Net Zero credibility

Ahead of COP26, one of the most eye-catching announcements came from an unexpected place - Saudi Arabia.  The announcement, made by Crown Prince Mohammed bin Salman, pledged the country will aim to reach "Net Zero" emissions of greenhouse gases by 2060, and to double the emissions cuts it plans to achieve by 2030. 

However, this announcement came in parallel with plans for the Kingdom to increase its oil production from 12 million barrels per day to 13 million barrels per day.  The Net Zero pledge is almost totally reliant on reducing carbon emissions through a “carbon circular economy”.  Untangling this jargon means Saudi Arabia plans to continue or even expand its production and burning of fossil fuels and dealing with carbon emissions through yet undeveloped Carbon Capture, Utilisation and Storage technologies. 

Delving even further into the murky details, the main Saudi Arabian state oil producer, Saudi Aramco has made its own pledge to achieve Net Zero emissions. But rather than taking responsibility for carbon emissions when its products are consumed, Saudi Aramco choose to define ‘Net Zero’ only within the boundaries of its Scope 1 and 2 emissions during oil production. This contrasts poorly with major players, such as BP, which also include some Scope 3 emissions in its targets and aims to be Net Zero on an absolute basis across the carbon in its upstream oil ‎and gas production by 2050 or sooner.

All of this comes in the same moment at the launch by the Science Based Targets Initiative (SBTi) of the first science-based framework for companies to set Net Zero targets - the Net Zero Standard.  As we discussed in a previous article on assurance of Net Zero targets and claims, the Standard sets challenging requirements for the way in which Net Zero targets should be built.  The Standard is voluntary, and it remains to be seen whether this will become ‘good practice, adopted by many’ or ‘the gold standard, adopted by the few’.

In other key sectors, such as steel, there are some approaches that threaten to stretch the concept and credibility of the term ‘Net Zero’ to breaking point.  US producer Nucor recently announced the creation of “the world’s first Net Zero carbon steel at scale, introduced to offer steel consumers emissions-free steel products to help meet their sustainability goals”.  This scheme relies on the neutralisation of Scope 1 emissions through the purchase of offsets, with scant details on the quality or credibility of these offsets.  The scheme also does not include any Scope 3 emissions, which for steel producers purchasing Direct Reduced Iron (DRI) as a raw material, can be a highly significant element in the overall product carbon footprint.

Nigel Topping, the UN Framework Convention on Climate Change’s (UNFCCC) high-level climate action champion, is reported as saying that reliance on buying offsets rather than doing the hard work of cutting emissions in their own supply chains is the litmus test for Net Zero commitments.

“There are companies that are not doing any emissions reduction work, they’re just buying offsets as if they were an indulgence.”

By contrast, others such as ArcelorMittal are backing their commitments with immediate action and huge investment in absolute emissions reductions.  Earlier this year the company set a new interim goal to reduce its carbon emissions intensity by 25% by 2030 for scope 1 and 2 emissions globally, and increased its European target for emissions reduction to 35% by 2030.  The company estimates that reaching these goals will require an investment of around $10bn in capital expenditure, of which approximately 35% will be made by 2025 with the remainder in the second part of this decade.   ArcelorMittal has, along with other steelmakers, been working on a set of principles by which it believes the steel industry’s alignment with a net zero by 2050 outcome should be measured.  ArcelorMittal is collaborating closely with the SBTi and has committed to publish a science-based target within the next two years.

As the recent UNEP Emissions Gap report shows, national climate pledges combined with other mitigation measures put the world on track for a global temperature rise of 2.7°C by the end of the century. If implemented effectively, Net Zero emissions pledges could limit warming to 2.2°C, but these targets need to be predicated on emissions reductions now, not on offsets or unproven technologies coming to market sometime in the future.  Otherwise ‘Net Zero’ risks becoming a glamorous distraction on our path towards catastrophic climate change.

Jon Woodhead, October 2021