Mind the Science Science-based target setting methodology. 22/05/2014 Giel Linthorst, Jeroen de Beer,

Transcription

1 Mind the Science Science-based target setting methodology 22/05/2014 Giel Linthorst, Jeroen de Beer,

2 GHG emissions accelerate despite reduction efforts. Most emission growth result from fossil fuel combustion and industrial processes Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014

3 Companies are responsible for large share of the global emissions Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014

4 Without more mitigation, global mean surface temperature might increase by 3.7 to 4.8 C over the 21 st century Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014 To prevent the most severe impacts of climate change, parties to the United Nations Framework Convention on Climate Change (UNFCCC) agreed in 2010 to commit to a maximum temperature rise of 2 C above pre-industrial levels. Limiting global temperature rise to 2 C corresponds according to the scientific community with a carbon budget of about 1,000 Gtonnes CO 2 after 2010.

5 Several 2 o C target setting methodologies exist and are used as starting point

6 Target setting practices linked to policies and global initiatives

7 Principles for developing the Mind the Science methodology The methodology should be based on the best of science The methodology should align with existing methodologies and practices of target setting by companies, i.e. using physical indicators for homogenous sectors and monetary indicators ($ value added) for heterogeneous sectors The methodology should distinguish between sectors and set absolute GHG emissions targets for scope 1 and 2 and if possible also scope 3. The methodology should be based on public data The methodology should allow for flexibility in achieving GHG emissions reductions The methodology should be flexible to set GHG emissions targets for each year up to 2050

8 Development of Mind the Science 2 o C 450 ppm CO 2 eq 20 GtCO 2 eq/yr in 2050 Emissions per sector in 2050 Carbon intensities in 2050 Activity per sector in 2050 Sectoral 2 o C scenario Targets for companies

9 Scope of Mind the Science methodology 49 GtCO 2 eq

10 GHG emissions (GtCO 2 eq) 2 o C decarbonisation pathway -64% -27% -20% -97%

11 Decision tree result in three methods for target setting Is a science-based sectoral 2 C scenario (including sector data) up to 2050 available? Yes No Is the sector homogeneous? Yes No Use a physical carbon intensity (CI) indicator Use a monetary carbon intensity (CI) indicator Use a monetary carbon intensity (CI) indicator Method I: Physical Companies Scope 1 CI and Scope 2 CI converges to 2050 sector CI based on a 2 C scenario Method II: Added value Companies Scope 1 CI and Scope 2 CI is based on GHG reduction of sectoral 2 C scenario Method III: Added value Companies Scope 1 CI and Scope 2 CI is based on GHG reduction in line with a 2 C pathway Applicable to 8 sectors: Power, Cement, Iron & Steel, Aluminium, Pulp & paper, Aviation, Automotive use, Commercial buildings Applicable to 1 sector: Chemical & Petrochemicals Applicable to all other sectors included in Mind the Science methodology

12 Method I. Companies carbon intensity (CI, physical) converges to 2050 sector carbon intensity based on a sectoral 2 C scenarios For scope 1, the used scenarios provide both GHG emissions and production data For scope 2, the used scenarios provide future electricity use per sector. Divided by the future production lead to the electricity intensity (in kwh/ tonne of product). Multiplying by the future carbon intensity of electricity results in the scope 2 pathways per sector.

13 Method I. Sector carbon intensity (CI, physical) 2010 and 2050 based on a sectoral 2 C scenarios Method I Intensity Absolute reduction 2050 Sector Scope >2050 Power generation 553->11 gco 2 /kwh Cement 0.7->0.4 tco 2 /t cement Scope >2050 Electricity intensity Scope 1 Scope 2 N/A -97% N/A 0.1->0.0 tco 2 /t cement -7% -19% -97% Iron and steel 1.8->0.7 tco 2 /t steel 0.4->0.0 tco 2 /t steel +4% -29% -96% Pulp and paper 0.6->0.2 tco 2 /t paper 0.7->0.0 tco 2 /t paper -38% -33% -97%

14 Method I. Sector carbon intensity (CI, physical) 2010 and 2050 based on a sectoral 2 C scenarios Method I Intensity Absolute reduction 2050 Sector Scope >2050 Aluminium 2.6->1.6 tco 2 /t aluminium Automotive use 213->68 gco 2 /pkm Scope > >0.1 tco 2 /t aluminium Electricity intensity Scope 1 Scope 2-41% +88% -96% N/A -40% N/A Aviation 108->33 gco 2 /pkm N/A -10% N/A Commercial buildings 24->13 kgco 2 /m 2 64->1 kgco 2 /m 2-6% -11% -97%

15 Method II & III. Companies carbon intensity (CI, added value) is based on GHG reduction in line with 2 C pathway For scope 1, the (generic) scenarios provide both GHG emissions and added value data For scope 2, the used scenarios provide future electricity use per sector. Divided by the added value growth lead to the electricity intensity (in kwh/ $ added value). Multiplying by the future carbon intensity of electricity results in the scope 2 pathway.

16 Method II & III. GHG reduction in line with 2 C pathway Method II Absolute reduction 2050 Sector Scope 1 Scope 2 Electricity intensity Chemicals and Petrochemicals -19% -97% -64% Method III Other industry -16% -96% -44% Other transport -17% -84% +124%

17 Case study on method I: Global steel company This case concerns a global steel company that wants to set science-based targets in 2030 using 2012 as base year Input Value Unit Base year 2012 Target year 2030 Base year scope 1 emissions Base year scope 2 emissions Base year activity Activity growth projection 79 MtCO 2 eq 8.5 MtCO 2 eq 44 Mt crude steel 2.0% per year 87,5 MtCO 2 eq in o C sector pathway Global steel production will increase by 62% in 2030, and almost 100% in o C reduction pathway shows that : sector scope 1 emissions will decrease by 29% and the intensity by 63% in 2050 compared to 2010 sector scope 2 emission intensity needs to reduce 96% in 2050 compared to 2010 Company targets Company-specific scope 1 and 2 intensities in 2030 are calculated by gradually decreasing the difference between the company carbon intensity and the sector carbon intensity Using activity growth projections, the intensity targets are translated to absolute emissions targets Output Value Target year activity 63 Unit Mt crude steel Scope 1 absolute target 71 MtCO 2 eq Scope 2 absolute target 4 MtC O2eq 75 MtCO 2 eq in 2030 (-15%)

18 Case study on method I and III: Global automotive company (1/2) This case concerns a global automotive company that wants to set science-based targets in 2025 Scope 1 and 2 of automotive company is Method III Other industry Input Value Unit Base year 2010 Target year 2025 Base year scope 1 emissions 0.8 MtCO 2 eq Base year scope 2 emissions 1.8 MtCO 2 eq Base year value added 3.3 Billion $2010 Value added growth projection 2.5% per year 2.6 MtCO 2 eq in o C sector pathway For scope 1 and 2: 2 o C reduction pathway shows that scope 1 intensity must decrease 45% and scope 2 intensity 6% in 2025 compared to 2010, corrected for increase of global GDP by 3.5% per year. Company targets The sector scope 1 and 2 intensities reductions are applied to the company base year intensities Output Value Unit Projected value added 4.8 Billion $2010 Scope 1 absolute target 0.7 MtCO 2 eq Scope 2 absolute target 1.5 MtCO 2 eq 2.2 MtCO 2 eq in 2025 (-15%)

19 Case study on method I and III: Global automotive company (2/2) Scope 3 (Use of sold product) is Method I Automotive use Input Value Unit Base year 2010 Target year 2025 Base year scope 3 intensity 185 gco 2 /pkm 2 o C sector pathway For scope 3, the 2 o C reduction pathway shows that the intensity reduces to 68 gco 2 /pkm in Company targets Scope 3 carbon intensity is calculated by gradually decreasing the difference between the company carbon intensity and the sector carbon intensity. This target is not translatable to absolute emissions Output Value Scope 3 intensity target 130 Unit gco 2 /pkm -30%

20 Benefits of Mind the Science methodology The methodology is based on the best of science The methodology uses physical indicators for homogenous sectors and monetary indicators ($ value added) for heterogeneous sectors or in case of lack of data Carbon intensity is used as interim calculation products to set absolute GHG emissions targets. In the methodology it is assumed that the physical carbon intensity of companies can converges to a sector average in The methodology allows for flexibility in achieving GHG emissions reductions Companies can set targets for scope 1 and 2 and use the methodology to set targets for (part of their) scope 3, if covered by the methodology. The methodology is flexible to set GHG emissions targets for each year up to 2050

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