What is Decarbonization? Practical Pathways for Businesses

Greenhouse gases, carbon footprint, and the low-carbon economy: what does it all mean?

Before we take a deep dive into decarbonization, let’s go over some commonly used terminology and what they mean. Many of these terms circulate in the news, politics, and industry as buzzwords without being defined, so there can be some confusion here.

Greenhouse gases and carbon emissions: more than just CO₂

Greenhouse gases (GHGs) are heat-trapping gases which contribute to the warming of the planet’s atmosphere. This heat-trapping greenhouse effect is a large reason why Earth is hospitable to life as we know it – with no natural greenhouse effect, Earth would have an average temperature of about -20°C / 0°F compared to our comfortable 15°C / 59°F – but excess GHGs emitted into the atmosphere contribute to global warming and the negative climate impacts that accompany it. 

Carbon dioxide (CO₂) is the most well-known GHG. Water vapour (H₂O) is the most abundant natural greenhouse gas, but it isn’t considered to be a cause of anthropogenic global warming because human activities have little direct effect on the concentration of water in the atmosphere. Additionally, it does not persist in the atmosphere for more than a few days at a time.

The six main greenhouse gas targets for reduction as defined by the Kyoto Protocol are:

• • Carbon dioxide (CO₂),

• • Methane (CH₄),

• • Nitrous oxide (N₂O),

• • Hydrofluorocarbons (HFCs),

• • Perfluorocarbons (PFCs), and

• • Sulphur hexafluoride (SF₆).

To make it easier to quantify the effect of greenhouse gas emissions, a metric called the Global Warming Potential (GWP) is used. The metric compares each gas’s ability to trap heat in the atmosphere compared to CO2, measured over a specific time horizon such as 100 years. Multiplying the quantity of GHG emitted by its GWP value gives the carbon dioxide equivalent (CO₂ eq or CO₂e) value, indicating how much CO2 emitted would produce an equivalent warming effect.

Below are some example 100-year global warming potentials for a few GHGs, according to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.

By using GWPs to convert emissions to CO₂ equivalent values, it becomes easier to quantify, compare, and discuss emissions, which brings us to terms such as carbon footprint and carbon neutral, with “carbon” used as a colloquial form of carbon dioxide.

Carbon footprint, carbon neutral, climate positive, oh my!

A carbon footprint is the result of an emissions calculation indicating the quantity of greenhouse gases released for a certain process, such as the production of a product or the annual operations of a business.

To be carbon neutral (also called net zero or carbon zero) means a process either emits no GHG emissions, or that the same amount of GHG is captured/offset as it’s emitted. This can be done by investing in offset methods: for example, forest & wetland protection, the recovery of methane gas from landfills for energy generation, or even by providing drinking water filtration technology to a household who would otherwise need to burn fuel to boil water to make it safe to drink.

Unintuitively, carbon negative and carbon positive mean the same thing – that a process or an organization’s activities result in a net reduction in the amount of greenhouse gases in the atmosphere. This confusing pair of terms exists because a net negativeamount of GHG is a positive outcome for our ecological health, so the terms are used interchangeably.

At Enviro-Stewards we often use the term climate-positive to refer to our operations, which avoids the confusion around carbon negative and carbon positive and encompasses a broader context of environmental health, including carbon, water, agriculture, weather, food, ecosystems, habitats, wellbeing, etc. Read more about this at our ESG blog.

What is a low-carbon economy, and how is it possible?

The low-carbon economy (also known as a decarbonized economy) is simply an economy that causes low levels of GHG emissions compared with today’s carbon-intensive economy or is carbon-neutral.

The Energy Transitions Commission emphasizes that to accelerate the transition to the low-carbon economy, the focus should be on hands-on, strategic, coordinated actions within economic sectors.

Achieving a low-carbon economy before the impending 2°C climate tipping points are reached can be done, and requires strong, broad, and rapid action. A 2019 study from the Institute of Physics shows that many of the models shaping policy in recent years have underestimated how efficiency-centric strategies and renewable energy sources together can not only offset but completely displace fossil fuels, often at a profit! 

For example, a 2018 study published in the journal Nature found that efficiency-centric strategies could keep global warming safely below the Paris Agreement’s aspirational 1.5°C goal, achieve many of the UN’s Sustainable Development Goals, and cut 2050 supply costs by over a trillion dollars per year, all while requiring no carbon removal except by natural processes.

By rapidly implementing smart decarbonization strategies, businesses working together can lead the way to the low-carbon economy while securing a more profitable and prosperous future both for themselves and for society.

What is decarbonization?

Decarbonization is the process of minimizing an organization’s greenhouse gas emissions, also referred to as carbon emissions. Decarbonization has the co-benefits of mitigating climate change while also making businesses less reliant on fossil fuels (a finite resource which continues to rise in price and is projected to run out in 50-70 years and therefore more resilient for long-term operations).

The 3 scopes of carbon emissions along the pathway to decarbonization

 

Carbon emissions are grouped into three scopes for the purposes of greenhouse gas inventories, which quantify an organization’s emissions so opportunities for decarbonization can be identified, and progress can be tracked. 

Essentially, scope 1 emissions are direct emissions from a company, while scope 2 and 3 emissions are indirect emissions which are not owned or controlled by a company but are a consequence of that company’s activities.

Scope 1 (Direct emissions)

Scope 1 emissions are emissions from operations that are owned or controlled by the company in question, also known as direct emissions.

For example, this could include emissions from owned or controlled furnaces, boilers, vehicles, etc., or emissions from chemical production in owned or controlled process equipment.

Scope 2 (Indirect emissions)

Scope 2 emissions are emissions from the generation of electricity, steam, heating, or cooling which is purchased and consumed by a company. 

For example, emissions from the powerplant which supplies the electricity to an office would be scope 1 emissions for the powerplant but scope 2 emissions for the company consuming the electricity in the office through their use of lights, computers, and A/C units.

Scope 3 (Indirect emissions)

Scope 3 emissions include all indirect emissions from the upstream and downstream value chain of a company that are not already accounted for in scope 2. 

For example, scope 3 emissions can include the production of ingredients purchased that go into a product, the transportation of purchased products, and even the end-of-life disposal of a sold product. Scope 3 emissions often account for the largest share of a company’s GHG emissions.

Scope 3 emissions are broken down into 15 categories, each of which occurs either upstream or downstream to a process. The table below lists all scope 3 categories.

Deep decarbonization

Deep decarbonization refers to a thorough, long-lasting shift to the low-carbon economy – not just short-term quick fixes. With deep decarbonization, the goal is to reduce humanity’s dependence on fossil fuels to a vanishingly small amount of our energy needs, instead opting for less damaging and more cost-effective solutions.^[1]

Practical pathways to decarbonization

 

By following a methodical strategy, businesses can completely decarbonize their operations in an efficient and profitable way. A standard strategy can be represented with the following 3 steps:

1. Define your baseline emissions
2. Conserve and decarbonize
   1. First increase efficiency and reduce consumption
   2. Then replace sources with cleaner alternatives
3. Credibly contribute to offsetting programs

With this strategy, your business can achieve decarbonization targets and reach net-zero emissions following a credible, affordable pathway.

 

 

Step 1: Define your baseline emissions

To track progress along the path to net zero, it’s important to know the starting point of your organization. 

The first step of decarbonization is to measure your organization’s current carbon footprint to define a baseline and set informed targets. Taking a detailed inventory of present emissions and their sources is important for two main reasons:

1. 1. With a baseline, there is historical data to compare to in future years, so you and your clients can see how far you have gone towards your sustainability goals. This adds credibility to your decarbonization journey, and encouragement when progress is visible.

1. 1. Identifying where the emissions are coming from provides direction on which processes to target first for reduction. 

Step 2: Conserve and decarbonize

A common mistake when it comes to decarbonization is jumping right to replacing carbon-heavy energy sources with renewables. While this is important, efficiency optimization must come first. Don’t just waste your energy more sustainably!

Southbrook Winery provides an illustrative example. The LEED gold-certified winery in Niagara-on-the-Lake conducted a conventional energy conservation study to identify further areas for improvement on their pathway to decarbonization. The study results suggested that they may be able to achieve an additional 5% reduction in energy consumption with a 20-year payback period.

Unsatisfied with that assessment, Southbrook Winery reached out to Enviro-Stewards for a second opinion. Enviro-Stewards’ subsequent assessment discovered that Southbrook could reduce both electricity and natural gas consumption by 40% with a combined payback of four months.

By prioritizing efficiency and reducing consumption first before switching to renewable energy sources, Southbrook Winery saved two-thirds of the solar panels they would have initially needed to install for their net-zero solar system, leaving the equivalent fertile land uncovered for growing grapes – approximately 50 cases of wine per year, valued at $20,000.

 

After implementing efficiency wins is the time to look at replacing carbon-intensive sources with low-carbon alternatives. 

In terms of energy sources, this could look like renewable energy generation onsite or offsite. Decarbonization doesn’t have to stop with electricity, though: expand sustainable thinking to all purchased resources and utilities. How is waste taken away and treated? Where does your facility get its water? 

A thorough analysis of all resources and processes involved with your organization can reveal bountiful and unexpected opportunities for savings and deep decarbonization.

Step 3: Contribute to offsetting programs 

 

Eventually, your business will reach a point where it is operating efficiently on all fronts and using low-carbon energy sources where possible. At this point, the next practical step is to contribute to an offsetting program to complete “the last mile” to net-zero emissions, carbon neutrality, and full decarbonization.

Carbon offsetting means funding a project anywhere in the world which takes action to reduce or absorb greenhouse gas emissions. Activities that absorb carbon are known as a carbon sink. 

Carbon offset projects can be grouped into two categories: 

1. 1. Emissions avoidance/reduction projects: e.g., renewable energy, methane capture at waste management facilities, wetland protection, Safe Water Social Ventures

1. 1. Emissions removal/sequestration projects: e.g., reforestation, direct carbon capture technology

The first example that often comes to mind for offsetting programs is the prevention of deforestation and the promotion of reforestation. 

A lesser-known, but even more effective offsetting strategy, is the protection of wetlands. Wetlands (peatlands, swamps, bogs, fens, marshes, etc.) lock down vast amounts of carbon by slowing organic decomposition, keeping carbon in the soil and out of the atmosphere. The wetlands in Ontario store approximately 29 billion tonnes of carbon, which is the equivalent of the emissions of every gas-powered vehicle in Canada running for 1,000 years!

Offsetting programs may not always be obvious when it comes to their decarbonization potential. For example, Safe Water Social Ventures empowers community-based entrepreneurs to sustainably provide safe drinking water to their communities. By creating access to biosand filters (a low-tech, reliable clean water solution) for families that would otherwise need to burn wood to boil water to make it safe to drink, Safe Water Social Ventures protects forests from deforestation and the resulting carbon emissions. This climate-positive co-benefit of the safe water projects can help companies decarbonize to the last drop and reach net-zero.

Carbon credits, also known as carbon allowances, are a regulatory measure that works like a permission slip to emit greenhouse gases. One carbon credit (usually purchased from the government but sometimes purchased from other companies which have a surplus of carbon credits) gives permission to emit one ton of CO₂ (or CO₂e). 

Carbon offsets are a system by which companies can “trade” carbon emissions. Organizations that complete carbon-negative (i.e., climate-positive) activities generate carbon offsets for the amount of carbon they have removed from the atmosphere. These carbon offsets can then be purchased by other companies who then put the purchased offset amount towards reducing their own carbon footprint. 

The downside of purchasing carbon offsets on the open market is credibility on the path to decarbonization because of lower visibility with regards to the climate-positive activities themselves.

By partnering directly with offsetting programs instead of relying on the purchase of carbon offsets, organizations gain higher visibility as to where their money is going, better clarity on how climate-positive activities are being conducted, and more credibility when explaining the organization’s deep decarbonization journey to net-zero.

If desired, we welcome partners in our Safe Water Social Ventures work to empower communities to access clean water sustainably.

Conclusion 

To recap, the pathway to decarbonization has the following steps:

1. 1. Define your baseline emissions to track progress and identify the biggest opportunities.

1. 1. Increase efficiency and reduce consumption before looking at alternative sources.

1. 1. Replace carbon-intensive sources with cleaner alternatives now that consumption has been reduced.

1. 1. Contribute to compelling offsetting programs for the last mile to net-zero emissions and become a climate-positive organization.

With a clear understanding of deep decarbonization and a dedication to rapid and effective action, we can work together to profitably achieve a low-carbon economy and secure a prosperous future for the whole planet.