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Deep Dive: Science‐Based Target Setting for Carbon‐Intensive Sectors

Science Based Targets initiative webinar

March 29, 2016

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Key Questions

• What are Science Based Targets and how are they developed? 

• How do Science Based Targets vary among carbon‐intensive sectors?

• What are the next steps for the SBT initiative?

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Webinar agenda10:00‐10:10        Science‐based targets overview

10:10‐10:40        Sector discussions:

Iron and steel

Electricity

Cement

Pulp and paper

10:40‐10:45        Summary and next steps

10:45‐11:00        Questions and discussion

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Webinar presenters

Nate Aden, (WRI)

Pedro Faria (CDP)

Nicole Labutong (CDP)

Paola Delgado Luna (WWF)

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Science‐based targets overview

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What is a science‐based target?

A science based target represents a company’s share of the global carbon budget.

• The global carbon budget is the amount of carbon the world can collectively emit while hoping to stay on a 2 degree C path.

• This budget is allocated to a company differently based on the various available methods.

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What do science‐based targets mean for companies?

Science‐based targets shift the discussion.

• Science‐based targets enable companies to understand what they need to do to align their targets with science.

• Companies can demonstrate to stakeholders that they are doing their part to help the world avoid the worst effects of climate change.

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“How much does my company expect to reduce emissions?”“How much does my company expect to reduce emissions?”

“How much MUST my company reduce emissions?”

“How much MUST my company reduce emissions?”

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Science Based Targets initiative overview

Goal Increase corporate ambition on climate action with the level of decarbonization required by science to limit global warming to less than 2°C compared to pre‐industrial temperatures.

Objectives• 250 companies with science‐based targets by 2018• Demonstrate to policy‐makers the scale of ambition achievable among leading companies to positively influence international climate stabilization

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IPCC AR5 is based on an ensemble approach

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From exceedance to avoidance: updating the 2‐degree budget

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Source: Rogelj et al. 2016. 

New recommended threshold avoidance budget: 590‐1,240 Gt CO2  (from 2015 onwards)

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3 characteristics differentiate SBT methods

Emissions scenario & carbon budget 

Level of disaggregation

Allocation mechanism

Global carbon budget

Carbon budget determined by a Peak & Decline trajectory

Carbon budget determined by a CAGR or linear trajectory

Convergence Compression 

AbsoluteIntensity

or

or or

Geographic budget

Sector budgetor

disaggregated carbon budget 

and / or

Economic indicator Physical indicatorand / or

Contraction 

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The SBT initiative has identified 7 methods

• Absolute contraction

• C‐FACT

• CSI

• CSO (context‐based)

• GEVA

• SDA

• 3% Solution

Allocation Mechanisms

Level of Disaggregation

Convergence Compression Contraction

Physical $ Intensity Absolute

Emissions Scenarios

Global

All economy

SectorSDA 

(homogenous)SDA 

(heterogeneous)

Geo

graphic*

All economy CSI  C‐FACT

Sector 3%

*Method differentiates by either Annex I  / non‐Annex I, regional, or country scenarios

CSO

, GEV

A

Absolute Contraction

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Global absolute contraction approach

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Historical data source: CDIAC (http://cdiac.ornl.gov/GCP/) 

• Cumulative 2015‐2050 CO2 emissions: 842 billion tonnes

• CAGR: ‐3.1 %

• Linear and peak‐and‐decline pathways generally have higher cumulative emissions

• At 40 Gt/yr, the 1,000 Gt budget will be exceeded in 2040

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Greenhouse gas emissions per unit of value added (“GEVA”) approach

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The Sectoral Decarbonization Approach is based on global pathways

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Industry is the largest sector source of GHGs

Source: IPCC, AR5.

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Science Based Targets for Iron & Steel Companies

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Source: IEA (2015) Energy Technology Perspectives. 

IEA forecasts that steel sector emissions need to drop 2% per year through 2050 to limit warming to 2˚C this century

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SDA pathway for iron & steel companies

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Absolute contraction approach

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Steel company example of method variation

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Company characteristics:

• 2014 base year

• 8 million tonnes crude steel production

• $7 billion value‐added

• 11 million tonnes CO2e

2011* 2020 2030

Physical intensity (t CO2e/t crude steel)

1.38 2.15 1.64

Economic intensity (kg CO2e/$)

1.57 0.39 0.21

* Company base year

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Science Based Targets for Electricity Companies

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Global electricity scenarios – scenario envelope

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Regional scenarios in ETP 2015 (2D compatible)

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Application – principle of convergence of intensity

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=1py = 0

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Comparison to other methods

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Activity projection

Linear reduction (80%)

SDA emissions pathway

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Science Based Targets for Cement Companies

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Summary of current cement sector GHGs and cumulative budget 2010‐2050

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• Cement is made from clinker and a mix of otherminerals. It is an energy‐intensive sectorbecause it involves the heating of ingredients to1,450 °C.

• The calcination reaction that takes place incement production also produces CO2 as aninherent process emission separate from energyuse.

• In 2012, it accounted for 8.5% of total industrialenergy use and 34% of industrial direct CO2emissions.

CARBON BUDGET

Scope 1:     89,785 Mt CO2Scope 1+2:    94,462 Mt CO2

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SDA pathway: Cement

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SDA pathway: Cement

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Mitigation options:• Fuel‐related emissions can be brought down through fuel switching, using biofuels instead of fossil fuels

• Emissions can be brought down even further by implementing best available technologies including energy efficiency measures (limited potential)

• CCS can achieve further reductions (CO2 emissions from the calcination reaction)

Assumptions:• Demand increase assumption holds if no new building technologies or fabrications are found with equivalent properties as a building material

• Sufficient access to biofuels for the cement sector• Emissions peak in 2020 because of the growing activity, and then decline toward 2050 due to the effect of mitigation measures

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Example: “Company X”

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Summary table 2010

Scope 1 tCO2e 43,000,000.00

Scope 2 tCO2e 3,212,100.00

Total scopes 46,212,100.00

Activity t cement 60,000,000.00

Annual growth 0.78%

GEVA 0.023

0.00

10,000,000.00

20,000,000.00

30,000,000.00

40,000,000.00

50,000,000.00

60,000,000.00

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

TONNEOF CO2E

SDA‐ ETP 2DS Abs. Cont. 2.0°C Abs. Cont. RCP 2.6 GEVA RCP2.6

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Science‐Based Targets for Pulp and Paper Companies

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Pulp and Paper Overview

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• Manufacture of all grades of paperincluding pulp, paper, and paperboardintended for further industrial processing.

• GHG emissions mainly from fuel andenergy use during forestry, pulping, andmanufacturing.

• Continued increased demand, mostlyfrom non‐OECD countries.

IEA ETP CARBON BUDGET 2011‐2050

Scope 1:     8 GtCO2

Source: IEA ETP 2015

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Science Based Targets for Pulp & Paper Companies

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Source: IEA ETP 2014

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Pulp and Paper Mitigation Options

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Decreased carbon intensity can be achieved through:• Energy efficiency in heat use• Efficiency in paper mills• Waste‐to‐energy technologies• Carbon capture and sequestration

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0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2010 2015 2020 2025 2030 2035 2040 2045 2050

TCO2E

YEAR

SDA ETP 2DS Abs. Cont. 2.0°C Abs. Cont. RCP 2.6 GEVA RCP2.6

Summary Table

Scope 1 tCO2e 6,000,000 

Scope 2 tCO2e 5,000,000 

Total tCO2e 11,000,000 

Activity (t paper) 15,000,000 

Annual activity growth 0.32%

GEVA (tCO2e/Euro) 0.004

Example: “Paper Company A”

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Summary & next steps

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Additional sector‐specific pathways are being defined

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Options for company engagement

• Freely available tools and guidance at http://sciencebasedtargets.org/.

• Commit to set a science based target and submit targets for review process and announcement

• Submit targets for unofficial target review process

• Engage with CDP, WRI or WWF to receive technical assistance

For  more information contact us at info@sciencebasedtargets.org. 

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