In a joint effort, CDP, the UN Global Compact, WRI and WWF launched the Science Based Targets initiative to engage companies in setting ambitious GHG reduction targets as a response to the urgent call of the IPCC to decarbonize the economy. Ecofys was commissioned as consultancy partner to support the development of a new methodology to guide companies in setting science-based targets. In this webinar Giel Linthorst will present the developed methodology, called the Sectoral Decarbonization Approach (SDA). Next to this, he will also present the results of applying this SDA-methodology to various multinational companies and highlight some specific cases.

1. Aligning corporate GHG reduction
targets with climate science
Science-based target setting methodology
30/09/2015
Giel Linthorst, Programme leader Science-based Targets
g.linthorst@ecofys.com
@GielGHLinthorst

2. © ECOFYS | |
GHG emissions accelerate despite reduction efforts. Most emission
growth result from fossil fuel combustion and industrial processes
30/09/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
Setting Science-based Targets2

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Companies are responsible for large share of the global emissions
30/09/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
Setting Science-based Targets3

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Without more mitigation, global mean surface temperature might
increase by 3.7° to 4.8°C over the 21st century
30/09/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
> To prevent the most severe impacts of climate change, parties to the United
Nations Framework Convention on Climate Change (UNFCCC) agreed in 2010 to
commit to a maximum temperature rise of 2 °C above pre-industrial levels.
> Limiting global temperature rise to 2 °C corresponds according to the scientific
community with a carbon budget of about 1,000 Gtonnes CO2 from 2011 onwards.
Setting Science-based Targets4

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How to correlate global carbon budget with corporate carbon
accounting and targets
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Source: Greenhouse Gas Protocol, 2011
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0
10
20
30
40
50
60
2010 2015 2020 2025 2030 2035 2040 2045 2050
GtCO2eq
Global 2 oC scenario
From global carbon budget to company targets: two
methodologies already existed
30/09/2015 Setting Science-based Targets
ABSOLUTE REDUCTION
1 ECONOMIC ALLOCATION
2
> Apply global or OECD/non-OECD
absolute emissions reduction
pathway to each company, or
> Apply linear absolute reduction
per year towards 2050 (1.5%
p.y.)
> Apply global or OECD/non-OECD
intensity reduction pathway to
each company (2.2% p.y.)
0%
50%
100%
150%
200%
250%
300%
350%
400%
0
10
20
30
40
50
60
2010 2015 2020 2025 2030 2035 2040 2045 2050
GDPgrowth
GtCO2eq
Global 2 oC scenario
GHG (GtCO2eq)
GHG intensity (GtCO2eq / GDP contribution)
GDP index
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New methodology was developed to translate global carbon
budget to company targets based on sectoral approach
30/09/2015 Setting Science-based Targets
> For the Science Based Targets initiative, Ecofys
developed with CDP, WRI and WWF a new
methodology, called the Sectoral
Decarbonization Approach (SDA)
> The SDA methodology is based on the least-cost
modelled 2oC scenario (2DS) developed by the
International Energy Agency (IEA) as part of
its publication, Energy Technology Perspectives
2014
> Development of the SDA methodology involved
intensive stakeholder consultation
> The SDA methodology is freely available
> Scientific backing published in Nature Climate
Change
Source: www.sciencebasedtargets.org, 2014/2015
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SDA methodology: allocating a global carbon budget to sectors
and companies
30/09/2015 Setting Science-based Targets
Temperature
increase
threshold
Representative
concentration
pathway
Sectoral activity
and electricity
use projections
Global
carbon
budget
Sectoral
carbon
budget
Sectoral
intensities
(scope 1 & 2)
Sectoral Decarbonization Approach (SDA)
(methodology & tool)
Input from
company
Science-based targets
at company level
Source:
IPCC, 2014
Source:
IEA, ETP, 2014
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Current sectoral coverage of the SDA methodology
30/09/2015 Setting Science-based Targets
Currently, over 60% of the global GHG
emissions are covered by the methodology.
However, not covered and related to corporate
emissions are:
> Other Energy, e.g. fossil fuel extraction and
production
> Agriculture, forestry and Land Use
(AFOLU). However a methodology for 10
major agriculture and forestry commodities is
being developed by Ecofys, University of
Aberdeen and PBL Netherlands
Environmental Assessment Agency
AFOLU
Transport
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SDA methodology: sectoral pathways based on reduction
potential and forecasted activity growth
30/09/2015 Setting Science-based Targets
Total carbon budget
1054 GtCO2
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SDA methodology: sectoral activity indicators
30/09/2015 Setting Science-based Targets
Buildings Service / Commercial buildings Homogeneous m2
Other transport Heterogeneous $ value-added
Aviation passenger transport Passenger kilometer
Rail passenger transport Passenger kilometer
Heavy road passenger transport Passenger kilometer
Light road passenger transport Passenger kilometer
Other Processing & Manufacturing Industry $ value-added
Chemicals & Petrochemicals $ value-added
Pulp & Paper Tonnes of paper & paperboard
Aluminium Tonnes of aluminium
Iron & Steel Tonnes of steel
Cement Tonnes of cement
Electricity Power Generation Homogeneous MWh
Transport
Industry
Homogeneous
Homogeneous
Heterogeneous
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SDA methodology: from sector to company targets,
convergence and compression principle
30/09/2015 Setting Science-based Targets
HomogeneousHeterogeneous
The methodology assumes that the
carbon intensity for the companies
in all homogeneous sectors tend to
converge in 2050. The rate of
convergence depends on the
differential between the carbon
intensity of the company and the
2ºC carbon intensity of the sector
in 2050 and the predicted change in
market share of the company.
For heterogeneous sectors, the
target setting methodology is based
on the compression of absolute
emissions, which means that the
absolute emissions of all companies
in the sector will be reduced by the
same percentages as the sector in
the target year.*
*In the draft methodology emission reduction for heterogeneous sectors was based
on intensity reduction, however this was changed in the final version to absolute
reduction to guarantee that the SDA methodology stays within the carbon budget.
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SDA methodology: companies with growing market share
should do more
Setting Science-based Targets
Sector average
Company with higher carbon intensity
… and growing market share
… or decreasing market share
Company with lower carbon intensity
Carbonintensity(tCO2eq/tofproduct)
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Observations from first applications of SDA methodology
Setting Science-based Targets30/09/2015
Ecofys has already applied the SDA methodology to over 20 multinational
companies in various sectors. We have the following observations:
> Mainly consumer brands are interested to set to science-based targets
> Results of SDA methodology are well received by these companies and
provide very valuable input into target setting process
> Heavy emitting industry are getting more and more interested, but want to
understand the modelled technologies in the IEA 2oC scenario in detail
> For some sectors, especially heterogeneous sectors (like Chemical &
Petrochemicals and Other industry), the SDA methodology needs further
refinement over the coming years
> More 2oC scenarios with sufficient sectoral detail and data should be
developed
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SDA – Example: fictional beverage company
Setting Science-based Targets30/09/2015
> International beverage company
– $84 million gross profit in 2010
– Annual production of 1,1 billion juice packs
– Purchased paper: 50,000 tonnes
– Predicted annual activity growth of 3%
– Target year: 2020
> Emissions included in Science-based target setting:
– Scope 1 emissions from operational processes: 18,000 tonnes of CO2e
– Scope 1 emissions from own fleet: 10,000 tonnes of CO2e
– Scope 2 emissions from operational processes: 20,500 tonnes of CO2e
– Scope 3 emissions from logistics: 22,500 tonnes of CO2e
– Scope 3 emissions from purchased paper: 62,000 tonnes of CO2e
(c)viperagp/Fotolia
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Step 1. Allocate company’s activities to SDA-sectors
Setting Science-based Targets30/09/2015
Scope 1 emissions
from operational
processes
Scope 1 emissions
from fleet
Scope 2 emissions
from operational
processes
Scope 3 emissions
from logistics
Scope 3 emissions
from purchased paper
Other industry $ Value-added
Air/road passenger
transport
Other transport
Passenger kilometer
$ Value-added
Other transport $ Value-added
Pulp & Paper Tonnes of paper
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Step 2. Enter GHG data in the tool for Scope 1 & 2 Operational
processes
Setting Science-based Targets30/09/2015
Source: www.sciencebasedtargets.org
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Step 2. Result for Scope 1 & 2 Operational processes
Setting Science-based Targets30/09/2015
Source: www.sciencebasedtargets.org
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Step 2. Enter Activity and GHG data in the tool for Scope 1 & 2
of paper supplier
Setting Science-based Targets30/09/2015
Source: www.sciencebasedtargets.org
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Step 2. Result for Scope 1 & 2 targets for paper supplier
Setting Science-based Targets30/09/2015
1.24 tCO2/ t paper
->
0.87 tCO2/ t paper
(-30% reduction)
Source: www.sciencebasedtargets.org
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Step 2. Result for Scope 1 & 2 targets for paper supplier
Setting Science-based Targets30/09/2015
Source: www.sciencebasedtargets.org
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1. The methodology is based on the best of science and a least-cost
modelled 2oC scenario (IEA 2DS)
2. The methodology combines sectoral emissions pathways with sectoral activity
projections from IEA 2DS to construct sectoral intensity pathways
3. Both carbon intensity and absolute targets can be set. The methodology
uses physical intensity indicators for homogenous sectors and monetary
intensity indicators ($ value added) for heterogeneous sectors
4. The methodology can be used to set separate targets on scope 1 and 2 and
to set targets for a selection of scope 3 categories as well
5. The methodology is flexible to set targets for each year until 2050
6. The methodology will be improved continuously based on new insights
SDA methodology: key characteristics
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23. © ECOFYS | |
Giel Linthorst
Programme leader Science-based Targets
T: +31 (0)30 662 3322
M: +31 (0)6 11 366 935
E: g.linthorst@ecofys.com
@GielGHLinthorst
30/09/2015 Setting Science-based Targets23

24. ScienceBasedTargets-
Call to Action
September 30, 2015
An initiative by
30/09/2015 Setting Science-based Targets 24

25. An initiative by
Introduction I About the initiative
Science Based Targets is a joint initiative by CDP, the UN
Global Compact (UNGC), the World Resources Institute
(WRI) and WWF intended to increase corporate ambition
on climate action by changing the conversation on GHG
emissions reduction target setting and creating an
expectation that companies will set targets consistent with
the level of decarbonisation required by science to limit
warming to less than 2°C compared to pre-industrial
temperatures.
30/09/2015 Setting Science-based Targets 25

26. An initiative by
facilitate theadoptionofscience-
basedemissionreductiontargets
incentivize theadoptionofscience-
basedemissionreductiontargets
SDA
method
SDA
onlinetool
Target
setting
manual
Mindthe
Science
Report
Scoring&
Tracking
Callto
Action
Introduction I About the initiative
30/09/2015 Setting Science-based Targets 26

27. Science Based Targets I Call to Action
An initiative by
The Science Based Targets initiative
is calling on companies to
demonstrate their leadership on
climate action by publicly committing
to science-based greenhouse gas
reduction targets.
We plan to enlist 100 companies in
2015, and 250 companies by 2020.
30/09/2015 Setting Science-based Targets 27

28. Science Based Targets I Call to Action: process
An initiative by
Announce
your
science-
based target
• Publicly announce
the science-based
target
Submit your
science-
based target
for Quality
Check
• Complete the
“Science Based
Target Form” for
review against
eligibility criteria
Develop a
science-
based target
• Companies have to
develop a science-
based target
aligned with the
eligibility criteria
Commit to
set a
science-
based target
• Complete the
“Commitment letter
form” to setting a
science-based
target
(up to December
2015)
(up to 24 months after commitment) (3-4 weeks)
(Permanently featured in the website plus
showcase in several events up to COP 21)
30/09/2015 Setting Science-based Targets 28

29. info@sciencebasedtargets.org
www.sciencebasedtargets.org
An initiative by
30/09/2015 Setting Science-based Targets 29