Defining Decarbonization and Net Zero
Decarbonization refers to the systematic reduction of carbon emissions across all aspects of business operations and supply chains. For industries, this means adopting practices and technologies that reduce reliance on fossil fuels and lower greenhouse gas (GHG) emissions across all scopes.
Scope 1: Direct Emissions
Scope 1 emissions are direct GHG emissions that occur from sources owned or controlled by the organization.
Stationary Combustion: Emissions from burning fossil fuels in boilers, furnaces, or turbines.
Mobile Combustion: Emissions from company-owned vehicles, such as delivery trucks or service cars.
Process Emissions: Industrial emissions from chemical reactions during manufacturing, such as cement or steel production.
Fugitive Emissions: Leaks from refrigeration systems, air conditioning units, or natural gas pipelines.
Scope 2: Indirect Emissions from Energy Use
Scope 2 emissions are indirect GHG emissions from the consumption of purchased energy, such as electricity, steam, heating, or cooling. These emissions are generated at the power plants or facilities that produce the energy.
Scope 3: Other Indirect Emissions
Scope 3 emissions encompass all other indirect emissions that occur across the value chain, outside of the organization’s direct control. These emissions can be further divided into upstream and downstream categories.
Upstream Activities
Emissions from purchased goods and services.
Transportation and distribution of raw materials.
Employee commuting and business travel.
Waste disposal.
Downstream Activities:
Emissions from the use of sold products, such as fuel combustion in customer-owned vehicles.
End-of-life treatment of products, such as recycling or landfill disposal.
Transportation and distribution of finished goods.
As a result, decarbonization mitigates the negative impacts of climate change and supports a cleaner, more sustainable economy.
Figure 01
A representation of Scopes 1,2 & 3
Source: Ark Energy IC
Achieving "Net Zero" is about balancing the amount of carbon dioxide emitted with an equivalent amount removed from the atmosphere. To reach Net Zero, companies must not only reduce their emissions but also invest in carbon removal initiatives to offset any residual emissions. This goal underpins international climate efforts, such as the Paris Agreement, and is increasingly a benchmark for corporate environmental responsibility.
The journey to Net Zero is complex, requiring a clear understanding of emissions sources, actionable targets, and effective strategies. Decoding pathways for decarbonization involves breaking down this complexity into tangible steps, enabling organizations to navigate the transition with clarity and purpose.
An effective Net Zero strategy begins with a detailed emissions inventory to identify the largest sources of GHGs across operations, supply chains, and product life cycles. This Baseline Assessment involves:
Conducting energy audits to understand usage patterns and inefficiencies.
Mapping Scope 1 (direct), Scope 2 (indirect from purchased energy), and Scope 3 (indirect from the value chain) emissions to quantify their impact.
- Utilizing advanced tools, such as life-cycle assessments (LCA) and digital twin modeling, to simulate and predict outcomes for decarbonization initiatives.
Followed by, Setting Goals and Milestones, by establishing time-bound goals ensures progress and accountability. These include:
Short-term goals: Implementing quick wins like energy-efficient upgrades and low-carbon procurement practices.
Medium-term goals: Transitioning significant operational components to renewable energy sources.
Long-term goals: Achieving full decarbonization and investing in carbon capture and removal solutions.
These goals should align with global initiatives like the Science Based Targets initiative (SBTi), which defines emissions reduction pathways based on climate science.
And similar to any other strategy, Decarbonization and Net-Zero requires buy-in from:
Internal Stakeholders: Employees and leadership teams must be educated and incentivized to support sustainability initiatives.
External Stakeholders: Collaborating with suppliers, customers, and industry partners to align on sustainable practices.
Policymakers and Communities: Engaging local and international policymakers ensures alignment with evolving climate policies.