Decarbonization: meanings, technology and goals

Decarbonization is a megatrend around the world for limiting global warming. Discover why decarbonization goals and strategies matter for businesses.

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April 22, 2022

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Since the 2015 Paris Agreement, decarbonization has become a growing agenda item for countries, regions, and businesses around the world. Countries are now on a path to decoupling GDP from greenhouse gas emissions (GHGs) and making significant gains in the process.

Many question whether these actions are taking place at the rate needed for limiting global warming to a safe limit. Read the evidence and decide for yourself. Hopefully, this inspires you to take action in line with climate science.  

 

🤔 What is decarbonization?

“Decarbonization” is the most important strategy to limit the harm from climate change. Fortunately, decarbonization comes with major benefits beyond environmental protection related to risk management, health, value creation, and innovation opportunities.  

Decarbonization: definition 🔎

Decarbonization is the process to reduce human-caused carbon dioxide (CO2) emissions to limit the unprecedented, life-threatening impacts of global warming. Decarbonization requires a coordinated global shift to alternative energy sources other than fossil fuels (oil, gas, and coal). 

At present, energy use is the main source of CO2 emissions–contributing 83% of emissions globally (McKinsey). Over 34 billion metric tons of CO2 emissions are emitted every year into the atmosphere. 

To date, 197 of the world’s nations have signed the 2015 Paris Agreement to limit atmospheric warming to less than 2 °C compared to the pre-industrial average by the year 2100. In 2018, the UN IPCC revised the target to 1.5°C, warning that a 2°C scenario would not ensure our safety. 

Limiting temperature rise to 1.5°C requires total global emissions reductions of 45% by 2030 and 100% by 2050. This requires an annual cut around the globe of 7.6% each year. 

The UN Environment Programme (UNEP) Emissions Gap Report of 2021 shows that current emissions pledges and policies–if achieved–would only limit our total warming to 2.7°C by the end of the century.

How are businesses doing? Only 45% of FTSE companies, which are listed for their ESG performance, have pledged to achieve net zero by 2050. The majority of these (84%) don’t have a clear strategy in place to achieve their target. 

While shifting economic infrastructure and technology away from fossil fuels will not be easy, it is not impossible. Building the collective social and political momentum to change our systems has proved more challenging. 

How does it work? 👀

Reaching deep decarbonization requires full participation and collaboration among businesses, consumers, and political leaders. The first step any entity can take is to identify the main sources of CO2 emissions for their activities.

The main sources of greenhouse gases (GHGs) in the US are currently: 

  • Transportation (27%)
  • Electricity production (25%)
  • Industry (24%)
  • Commercial and residential heating and waste management (13%)
  • Agriculture (11%)

Taking steps to decarbonize requires a coordinated technological and social shift away from technology that burns fossil fuels. Each sector needs to undergo decarbonization to support the other sectors, as these systems are highly interdependent. 

💸 Why do we have to decarbonize our economy? 

The risks of current warming scenarios threaten millions of lives, billions of homes, and trillions of dollars in global economic value. It’s simply not ethical, logical, or safe to assume we can continue burning fossil fuels without rapid decarbonization. 

Let’s take a closer look at these figures. An estimated $54 trillion in costs are associated with current warming projections for the existing pledges countries have made according to the consulting firm, Moody’s. Failure to meet those pledges would increase these costs to $69 trillion.  

Nearly half the world’s population (40%) is vulnerable to the risks of climate change, according to the 2022 IPCC report on Adaptation. This means billions of people will likely experience 5 times more floods, storms, drought, and heatwaves without rapid decarbonization. 

These impacts are already harming people around the world, especially in poorer regions. In the past decade, from 2010 to 2020, 15 times more people in Africa, South Asia, and Central and South America died from floods, droughts, and storms than in other parts of the world.

In the coming decades, the death toll of these impacts will be hard to ignore. The World Health Organization estimates 250,000 excess deaths per year from 2030 to 2050, unless we decarbonize the economy. These deaths come from impacts such as heat stress, malnutrition, and heat stress. 

Sea level rise alone could displace 10 million people for every 10 centimeters the coastline rises. The difference between 1.5°C to 2°C brings an estimated 48 to 56 centimeters of sea level rise. 

Heavy rainfall events are already 30% more likely to occur every ten years than pre-industrial times. At 1.5°C this rises to a 50% higher chance of occurrence, and at 2°C, this rises 70%. 

These figures illustrate how every half a degree of temperature rise brings massive change. All of these impacts lead to social and environmental risks including water scarcity, poverty, rapid species extinction, supply chain disruptions, and systemic economic risks. 

The latest 2022 IPCC report on mitigation tells us the cost of inaction is far higher than the cost of action. 

The good news? There are known, viable solutions to these impacts. We just need to take the initiative to unlock their massive benefits. 

🏆 What do we need to succeed? 

Decarbonization requires a coordinated technological and infrastructural shift unlike any we’ve ever seen. Similar to the industrial revolution, all sectors of society will be affected. Building the momentum to make these shifts requires collaboration and participation from everyone and significant capital investments. 

Here are some of the key sectors to decarbonize

Industry – Industrial activities such as mining, oil extraction and production, chemicals, cement, and steel production require massive amounts of heat to smelt metals, mix compounds, and extract resources. 

Industrial heat from fossil fuel combustion makes up 20% of the global energy consumption (IEA, 2017). Industrial processes also account for 30% of global CO2, 33% of methane, and 8% of N2O emissions. 

Coal is one of the main sources of energy used in industrial processes, and it would have to drop from 40% of our global energy source to less than 7% by 2050 to achieve global CO2 reduction targets. 

Most industrial heating processes could use alternatives to coal-fired heating through fuel substitution with biomass, green hydrogen, or natural gas or electrification technologies. These include cement, steel, ammonia, and ethylene production. 

Industrial processes are some of the hardest emissions to abate, so carbon capture and storage technologies could sink or remove hard to reduce emissions. 

Electricity and heat production – Most power for electricity used in appliances, lighting, and digital technologies and heat production comes from fossil fuel energy sources (oil, natural gas, and coal). This sector accounts for 30% of CO2 and 3% of N20 emissions. 

However, recent reports reveal that a record of 10% of global electricity was supplied by wind and solar energy sources in 2021. That’s double the amount from 2015 (4.6%). A total of 38% of electricity was produced by non-fossil fuel sources that year. 

Electrification paired with energy efficiency is considered a viable solution for reducing the footprint of lighting, appliances, and heating. 

For instance, replacing natural gas furnaces with air source heat pumps (ASHPs) would reduce CO2 emissions from heating by roughly %. If ASHPs can use renewable energy as their electricity source, this reduces the impact even more. 

However, the upfront cost of this technology may not be viable in low-income countries, where replacing coal with biochar would be more cost-effective.

Transportation  – While some of our main forms of transportation would require alternative fuels to reduce emissions (air and shipping), ground transportation solutions are available today. In total, ​​19% of CO2 and 2 percent of N20 emissions comes from transportation. 

Electric vehicles, hydrogen fuel cell vehicles, and biofuels could help transition the transportation sector to low emissions. In addition, efficiency optimization through shorter trips and fewer commutes could draw down the emissions from this sector. 

Mutual benefits can also be shared by adopting EV technologies. With the adoption of more variable forms of energy generation such as wind and solar, battery storage technologies will be necessary to make energy available at any given time. 

EVs carry batteries with them in their motors and their chargers also provide this support. In a well-planned system, the battery resources of EVs could help store and distribute intermittent power sources. 

On the other hand, unless EVs will need to charge their batteries with renewable energy sources in order to produce the broader CO2 emissions reductions they’re designed for. 

Agriculture – While CO2 emissions from agriculture are relatively low, this sector produces a high rate of methane (38%) and N2O (79%) globally. Agriculture includes energy use for farming, livestock production, and fishing. 

Similar to transportation and industry, the engines for large machinery used in agriculture will need to switch to alternative fuels. 

Additional benefits from regenerative agriculture and restoring fields could provide CO2 sinks from this vast resource. Roughly three-quarters of the world’s landmass is devoted to agriculture. 

Forestry and land use change – Currently a significant amount of CO2 emissions (14%) along with some methane (5%) and N20 (5%) emissions come from land use change. This can result from deforestation for agriculture or development for urbanization. 

Brazil and Indonesia have some of the highest CO2 emissions resulting from land use change, as they hold some of the richest carbon storing rainforests in the world. Preserving these critical resources is vital to avoiding tipping points where carbon sinks transform into carbon producing regions. 

Waste management – Another large source of methane (23%) and N20 (3%) emissions are waste management practices. Whether it’s from rotting food waste or the incineration of solid waste, the waste management industry contributes to global warming like many other sectors. 

While most of the burden of waste management comes from the act of disposing of goods, the problem starts much earlier in a product’s life cycle. This is why designing products and waste systems to support reuse, recyclability, or long-term use is vital to reducing consumption- and production-based emissions. 

✋ 5 tips to decarbonize your company 

These five tips will help your business embark on the path to net zero. 

Measure the carbon footprint of your company 📏

Your company’s impact matters. Without measuring the level of CO2 emissions you have today, you won’t know where to reduce emissions tomorrow. 

CO2 emissions assessments can be difficult unless you have the tools and resources to make accurate estimations. Greenly specializes in CO2 measurement and we partner with businesses of all sizes to complete a carbon footprint assessment. 

Define clear objectives and indicators to follow 🎯

The science behind climate scenarios has been rigorously validated through years of climate modeling experiments. Yet, exact reduction pathways for net zero can vary depending on the operations of an organization. 

Each organization will have its own unique objectives and key performance indicators to reduce emissions over time. Developing these targets is the next step after measurement for the process of decarbonization. 

Take decarbonization as a business opportunity 😎

Decarbonization is a mega-trend that will continue to grow in significance over the course of the century. The key point companies should realize is that the upfront investments will produce significant outcomes over time. 

We have entered a critical decade where intense decarbonization efforts today will support economic stability and sustainable business conditions throughout the remainder of the century. 

Not only will your efforts play a critical role in reducing climate risks, they have the potential to attract ESG investment, they will offer a competitive advantage, you’ll access new markets, and key stakeholders will likely give a positive response to your initiative.  

Raise the awareness of your employees 👥

Employee awareness of the role decarbonization plays in your business strategy is important for gaining buy-in and clarity among your team. 

Alignment for a decarbonization mission will produce better results, as this will help you access stronger partnerships, maintain momentum towards your goals, and build a culture of change management. 

Organizational change can lead to uncertainty and confusion when not managed well, so be sure to include your employees in the process through strong communication and incentives for participation.  

Engage your business partners in your transition 🤝

When addressing CO2 emissions, most businesses start with Scope 1 and Scope 2 emissions, which come from the direct operations and their energy requirements. 

However, businesses have influence well beyond their office walls. Each business has a network of suppliers, professional services, logistics, and other key partners which businesses can engage to further reduce their impact.

Scope 3 emissions come from this value chain, which extends upstream to suppliers and downstream to consumers. For most businesses, value chain emissions are far higher than Scope 1 and Scope 2 impacts. 

While they are harder to manage and quantify, Scope 3 emissions are a vital piece of the decarbonization puzzle. Engaging business partners, beginning with your suppliers, to reduce their emissions is essential to effectively decarbonize the economy. 

If this seems daunting, consider it part of your process to sign contractual agreements. Companies that prioritize decarbonization will send a strong signal that climate risk reduction is a non-negotiable part of future business. 

🌱 What about Greenly?

Greenly supports business decarbonization as an environmental services company which helps measure, track, and manage carbon emissions. Book a demo to learn more. 

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by
Arnaud Delubac

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