The debate about who should pay for renewable energy and other measures to fight climate change is at the top of the agenda at COP29, with developing countries proposing that rich ones foot the bill. The UK’s Prime Minister indicated that the private sector, rather than the UK government, will be expected to contribute to the fund to pay for developing countries to decarbonise their economies. There is also a COP working group that is tasked with suggesting worldwide taxes on aviation, shipping, or other highly emitting sectors, to help poorer countries.
Climate activists are growing impatient at the slow progress towards decarbonisation. So, they are targeting high profile emitters. Shell’s recent win in court against Dutch NGOs, who demanded it reduce emissions by 45%, may reassure some organisations about the limits to their own obligations. But closer reading of the verdict indicates that companies do have a legal responsibility to citizens to limit greenhouse gas emissions, at least in the Netherlands.
With the re-election of President Trump, who may remove the US from the Paris Agreement again, and the exit from COP29 of the Argentinian delegation, the world is fracturing in its approach to decarbonisation. The EU is trying to bring climate measures into trade arrangements to protect its industries from ‘carbon leakage’ and to encourage other countries to align with Europe’s approach. But it is facing concerted opposition to the first pieces of legislation; the Deforestation Regulation (EUDR) and the carbon border adjustment mechanism (CBAM).
So, companies face a world of rapidly evolving requirements, and those in high emitting sectors, or those that risk environmental degradation, will be subject to more scrutiny. The ongoing publicity around CBAM is bringing the high impact of cement, iron and steel, aluminium, fertilisers electricity and hydrogen to public attention. Many operators have voluntarily made ambitious pledges to reduce their emissions or even reach net zero. But there is no independent monitoring of their progress by governments. The reporting of GHG emissions in the EU is now more transparent, with the aim of exposing high emitters who are not reducing their emissions. Climate activists will use this information to hold more companies to account.
But deciding which course of action a company should take is far from easy. Each one will have to balance costs and ease of implementation for different methods of decarbonisation. COP29 is trying to reach agreement on a worldwide carbon credits market. But many offsetting projects already have a bad reputation for under delivery of carbon savings and NGOs such as WWF and Greenpeace are largely against them. This lack of acceptance will disincentivise their uptake.
Organisations must also choose a metric to track their progress. The carbon footprint of manufactured products is a term widely understood by consumers who are getting accustomed to see it on packaging or promotional literature. Some operators may wish to continue focussing on their own emissions, but the public finds the terms used (Scopes 1,2 and 3) opaque and also confusing as one company’s scope 3 is another’s Scopes 1 and 2.
The calculation of carbon footprint (also called carbon intensity) involves adding a company’s own emissions to those which are already embedded into the raw materials they purchase then averaging over annual production. For those organisations that produce a wide range of products with differing carbon intensities, an average value can give them more freedom to reduce emissions where it is most convenient. Calculating a carbon footprint also encourages communication and cooperation amongst the supply chain as values are passed from the top of the supply chain downwards. Sustainability Schemes are now providing certification Standards to enable third party verification of carbon footprint reductions.
Whatever course of action and metric an organisation chooses, they will need to be kept under regular review at the highest level. To do anything else is a COP out – a high risk strategy with unknown consequences.
Published: 20 November 24
