The Carbon Budget — A tool for setting business decarbonisation goals

How to ensure your business is in line with global expectations

Collage by Author from Pexels

Historic global carbon emissions are 2160Gt CO2e. Scenario modelling (Global Carbon Project) suggests that we need to maintain CO2 levels below 2750Gt +/- 400Gt to have a chance of staying below the 1.5degC warming limit.

Modeled impacts of CO2e on Global Temperature rise (Global Carbon Project)

Given the uncertainty, business’s need a flexible tool to ensure they are setting targets consistent with current public expectations, and easily adaptable in the likely event of these expectations shifting.

“…if a company doesn’t develop its own carbon budget, or its strategic response to a broader carbon budget, someone else may do it for you — and you may not like the result.” Energetics

Carbon Spirals by Open Climate Data @ed_hawkins

A carbon budget provides a tool that can help cut through the current rhetoric about long term emissions targets. It sets a clear and transparent cap on emissions over a fixed period of time, whilst also providing a degree of flexibility to adapt their specific decarbonisation strategy as relevant to their business circumstance.

The interactive ABC story provides a sensible way to think about setting a carbon budget.

Visualisation of Global Carbon Budget (ABC)

The ABC graphic highlights that from the current global emissions scenario of 35gt CO2e per year we have to reduce linearly to zero by about 2050 to achieve the 1.5degC Paris Agreement commitments.

Working through an example

This provides an excellent frame from which a business or individual can think about their remaining carbon budget in order to be broadly on track with global expectations. The following example helps to illustrate:

• Take your business current carbon footprint — Say it is 1.0mtpa CO2e
• Extrapolate linearly to zero through to 2050 (ie 29years)
• Take the area of this triangle to provide your carbon budget — 1.0 x 29year / 2 = 14.5Mt CO2e

Now you have the total emission budget available through to 2050, against which the business can create various scenarios to achieve the net zero target.

Example emission profile to establish a Carbon Budget (author)

This framework creates an urgency to act that is missing from the more highly publicised commitments to be at net zero by 2050 — what is stopping a business from delaying action until the last minute. By implementing a carbon budget action is brought forward — if a business did nothing to reduce emissions then their budget would be all consumed by 15 years.

Business as Usual (BAU) will spend the budget in 15 years (author)

Alternatively if they delay climate action by 5 years then a third of the budget is consumed in only 1/6th of the time, requiring far more aggressive action in subsequent years to reduce emissions. There may be a sensible business reason for this delay, and the carbon budget provides a defendable framework — ie total emissions over this period remain broadly within expectations.

A delay of 5 years in action to reduce carbon emissions will require more aggressive decarbonisation plans (author)

Hard to abate emissions

This also provides a frame for a business to work within, if they know they have aspects of their business that are hard to decarbonise.

Take cement manufacturing. Carbon emissions come from 3 main sources- ~50% from the chemical reaction when limestone is heated to form calcium oxide; ~40% from the fuel source used to heat the limestone and the remaining 10% from electricity used to power auxiliary processing equipment (motors etc). In this scenario, the Scope 2 electricity emissions can be quickly decarbonised, the Scope 1 emissions from the fuel source might be more difficult but should be achievable by electrifying the process and sourcing green power. However the emissions from the chemical reaction have no straight forward solution, and a significant technology breakthrough is required.

Using the concept of the carbon budget it make sense to rapidly decarbonise the first 50% of emissions to buy as much time as possible for the technology breakthrough to be developed whilst staying within the allowable budget.

The budget highlights the priority in addressing low hanging fruit with urgency to provide space for technology to solve for hard to abate emissions (author)

Splitting the Budget to shorter timeframe targets

A good suggestion is to split the carbon budget into manageable chunks of time with interim targets to more closely track and set objectives (Energetics). Business’s can clearly identify through these interim targets whether they are on track or not and put in place actions to course correct long before the 2050 deadline.

Using the Budget to establish interim targets (author)

Conclusion

A carbon budget is a tool that business’s can adopt to provide a clear, defendable and importantly adaptable frame under which they can develop a decarbonisation plan. By setting the emissions budget available, an urgency is create to take advantage of any low hanging opportunities so that more of the budget can be left for the harder challenges. This prudent risk management will also likely pay dividends on a global level, as it can be anticipated that many of these challenges will be solved earlier than predicted. This will allow a business to deliver under their budget and provide a better chance for the world to hit the aggressive targets required for the 1.5C scenario.

Further reading

• What is the Carbon Budget & Why 1.5 Celsius? | by Geoffrey von Zastrow | Medium
• What carbon budgets do, and what they can do for your business | Energetics
• Climate 201: What on Earth is a Carbon Budget? | by Physical Attraction | Medium
• Why the next five years are an opportunity to buy us time to solve climate change — ABC News
• Budgeting Carbon Like We Budget Money | by Bhavya Reddy | The Billfold | Medium
• The global carbon budget or how much CO2 is too much | by Akhil Puri | Earth 47 | Medium

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