Month: October 2021

A guide to addressing Scope 3 value chain emissions

As organizations around the world take action to address climate change, many are committing to ambitious climate goals, including net zero carbon emissions, carbon neutrality and science-based targets. However, knowing the proper steps to take to achieve climate goals can sometimes be a challenge, particularly as it relates to Scope 3 value chain emissions. Value chain emissions lie outside an organization’s direct operations, and can therefore be more difficult to address — but they often represent the majority of a company’s greenhouse gas (GHG) emissions. There are three key steps to addressing value chain emissions — measurement, materiality and engagement — that will help demystify the process of reducing Scope 3 emissions. 

Measurement

Methods for measuring Scope 3 emissions

Though one of the hardest things to do, measurement is a necessary first step for a company to take in the early stages of crafting a value chain emissions reduction plan. There are a few different approaches to consider:

Economic input-output model

An economic input-output model uses readily available data (e.g. company purchases, economic data) and multiplies it by industry standard emission factors. This is a simple, quick method to determine the order of magnitude for your value chain emissions. However, using a dollar per GHG ($/GHG) factor can limit your ability to quantify your successes if you continue to spend the same amount of money on products.

Life cycle assessments

Industry life cycle assessments (LCAs) can help alleviate the $/GHG limitation by providing industry sector GHG emission factors that can be applied to your company’s purchasing weights to estimate emissions. While the data may not be an exact match for your specific company’s operations, an LCA can be an effective mechanism for layering in more granular data to a Scope 3 inventory. 

Supplier-specific (primary) data

In order to fully capture your company’s successful value chain emission reductions, it’s important to eventually integrate more primary supplier-specific information into your measurement process. To do this successfully, you’ll need suppliers who are willing and able to gather the data necessary to make specific calculations for your Scope 3 emissions, which requires an effective supplier engagement strategy (more on that in a minute).

Materiality

Once you’ve measured your Scope 3 emissions footprint, you will need to make some decisions about where and how you want to begin reducing that footprint. Materiality is the idea of focusing your reduction efforts on the largest source of emissions in your footprint. For example, a consumer packaged goods company might discover that a significant amount of its emissions are generated by fertilizer used during the manufacturing of its food products, since the fertilizer emits the powerful warming gas nitrous oxide. The company can then take action to encourage a shift to a less emission-intensive fertilizer.

In addition to the relative size of an emissions source, it’s also important to consider your company’s sphere of influence over those emissions. A company that sells tea may find that the act of consumers boiling water to make the tea is the largest source of its value chain emissions, but converting consumer households to renewable electricity (or convincing them to drink cold tea) just isn’t an efficient use of the company’s time. In this case, addressing the second (or even third) largest source of emissions where it holds more influence is more practical. 

Engagement

Four actions that organizations can take to spur change across their value chainAs mentioned above, a key ingredient to a successful value chain emissions reduction plan is supplier engagement. Engagement is where you turn your analysis into action by communicating with suppliers, vendors and even customers about measuring and lowering their Scope 1 and 2 emissions (which fall into your Scope 3 emissions). There are a variety of paths for engaging partners, both upstream and downstream, to implement emissions reduction programs. 

Product innovation/design

Companies can talk to their suppliers about improving their core product in both innovation and design. This could include reducing the number or quantity of inputs, changing to a lower carbon input, or switching to a lower carbon supplier that uses an improved manufacturing process. You could also coordinate with suppliers within your value chain to help improve the way they operate. 

Policy advocacy

Organizations can also advocate for policies that support emissions reduction initiatives in their supply chain, such as expanding economically feasible renewable energy options in certain markets. 

Incentives

Considerations when engaging members of your value chainAnother effective tool is the use of incentives. This can be achieved through either a “carrot” or a “stick” approach, though it’s always recommended to start with a “carrot”, which results in a mutual win, win. Examples of carrots include: providing public recognition for climate leaders in the value chain, offering expertise and support to suppliers who are behind the curve, or offering longer contract terms to incentivize investments in climate initiatives. Should these fall flat, a punitive “stick” approach could be effective, such as canceling contracts with non-compliant suppliers that choose to not integrate GHG reduction initiatives into their operations.

Whatever your approach, communication is key. By collaborating closely with suppliers to understand their goals and motivations, you will be in a stronger position to implement successful value chain interventions. During this collaboration, you’ll likely find that cost is a major factor in your supplier’s decision-making process, so it will be critical to make a business case that spurs buy-in at the executive level. You should also be mindful that your suppliers have varying levels of resources available for climate action. Offering them assistance where tactical support is most needed is a great way to get things moving. Overall, it’s important to ask the right questions early on and determine where suppliers are on their path toward implementation. Some might even surprise you with their readiness.

Journey to net zero: addressing Scope 1, 2, and 3 emissions

Making progress on the journey to achieve net zero emissions requires organizations to leverage as much data, expertise, and solutions as are available.

In this video, Sak Nayagam, Tyler Espinoza, and Katherine Canoy, from 3Degrees’ Energy and Climate Practice detail how your organization can build a framework to address Scope 1, 2, and 3 emissions and start delivering results on its journey to net zero.

 

Watch the video

High-impact aggregated solar projects tackle energy affordability issues in low-income communities

 

Project type: Shared Solar Energy

Developer: BlueHub Capital logo

 

A reduced energy burden and extra $500 a year can allow for new opportunities, particularly for low-to-moderate income communities. One family is able to give its children lunch money. A neighbor fills her gas tank to get to and from work. A few units down, three roommates attend a community event they otherwise wouldn’t be able to afford. What would you do if half of your annual electricity bill was eliminated? This is a question residents of two affordable housing developments pondered when they were given net metering credits from a solar array to offset their electricity bill.

“I live in an apartment building, so typically I wouldn’t be able to take advantage of solar. But the shared Solar Program for Cranberry Manor makes it so easy. Everything about the program is great, from saving the environment to saving us money.”

– Kalissa S., a Onset Shared Solar Program participant

Project type: Shared Solar Energy

Developer:

A reduced energy burden and extra $500 a year can allow for new opportunities, particularly for low-to-moderate income communities. One family is able to give its children lunch money. A neighbor fills her gas tank to get to and from work. A few units down, three roommates attend a community event they otherwise wouldn’t be able to afford. What would you do if half of your annual electricity bill was eliminated? This is a question residents of two affordable housing developments pondered when they were given net metering credits from a solar array to offset their electricity bill.

“I live in an apartment building, so typically I wouldn’t be able to take advantage of solar. But the shared Solar Program for Cranberry Manor makes it so easy. Everything about the program is great, from saving the environment to saving us money.”

 – Kalissa S., a Onset Shared Solar Program participant

In the last decade, there has been a rapid increase in the installation of rooftop solar around the world. And although solar can offer significant financial savings, with heavy upfront costs and strict physical specifications, its deployment has historically been unattainable for many low- and moderate-income (LMI) communities.

Developer and nonprofit community development financial institution BlueHub Capital extends the benefits of renewable energy generation to LMI communities throughout Massachusetts. To date, BlueHub has developed approximately 7MWh of PV solar energy across the state. Roughly half of that comes in the form of rooftop solar projects on affordable housing developments. The other half are community solar projects serving 21 affordable housing developments, two nonprofit community facilities, and a pilot program serving low-income tenants.

BlueHub’s program and the entire residential solar industry is built on a mechanism known as net metering. Net metering allows a customer to be credited when excess electricity is sent to the grid. BlueHub’s pilot program, Onset Shared Solar Program, uses energy credits generated from two ground-mounted solar arrays to offset the electricity bills of residents at neighboring affordable housing developments. On average, participating customers see their bills reduced by half ﹘ a huge benefit for those struggling with rising utility costs.

The Mill Street Solar Project is another BlueHub project that utilizes virtual net metering to offset nearly 80% the electricity use of four local organizations. Projects like Onset Shared Solar and Mill Street Solar ensure that all communities can benefit from the environmental improvements of solar energy. Through its work, BlueHub makes sure that underserved communities can participate in climate change solutions and helps to build a future with more renewable resources.

The sale of renewable energy certificates (RECs) from these types of projects is critical to expanding access to solar for affordable housing developments and the communities they serve. With the growing accessibility and diversification of REC products, buyers can now integrate social impact considerations into their procurement decision making process.

To support energy justice opportunities, and push the market toward higher impact REC products, 3Degrees purchased a supply of 2021 RECs from BlueHub’s aggregated solar projects. To learn more about increasing the impact of your renewable energy purchase, contact us.

“We don’t find this just to be a cost benefit to GAAMHA, but a benefit to the community of Gardner and to the environment.”

– Tracy H., GAAMHA CEO

 

CO-BENEFITS

Environmental:

  • BlueHub’s solar energy projects reduce an estimated 3,652 tons of carbon emissions per year, which is equivalent to removing 1,260 cars from the road.
  • Virtual net metering projects allow ground-mounted solar systems to be built on land with negligible use, like brownfields, that have no economic value.

  • BlueHub’s solar energy projects reduce an estimated 3,652 tons of carbon emissions per year, which is equivalent to removing 1,260 cars from the road.
  • Virtual net metering projects allow ground-mounted solar systems to be built on land with negligible use, like brownfields, that have no economic value.

Economic:

  • Both the shared and rooftop solar projects stabilized and lowered electricity costs for affordable housing developments, nonprofit, and municipal facilities.
  • The national power system benefits from an inflow of low-to-no-cost solar energy being put onto the grid.

  • Both the shared and rooftop solar projects stabilized and lowered electricity costs for affordable housing developments, nonprofit, and municipal facilities.
  • The national power system benefits from an inflow of low-to-no-cost solar energy being put onto the grid.

Health:

The United State’s  energy system has created pollution leading to poor health outcomes in underserved communities. The expansion of shared solar improves air quality in LMI communities.

 

Social:

Shared solar projects ensure that marginalized communities see improvements from the deployment of renewables by involving climate justice in clean energy programs.

 

Click here to download the infographic

Photo provided by BlueHub and Marilyn Humphries Photography

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