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How to get to net zero

Net zero is everywhere as we all aim to decarbonise and minimise the negative effects of climate change. But what does it mean and how do you get to net zero?

Definition

The first issue is defining it; net zero and carbon neutral are often used interchangeably, for example. What is the difference? Generally, carbon neutral tends to imply a reliance on carbon offsetting schemes, whereas net zero implies a balance more reliant on reducing emissions directly within the organisation and minimising offsets, but the lines are blurred and it is not always as simple.

What is the boundary of your net zero goal? You can have net zero cities, net zero countries, net zero houses, and of course, net zero organisations. 

Assuming we are talking about your organisation, then there is still a discussion about what is included. Organisational emissions are normally defined by the GHG Protocol which sets out Scope 1, 2 and 3 emissions. Scope 1 are direct, such as gas boilers and company vehicles, Scope 2 is indirect, normally grid electricity and Scope 3 emissions are those upstream or downstream of the organisation. Which are included in your definition of net zero? There are different approaches.

The UN Science Based Targets initiative (SBTi) is increasingly becoming the standard for organisations, requiring a 90-95% reduction in emissions by 2050, with the remainder allowing offsets. Whether you include Scope 3 depends on their significance and your type of organisation. Even then, you may wish to go faster or slower or use a different scheme. 

For organisations with lots of buildings there are also Government and industry schemes that are focused on decarbonisation, if not explicitly net zero. Two obvious examples are CRREM (Carbon Risk Real Estate Monitor) and MEES (Minimum Energy Efficiency Standards). Each sets specific requirements that need to be achieved for properties at different dates. Your net zero strategy needs to ensure that it meets these requirements as well as the overall goal.

There are other schemes and commitments in sectors such as steel, housing and aviation. It is important that you understand how these initiatives and regulations align and interact to get the best outcome.

Process

There is generally a five-stage process to your net zero strategy and implementation.

1) Define

The first step is to understand what you are seeking to achieve and by when, as outlined above. There will be several schemes and dates interacting, so it can be a substantial piece of work to understand what your route to net zero means. Most of them align, but there can be tensions.

2) Baseline

Before working out how to get to net zero, you must understand where your organisation is. Scope 1 and 2 emissions mean understanding your gas or heat demand, electricity use, business travel and emission from processes. Scope 3 emissions are more varied and may not be required.

Even for Scope 1 and 2, most companies we work with do not have the data immediately available. Where your organisation lets part of an office, for example, it is rare that the heat and electricity use is sub-metered. Records of fuel used in business travel are normally available. Ironically, it is often those organisations which have the lowest emissions that have the least data. This is because organisations with high energy uses tend to be tracking them already.

The sudden increase in homeworking is also a big issue for many organisations; we need to agree how to account for that.

In many cases we have to use benchmarks, estimations and extrapolations to develop the baseline, whilst we plan for better data collection in the future.

3) Business as usual

Net zero goals are normally multi-decade. That means that we need to think about how the world and your organisation will change over that period, outside your decarbonisation efforts. Most companies have growth plans, for example, so we need to account for that. The electrical grid is decarbonising fast, how will that contribute? Perhaps you are planning more international work or moving into new business areas. 

The Government has already made specific policy requirements around the energy performance of buildings and the switch to electric cars. The same for many industry sectors with specific commitments on issues such as steel production and shipping. We need to build that in as business as usual.

The result here is a projection of where you will be from your baseline to the date in the future. 

4) Analysis and engagement

The meat of a net zero strategy is the analysis and engagement. This is an iterative process where we look at all the opportunities for intervention and consider what they can do. They normally fall under one of five headings:

• Energy efficiency – LED lighting, variable speed pumps
• Fuel switching – electrifying heating, switching to biofuels
• Controls – sensors to turn things off, AI systems
• Generation – solar power, wind turbines
• Offsetting - third party schemes, or off balance sheet projects

For heavy industry, one issue can dominate, but for most there are a variety and we normally identify between 10-20 major opportunity areas to discuss with you.

A crucial phase of this iterative analysis and engagement is to involve the whole business; the strategy needs to be embraced across the business. Working with retail organisations in the past, for example, if we only engaged with the energy teams, we found that you are in tension with a sales business that is focused on making their product as attractive as possible. 

Net zero transitions can unlock large cost savings, but they will probably need capital investment and long-term projects. How will that fit in with committed financial plans? How will it align with planned and preventative maintenance programmes? If all your staff are busy, do you need more resource? 

Each part of the organisation needs to understand why this is important. How does it benefit them? In some cases, we need to talk to external partners, such as suppliers and customers. 

A successful plan needs to work for the whole organisation; it needs to be sustainable in all senses.

5) Plan

After several rounds of analysis and engagement, we develop the agreed strategy. This will include: 

• What and when – the interventions and when they will happen
• Responsibilities – who is delivering the work and who takes overall charge
• Financial plans – capital investment, ongoing costs and savings
• Monitoring and feedback – method to capture performance against plan and enable updating and adjustment

The strategy normally has three specific outputs:

• Detailed strategy – setting out in full the work undertaken, the results and plan. For use by the team overseeing the process
• Executive slides – an engaging and clear presentation setting out the key points. This may be for internal engagement and may also be shared with the public and third parties
• Underlying model – normally a spreadsheet techno-economic model that shows all the calculations and assumptions. To be used to track performance and enable the strategy to be updated as more information becomes available

For more information on our net zero expertise please contact Barny Evans. Click here to read more about how we can support your net zero goals.

29 November 2022