The Decarbonization Formula
Decarbonization has become this century’s buzz word but what does it mean to decarbonize? What are the elements in a decarbonization formula?
The world is not decarbonizing fast enough. Based on the latest climate science and UN Sustainable Development Goals Report 2022, most countries are nowhere near their agreed-upon targets under the Paris Agreement that would allow limiting global warming to below 2 degrees Celsius above pre-industrial levels. In fact, even with many positive climate actions gaining momentum, the world remains on track for 2.5 degrees Celsius of warming by the end of the century.
With so much pressure being exerted on the public and private sectors to reduce their carbon footprints, many different approaches to decarbonization are being promoted by the sustainability industry. Most of these approaches will include a combination of factors such as energy efficiency, renewable energy sources and carbon capture and storage. However, the varied approaches do not offer companies with an easy-to-use, easy-to-implement and well-rounded formula that can get them the starting point needed to effectively measure their carbon emissions footprint.
Thus, in attempting to build an all-encompassing decarbonization formula applicable to most companies one will have to take into consideration various factors such as their industry, their energy consumption patterns, and emissions sources.
Once those factors are taken into account, one possible comprehensive decarbonization formula would look like this:
C = (E × CF × (1 – RE) + T × TF + M × MF) × (1 – D) / (1 – OR)
Where:
C is the amount of carbon emissions that need to be reduced.
E is the total energy consumption.
CF is the carbon factor, or the amount of carbon emissions per unit of energy consumed.
RE is the renewable energy factor, or the percentage of energy consumed that comes from renewable sources.
T is the total transportation emissions.
TF is the transportation factor, or the amount of carbon emissions per unit of transportation activity.
M is the total manufacturing emissions.
MF is the manufacturing factor, or the amount of carbon emissions per unit of manufacturing activity.
D is the desired level of decarbonization, expressed as a decimal (e.g. 0.5 for 50% decarbonization).
OR is the offset rate, or the percentage of carbon emissions that can be offset through the purchase of carbon credits or other means.
This formula takes into account the main sources of carbon emissions for a typical company: energy consumption, transportation, and manufacturing. By including specific factors for each source, it allows for a more accurate calculation of emissions and potential reductions. The formula also incorporates the renewable energy factor and the offset rate to account for the company’s use of renewable energy and its ability to offset emissions through carbon credits or other methods.
However, it’s important to note that this formula is just one possible approach and may not be the most comprehensive or appropriate for all companies. That is because, depending on their industry specifications, each company might have to report on additional factors. For example, based on the Global Reporting Initiative (GRI) industry standards, a Consumer Goods company will also need to take into account their use and management of water (GRI 303) or report at a SKU (product) level the use of all the materials employed in their production of goods (GRI 305), including how they manage their waste.
Finally, the best decarbonization formula for a company will depend on its unique circumstances and goals, and may require a more customized approach that takes into account additional factors such as supply chain emissions – this where where understanding Scope 3 emissions come into play – carbon offsets, and other decarbonization technologies.
Ed. If you are interested in exploring carbon measurement offerings, please contact us at editor@indvstrvs.org.
