• Graham Harris

There's a right way and a wrong way to set a GHG emissions reduction target.

Developing a greenhouse gas inventory is typically part of a process. At its simplest, this process can be reduced to three-stages: 1) measure (quantify the inventory), 2) plan (to reduce emissions through a variety of actions) and 3) act (implement the plan). The process then repeats in a cycle, beginning again with measurement (quantifying changes to the inventory, including the impacts of the implemented actions) and continuing with plan adjustments, additional actions and so on.

The idea of this cycle, of course, is to continually drive improvement towards a target.

It’s this end goal – the reduction target - that is the subject of this blog post. Often, one of the questions clients have on developing their initial inventory is “what’s the right target to set?” Targets can take many forms, but I think of all targets as belonging to one of two broad groups:

1. Independent (or 'fixed') targets – These can be expressed as a reduction target compared to a baseline – either in percentage form (e.g. to reduce emissions by 30% by 2030) or in absolute form (e.g. to reduce emissions by 30,000 tonnes CO2e by 2030) – or may be expressed as an achievement target (e.g. to reduce emissions to 300,000 tonnes CO2e by 2030). However, what these targets have in common is a defined and predictable end-goal because the target is independent of the performance of other variables[1].

2. Dependent (or 'moving') targets – By contrast to independent targets, these are targets for which the impact is fundamentally dependent on other parameters. The most common and popular of these kinds of targets is an intensity-based target. Here, the target is expressed in units of GHGs per unit of production, throughput, revenue, expenditure, floor area or other appropriate metric. So a target may be to reduce emissions per unit of production (tonnes CO2e/unit) by 30% by 2030. Another kind of dependent target used is a benchmarking target, whereby emissions performance is compared to a peer group (e.g. to reduce emissions to the lowest 30% of the industry, to reduce emissions to 30% below the industry average, etc.) These targets all share the characteristic that their impact depends on the performance of another variable, be it changes in production or changes in peer group emissions performance. As such, the end result of these kinds of targets is far less predictable.

So, in the context of greenhouse gas emissions reduction, what is the right target to set? To begin answering this question, let’s start by stating what’s the wrong kind of target to set. Ironically, it is the one which most organizations adopt – which is to say, they adopt only a dependent target. Unfortunately, the very reason organizations are attracted to these kinds of targets – which is that the fuzzy nature of these targets more easily align with proposed organizational growth – is the same reason that using them in isolation is ineffective in achieving real emissions reductions.

Consider that under any growth scenario a dependent target (e.g. 30% reduction in tonnes CO2e/unit by 2030) will, due to the growth in the dependent variable, always result in a smaller-than-target reduction in actual GHG emissions released. And indeed, if the dependent variable grows by more than the target over the same time-frame, it won’t reduce GHG emissions at all! In this simple illustration, Organization A produces 100 Units and releases 100 tonnes CO2e in 2021. They also have an emissions intensity reduction target of 30%, compared to 2021, by 2030. However, they also have a growth plan of 5% production increase annually. End result? In 2030, Organization A celebrates hitting their emissions intensity reduction target – but despite this, their actual emissions have risen by almost 9%.

This is not to say that emissions intensity targets are a bad thing per se. They’re not. Monitoring the emissions intensity of your organization is an excellent indicator of your progress and setting an emissions intensity reduction target may be a good way of motivating action. However, dependent targets like this shouldn’t be used in isolation but instead only where they are part of a wider emissions reduction plan that also includes some kind of independent GHG emissions reduction target.

Fundamentally, we have to view GHG emissions reduction targets in the context of the science. The carrying capacity of our world’s environment to absorb GHG emissions without damaging changes has been exceeded and the science is clear that we need to reduce GHG emissions to net zero by 2050 to avoid the worst effects of a warmer climate. Net zero is an absolute, independent target – not a dependent one. So it’s clear that the right kind of target to set for organizational greenhouse gas emissions should be (or should include) an independent one. This may be harder to reach, but big problems require bold solutions, and there’s no bigger problem than climate change.

[1] Of course, the GHGs emitted are dependent on many variables! Fuel consumed, distance travelled, goods purchased, etc. However, the target itself is not.

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