such as ENVision will undoubtedly be a revolutionary approach in allowing companies to seamlessly track their real-time emissions. Accurate data is key. Assumptions will not drive certainty in our markets. Only certainty will drive the $6 trillion investment needed in the energy sector between now and 2030 to restrict global warming by 1.5 degrees.
