Decarbonization for Businesses

Author: Nicole Stika | Published: October 4th, 2022

In 2021, the International Energy Agency (IEA) recorded the highest levels of global carbon emissions. Today, cities across the world are experiencing record-breaking summer heat waves. In order to combat the negative repercussions of global warming, fighting against climate change has become a priority for many countries, organizations, and businesses alike. Both the public and private sectors are creating sustainability strategies to take action, such as setting net zero, carbon-neutral, and decarbonization goals to balance and reduce emissions. The concept of net zero emissions relates to reducing GHG emissions as much as possible and then offsetting the remainder. Carbon neutral refers to offsetting emissions, and decarbonization is the process of shifting towards less carbon-intensive practices, such as converting a coal power plant to a natural gas power plant.  

So why focus only on carbon? According to the U.S. Environmental Protection Agency (EPA), carbon dioxide (CO2) made up almost 80% of total U.S. emissions in 2020. For businesses, decarbonization can help save money in the long run as well as boost public image; Environmental, Social, and Governance (ESG) initiatives now play a vital role in modern business marketing strategy. Cutting carbon emissions, investing in renewable energy, reducing energy usage, and purchasing carbon offsets are a few methods to begin decarbonizing.  

What is Decarbonization? 

Similar to net zero or carbon neutral, decarbonization can be a goal for countries, governments, and businesses. Decarbonization refers to the process of cutting down carbon emissions in the atmosphere. This process occurs mainly through two methods: reducing emissions before they are released and capturing emissions that have already been emitted. A large part of decarbonization is reducing emissions before production. Businesses can cut emissions significantly by reducing energy consumption, educating and incentivizing employees to be more carbon conscious, and upgrading to more efficient equipment.  

Although possible, total decarbonization is challenging as some carbon emissions prove very difficult to cut. For example, Scope 2 emissions (emissions from purchased or acquired electricity) can make it difficult to decarbonize if the region has no renewable sources of energy contributing to their electricity and no electricity companies offering renewable sources.  

Energy Alternatives 

The journey to total decarbonization heavily relies on the energy transition. Whether the goal is to reduce environmental impact, appeal to investors or consumers, or save money, switching to renewable energy sources can be rewarding for your business. Approximately 20% of electrical power in the U.S. comes from renewable energy. Wind accounts for 9.2%, hydropower makes up 6.3%, solar provides 2.8%, and the remainder is produced by biomass and geothermal energy. Renewable Energy Certificates (RECs) allow companies to invest in renewable energy sources without having to produce renewable energy themselves.    

Managing Your Carbon Output 

The first step of a carbon reduction plan is to calculate your carbon footprint. Understanding how much you are contributing to global emissions allows you to take responsibility for your actions and make measurable change. Carbon emissions calculators can be helpful in understanding the basic scope of your GHG emissions and helping your organization become carbon literate. Carbon literacy is having the knowledge and capacity to be able to make sustainable change that helps fight the impacts of climate change.  

Once you calculate your carbon footprint, establishing a comprehensive carbon reduction plan is the next step in order to create realistic goals that are customized to your business and industry. Long-term goals provide focus and a vision for larger aspirations such as net zero emissions or even carbon neutrality. Carbon reduction plans give structure to those goals and help prioritize activities based on time, effort, and feasibility. Plans, such as Science Based Targets (SBTis), are formulated in accordance with the Paris Agreement to help fight climate change. They rely on reporting frameworks such as Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) for guidance.  

While businesses should prioritize reducing energy use and transitioning to renewable energy sources, offsetting carbon emissions is also an important step on the sustainability journey. Carbon offsetting offers a solution for businesses to become carbon neutral without having to reduce all energy usage completely. Businesses can offset carbon emissions through projects such as planting trees or capturing biogas. Carbon offsets are not a replacement for cutting carbon emissions, but they can help decrease the negative repercussions of the emissions that prove difficult or impossible to cut. Many companies would not be able to achieve their sustainability goals without carbon offsets. 

According to the United Nations Framework Convention on Climate Change (UNFCCC), the organization responsible for the 2015 Paris Agreement, global emissions need to be halved by the end of this decade (2030) and reach net zero emissions by mid-century (2050) to keep the global rise in temperature within 1.5 degrees Celsius of pre-industrial numbers. Decarbonization is the process of shifting towards lower-emitting or non-carbon solutions and can be a tedious task. Calculating your carbon emissions is the first step on the road towards total decarbonization. After calculating your carbon footprint and GHG emissions, working with the professionals at World Kinect Energy Services to create a carbon reduction plan to help define your business’s sustainability journey can make all the difference. Carbon reduction plans that include measurable outcomes will help keep your company accountable to stakeholders and on track with your sustainability goals. This sustainability plan will offer actionable ways to reduce your energy usage, source renewable energy, and offset the remaining emissions.