Deep Dive on Science -Based Target Setting Science Based Targets Initiative

Transcription

1 Deep Dive on Science -Based Target Setting Science Based Targets Initiative Sep 21, 2017 Climate Week NYC An initiative by In collaboration with

2 @sciencetargets #sciencebasedtargets An initiative by In collaboration with

3 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 3

4 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 4

5 Outline 2. Brief overview of the Science Based Targets initiative and methodologies available 1. What are science-based targets? 2. The Science Based Targets initiative 3. Join the global call to action 4. Approved SBT Methodologies 5

6 Brief overview I What are science-based targets? Greenhouse gas emissions reduction targets aligned with the latest climate science for keeping warming below 2 C A clear pathway for companies to future-proof growth by specifying necessary greenhouse gas emissions reductions A challenge to companies to transform their business and help create and prepare for a low-carbon economy 6

7 Brief overview I The need for science-based targets Understanding emission reduction targets based on climate science for keeping warming below 1.5ºC and 2ºC 40% to 70% below 2010 levels for 2⁰ C 70% to 95% below 2010 levels for 1.5⁰C Source: Climate Action Tracker

8 Brief overview I What are science-based targets? Dell commits to reduce GHG emissions from their facilities and logistics operations 50% by 2020, using a 2010 base-year. Dell also commits to reduce the energy intensity of their product portfolio 80% by 2020, using a 2011 base-year. EDP commits to reduce scope 1 and 2 emissions from electricity production 55% per TWh by 2030, from 2015 levels. The company also commits to reduce absolute scope 3 emissions 25% over the same time period. Enel commits to reduce CO2 emissions 25% per kwh by 2020, from a 2007 base-year. The target includes the decommissioning of 13 GW of fossil power plants in Italy, and is a milestone in the long term goal to operate in carbon neutrality by Konica Minolta commits to reduce absolute greenhouse gas emissions from across its value chain (scopes 1, 2 and 3) 60% by 2030, from 2005 levels. The scope 3 reductions cover purchased goods and services, upstream transportation and distribution, and the use of sold products 8

9 Outline 2. Brief overview of the Science Based Targets initiative and methodologies available 1. What are science-based targets? 2. The Science Based Targets initiative 3. Join the global call to action 4. Approved SBT Methodologies 9

10 Brief overview I The Science Based Targets initiative The Science Based Targets initiative champions science-based target setting as a powerful way of boosting companies competitive advantage in the transition to the low-carbon economy. 10

11 Brief overview I The Science Based Targets initiative STRATEGIES Reduce the barriers to the adoption of sciencebased targets Institutionalize the adoption of sciencebased emission reduction targets Create a critical mass ACTIVITIES SDA method Methods and Guidance Target setting manual Engaging Amplifiers Validating Targets Call to Action Platform 11

12 Outline 2. Brief overview of the Science Based Targets initiative and methodologies available 1. What are science-based targets? 2. The Science Based Targets initiative 3. Join the global call to action 4. Approved SBT Methodologies 12

13 Science-based targets I Join the global call to action Since officially launching in June, 2015: ~2 Companies have formally joined the SBTi Call to Action Companies have approved targets Companies joining the Call to Action every week 13

14 Science-based targets I Join the global call to action 14

15 Science-based targets I Join the global call to action Top countries represented by companies committed to science-based targets 15

16 Science-based targets I Join the global call to action. SBTi Companies by Sector Committed Set targets

17 Science-based targets I How can companies participate? Download, sign and submit the Commitment Letter Be featured as a Committed Company on SBT and WMB websites Consult target setting resources (SBT manual, criteria, GHG Protocol) Work internally to develop an SBT Test different methods and use most ambitious scenarios Download and complete the target submission form with the help of the guidance document Submit final target for validation to info@sciencebasedtarge ts.org Approved targets will be featured on the SBT website You will be invited to speak at events and be quoted in media pieces You will receive the SBTi welcome pack explaining how you can communicate about your target 17

18 Science-based targets I Why should companies engage? Increase efficiency to be more competitive Unlock new financial returns Attract investors Proactive policy engagement as a leader Pre-empt policy changes and regulatory risk Future proof growth Join the global call to action 18

19 Outline 2. Brief overview of the Science Based Targets initiative and methodologies available 1. What are science-based targets? 2. The Science Based Targets initiative 3. Join the global call to action 4. Approved SBT Methodologies 19

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21 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 21

22 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 22

23 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 23

24 Outline 5. Scope 1 and 2 1. Target modelling 2. SBTi Criteria 3. Target analysis 24

25 Scope 1 and 2 I S1 Target modelling SBT approach A) Sector-based approach Based on sector-specific carbon budgets determined by mitigation/technology options and activity projections. B) Absolutebased approach Based on absolute emissions reductions determined in climate reports (e.g % reduction in IPCC 5th AR). C) Economicbased approach Based on the average emissions reductions determined in climate reports per projected economic output. 25

26 MT CO2 TWh Scope 1 and 2 I S2 Target modelling DS trajectory for power generation According to the World Energy Council, demand for electricity is expected to double to At the same time, the International Energy Agency (IEA) in its 2016 Energy Technology Perspectives report (2016) projects that net CO2 emissions from electricity generation need to be phased out by mid century Direct CO2 emissions (Mt CO2) Gross electricity generation (TWh) 26

27 Scope 1 and 2 I S2 Target modelling Gross electricity capacity (GW) Renewables (incl. Hydro) Biomass with CCS Biomass and waste Nuclear Fossil generation with CCS Unabated fossil generation Meeting the growing demand for electricity with the global goals adopted in the Paris Agreement requires a radical transformation in the power sector. According to the 2 Degree Scenario (2DS) of the IEA, installed capacity from non-fossil sources needs to increase by a factor of five by 2050 compared to the installed capacity in

28 Emissions [MtCO2e] Emissions [MtCO2e] Scope 1 and 2 I S2 Target modelling 2500 Chemical and petrochemicals - total emissions (ETP DS) Other industries - total emissions (ETP DS) Scope 2 emissions Scope 1 emissions Scope 2 emissions Scope 1 emissions Years Years Science-based target setting assumes that corporates play a key role in transforming the power sector through the decarbonization of their own electricity supplies in line with a well-below 2ºC scenario. Science-based target setting methods, such as the Sectoral Decarbonization Approach, help companies understand how their electricity-related emissions need to be reduced in order to be in line with a 2ºC trajectory. 28

29 Outline 5. Scope 1 and 2 1. Target modelling 2. SBTi Criteria 3. Target analysis 29

30 Scope 1 and 2 I Call to Action criteria General criteria: C1 - Scopes: The targets must cover company-wide scope 1 and scope 2 emissions, as defined by the GHG Protocol Corporate Standard. C2 - Significance thresholds: Companies may exclude up to 5% of scope 1 and scope 2 emissions combined in their inventory and target. C3 - Greenhouse gases: The targets must cover all relevant GHGs as required per the GHG Protocol Corporate Standard. C4 - Base and target years: All targets must cover a minimum of 5 years and a maximum of 15 years from the date the target is submitted to the SBTi for an official validation. C5 - Progress to date: Targets that have already been achieved by the date they are submitted to the SBTi are not acceptable. C6 - Level of ambition: At a minimum, the target will be consistent with the level of decarbonization required to keep global temperature increase to 2 C compared to pre-industrial temperatures, though we encourage companies to pursue greater efforts towards a 1.5 trajectory. 30

31 Scope 1 and 2 I Call to Action criteria General criteria: C7 - Absolute vs. intensity: Intensity targets are only eligible when they lead to absolute emission reduction targets in line with climate scenarios for keeping global warming below 2 C or when they are modelled using an approved sector pathway or method approved by the Science Based Targets initiative (e.g. the Sectoral Decarbonization Approach). C8 - Method validity: Targets must be modelled using the latest version of methods and tools approved by the initiative. Targets modelled using previous versions of the tools or methods can only be submitted to the SBTi for an official validation within six months of the revision. C9 - Combined scope targets: Targets that combine scopes (e.g. 1+2 or 1+2+3) are permitted; however, when a company has a combined scope 1, 2, and 3 target the scope 1 and 2 portion of the target must be in line with climate science. 31

32 Scope 1 and 2 I Call to Action criteria Scope 2 specific criteria: C10 - Approaches: Companies shall disclose whether they are using a location or market-based approaches as per the GHG Protocol Scope 2 Guidance to calculate base year emissions and to track performance against a science-based target. 32

33 Scope 1 and 2 I Call to Action criteria Recommendations and additional guidance General: R1 - Subsidiaries: It is recommended for only the parent company to submit its targets; however, subsidiaries may submit separate targets if they so wish. In cases where both parent companies and subsidiaries submit targets, they must make it clear whether the parent company s target includes or excludes the target of the subsidiary. Please see boundary criteria above. R2 - Avoided emissions: Avoided emissions fall under a separate accounting system from corporate inventories and do not count toward science-based targets. R7 - Choosing an approach: The SBTi recommends using the most ambitious decarbonization scenarios that lead to the earliest reductions and the least cumulative emissions. R8 - Offsets: The use of offsets is not counted as reductions toward the progress of companies science based targets. The SBTi requires that companies set targets based on emission reductions through direct action within their own boundaries or their value chains. Offsets are only considered to be an option for companies wanting to contribute to finance additional emission reductions beyond their science-based targets. 33

34 Scope 1 and 2 I Call to Action criteria Recommendations and additional guidance Scope 2: It is recommended that companies model heat and steam related-emissions as if they were part of their direct (i.e. Scope 1) emissions. The rationale is that, in absence of purchased heat or steam, the thermal energy needs would be met through thermodynamic processes that would take place within the boundaries of the company. It is recommended that electricity-related Scope 2 emissions are modelled taking into account two factors: (a) efficiency gains projected for the sector based on below 2ºC scenarios (if available) and; (b) the decarbonization projected for the power sector. Any Scope 2 reduction measure should only be applied to the Scope 2 portion of the science-based target. When companies reduce Scope 2 emissions throughout the use of contractual instruments, it is strongly recommended for companies to ensure that all contractual instruments used to meet a science-based target are in conformance with the Scope 2 Quality Criteria as listed in Table 7.1 of the GHG Protocol Scope 2 Guidance. 34

35 Outline 5. Scope 1 and 2 1. Target modelling 2. SBTi Criteria 3. Target analysis 35

36 Scope 1 and 2 I Analysis of targets Examples of targets: Example 1: The company commits to reduce its S1+S2+S3 emissions 50% by 2050 compared to emissions in Example 2: The company commits to reduce its S1+S2+S3 emissions intensity 50% by 2030 compared to its 2010 emissions intensity. Example 3: The company commits to reduce S1+S2 emissions by 2050 compared to its 2010 emissions. 36

37 Scope 1 and 2 I Analysis of targets Examples of targets: Example 1: The company commits to reduce its S1+S2+S3 emissions 50% by 2050 compared to emissions in o o Shorter term target missing Not possible to figure out the level of ambition in S1+S2 portion of the target 37

38 Scope 1 and 2 I Analysis of targets Examples of targets: Example 2: The company commits to reduce its S1+S2+S3 emissions intensity 50% by 2030 compared to its 2010 emissions intensity. o o Not possible to figure out the level of ambition in S1+S2 portion of the target. Without activity projections, it is not possible to figure out the impact of the target in the absolute emissions of the company. 38

39 Scope 1 and 2 I Analysis of targets Examples of targets: Example 3: The company commits to reduce S1+S2 emissions by 2050 compared to its 2010 emissions. o o Shorter term target missing The target could potentially be in line with a 2ºC trajectory or not... o o Depending on sector Depending on S1 / S2 ratio o If S2 represents a significant a portion of S1+S2 emissions, the target may not be ambitious enough. 39

40 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 40

41 Outline 6. Scope 3 target setting 1. SBTi criteria 2. Target validation results 3. Draft scope 3 guidance 1. Examples of approved targets 2. Scope 3 category analysis 3. Additional guidance 41

42 Scope 3 I SBTi vision VISION Science-based GHG emission reduction target setting will become standard practice and corporations will be contributing to closing the emissions gap left by country commitments. S3 represents the largest impact for most sectors. Having a Scope 3 target allows and motivates companies to focus where they can have the largest impact. Upstream Scope 3 targets help build momentum and help multiply the adoption of science-based targets. 42

43 Scope 3 I SBTi scope 3 criteria summary C11- Boundary: Complete a scope 3 screening. If scope 3 emissions are > 40% of total emissions, a scope 3 target is required. The scope 3 target boundary must include the majority of value chain emissions. C12 - Ambition: Targets should clearly demonstrate how the company is addressing the main sources of GHG emissions in line with current best practice. C14 Timeframe: Targets must cover 5 to 15 years from date submitted to SBTi for an official validation. R11 - Adapting SBT methods for scope 3 target setting: While current methods were developed for scope 1 and 2 emissions, companies should consider using these methods to inform their scope 3 targets when possible. C13 - Power generators that distribute fossil fuels: Targets required for the use of sold products. 43

44 Outline 6. Scope 3 target setting 1. SBTi criteria 2. Target validation results 3. Draft scope 3 guidance 1. Examples of approved targets 2. Scope 3 category analysis 3. Additional guidance 44

45 Scope 3 category analysis I Recent target validation results Most targets are unapproved due to the failure to meet scope 3 criteria C2 - S1 S2 significance threshold 3% C5 - S1 S2 progress to date 3% C6 - S1 S2 level of ambition 4% C1 - S1 S2 companywide emissions covered 7% Other 8% C4 - S1 S2 target year 5 to 15 years from submission 11% Scope 3 64% C12- S3 level of ambition 27% C11 - S3 screening conducted 23% C11 - S3 boundary covers 2/3 of S3 or top 3 categories 10% C11 - S3 target required if S3 is significant 4% 45

46 Outline 6. Scope 3 target setting 1. SBTi criteria 2. Target validation results 3. Draft scope 3 guidance 1. Examples of approved targets 2. Scope 3 category analysis 3. Additional guidance 46

47 Scope 3 I Ambition Percentage-based emissions reduction targets Percentage-based absolute target in line with 2C pathway when possible or intensity target based on the SDA Most preferred Non-emissionsbased targets Other percentage-based intensity target resulting in ambitious reductions in absolute emissions Performance-based target expressed in absolute or intensity terms Influence the behavior of suppliers or customers Least preferred 47

48 Scope 3 I Ambition: examples of approved targets Percentage-based absolute target or intensity target in line with 2 C pathways And KPN will reduce its scope 3 emissions 20% by 2025 and 50% by 2050 from a 2014 base year Target is in line with the absolute contraction approach Over 98% of scope 3 covered Forward looking ambition KPN plans to start addressing the categories it has the most influence over Targets after 2025 will be set using the SDA 48

49 Scope 3 I Ambition: examples of approved targets Performance-based target expressed in absolute or intensity terms and and AMD commits to improve the compute performance per watt of energy consumed by their mobile APU processors by 2500% by 2020 from a 2014 base-year Target covers sold products, which is 91% of scope 3 Separate purchased goods and services target covers additional 8% Over the same timeframe, Moore s Law indicates efficiency would increase 14.13X, while AMD s target is a 25X improvement 49

50 Scope 3 I Examples of approved targets Influence the behavior of suppliers or customers And Daiichi Sankyo commits that 90% of key suppliers by purchase value will institute GHG reduction targets by fiscal year 2020 Target covers over 70% of scope 3. Suppliers will set GHG reduction targets. Earlier target years preferable for engagement targets. Best practices would include having suppliers set science-based GHG reduction targets 50

51 Outline 6. Scope 3 target setting 1. SBTi criteria 2. Target validation results 3. Draft scope 3 guidance 1. Examples of approved targets 2. Scope 3 category analysis 3. Additional guidance 51

52 Scope 3 I Sector profiles Using reported and modelled CDP data, we can determine what scope 3 categories are likely to be relevant for a given sector This will give companies a greater understanding of what may be significant in their scope 3 inventory The SBTi can use this information when assessing targets since it provides reference points to evaluate self-reported information against For each key sector, the objectives are: 1. Identify the main Scope 3 categories 2. Identify the type of targets the sector can set for those categories 3. Develop sector-specific guidance for based on that information 52

53 Scope 3 I Sector profiles Most companies have not reported emissions for all relevant scope 3 categories 12% Incomplete Not all relevant S3 screening categories calculated Complete Relevant S3 categories screening calculated 88% 53

54 Scope 3 I Sector profiles Percent of scope 3 emissions in each category 100% 90% Others 80% End-of-life treatment of sold products 70% Use of sold products 60% 50% 40% Downstream transportation and distribution Upstream transportation and distribution 30% Fuel- and energy-related activities 20% Capital goods 10% 0% Automobiles & Components Construction materials Containers & Packaging Oil & Gas Food & Beverages Processing Purchased goods and services Source: CDP 2014 data 54

55 Outline 6. Scope 3 target setting 1. SBTi criteria 2. Target validation results 3. Draft scope 3 guidance 1. Examples of approved targets 2. Scope 3 category analysis 3. Additional guidance 55

56 Scope 3 I Additional guidance Targets not considered relevant/ambitious Targets to collect data Targets that cover avoided emissions (e.g. emissions reduced against a BAU baseline) Targets already that have already been achieved or nearly completed Targets without a set base or target year 56

57 Scope 3 I Sector guidance in support of scope 3 development Sector Progress description Apparel Launched, in scoping phase Oil and gas Proposed method white paper to be finalized in Q Vehicle manufacturers Tool, technical paper and guidance expected December 2017 Financial institutions Seeking funding Sector development information now available on 57

58 Scope 3 I Resources SBTi Call to Action Guidelines GHG Protocol Value Chain (Scope 3) Standard GHG Protocol Scope 3 Calculation Guidance Scope 3 Evaluator tool CDP Supply Chain Program Draft SBT Manual SBTi Website 58

59 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 59

60 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 60

61 Agenda 1. Welcome and Introductions 2. Brief overview of the Science Based Targets initiative and methodologies available 3. Corporate perspective: Getting a SBT approved 4. Q&A 5. Scope 1 and 2 6. Scope 3 target setting 7. Corporate perspective: Implementing an approved SBT 8. Q&A 9. Closing 61

62 An initiative by In collaboration with