Achieving Zero Carbon
With growing concern for climate change and increasing consumer pressure, achieving zero carbon is becoming an important goal for businesses. But how and why should organisations start working towards zero carbon? Richard Sulley, ENGIE’s Senior Energy and Sustainability Manager, addressed this at today’s Energy Solutions Show.
The Financial Risks of Climate Change
In April 2019, the Network for Greening the Financial System (NGFS), a coalition of 34 central banks representing two thirds of the global systematically important banks and insurers, highlighted the large financial risk that climate change poses to businesses.
In its first climate report, the NGFS emphasised three climate-related financial risks that companies, banks and governments need to fight against:
Physical - The immediate problems caused by increasingly frequent climate and weather-related events - such as severe droughts or cyclones that affect crops.
Transition – Such as a business moving away from carbon-intensive industries in a "sudden or disorderly" way and finding that their business models and asset valuations take a hit.
Liability - When people or businesses claim compensation for losses suffered from either the physical or transition risks, which can have a huge impact on insurers.
They state that "If some companies and industries fail to adjust to this new world, they will fail to exist."
Leading the Way to a Low Carbon Future
To address climate change, the Government announced its Clean Growth Strategy (published in 2017 and amended April 2018). The strategy focuses on ‘leading the way to a low carbon future’. It specifies that clean growth means growing the country’s income while cutting emissions and ensuring affordable energy for businesses. The strategy promises that it will “increase our productivity, create good jobs, boost earning power for people right across the country, and help protect the climate and environment upon which we and future generations depend.” But how is this possible?
Zero Carbon in a Business Context
The Government’s strategy aims to reduce 25% of UK gas emissions by improving business and industry efficiency. Their plan includes:
- Supporting businesses to improve their energy productivity by at least 20 per cent by 2030.
- Establishing an industrial energy efficiency scheme to help large companies install measures to cut their energy use and bills.
- Publishing joint industrial decarbonisation and energy efficiency action plans with seven of the most energy intensive industrial sectors.
- Demonstrating international leadership in carbon capture usage and storage (CCUS) by collaboration with partners.
- Phasing out the installation of high carbon forms of fossil fuel heating in new and existing businesses off the gas grid during the 2020s.
- Supporting the recycling of heat produced in industrial processes, to reduce business energy bills and benefit local communities.
It’s important to stay up to date with the development of these processes and any assistance available from the government to support your business in reducing its carbon generation.
Advice from the NGFS
The NGFS suggest that companies "integrate the monitoring of climate-related financial risks into day-to-day supervisory work, financial stability monitoring and board risk management". In simpler terms - businesses need to make climate change planning an everyday thing.
Most importantly, they call for more collaboration, with different companies and bodies sharing information about how they are dealing with these climate risks. They write "An important element to achieving effective consideration of climate risks across the financial system is to support internal and external collaboration".
The NGFS has also called for regulators to come up with a classification system that shows exactly "which economic activities contribute to the transition to a green and low-carbon economy".
Where to Start
The first step towards zero carbon is identifying where your emissions are coming from.
A company’s greenhouse gas emissions can be classified into three scopes:
- Scope one are direct emissions. They can come from fuel combustion, owned vehicle fleet and fugitive emissions
- Scope two are energy indirect emissions. They originate from electricity, heat, steam and cooling purchased for own use.
- Scope three are any other indirect emissions, such as those from purchased goods and vehicles, product use, waste disposal, transportation, distribution and employee business travel.
The newly introduced Streamlined Energy & Carbon Reporting (SECR) legislation requires all large companies to report on scope one and two emissions, so these emissions will be available to view in your next annual report.
How to Reduce your Carbon Emissions
Alternative sources of energy can lead to large CO2 savings. Biomass boilers, biogas from organic waste, biogas certificates, CHP biomass or biogas and CHP from organic waste all produce less carbon than traditional sources. While power purchase agreements and renewable energy certificates ensure that you know where your energy is coming from, allowing you to choose low – Zero Carbon options.
Improving your energy efficiency can have a dramatic impact on the amount of energy you consume and therefore the amount of carbon generated through energy consumption. While solar PV on site, thermal solar and CHP from natural gas will all allow a business to make significant CO2 savings.
Finally, there’s carbon compensation and conversion for those remaining emissions that aren’t practical to remove.
Zero Carbon as a Service
A major barrier for businesses in becoming zero carbon is the inability to direct resources away from core business processes to focus on creating a strategic plan. This is where zero carbon “as a service” has considerable potential.
This refers to integrated zero carbon transition solutions that are financed by a third party. They’re cost effective and support a businesses’ sustainability goals. As-a-service solutions combine strategy, design, engineering, energy efficient assets, digital platforms, operations management, financing syndication and outcome assurance.
The approach of a zero-carbon transition “as a service” is based on:
- Understanding customers global needs
- An overhaul of energy use for energy & CO2 savings helping customers to achieve massive cuts in their energy use and CO2 emissions,
- An upgrade or replacement of infrastructure equipment to gain efficiency,
- Supplies with greener energy, be it on-site or off-site,
- Leveraging big data to support continuous improvement,
- Operations of clients’ installations,
- Financing to build at a cost-effective price.
ENGIE’s ambition is to be a world leader in the zero-carbon transition, proposing a zero-carbon transition as a service that takes care of everything including the investments needed on site. Find out more.