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What is decarbonization?

Decarbonization is both a method of climate change mitigation and the process of significantly reducing or eliminating carbon dioxide (CO2) and other greenhouse gas (GHG) emissions from the atmosphere.

To keep the global temperature from warming more than 1.5°C (2.7°F) above pre-industrial levels, many countries have set goals to reach net zero GHG emissions by 2050. Net zero is the point at which GHG emissions going into the atmosphere are balanced by an equivalent amount removed from the atmosphere. Rapid decarbonization efforts are necessary to achieve net zero emissions.

As a first step, decarbonization requires drastic reduction of the release of GHG emissions from human activities to the atmosphere. For residual emissions that can't be eliminated, steps must be taken to remove them from the atmosphere.

The term “decarbonization” generally captures all GHG emissions, including carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, nitrogen trifluoride, perfluorocabons and hydrofluorocarbons. The potency of GHGs is measured by their global warming potential (link resides outside ibm.com), expressed in CO2 equivalents.

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Why decarbonization matters

The more greenhouse gas emissions added to the atmosphere, the more the planet warms. The more the planet warms, the more significant the impacts of climate change will be.

In 2015, nearly 200 nations committed to the Paris Agreement (link resides outside ibm.com) with the stated goal of limiting the Earth’s warming to below 2°C (3.6°F) above pre-industrial levels. Parties agreed that pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels would significantly reduce the risks and impacts of climate change.

In its 2022 Emissions Gap Report (link resides outside ibm.com), the United Nations Environment Programme (link resides outside ibm.com) highlighted the urgent need to reduce global GHG emissions. According to the report, to limit the global temperature rise to 1.5°C, emissions must be cut by 45% within the next eight years, compared to the current reduction policies (link resides outside ibm.com). In addition, the United Nations report makes it clear that beyond 2030, carbon reductions must continue to decline rapidly to avoid exhausting the limited remaining atmospheric carbon budget (link resides outside ibm.com).

Reducing global emissions through deep decarbonization is vital to altering the trajectory of climate change that human activity has caused.

Some strategies for decarbonization

Organizations make decisions in formulating their decarbonization strategy based on what makes sense for the business, what opportunities exist and what they can feasibly implement. Based on these criteria, organizations can adopt several key strategies:

  • Improve operational efficiency
  • Pursue electrification
  • Switch to low-carbon energy sources
  • Drive reduction of upstream and downstream Scope 3 emissions
  • Put a process in place to deal with residual emissions

Improve operational efficiency

Energy efficiency is the first fuel—the fuel that you don’t have to use.1 Looking internally to eliminate energy waste and identify opportunities to increase efficiency can help save resources and reduce energy system emissions. Performance monitoring software can identify energy use issues that manual, human monitoring might overlook. Other software can be used to benchmark asset performance against key performance indicators (KPIs) and highlight areas where energy consumption can be reduced. Also, when refreshing or upgrading equipment, energy-efficient technology should be selected.

Pursue electrification

Electrification is the process of replacing technologies that use fossil fuels with technologies that use electricity as a source of clean energy. Examples of processes these technologies support include heating, cooling, ventilation, transportation and manufacturing.

Switch to low-carbon energy sources

Switching to low-carbon fuels or carbon-free renewable energy sources is something organizations can do today. This switch might take the form of installing renewable power generation technologies such as solar power across the organization’s property portfolio, or contractual arrangements to procure renewable power from energy providers. Examples of carbon-free energy sources include wind, solar, hydropower and biomass.

Drive reduction of upstream and downstream Scope 3 emissions

By engaging suppliers up and down the supply chain, organizations can collaborate to accelerate decarbonization (link resides outside ibm.com).

Put a process in place to deal with residual emissions

It will be exceedingly challenging—if not impossible—to eliminate all GHG emissions from human activities, so reaching net zero GHG emissions will require removal of residual emissions through either natural processes or technology-based solutions. One such technology, called carbon capture and storage, involves capturing emissions from processes before they’re released into the atmosphere followed by securely and permanently storing the captured emissions deep underground or making them available for further processing. Another technology is direct air capture technology, which sucks carbon dioxide out of the air by using fans to move air over substances that bind specifically to the carbon dioxide.

Setting and tracking decarbonization targets

Today, GHG emissions reduction is a key pillar in most organizations’ sustainability strategies and environmental, social and governance (ESG) reporting. The following are key processes companies should follow for data management in the setting and tracking of decarbonization targets:

Understand impact and establish baselines

Before embarking on an emissions-reduction journey, organizations must first understand the impact of their operations and set baselines against which progress will be measured. Data is necessary to complete these steps, so strategic and upfront decisions help maximize the value of this data. These decisions include what data needs to be collected, where data should be stored, how data needs to be structured and managed and how to ensure data integrity and audit readiness. Establishing baselines and clear criteria for measuring performance (for example, reductions in energy consumption and GHG emissions) enables performance assessment and drive improvements.

Create targets and commit publicly

Next is determining which target to aim for and by when. Examples of targets include powering a company’s operations with 100% renewable electricity, sourcing 100% of the energy a company consumes from renewables and achieving net zero GHG emissions on a timeline that is consistent with—or more aggressive than—the recommendations of the Intergovernmental Panel on Climate Change (link resides outside ibm.com) to limit the Earth’s warming to 1.5°C above pre-industrial levels. Make your commitments public, clearly stating their scope and how you plan to measure progress.

Execute actions

Once the target is set, execution needs to kick in. Execution may begin with translating the high-level organization target into actionable steps all the way down to the individual asset level, such as heating, ventilation and air conditioning systems. There are many dimensions that can be considered when breaking down a target, such as asset type, emissions source and location. Whichever approach is selected, it’s important that the data needed to measure progress is identified, the data structure is configured to match and data reporting mechanisms are deployed.

Only with the availability of factual and credible data can an organization be effective in identifying where they are exceeding expectations or where they are falling short. A superior data management platform needs to be a tool that helps inform strategic decisions.

Track and report on performance against goals

Many organizations are seizing on the opportunity to report on their environmental performance as a key competitive differentiator. Examples of environmental KPIs include GHG emissions reduction and energy and water use efficiency. For others, increasing regulatory requirements and stakeholder expectations for information on sustainability performance are leading to more reporting. Either way, reporting requires a strong data foundation. It needs to be robust and set up to support various reporting motivations and frameworks.

Learn more about developing an ESG data foundation and calculating GHG emissions for reporting

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Resources What is net zero?

Net zero is the point at which greenhouse gases emitted into the atmosphere are balanced by an equivalent amount removed from the atmosphere.

What is carbon accounting?

Carbon accounting allows organizations to quantify their greenhouse gas emissions, understand their climate impact and set goals to reduce their emissions.

Electrification: Decarbonizing buildings through fuel switching

Electrification is the process by which technologies that use coal, oil and natural gas are replaced with those that draw energy from electricity.

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1Energy efficiency is the first fuel, and demand for it needs to grow, (link resides outside ibm.com) IEA, Brian Motherway, Dec 2019.