CarbonTP provides a structured approach to identify, model, analyse and prioritise initiatives to achieve transformative change.
We provide advisory and implementation services across these key areas:
What is it?
Emissions target setting is an iterative process that evolves with a company’s changing carbon ambitions. It serves a dual purpose; to signal to the market and other key stakeholders the company’s intent with respect to decarbonisation, and to drive behaviours within the organisation to deliver the desired emissions outcome.
Leading companies are starting to use Science Based Targets (SBTs) to define their decarbonisation trajectories. SBTs can be used to align company emissions targets with the 2015 Paris Agreement target of limiting global average temperature rise to 2°C or below. SBTs translate Paris Agreement targets into emissions intensity target trajectories, based on emissions per unit of output rather than absolute emissions targets, and can easily be applied at the corporate level.
For most companies this journey is just beginning, and their emissions targets are unlikely to be backed by feasible plans to deliver them.
Why do it?
Financial stakeholder organisations, such as CA100+ and TPI, are pressuring global companies to adopt Science Based Targets to effectively manage financial risk. A failure to properly manage the financial risks associated with climate change is likely to result in a reallocation of investor capital away from non-compliant “higher risk” organisations.
What is it?
Emissions forecasting involves modelling future greenhouse gas emissions from operations across a range of production and project development scenarios.
Why is it important?
Emissions forecasts allow companies to map their emissions trajectories over time against company targets and regulatory requirements. Emissions abatement and carbon offset strategies are guided by forecasts which provide validation for the targets and justification for emissions reduction activities.
Integrated industrial facilities typically have many interdependencies between facility components requiring appropriately detailed emissions forecasting models to account for them. If properly constructed, emissions forecasting models are helpful in both identifying and quantifying emissions abatement opportunities. Accurate modelling is crucial to avoid double counting across multiple emissions abatement opportunities, allowing development of true Marginal Abatement Cost Curves [MAC Curves] and minimising the risk of wasted capital.
What is it?
Emissions abatement is the development and implementation of projects which directly reduce carbon emissions from a company’s current or future operations and should not be confused with carbon offsets. Abatement opportunities may range from installing a variable speed electric drive, to building a renewable hybrid power plant, to implementing a CCS project. Proper evaluation of abatement opportunities is critical.
Why is evaluation so critical?
Abatement opportunities vary considerably in magnitude, lifetime and cost and cannot be considered in isolation from each other or from traditional project investment decisions. Projects with higher emissions profiles require greater abatement initiatives to satisfy corporate emissions targets. These additional abatement costs must be factored into decision making.
Additionally, there are often overlapping emissions abatement potentials across concurrent projects and care is required to ensure the marginal abatement potential and economics of each project are valid. This issue is managed by the generation of Marginal Abatement Cost (MAC) curves.
What Is It?
Clean energy integration is the deployment of clean energy technologies such as solar, wind and batteries to supply power for extraction, processing and transportation of a company’s products.
Why do it?
Replacement of fossil fuel energy sources with clean power generation can significantly reduce carbon emissions and is often NPV positive when deployed effectively. For energy companies it can be a way to gain experience in the clean energy sector in preparation for transitioning a portion of the business away from fossil fuels and reducing carbon intensities.
What is it?
Capital allocation refers to the process of choosing which projects to fund from a portfolio of possible options.
Today our clients face the challenge of optimising their allocation of capital across traditional investments, emissions abatement projects, and renewable energy opportunities.
Why is it more of an issue now?
An increased focus on the transition to clean energy is driving a step change in the complexity of capital allocation decisions with additional project types, more variables to consider and greater uncertainty.
Considering that traditional development projects drive future emissions profiles, and abatement projects seek to reduce these emissions, different project types cannot be considered in isolation.
A holistic approach must be taken to portfolio optimisation to maximise shareholder value within corporate financial constraints, while also delivering on emissions targets at the lowest long-term cost.
What are they?
Carbon offsets are carbon emission sinks or carbon sequestration activities executed in addition to carbon emissions abatement activities. A carbon offset unit represents one tonne of CO2e stored or avoided by a project, and can be purchased by a company to reduce its net carbon emissions.
Offsets may be viewed as a ‘get out of jail free card’ by organisations who are yet to develop a transition strategy. However, mounting shareholder pressure is likely to result in offset strategies being restricted to supplementing emission reductions as part of a comprehensive transition strategy.
Why offset?
Carbon offsets can be purchased when emissions abatement opportunities cease to become a cost-effective means to deliver on a company’s carbon emissions targets. A project’s marginal cost of emissions abatement, and the cost of carbon offsets, will therefore determine the optimal use of carbon offsets.
We recommend carbon offset purchases be based on accurate emissions forecasts and supplemental to an effective emissions abatement strategy.