SBTi’s new Net-Zero Standard provides a common, robust, and science-based definition of net-zero and offers companies a way to set verified decarbonisation targets with long-term emissions reduction plans that are consistent with limiting the global temperature rise to 1.5 °C above pre-industrial levels.
Mads Nipper, CEO at Ørsted, says: “Ørsted strongly welcomes the SBTi’s new Net-Zero Standard, which provides much needed clarity on what is required for corporate net-zero targets to actually help fight climate change.
I encourage all business leaders who want to have a real impact on climate to commit to the necessary near-term and long-term reductions under the new SBTi-standard.Mads Nipper, CEO Ørsted
He continues: “We see growing ambitions from businesses to reach net-zero, and that’s absolutely necessary to reach a net-zero world. However, it’s critical that these goals meet the requirements of climate science. I encourage all business leaders who want to have a real impact on climate to commit to the necessary near-term and long-term reductions under the new SBTi-standard.”
As a consequence, businesses have had significant discretion on how they define their pathways towards net-zero, allowing some to claim net-zero and basing their net-zero commitments to a large extent on offsets without the significant reduction in emissions required to accelerate decarbonisation.
Substantiating Ørsted’s commitment to net-zero across the value chain Ørsted was previously one of the first energy companies to set a near-term science-based target for reducing emissions from power and heat generation and has the following targets: Reducing scope 1 and 2 GHG emissions to 10 g CO2e/kWh by 2025, corresponding to a 98 % reduction from a 2006 base year.
Building on its accelerated decarbonisation progress to-date, Ørsted now substantiates its commitment to reaching net-zero emissions across the entire value chain by 2040 by setting additional science-based long-term emissions reduction targets: Reducing GHG emissions in scope 1-2 from energy generation and operations to 1 g CO2e/kWh, corresponding to a 99.8 % reduction from 2006 and down from targeted 10 g CO2e/kWh in 2025.
Key requirements of the Net-Zero Standard
- Focus on rapid, deep emission cuts: Rapid, deep cuts to value-chain emissions are the most effective and scientifically-sound way of limiting global temperature rise to 1.5°C. This is the central focus of the Net-Zero Standard and must be the overarching priority for companies. The Net-Zero Standard covers a company’s entire value chain emissions, including those produced by their own processes (scope 1), purchased electricity and heat (scope 2), and generated by suppliers and end-users (scope 3). Most companies will require deep decarbonization of 90-95% to reach net-zero under the Standard
- Set near- and long-term targets: Companies adopting the Net-Zero Standard are required to set both near-term and long-term science-based targets. This means making rapid emissions cuts now, halving emissions by 2030. By 2050, organizations must produce close to zero emissions and will neutralise any residual emissions that are not possible to eliminate
- No net-zero claims until long-term targets are met: A company is only considered to have reached net-zero when it has achieved its long-term science-based target. Most companies are required to have long-term targets with emission reductions of at least 90-95% by 2050. At that point, a company must use carbon removals to neutralize any limited emissions that cannot yet be eliminated.
- Go beyond the value chain: The SBTi recommends Companies to go further by making investments outside their science-based targets to help mitigate climate change elsewhere. There is an urgent need to scale up near-term climate finance; however, these investments should be in addition to deep emission cuts, not instead of them. Companies should follow the mitigation hierarchy, committing to reduce their value chain emissions before investing to mitigate emissions outside their value chains
Source: Science Based Targets Initiative
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