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At the 2015 Paris Agreement, around 200 nations came together to sign a legally-binding global climate deal that aims to limit global warming within this century to 2oC. Limiting temperature rise will not be possible without emission reductions and active participation from companies and businesses around the world. Around 70% of the global greenhouse gas emissions come from just 100 companies.
When we talk about reducing emissions, most people often think of two main approaches: an absolute greenhouse gas reduction target or a greenhouse gas intensity reduction target.
An absolute greenhouse gas reduction target refers to the total quantity of greenhouse gas emissions. An absolute target aims to reduce greenhouse gas emissions by a predefined amount. For example, a company sets an absolute greenhouse gas reduction target to reduce emissions by 30% by 2025.
On the other hand, intensity compares the amount of emissions to a unit of economic output. An intensity target allows companies and businesses to set emission reduction targets while accounting for economic growth.
People tend to firmly believe that either absolute greenhouse gas reduction is essential for achieving carbon neutrality, or that intensity is a preferred option from a business perspective for a low-carbon future.
One thing that we need for sure to save our planet and achieve carbon neutrality is an absolute greenhouse gas reduction. The Intergovernmental Panel on Climate Change (IPCC) has said that we need to limit our emissions to 1000 Gt (gigatonnes) of CO2 to contain warming to 2oC. That means that we have to reduce our greenhouse gas emissions by 72% by 2050. We can only achieve this if a majority of companies and businesses worldwide set absolute emissions targets.
The short answer to absolute greenhouse gas reduction target is the most effective or not is: that it depends. An industry expert noted that he witnessed a company that had set an intensity target decrease its emissions over the past decade. However, when he looked more closely at the data, he noticed that the company’s electricity use had actually increased. But, because the company was using an intensity target that accounts for economic growth, it appeared that the company reduced its emissions.
However, this doesn’t mean that an absolute greenhouse gas reduction target is the only solution. Let’s look at countries across the globe. We mostly see that the developed nations are the ones shouldering the burden of reducing emissions. On the other hand, developing countries are the highest emitters. Part of the reason behind this is that most developed countries have entered into legally-binding absolute greenhouse gas reduction targets. Developing countries also have absolute targets, but they do not have repercussions for failing to deliver on commitments.
Whether your company needs an intensity target or an absolute target to ensure carbon neutrality in the future, keep in mind the following points:
1. Your target must include a base year and the target year
The base year will be the year against which you will track your greenhouse gas emission reductions. The target year should ideally be 5-10 years from the base year
2. Your target must be aggressive
An aggressive target is one that is well beyond business as usual in a sector. You can find out if your target is sufficiently aggressive by aligning it with the Science Based Targets initiative (SBTi) criteria. The SBTi criteria mention that emission reductions must occur by 2.5% annually for targets covering scope 1 and 2 emissions. Emission reductions must occur by 1.23% annually for targets covering scope 1, 2, and 3 emissions.
3. Set an absolute reduction target
You must clearly define your target and the absolute greenhouse gas reduction you aim to achieve over a specific period of time. For example, 25% emission reductions over the next ten years.
4. The target should cover all global operations within geographical boundaries
Your target should cover the emissions your business or company generates in all countries, not just in one. It could include emissions reductions in different parts of your supply chain.
5. The target must address all three scopes
Your target must cover all scope 1 and 2 emissions. Additionally, the target should also cover at least a small portion of the scope three emissions.
Targets help businesses and countries reduce their greenhouse gas emissions. Companies have recognized this, and we’re seeing a growing number of organizations committing to delivering climate promises.
The type of target (intensity or absolute) adopted depends on the emission reductions we’re trying to achieve.
It is evident that we need large-scale adoption of absolute greenhouse gas reductions to achieve carbon neutrality.
Intensity targets are only effective when they lead to absolute greenhouse gas reduction targets.
Targets must be in line with climate scenarios for keeping warming below 2oC.
Targets must cover, at a minimum, scope 1 and 2 emissions.