deep dive on science -based target setting · deep dive on science -based target setting science...

Deep Dive on Science -Based Target SettingScience Based Targets Initiative

Sep 21, 2017

Climate Week NYC

An initiative by In collaboration with


@sciencetargets

#sciencebasedtargets

Agenda

3

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

Agenda

4


2. Brief overview of the Science Based Targets initiative

and methodologies available


4. Q&A

5. Scope 1 and 2



8. Q&A

9. Closing

Outline

5

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

• 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

Brief overview I What are science-based targets?

6

Source: Climate Action Tracker 2017

Brief overview I The need for science-based targets

7

70% to 95% below

2010 levels for 1.5⁰C

40% to 70% below

2010 levels for 2⁰ C

Understanding emission reduction targets based on climate science for keeping

warming below 1.5ºC and 2ºC

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 2050.

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

Brief overview I What are science-based targets?

8

Outline

9







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.

Brief overview I The Science Based Targets initiative

10

SDA

method

Engaging

Amplifiers

Target

setting

manual

Methods

and

Guidance

Validating

Targets

Call to

Action

Platform

Reduce the barriers to

the adoption of science-

based targets

Institutionalize the

adoption of science-

based emission

reduction targets

Create a critical mass

STRATEGIES

ACTIVITIES

Brief overview I The Science Based Targets initiative

11

Outline

12







Since officially launching in June, 2015:

305Companies

have formally

joined the

SBTi Call to

Action

73Companies

have

approved

targets

Companies

joining the Call to

Action every

week

~2

Science-based targets I Join the global call to action

13


14


15

Top countries represented by companies committed to science-based targets

.

22

710 9 10

8 79

58 7 7

57 6

3 4

73

2 12 3

42

3 2

0

5

10

15

20

25

SBTi Companies by Sector

Committed Set targets


16

• 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

Science-based targets I How can companies participate?

17

mailto:[email protected]

• 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

Science-based targets I Why should companies engage?

18

Outline

19







Agenda

21





4. Q&A

5. Scope 1 and 2



8. Q&A

9. Closing

Agenda

22





4. Q&A

5. Scope 1 and 2



8. Q&A

9. Closing

Agenda

23





4. Q&A

5. Scope 1 and 2



8. Q&A

9. Closing

Outline

24

5. Scope 1 and 2

1. Target modelling

2. SBTi Criteria

3. Target analysis

Scope 1 and 2 I S1 Target modelling

25

Based on sector-specific carbon budgets

determined by mitigation/technology

options and activity projections.

SBT approach

A) Sector-based

approach

B) Absolute-

based approach

C) Economic-

based approach

Based on absolute emissions reductions

determined in climate reports (e.g. 49-72%

reduction in IPCC 5th AR).

Based on the average emissions reductions

determined in climate reports per projected

economic output.


26

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2013 2020 2025 2030 2035 2040 2045 2050T

Wh

MT

CO

2

2DS trajectory for power generation

Direct CO2 emissions (Mt CO2) Gross electricity generation (TWh)

According to the World

Energy Council, demand

for electricity is expected

to double to 2060. 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.


27

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

2013.0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2013 2020 2025 2030 2035 2040 2045 2050

Gross electricity capacity (GW)

Renewables (incl. Hydro)

Biomass with CCS

Biomass and waste

Nuclear

Fossil generation with CCS

Unabated fossil generation


28

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.

0

500

1000

1500

2000

2500

2025 2030 2035 2040 2045 2050 2055 2060

Emissions[M

tCO2e]

Years

Chemicalandpetrochemicals- totalemissions2025-2060(ETP2017

2DS)

Scope2emissions

Scope1emissions

0

500

1000

1500

2000

2500

3000

3500

4000

2025 2030 2035 2040 2045 2050 2055 2060

Emissions[M

tCO2e]

Years

Otherindustries- totalemissions2025-2060(ETP20172DS)

Scope2emissions

Scope1emissions

Outline

29

5. Scope 1 and 2

1. Target modelling

2. SBTi Criteria

3. Target analysis

Scope 1 and 2 I Call to Action criteria

30

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.


31

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.


32

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.


33

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.


34

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.

Outline

35

5. Scope 1 and 2

1. Target modelling

2. SBTi Criteria

3. Target analysis

Scope 1 and 2 I Analysis of targets

36

Examples of targets:

• Example 1: The company commits to reduce its S1+S2+S3 emissions 50%

by 2050 compared to emissions in 2010.

• 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.


37


• Example 1: The company commits to reduce its S1+S2+S3 emissions 50%

by 2050 compared to emissions in 2010.

o Shorter term target missing

o Not possible to figure out the level of ambition in S1+S2 portion of the target


38


• Example 2: The company commits to reduce its S1+S2+S3 emissions

intensity 50% by 2030 compared to its 2010 emissions intensity.

o Not possible to figure out the level of ambition in S1+S2 portion of the target.

o Without activity projections, it is not possible to figure out the impact of the target

in the absolute emissions of the company.


39


• Example 3: The company commits to reduce S1+S2 emissions by 2050

compared to its 2010 emissions.

o Shorter term target missing

o The target could potentially be in line with a 2ºC trajectory… or not...

o Depending on sector

o Depending on S1 / S2 ratio

o If S2 represents a significant a portion of S1+S2 emissions, the target

may not be ambitious enough.

Agenda

40





4. Q&A

5. Scope 1 and 2



8. Q&A

9. Closing

Outline

41


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

42

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.

Scope 3 I SBTi vision

43

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.

C13 - Power generators that distribute

fossil fuels: Targets required for the use

of sold products.

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.

Scope 3 I SBTi scope 3 criteria summary

Outline

44


1. SBTi criteria






Most targets are unapproved due to the failure to meet scope 3 criteria

C4 - S1 S2 target year 5 to 15 years from submission

11%

Other8%

C1 - S1 S2 company-wide emissions

covered7%

C6 - S1 S2 level of ambition4%

C5 - S1 S2 progress to date3%

C2 - S1 S2 significance threshold

3%

C12- S3 level of ambition27%

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%

Scope 364%

Scope 3 category analysis I Recent target validation results

45

Outline

46


1. SBTi criteria






47

Percentage-based

emissions

reduction targets

Percentage-based absolute target in

line with 2C pathway when possible or

intensity target based on the SDA

Other percentage-based intensity

target resulting in ambitious reductions

in absolute emissions

Non-emissions-

based targets

Performance-based target expressed

in absolute or intensity terms

Influence the behavior of suppliers or

customers

Most preferred

Least preferred

Scope 3 I Ambition

48

• 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

KPN will reduce its scope 3 emissions 20%

by 2025 and 50% by 2050 from a 2014

base year

Percentage-based absolute target or

intensity target in line with 2°C pathwaysAnd

Scope 3 I Ambition: examples of approved targets

49

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

Performance-based target expressed in

absolute or intensity terms

and

and

Scope 3 I Ambition: examples of approved targets

• 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

Daiichi Sankyo commits that 90% of key

suppliers by purchase value will institute

GHG reduction targets by fiscal year 2020

Influence the behavior of suppliers or

customers

And

Scope 3 I Examples of approved targets

50

• 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

Outline

51


1. SBTi criteria






• 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

Scope 3 I Sector profiles

88%

12%

Most companies have not reported emissions for all relevant scope 3 categories

Incomplete S3 screening

Complete S3 screening

Not all relevant

categories calculated

Relevant categories

calculated

53


Source: CDP 2014 data

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Automobiles &Components

Constructionmaterials

Containers &Packaging

Oil & Gas Food & BeveragesProcessing

Percent of scope 3 emissions in each category

Others

End-of-life treatment of soldproducts

Use of sold products

Downstream transportationand distribution

Upstream transportation anddistribution

Fuel- and energy-relatedactivities

Capital goods

Purchased goods andservices

54


Outline

55


1. SBTi criteria






56

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

Scope 3 I Additional guidance

57

Sector Progress description

Apparel Launched, in scoping phase

Oil and gasProposed method white paper to be finalized in

Q1 2018

Vehicle manufacturersTool, technical paper and guidance expected

December 2017

Financial institutions Seeking funding

Sector development information now available on www.sciencebasedtargets.org

Scope 3 I Sector guidance in support of scope 3 development

http://www.sciencebasedtargets.org/

58

SBTi Call to Action Guidelines

GHG Protocol Value Chain (Scope 3)

Standard

CDP Supply Chain Program

Scope 3 Evaluator tool

SBTi Website

Draft SBT Manual

GHG Protocol Scope 3 Calculation

Guidance

Scope 3 I Resources

Agenda

59





4. Q&A

5. Scope 1 and 2


7. Corporate perspective: Implementing an approved

SBT

8. Q&A

9. Closing

Agenda

60





4. Q&A

5. Scope 1 and 2



8. Q&A

9. Closing

Agenda

61





4. Q&A

5. Scope 1 and 2



8. Q&A

9. Closing

[email protected]

www.sciencebasedtargets.org

@sciencetargets


http://www.sciencebasedtargets.org/

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