In the lifetime of infrastructure, 2050 is just around the corner. Infrastructure owners need routemaps that will guide them to net-zero carbon – and their journeys need to start now, writes Priyesh Depala.
Organisations are rushing to set carbon reduction targets. The move follows the UK government’s 2019 commitment to achieve net-zero greenhouse gas emissions nationally by 2050 and now the focus on a green recovery from the COVID-19 pandemic. Working towards net-zero will help organisations to stay abreast of new legislation and regulatory change, gain competitive advantage, avoid stranded assets, and maintain positive relations with investors, stakeholders and customers.
In 2020 we, with fellow consultant Ricardo, developed the first sector-wide net-zero routemap for the UK water industry: ‘Net zero 2030 routemap – unlocking a net-zero carbon future’ was published by Water UK, the body representing the UK’s water and wastewater companies, in November. In February 2021 we held the first of five webinars explaining why it is important for every infrastructure owner to develop a routemap to net-zero.
A clear target
Net-zero by 2050 is something everybody can understand – in contrast to the UK’s previous commitment, which was to reduce carbon emissions to 80% below 1990 levels. Net-zero means cutting greenhouse gas emissions as much as possible and then sequestering or offsetting any emissions that are left.
Getting to net-zero involves setting interim targets guided by climate science. Route-mapping is about plotting the journey, starting now, to make the transition to net-zero over time. In doing so it is important to recognise that infrastructure assets built today will be in use for many decades to come: new assets must be net-zero ready from the outset. It is important not to delay, because although the deadline is three decades away, organisations will have to spend more to reduce emissions faster, the later they start.
Once targets have been set, organisations can start to put the necessary processes and tools into place. However, many organisations that have pledged to become net-zero do not yet have a routemap and are therefore unclear on what they need to do. This is what a snap survey of webinar participants showed:
- Two thirds work or an organisation that has committed to net-zero
- Half said their organisation has not developed a routemap
- Just under a quarter said their organisation is developing a routemap
- And just over a quarter said there was no process in place to meet the target
A credible routemap should set out an emissions reduction hierarchy focused on making the most cost-efficient and sustainable emissions reductions first.
- Tier 1 reductions come from measures that avoid emissions by reducing waste, making your operations more efficient and using new technologies.
- Tier 2 reductions arise through the use of renewable energy, either by installing capacity onsite or by buying clean energy.
- Tier 3 reductions come from carbon offsets.
A routemap is an effective way to communicate your plan of action, internally and externally, explaining how your stakeholders can help you to meet your targets.
So what does setting a net-zero target involve?
The first step is to determine your boundaries – what is the scope of your target, when is the end date and how are you going to achieve your goals?
Boundaries are unique to each organisation: will your net-zero target address just the emissions from your core business or market, or do you include other regions, franchises or subsidiaries? You also need to consider if you are just going to focus on emissions from your own facilities and energy use (Scope 1 and 2 emissions) or look at emissions within your value chain (Scope 3).
Once these boundaries are set, the next step is to set a baseline. For the water industry routemap, Water UK had access to 10 years of emissions data, showing where the industry’s major emissions were and how that had changed over time. The data showed that the industry had benefited significantly from grid decarbonisation and made good progress on improving energy efficiency, but many of its Scope 1 and 3 emissions had remained stable or were growing. It highlighted where attention and effort should be focused.
In another snap poll, three quarters of webinar respondents said their organisation had good data for Scope 1 and just under two thirds had good Scope 2 data. However, only a tenth said their organisation has a good grasp of all their Scope 3 emissions from their supply chain.
Organisations do not require detailed data on every aspect of their operations before taking action; they simply need to collect and understand available data, and fill the gaps over time. This understanding helps organisations to rapidly take command of the carbon agenda for their organisation and drive change.
Identify priority areas
The best path to net-zero is different for every organisation. However, there are some common opportunities and risks. Our analysis of water industry emissions followed the emissions reduction hierarchy and revealed some comparatively easy wins – for example, developing renewable energy generating capacity to decarbonise electricity supply. It also highlighted challenges that are so significant they cannot be deferred until later – such as ‘fugitive’ process emissions from wastewater treatment. Knowing where to focus enables you to focus effort, in the case of fugitive emissions the focus being on driving process efficiencies, using alternative technologies and identifying credible sequestration and offset options.
Organisations should take full advantage of their own experts, as well as those in their supply chain and external consultancies. They should group similar challenges together to encourage innovation and achieve efficiencies of scale. And they need to consider not just technologies that are available now, but those that will come on stream in years to come.
To help prioritise options, you can use a marginal abatement cost curve, which will identify options that cost least, that can be incorporated into planned activities, and that carry little or no risk – so-called ‘no regrets’ options. Procuring renewable power and energy efficiency are good examples. As well cost, you should look at ease of deployment, commercial readiness and replicability across different sites.
There is very rarely one clear pathway you can just implement. Site by site, you need to look at what the options are, when they will be available, what infrastructure investment will be needed and what barriers need to be removed. Organisations need to shake up traditional ideas about finance and return on investment. If the target is 10, 20 or 30 years away, the normal rules of a two-year return on investment cannot be applied. If they are, the target will be missed.
Organisations need to assess the cost of inaction. Not only will delay require greater effort and expenditure later, but there will be mounting risks of stranded assets, soured investor and stakeholder relations and consequent loss of revenue and access to capital.
Communication is key
No organisation can achieve net-zero on their own: all need to work with others in their sector, and in different sectors too – regulators and NGOs, as well as energy, industry, environment, agriculture and forestry, and more. Creating a routemap paves the way for conversations and helps all involved to understand interdependencies and the co-benefits of working together to reduce emissions. To aid those conversations, routemaps should be kept simple and visual, if possible. This is especially important as high-level stakeholders with strong influence over plans for decarbonisation often don’t have time for detail. Detail should be saved for those who will implement the routemap.
It is also important that, within each organisation, departments and individuals know their roles in achieving net-zero. The water industry routemap is accompanied by a guidance document to help companies do this. It is also accompanied by a spreadsheet so that companies can create models using their own data. The aim: to make is easy for the companies to start and accelerate their journey to net-zero.
It is critical to engage at an early stage with a broad audience to outline the scale of the challenge. Measured in terms of an individual’s working career and life events, 2050 seems a long way off. But in terms of the whole life of infrastructure – even in terms of how long it takes to plan, design and deliver some major assets – 2050 is close. Creating and sustaining motivation to achieve net-zero is essential. If you’re guiding the way to net-zero, you need to identify the stakeholders you need now and those you will need in 10 years’ time. The key to maintaining momentum is to set lots of stepping stones along the way.
Priyesh Depala, Mott MacDonald investment planning advisor