Category: The Green Tau

30th May 2023

Understanding Net Zero Targets

Introduction

Global temperatures have fluctuated considerably over the geological lifetime of the plants, and indeed in the past have been at much higher levels than we are currently experiencing. What is different now is the rate at which global temperatures are rising – far faster than at any previous time. The current rise in temperatures is not ‘natural’ but anthropogenic- human-made. The cause of this rise in temperatures has been the increasing quantity of greenhouse gases (principally carbon dioxide) that through human activity has been released into the atmosphere. These act like an insulation jacket on a hot water cylinder keeping in the sun’s heat. 

The earth’s ecosystem can cope with a certain degree of fluctuation in global temperatures and still stay pretty much the same  – with snow and glaciers on mountain tops, ice sheets at the poles, a stable Gulf Stream in the Atlantic  and an equally stable jet stream in the high atmosphere – both ensuring  reliable  weather patterns. However there comes a point at which increases in global temperatures causes changes that are irreversible and/ or which accelerate further temperature rises. 

A 1.5C temperature rise is one such tipping point. Exceeding this will likely lead to the loss of the Greenland ice sheet and the Western Antarctic ice sheet. Both will expose ground that unlike the ice sheet, absorbs  rather than reflects the sun’s rays, and will thus accelerate rising temperatures. Whilst the sudden thawing of the northern permafrost which will release large amounts of methane which in the short term has an even greater greenhouse (warming)  effect than carbon dioxide. The 1.5C tipping point is also likely to see the death of many coral reefs which would otherwise be absorbing carbon dioxide, again leading to further increases in temperature. These will all be irreversible events in our human timescale. 

The need for action

For many decades scientists have been arguing for a reduction in carbon dioxide and other greenhouse gases – and this has not gone un-noticed by governments and communities. Here in the UK, the Climate Change Act was passed in 2008 and sets out legally binding emissions targets, initially aiming for an 80% reduction from 1990 levels by 2050. The Act also established a series of national carbon budgets, with a decreasing cap on emissions  for succeeding five year time spans. (These budgets exclude emissions from aviation, shipping and from imported goods).

In 2016 nearly 174 nations plus the EU signed up to the 2015 Paris Agreement that tasked them with reducing   emissions to a level that would keep the global temperature rise well below 2C and ideally no more then 1.5C. The  agreed target was that the world – as represented by the parties at COP21 that had produced the agreement – should seek to half greenhouse gas emissions by 2030 and to cut them to net zero by 2050 (at the latest).

By this time there was a growing grassroots movement of climate activists calling on governments and institutions to take action. Across the world the demands from climate activists led to many institutions and authorities declaring a ‘climate emergency’. The first such declaration was made by the City of Darebin in Melbourne, Australia in 2016. Bristol City Council, in 2018, became the first local authority to do so in the UK,  and in 2019 the UK Parliament itself declared an environment and climate emergency. This latter following 10 days of protests by Extinction Rebellion.

Terminology
Net zero is the end reference point rather than absolute zero because it is recognised that there will always be some areas of human activity that produce carbon and other greenhouse gas emissions – simply breathing produces carbon dioxide – but that these can be offset by increasing activities that absorb carbon dioxide. Such activities includes creating maintaining woodlands, peat lands, sea grasses etc.

Carbon neutral is a similar term related to net zero. It is used when an organisation/ production process etc has neutral balance vis a vis carbon produced and carbon absorbed. Another term in use is carbon negative. This is when an organisation/ production process removes more carbon dioxide than it produces. A well maintained forest could achieve this. Net zero on the other hand assumes that as far as possible all greenhouse gas emissions have been reduced with offsetting only used to compensate for a small and impossible to remove residue.

Net zero for nations 

Since 2016, more nations  have signed up to the Paris Agreement, with now just under 200 signatories. Each nation is tasked with working out its own plan to achieve the global net zero by 2050 target, producing a quota that is their Nationally Determined Contribution. Each NDC is added to a register at the UN, and at each subsequent Climate COP, they are invited to review and ideally improve upon their NDC.

The UK chooses to distinguish between emissions produced from within the UK borders and those from without. The UK’s measure includes thus emissions produced by companies who export products from the UK (which are often in the form of financial services which tend to have a lower footprint) and excludes emissions produced elsewhere on items that are imported (which are often manufactured goods coming in from China, India etc). The UK’s measure has also excluded emissions from aviation and shipping, but this is  going to being adjusted in relation to proposals for future decades.

New Zealand for its emissions budget, chooses to exclude biogenic methane being the emissions arising from livestock, agriculture and rotting organic waste. Whilst Costa Rica’s targets covers all greenhouse gases and aims to reach net zero within national boundaries – meaning it won’t use international offsets – by 2050. The plan sets out a strategy for decarbonising ten areas of the country’s economy, with interim goals such as 30% of its public transport fleet being zero-emissions by 2035. https://www.bbc.com/future/article/20211028-why-not-all-net-zero-emissions-targets-are-equal

To help nations predict the effectiveness of their plans, and to enable their progress to be independently monitored, The Climate Action Tracker scrutinises nation’s  climate actions and measures them against the globally agreed Paris Agreement aim of “holding warming well below 2°C, and pursuing efforts to limit warming to 1.5°C.” They report publicly the progress being made by leading  countries. The most recent assessment grades the UK’s rating as ‘almost sufficient’. (Costa Rica has the same rating whilst New Zealand is rated as ‘highly insufficient’. https://climateactiontracker.org/media/images/CAT_2021-09_Graph_SplitSummary_UK.original.png

CAT also draws data together to give a global overview of policies to determine likely trends in temperatures over the coming century. For example in November 2022 CAT reported on the future shape of  liquified natural gas production based on future projects (approved and proposed) and showed that the projected increase in production was well outside the scenario needed to keep with it the net zero target.   https://climateactiontracker.org/press/dash-for-gas-a-serious-threat-to-the-paris-agreements-warming-limit/

Net zero policies in the UK

The 2019 Environment and Climate Emergency Declaration  itself has no legally binding requirements, rather the legal obligation to reduce UK emissions lies with the 2008 Climate Change Act. This, in the light  of the Paris Agreement, was amended such that the end target for 2050 is now set to be net zero. And action has been taken:- UK terrestrial (ie emissions that occur within the UK borders) have fallen from 800million tonnes of CO2 in 1990 to 424.5 Mt CO2e in 2021.

The 2008 Climate Change Act also set up  the Climate Change Committee as an independent statutory body which advises the Government on achieving its emissions targets. To this end the CCC produces a five yearly carbon budget. The most recent, the Sixth Carbon Budget, covers the period 2033-2037. It includes the following four key steps:

1. Enabling people  and businesses to choose low-carbon solutions, as high carbon options are progressively phased out. By the early 2030s road transport and home heating will be largely electrical. Industry too will shift to using largely non fossil fuel energy.   
2. UK electricity production will be zero carbon by 2035 with offshore wind the main source. With new and expanding uses for electricity (arising from the above) electricity demand is likely to increase by 50%. Hydrogen production will also increase to fuel shipping and industry. 
3. Reducing demand for carbon-intensive activities through insulating buildings, reducing air and car travel, and reducing meat and diary consumption. These will additionally improve health and well being! 
4. Increasing the absorption of greenhouse gas through transforming agriculture, increasing tree planting and restoring peat lands.

The effect of these steps would be to reduce greenhouse gas emissions in 2035 to 20% of their level in 1990, putting the UK on track to meet the objectives of the Paris Agreement. 

The Climate Change Committee is also tasked with reviewing and reporting back to  Government the progress being made. The most recent assessment published in March 2023  covered the period of 2018 – 2023. The CCC stated that the “found very limited evidence of the implementation of adaptation at the scale needed to fully prepare for climate risks facing the UK across cities, communities, infrastructure, economy and ecosystems.” https://www.theccc.org.uk/publication/progress-in-adapting-to-climate-change-2023-report-to-parliament/ 

Net zero for businesses and organisations 

However it is not just governments that have pledged to take action to achieve the net zero 2050 target.  Educational institutions, businesses, health providers, local authorities, service providers, financial institutions etc too have drawn up climate action plans. As of 2022 75% of UK universities committed to net zero targets under scopes 1 and 2 (see below to learn more about scopes). 

https://www.universitiesuk.ac.uk/latest/insights-and-analysis/climate-crisis-what-progress-have

The Church of England has a route map to net zero by 2030 which includes church schools. https://www.churchofengland.org/sites/default/files/2022-09/RoutemapToNetZeroCarbonFinal.pdf

As of July 2022, the NHS became the first health system to embed net zero into legislation, through the Health and Care Act 2022 covering scopes 1,2 and 3.. https://www.england.nhs.uk/greenernhs/a-net-zero-nhs/

The London Borough of Richmond upon Thames declared a climate emergency in 2019, and has a Climate Change Strategy and Action plan with the target of becoming carbon neutral by 2030. https://richmond.gov.uk/news/press_office/campaigns_and_events/climate_emergency/how_we_can_tackle_climate_change/what_are_we_doing_about_climate_change

Unilever has a Climate Transition Action Plan which aims to achieve zero emissions by 2030 for their operations (eg manufacturing products – scope 1 emissions) and net zero across their supply chain by 2039 (scope 2 emissions) and are working on reducing the emissions arising from when their products are used by customers (eg when they consume energy having a shower or running a washing machine scope 3 emissions).  

https://www.unilever.com/planet-and-society/climate-action/taking-a-stand/

Greggs bakery chain plans to become net zero in its operations by 2035 and in its chains by 2040. https://www.futurenetzero.com/2022/04/12/greggs-rolls-onto-net-zero-by-2040/

Network Rail is aiming for net-zero emissions by 2045 in Scotland and by 2050 in the rest of Britain. https://www.networkrail.co.uk/sustainability/a-low-emission-railway/ whilst the train operator South West Trains, proposes to be net zero (scope 2 and 3) by 2040 https://www.southwesternrailway.com/other/about-us/our-plan/sustainability/-/media/62428c246dc84f0b97b2c055d1cda480.ashx

 Of course it is in everyone’s long term interests to take such action. Every activity whether it’s teaching a class of 5 year olds, running a train service, or producing bread will become much harder as the climate crisis escalates. How do you teach 30 children when temperatures rise to 40C? How do you run a train service when floods and landslides block the line? How do you produce bread when high temperatures and extended droughts halve the wheat crop?

Monitoring emissions and what is included.

Just as the Government has it advisory committee, so businesses, institutions and others have advisers – some commercial, some not for profit and others operating as charities. The UN is backing the global campaign ‘Race to Zero’ helping companies, cities, regions, financial and educational institutions, to  halve global emissions by 2030 and to net zero by 2050.  https://racetozero.unfccc.int/ , and the Science Based Targets initiative (SBTi): The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) that drives ambitious climate action in the private sector by enabling companies to set science-based emissions reduction targets: https://sciencebasedtargets.org/ 

About a third of Britain”s largest businesses have signed up for the Race to Zero campaign, pledging to eliminate their contribution to carbon emissions by 2050. 

The UK government records its net zero progress by measuring greenhouse gases emitted within its borders. (This means incidentally that it does not include in its assessment emissions that arise from items consumed in the UK but produced elsewhere such as China). Businesses likewise have to determine which emissions they are going to ‘own’. To assist this, emissions are categorised as falling into three areas – 

Scope 1 emissions which are directly related to their business – eg burning gas to smelt steel, burning petrol to run a bus.  

Scope 2 emissions which are generated off-site such as electricity which is produced in a regional power station but which is used to power a café‘s coffee machine, the emissions generated when your staff/ pupils travel  to work school. 

Scope 3 emissions which includes emissions relating to the products you use upstream of your business – eg the emissions arising from growing, transporting and roasting the coffee beans bought by the café; the emissions arising from manufacturing the bus; emissions arising in extracting the  iron ore that is used at the steel works – and those expended downstream – the emissions arising from recycling or otherwise disposing of used coffee cups, the emissions that arise from running a shower for someone  using Unilever’s soap,  or in the case of an oil refinery, the emissions arising when that oil is burnt to run someone’s boiler. 

Of these, scopes 1 and 2 are relatively easy for businesses to identify and adapt to achieve a net zero target. It maybe that they will have to shop around and find alternative suppliers for some items – eg a green electricity supplier, someone who grows organic coffee beans etc, or provide staff with bicycles. Scope 3 emissions can be trickier to adjust, and may involve a lot of working with suppliers to change the carbon footprint of what they produce – a café might work with both coffee roasters and coffee bean growers to grow, roast and ship a bean with a smaller footprint – or may mean finding new suppliers. Equally a café might look at the waste they produce – paper cups, plastic packaging, used coffee grounds – and work out ways of ensuring that the resulting emissions are reduced by for example, replacing single use cups with reusable ones, replacing plastic packaging with paper bags, or finding ways of recycling coffee grounds.

There is obviously an overlap between the different scopes – scope 3 emissions from one organisation being the scope 2 emissions of another. Working together is a key part of achieving net zero targets. This includes us as individuals as we make choices about how to travel to work/ school, whether to bring a keep cup for our take out coffees, or how long we spend in the shower. 

For some organisations such as fossil fuel companies, reducing scope 3 emissions can be a challenge to the raison d’être of the company: their  whole business is all about extracting and selling greenhouse gas emitting products.  One such company, Ørsted, faced this challenge head on: “In the late 2000s we were one of the most coal intensive power generators in Europe with an expanding oil and gas production business. But we took a strategic decision to become a green energy company, as we were convinced it was the right approach strategically, financially and environmentally. To drive our transformation, we invested heavily in renewable energy, particularly offshore wind; exited our fossil fuel businesses, and formulated our vision of creating a world that runs entirely on green energy. We are now one of the largest renewable energy companies by capacity globally and the leading offshore wind company. Financial performance has significantly improved whilst we have reduced our carbon emissions by 86%.” https://orsted.com/en/insights/white-papers/green-transformation-lessons-learned

Other fossil fuel companies however are trying to combine fossil fuels with renewables such that they can continue to extract and sell oil and gas (which still remain highly lucrative). Is this compatible with a net zero target? There are at least three ways in which this can be orchestrated. 

One is to set the net zero target for 2050, and to sit lightly to any interim targets such as halving emissions by 2030. In theory a company could continue its high emissions production until 2049 and then cut all production in the last year and achieve its net zero target. 

Second, it could mask its emissions in the interim by adding renewable energy production to its portfolio, and thus show a reduced intensity of their overall emissions  without cutting back on fossil fuels. 

Third it could invest in carbon absorbing projects – such as planting trees – or invest in carbon capture projects – where carbon dioxide emissions are trapped as they are produced and ‘locked away’ through physically storing the gas underground or by mixing it with other materials to store it as different chemical compound. The former take time to become effective: trees need to grow before they become efficient stores of CO2 and managed to ensure a long and useful life; whilst as regards carbon capture, much of that is based in untested technology that is not yet available at the necessary scale needed. 

Net zero targets and green washing 

Investopedia defines green washing as “the process of conveying a false impression or misleading information about how a company’s products are environmentally sound. Greenwashing involves making an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than they actually do. In addition, greenwashing may occur when a company attempts to emphasise sustainable aspects of a product to overshadow the company’s involvement in environmentally damaging practices”.

Reliable monitoring and certification schemes are critical if ‘green washing’ is to be avoided. 

In 2022 the Uk government passed legislation that requires Britain’s largest companies to report on the climate risks they face and their strategies to overcome these. In other words they must have thought through climate transition plan that shows how they will transition to a low carbon future  in line with the Government’s net zero target. As well as having a duty under the UK companies Act 2006 to promote the success of the company, company directors must also have regard to the impact of the company’s operations on the environment and the community. (For more info see https://www.allenovery.com/en-gb/global/news-and-insights/publications/risks-for-directors-in-the-spotlight-climate-litigation)

Having legislated for the requirement to disclose and for the directors’ responsibilities vis a vis the environment, it is now possible for interested parties (principally share holders) to challenge companies at law to prove that they are indeed shifting their businesses in the direction needed to address the climate crisis. 

In February 2023, the environmental law organisation ClientEarth announced that it was taking Shell to court. ClientEarth. “The shift to a low-carbon economy is not just inevitable, it’s already happening.”But the Shell board is persisting with a transition strategy that is “fundamentally flawed,” Benson claims. He says it leaves the company seriously exposed to the risks climate change poses to their success in the future – “despite the board’s legal duty to manage those risks”. Shell says its ‘Energy Transition Strategy’ – including its plan to be net zero by 2050 – is consistent with the 1.5C temperature goal of the Paris Agreement. The company also claims its plan to halve emissions by 2030 is “industry-leading”. But ClientEarth says this covers less than 10 per cent of its overall emissions and independent assessments have found that Shell’s climate strategy is not Paris-aligned.

https://www.euronews.com/green/2023/02/09/shells-board-of-directors-sued-over-flawed-climate-strategy-in-first-of-its-kind-lawsuit. (NB Shell’s Energy Transition Strategy covers only scope 1 and 2 emissions)

This year’s Shell AGM faced a shareholder vote backed by big pension funds and investors to set carbon emission reduction targets for 2030, while dozens of protesters called for an immediate end to fossil fuel production –  https://www.theguardian.com/business/2023/may/23/shell-agm-protests-emissions-targets-oil-fossil-fuels However the level of objection was insufficient to win a resounding vote against the Shell board. 

Interim conclusion 

The pursuit of net zero targets by governments and organisations will continue to be live issue.