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May 22 --A group of nongovernmental organizations is looking to recruit 100 companies to set greenhouse gas emissions reduction targets that match up with the cuts scientists say are necessary to avert the worst impacts of climate change.
The majority of the world’s largest companies already have emissions reduction goals by now, but only a few of them, including Mars Inc. and NRG Energy, actually align their targets with an internationally agreed-upon goal to limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit).
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The rest have been deemed not ambitious enough, or they follow what has been called an “out-of-thin-air” approach to target-setting.
The World Resources Institute, World Wildlife Fund (WWF), CDP (formerly the Carbon Disclosure Project) and the United Nations Global Compact want to change that. They have come up with their own methodology for helping energy-intensive companies establish emissions targets in line with their sector’s projected level of economic activity and potential for emissions reductions.
A final version of this Sectoral Decarbonization Approach and a tool for implementing it were launched May 20 in Paris after about a year of work. It is one of many how-to guides companies can choose from when they want to go about setting a science-based target.
The launch was part of a week-long series of business-focused events meant to build momentum for a year-end UN summit on climate change being held in the same city.
As policy makers grapple with getting more than 190 countries to agree on a climate accord, businesses are trying to show that the emissions cuts outlined by scientists are in fact possible to achieve.
Kevin Rabinovitch, global director of sustainability at Mars Inc., said that in talking to different employees at factories, utilities and elsewhere, he has found “the closer you are to the actual equipment, the better you understand what’s possible.”
International negotiators, on the other hand, aren’t spending their time on the ground with industry, “so they’re reliant on other experts to give them a sense of what is possible and what is not,” he said.
“I think that’s an important role that we can play--we and many of our peers--to say this is not science fiction, this is not economic fiction,” Rabinovitch said in an interview before the launch event. “This is possible, this is doable, we’re doing it.”
To get a sense of how many companies are doing it, the CDP looked at a sample of the world’s largest publicly listed corporate emitters across the aluminum, cement, chemicals and electric utility sectors. Of the 70 companies sampled, less than half have set emissions reduction targets that align with the 2-degree Celsius goal, according to a report the CDP released at the event.
About a third of the companies have no emissions targets at all, while the remainder have targets that either don’t meet the 2-degree Celsius mark or don’t cover a meaningful percentage of the company’s emissions.
There were, however, five standouts in the CDP research: Hong Kong-based utility CLP; Italian power company ENEL and its subsidiary Endesa; NRG Energy, the largest independent power producer in the U.S.; Austrian utility Verbund and Swiss cement company Holcim. These companies have set science-based targets for cutting emissions that go out past 2020 and, in some cases, to 2050.
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Steve Corneli, NRG senior vice president for policy and strategy, said there are three reasons why the company--which has been focusing on utility-scale and distributed renewables as its conventional fossil-fuel power business faces declining demand growth--set a science-based goal to cut its greenhouse gas emissions 90 percent by 2050.
“First, we know it takes 30 or 40 years to transform a system with assets that have such long lives,” Corneli said in an e-mailed statement. “Without the right long-term goals in this industry, we’re not likely to achieve the right results.”
NRG also thinks they can be met profitably, “but only if we really focus on the right goals and make the effort to achieve them in ways that will increase the value we offer our customers and our shareholders,” he said.
“Third, we think they are the right targets--not just because we pay attention to science, but also because we pay attention to our customers,” Corneli said. “And increasingly, we see our customers demanding cleaner power as part of their energy solutions.”
What makes the targets of NRG and the other four companies stand out is that they are not only science-based but they are long-term.
Why does the long term matter? Part of it is because climate change is a long-term issue by nature, but it also has to do with companies’ investment horizons.
Companies’ investments today could have an impact on their emissions over the next three to four decades, Pedro Faria, CDP technical director and lead author of the report, told Bloomberg BNA. So companies should start planning now for a low-carbon future, he said.
In the meantime, companies also need interim targets, which Faria said “are more operational,” to hold themselves accountable toward their long-term goal.
“This is the reason why we strongly believe that the long-term vision is really important,” he said.
One company that has both a long-term target and a short-term check point is Mars.
When Mars started developing its corporate emissions target in 2008, the company saw “an opportunity here to try and build a sustainability program around fundamentally what is right … with a capital R,” Rabinovitch told Bloomberg BNA.
“In climate science, fortunately, there’s pretty clear indications of what’s necessary to avoid the worst consequences of climate change,” he said. The UN Intergovernmental Panel on Climate Change had warned at the time that global greenhouse gas emissions must be cut approximately 80 percent below 1990 levels by 2050 to stay within the 2-degree Celsius threshold.
So Mars took that 80 percent goal and turned it up a notch: the company pledged to eliminate emissions from its factories and offices by 2040. Having a more ambitious goal is meant to make up for the fact that it only covers direct emissions, which account for about one-seventh of the company’s total footprint. Mars eventually plans to bring in the rest of its supply chain emissions.
Until then, the company has been working toward an interim target to cut operational emissions 25 percent by 2015, from a 2007 baseline.
But achieving that target hasn’t been easy. The company’s emissions have fallen 5 percent as of the end of 2013, “which is frankly a little disappointing to us,” Rabinovitch said. “We had hoped and intended to be further.”
He said Mars made some progress on efficiency, but those gains were counteracted by other factors, so to offset it, the company is ramping up its renewable energy commitments. With the help of a huge wind farm in Texas, Mars is now back on track to meet the 25 percent goal in 2015.
Rabinovitch said one of the lessons he’s learned in having a science-based target is that while they are “stretch targets,” they still are grounded in something meaningful--trying to minimize the consequences of climate change for future generations--so that makes it easier to motivate people to solve the problem.
Otherwise, corporate climate targets can be hard to justify.
When Brown-Forman Corp., maker of Jack Daniel’s and other spirits and wines, set its first greenhouse gas targets in 2010, it did not use a science-based approach.
“We used the out-of-thin-air approach, which was, you know, we sat around, we looked at it, and we said, 'Okay we know we’re growing. What number do we think sounds good?' ” Andy Battjes, Brown-Forman’s director of environmental health and safety, said at the annual Climate Leadership Conference in February. The company developed an intensity target: a 30 percent reduction in carbon emissions per unit of production by 2020.
But without basing it on science, “when you get challenged either internally or externally … you really have no basis for why you chose that,” Battjes said.
So after its first goal was achieved eight years ahead of schedule, which Battjes said was perhaps an indication of “not trying hard enough,” Brown-Forman went back to the drawing board.
This time, the company aligned its new target--an absolute 15 percent reduction in emissions between 2012 and 2022--with climate science, using a method developed by WWF and CDP called The 3% Solution.
The 3% Solution is based on the idea that U.S. corporations should cut their carbon emissions by about 3 percent each year to achieve the 2020 carbon reductions scientists say are needed. In the process, companies could save up to $190 billion in 2020, according to their research.
“So as we looked at it, we said, 'Well, if we are concerned that climate change impacts are risks to our business, and there’s science out there that says the scale of reductions that are necessary to help reduce those impacts, then why don’t we set our targets in accordance with that science?' ” Battjes said.
For science-based emissions targets to really matter, more companies will need to sign on.
CDP, WRI and their partners want 100 companies to announce science-based goals by the end of 2015. By 2020, they want 250 companies with science-based targets.
So far, 41 global brands--including Honda Motor Co., H&M, Kellogg Co. and Unilever Plc--have made a commitment to science-based targets as part of a parallel Road to Paris effort organized by the CDP and the We Mean Business coalition. Some of those companies already have science-based targets.
“The challenge with science-based targets is if you really believe climate science, like we do, and only Mars is setting targets that look like that and delivering on them, it doesn’t work, right? It’s not good enough,” Rabinovitch said.
He said Mars wants to help make other companies believe in it, too, or at least act like they do, “because otherwise we still suffer the consequences, and everyone else still suffers the consequences.”
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More information on the science-based targets initiative is available at http://sciencebasedtargets.org/.
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