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Science-Based Targets Initiative

15th April, 2024

Science-Based Targets Initiative

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Context

  • A decision by the Science Based Targets Initiative (SBTi), permitting carbon offsetting for Scope 3 emissions of businesses with SBTi-based climate targets, has stirred controversy and skepticism. This decision involves tightening regulations around carbon offsetting practices.

Debate over the decision of Science Based Targets Initiative (SBTi) :

  • The SBTi board of trustees recently announced its plan to expand the use of 'environmental attribute certificates' (EAC) to reduce Scope 3 emissions.
    • SBTi defines EACs as including emission reduction credits (or carbon credits) and energy certificates.
  • The controversy surrounding the watchdog's decision reflects ongoing debates within the corporate sector and environmental community about the role and effectiveness of carbon offsetting in addressing climate change.
  • A new analysis, ‘The Corporate Climate Responsibility Monitor (CCRM) 2024’, by the New Climate Institute and Carbon Market Watch, reveals that Scope 3 emissions could go up to as much as 99%, as seen in the automobile sector.
    • This makes measuring, reporting, and reducing Scope 3 emissions incredibly important for companies.
  • In SBTi’s Corporate Net-Zero Standard Criteria, the standard does not permit the use of carbon credits to count as emission reductions toward a company’s near-term or long-term SBTs.
    • Instead, they are only to be considered as an option for neutralising ‘residual emissions’, which are emissions that persist after a company has achieved its long-term SBTs.
    • Or they can be used to finance additional climate mitigation efforts beyond their science-based emission reduction targets, extending beyond their value chain.

Carbon Offset:

  • Carbon offsetting is a method used by companies to compensate for their greenhouse gas emissions by funding projects that reduce or remove emissions elsewhere.
  • It allows companies to achieve carbon neutrality by balancing their emissions with offset projects.
  • Importance of Carbon Offsetting:
    • Carbon offsetting is viewed as a valuable tool in the fight against climate change, especially for industries that find it challenging to reduce emissions directly.
    • It enables companies to take immediate action to offset their emissions while working on longer-term emission reduction strategies.
  • Complexities of Carbon Offsetting:
    • Carbon offsetting has limitations and complexities, including concerns about additionality (whether offset projects truly result in additional emissions reductions), permanence (the long-term effectiveness of offset projects), and leakage (emissions shifting from one location to another).
    • Despite these challenges, carbon offsetting remains a widely used approach by companies worldwide.
  • Need for a Balanced Approach:
    • There is a need to take a balanced approach to carbon offsetting.
    • While acknowledging its limitations, carbon offsetting can be a part of a broader strategy for corporate climate action, alongside efforts to reduce emissions directly and transition to renewable energy sources.

About Science Based Targets Initiative (SBTi):

  • The Science Based Targets Initiative (SBTi) is a collaborative initiative aimed at helping companies set ambitious climate targets aligned with climate science.
  • Purpose:
    • The primary purpose of the SBTi is to drive corporate action on climate change by providing a framework for setting science-based targets.
    • It seeks to ensure that corporate greenhouse gas reduction targets are consistent with the level of decarbonization required to limit global warming to well below 2 degrees Celsius above pre-industrial levels, as outlined in the Paris Agreement.
  • Collaborative Effort:
    • The SBTi is a collaboration between CDP, the United Nations Global Compact (UNGC), the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF).
    • It leverages the expertise of these organizations to develop and promote best practices for setting science-based targets.
  • Criteria for Science-Based Targets:
    • The SBTi provides companies with criteria and guidance for setting science-based targets.
    • Targets are considered science-based if they are consistent with the level of decarbonization required to keep global temperature rise below 2 degrees Celsius, and preferably 1.5 degrees Celsius, compared to pre-industrial levels.
    • Targets must cover Scope 1, Scope 2, and Scope 3 emissions and be based on the best available science.
  • Benefits for Companies:
    • Adopting science-based targets can help companies future-proof their business by aligning with climate goals and reducing risks associated with climate change.
    • It can also enhance corporate reputation, attract investors, and drive innovation.

Scope 1, Scope 2, and Scope 3 emissions

Scope 1, Scope 2, and Scope 3 emissions are different categories used to classify greenhouse gas emissions associated with an organization's activities. Here's a breakdown of each scope:

Scope 1 Emissions:

●Scope 1 emissions refer to direct greenhouse gas emissions that occur from sources that are owned or controlled by the reporting entity.

●These emissions typically include:

●Combustion of fossil fuels in owned or controlled facilities, such as emissions from boilers, furnaces, vehicles, and other equipment.

●Emissions from chemical reactions, such as those occurring during production processes.

●Emissions from owned or controlled biological sources, such as methane from livestock or wastewater treatment.

Scope 2 Emissions:

●Scope 2 emissions represent indirect greenhouse gas emissions associated with the generation of electricity, heating, or cooling consumed by the reporting entity.

●These emissions are produced by third-party sources but are associated with the organization's activities.

Scope 2 emissions are typically categorized into two types:

●Market-based emissions: These are emissions associated with the electricity purchased by the organization, accounting for the emissions intensity of the purchased electricity.

●Location-based emissions: These are emissions based on the average emissions intensity of the electricity grid in the location where the electricity is consumed.

Scope 3 Emissions:

●Scope 3 emissions include all other indirect greenhouse gas emissions that occur as a result of the organization's activities but are not included in Scope 1 or Scope 2.

●These emissions typically result from sources that are not owned or controlled by the reporting entity but are associated with its value chain, including:

●Upstream emissions from the extraction, production, and transportation of purchased goods and services.

●Downstream emissions from the use and disposal of products and services sold by the organization.

●Emissions from business travel, employee commuting, waste generation, and other activities related to the organization's operations but occurring outside of its direct control.

Source: https://www.downtoearth.org.in/blog/climate-change/carbon-controversy-corporate-climate-action-watchdog-s-new-decision-regarding-use-of-offsetting-causes-backlash-95545

PRACTICE QUESTION

Q. Match the following categories of greenhouse gas emissions with their corresponding definitions:

A) Scope 1 Emissions

B) Scope 2 Emissions

C) Scope 3 Emissions

  1. Direct emissions from on-site combustion and chemical reactions are owned or controlled by the reporting entity.
  2. Indirect emissions from the consumption of purchased goods and services, including transportation and waste disposal.
  3. Emissions from purchased electricity, categorised into market-based and location-based emissions.

Match:

  1. A-1, B-3, C-2
  2. A-2, B-1, C-3
  3. A-3, B-1, C-2
  4. A-2, B-3, C-1

Answer: A