Month: July 2024

Global financial institution uncovers financed emissions hotspots through GHG inventory

Team working on a greenhouse gas (GHG) inventory for scope 3

Executive Summary

A global investment manager (Investment Manager), looked to 3Degrees for assistance in preparing a comprehensive greenhouse gas (GHG) inventory using a leading carbon management technology platform. Previously, the Investment Manager had completed a screening of all three scopes of emissions in the platform, including select investment funds. 

As is typical of financial institutions, the majority of the Investment Manager’s GHG emissions comes from its investments. Expanding the Investment Manager’s inventory to include all of its investments, however, was a challenge because of the vast number of portfolio companies. In working with 3Degrees, the Investment Manager was able to expand its inventory coverage to include an estimate of nearly all of its public investments and about two-thirds of all private investments. 3Degrees also collaborated with the Investment Manager to re-categorize certain emission sources and refine its remaining scope 1, 2, and 3 emissions calculations.

During the engagement, 3Degrees also developed an inventory management plan (IMP) for the Investment Manager to ensure consistency in the measurement process moving forward and prepare for potential verification in the future.

The engagement resulted in:

  • High-level GHG emissions inventory  for scope 3 category 15 and complete GHG inventory across remaining scopes and categories, all within the carbon management platform
  • Documented, repeatable process for future inventories
  • Identification of emissions hotspots within direct operations and investments

Background

A global investment management firm (Investment Manager) that invests in both public and private companies is dedicated to fighting climate change through investments in climate innovators, such as carbon management technology platforms. With this climate-focused investment strategy came a desire to measure its own carbon footprint and address these emissions moving forward.

A year prior to our engagement, the Investment Manager began measuring its emissions within a carbon management platform. However, they sought additional expertise and guidance with gathering and evaluating the data inputs, as well developing a streamlined process for GHG measurement moving forward. The Investment Manager hired 3Degrees, an experienced climate solutions provider, to support this process.

Challenges

While scope 3 emissions typically account for the majority of any organization’s footprint, for the Investment Manager, it accounts for nearly all of its emissions, with the bulk coming from its financed emissions (category 15). These emission sources ultimately stem from the companies to which the Investment Manager provides capital or financing. Reducing or even measuring this category can be challenging because these emissions occur from entities outside of the Investment Manager.

Various paths exist for quantifying financed emissions, each requiring varying levels of data from portfolio companies. The most granular methodology entails collecting detailed emissions data from every portfolio company, a time consuming and likely impractical approach, as while many companies measure and disclose emissions data that could be leveraged by the Investment Manager, many do not.

Additionally, having only recently begun their measurement journey, the Investment Manager had not yet developed documentation around the processes involved in preparing their inventory and had data gaps in other parts of it, including uncertainty around which scope select activities ultimately belonged.

How We Helped

The 3Degrees team supported the Investment Manager with two main tasks, GHG Inventory Measurement and developing an inventory management plan (IMP).

GHG Inventory Measurement: 

3Degrees supported the Investment Manager with this task by first solidifying its organizational boundary. This required aligning on the consolidation approach it would use and then identifying where the Investment Manager’s activities would fall as a result of that boundary. Additionally, 3Degrees identified ways in which the inventory could be further improved from the previous year, including more specific data sources and assumptions. 

Next, 3Degrees reviewed the emission factors used for categories that were quantified in the previous year and refined the selection using the vast emission factor database in the carbon management platform. Selecting the emission factors that most closely represent emissions activities is an important step in the measurement process.

To address the Investment Manager’s financed emissions, 3Degrees worked with it to first begin collecting enough data about each company it invested in to perform a basic screen of all funds. To perform these calculations, 3Degrees used revenue data paired with emission factors (tCO2e/$ revenue) generated by the carbon management platform. While imperfect, these emission factors enable the Investment Manager to get an initial estimate of where its emissions hotspots are within this category. In future years, the Investment Manager can prioritize gathering primary data for its investments with the highest emissions. The Investment Manager can also further improve its measurement by incorporating publicly available emissions data that is disclosed by investees.

Upon completion, 3Degrees quantified nearly all public investments and about two-thirds of all private investments. Using the carbon management platform, 3Degrees was able to break down the Investment Manager’s emissions sources in a way that enabled the identification of emissions hotspots across category 15 as well as scopes 1, 2, and the remaining scope 3 categories. Through this analysis, the teams identified that out of all the Investment Manager’s portfolio companies, just three contributed to approximately half of its investment emissions. 

Additionally, 3Degrees identified opportunities for future automation within the carbon management platform that would streamline the collection and management of the Investment Manager’s GHG data.

Inventory Management Plan (IMP): 

To ensure that the Investment Manager could complete its GHG inventory in future years in a consistent and simplified manner, 3Degrees delivered an IMP along with two companion documents: 

  • A standard inventory management plan (IMP) that documents boundaries and data collection practices for each scope, along with steps to calculate emissions.
  • Data tracker that guides the Investment Manager in obtaining all the information they need to complete an inventory as well as intermediate cleaning and treatment steps.
  • Key findings presentation that provides high-level takeaways and links to raw data files as well as the documents listed above.

These documents not only allow the Investment Manager to calculate its inventory the same way each year, but also provide transparent documentation, should an auditor wish to validate its inventory data. Ultimately, 3Degrees also provided a roadmap that enables the Investment Manager to best leverage the carbon management platform’s software to streamline its annual GHG measurement process as well as continuously improve data quality and actionability going forward.

Results

  • Screen for scope 3 category 15 and complete GHG inventory across remaining scopes and categories in carbon management platform
  • Documented, repeatable process for future inventories
  • Identification of emissions hotspots within direct operations and investments

Beyond Emissions: Exploring Cutting Edge Carbon Removal Solutions (VIDEO)

 

Join 3Degrees as we explore two groundbreaking carbon removal projects. Discover the innovative technologies at Southwest Biochar and CarbiCrete, and learn how they are making significant contributions to combatting climate change.

At Southwest Biochar, we delve into the environmental benefits of biochar, including carbon sequestration, soil health improvement, and greenhouse gas reduction. Meanwhile, at CarbiCrete, we investigate cutting-edge carbon removal technology that integrates into concrete production, turning a critical building material into a carbon sink.

Witness firsthand how these pioneering solutions are revolutionizing our approach to sustainability. Meet the experts driving these innovations, explore the processes, and gain insights into the environmental benefits these technologies deliver.


Join us in our mission to combat climate change with innovative solutions. 

Discover how our Carbon Removal Suite can provide tailored solutions for your carbon reduction targets.

 

How your organization can support the decarbonization of concrete

Decarbonizing Concrete Article_3Degrees

The US Department of Energy (DOE) has identified cement production as a crucial lever for decarbonizing the industrial sector in its Industrial Decarbonization Roadmap. Concrete is the most widely consumed man-made material and the production of cement, a key ingredient in concrete, is responsible for approximately 8% of global CO2 emissions. The cement production process involves heating limestone to high temperatures, releasing large amounts of carbon dioxide both from the heat required for these kilns and by the CO2 released when limestone decomposes.

The market for low-carbon alternatives to traditional cement is rapidly evolving, as construction industry groups, governments, and private sector organizations seek more sustainable solutions. This growing demand is driven by increasing regulatory pressures, corporate sustainability commitments, and a heightened awareness of the need to reduce the built environment’s carbon footprint. While these alternatives may have higher initial costs, the long-term environmental and economic benefits are promoting wider adoption. Numerous innovative options are now available for companies committed to cement and concrete decarbonization. 

Current challenges and concerns 

Ordinary Portland cement (OPC), the most widely used type of cement, was developed in the early 1800s and is comprised of a mixture of calcium silicates and other compounds derived from limestone and silica sources. Acting as a binder, cement is mixed with water and aggregates, like sand and gravel, to produce concrete. The cement mixture – ‘the glue’ – in concrete is called clinker. Despite making up about 10-15% of the finished concrete product’s mass, cement is responsible for 85-90% of its emissions. 

Cement has two sources of emissions: calcination and combustion processes

Concrete has been a primary building material for centuries and is revered for its strength, resilience, and cost effectiveness. Currently, the global annual average for concrete use is roughly 30 billion tons – three times more than was the case 40 years ago. According to the Industrial Analytics Platform, demand for cement and concrete is expected to increase by more than one-third by 2050.

All of this production to meet global demand has come with a consequence – an enormous carbon footprint. OPC is an emissions-intensive material with a complex value chain and two major sources of emissions generation: 

  1. Production Process Emissions: The chemical processes involved in producing cement, particularly the calcination process, release substantial amounts of CO2 as limestone breaks down.
  2. Industrial Heat Emissions: The need for continuous high-temperature heat (around 3,000 degrees Fahrenheit) to produce cement requires a huge amount of energy, much of which is still dependent on fossil fuels, like coal

Cement production includes quarrying, grinding, and preheating.

The environmental impact of OPC extends beyond production, as concrete structures also contribute to urban heat islands and other ecological disruptions. Realistically, cement emissions cannot grow linearly if the sector is to remain on track for Paris-aligned decarbonization goals. 

Emerging solutions

There are numerous solutions being developed to reduce cement and concrete emissions, including low carbon concrete, clinker substitution (concrete blends), alternative production methods, and post-combustion direct air capture (DAC). 

Carbon capture utilization and storage (CCUS) within concrete is a key alternative becoming more prevalent in the market. Major companies like Amazon and Microsoft are already deploying carbon utilization in concrete technology at some of their data center locations. Curing concrete by injecting and mineralizing carbon dioxide offers a way to store carbon molecules effectively, while lowering the carbon intensity of key ingredients in concrete. As the CO2 mineralizes, it becomes permanently embedded in the concrete, preventing it from reentering the atmosphere. 

Mineralization can also occur by using steel slag, an often-landfilled by-product of steel manufacturing, as a replacement for Portland cement. This slag-based material differs from cement in that it does not cure by hydration, but instead by subjecting it to carbon dioxide. There are also methods like innovative powder additives that increase mineralization rates in concrete and in some cases also replace a portion of the OPC needed in the concrete mix. 

There are a handful of concrete decarbonization solutions at various levels of deployment, including Clinker Substitution, Energy Efficiency, Alternative Fuels, Carbon Capture Utilization and Storage, Alternative Production Methods and Alternative Binder Chemistries

Material substitution, involving the use of supplementary cementitious materials (SCMs) or alternative cementitious materials (ACMs) to replace clinker, is another effective strategy to reduce concrete emissions. According to the DOE, clinker substitution to create blended cement is the most powerful near-term decarbonization lever for concrete, one that if scaled and deployed in this decade could reduce U.S. cement emissions by 20% to 25%. As discussed earlier, steel slag or other industrial waste by-products can be used as clinker substitutes or replace cement altogether. Heated local clays are also potentially viable replacements that would reduce the amount of clinker used. Fly ash has historically been the most well-known clinker substitute, however, has received criticism because of its association with burning coal, resulting in only a marginal reduction in emissions. Material substitution offers many benefits, such as increasing the strength of the final product, reducing overall cost, and using less raw material extraction, due to its innovative use of commonly found materials or waste byproducts. 

Alternative production methods such as using biomass or hydrogen instead of fossil fuels to power the production process or avoiding the use of limestone as the raw feedstock in cement are also being explored. Some technologies use electrochemical processes or lower temperature kilns to decompose calcium-bearing minerals and create alternative cements that can be used as direct replacements for OPC. Because these processes can run on renewable electricity and avoid the use of limestone as a key ingredient, they can eliminate both of the primary sources of OPC’s emissions. The DOE cites alternative binder chemistries as an important emerging technology in the market. 

Using post-combustion DAC at cement plants is one of the most comprehensive mitigation options for Portland cement and one that both the Intergovernmental Panel on Climate Change (IPCC) and the Global Cement and Concrete Association (GCCA) cite as a critical mitigation option for the cement sector. The GCCA stated that carbon capture and storage (CCS) could result in roughly 36% of the concrete emissions reductions needed. Carbon utilization in the form of CO2 injection could also play a valuable role in the cement industry’s initial transition process. 

Other viable solutions to solving for concrete emissions include demand management using market creation and circular economy principles, energy efficiency retrofits and initiatives, and increasing the precision of materials needs. 

Opportunities for Involvement 

Decarbonizing concrete is one of the defining challenges of our century that must be addressed. Companies can make a significant impact by using their resources to engage with low-carbon solutions. Supporting or deploying one of the many available solutions in the market can be an important scope 3 reduction lever for organizations. Companies seeking these sorts of value chain reductions can work with suppliers, architects, and engineers to specify low carbon concrete in building projects, and establish themselves as early adopters of new technologies. 

Companies can also accelerate progress by providing funding and resources to research and development initiatives aimed at creating sustainable cement alternatives like the ones aforementioned, or by investing in or partnering with carbon project developers. Additionally, companies can purchase supply chain reductions (SCRs), carbon credits and/or invest upfront in new projects, with a commitment to forward purchase the environmental attributes. Supporting early stage low carbon cement with advanced market commitment helps startups drive down the green premium of their product and can help to unlock financing to scale and grow their facilities. 

There are many ways that companies can get involved with concrete decarbonization

This level of support can advance climate startups from the pilot program stage to commercial viability. Organizations can drive change by implementing purchase guidelines for green cement and advocating for green public procurement commitments in major municipalities and among importers of construction materials. Companies can leverage collective purchase power to catalyze a thriving market for low-carbon cement alternatives. Lastly, corporations can use their networks to collaborate with other companies, industry groups, and academic institutions to share best practices, learnings, and promote widespread adoption of lower carbon standards. 

Take action now 

To decarbonize the emission-intensive production of cement, market creation and support are needed to spur efforts toward net zero. While numerous solutions are available and continuously emerging, much work remains to reach scalable deployment. Early climate action can lead to significant reductions in GHG emissions and put you on track to meet upcoming guidance and regulations. Proactive sustainability efforts can also result in long term cost savings. By raising awareness, investing in innovation, and supporting policy changes, corporations can lead the way in decarbonizing concrete and contributing to a cleaner future.

3Degrees specializes in developing supply chain carbon reduction and removal projects, and is an active partner to numerous low-carbon concrete startups. Learn more about how your organization can support these vital emission reduction technologies by getting in touch today. 

Implementing Biomethane in Your Sustainability Strategy: Part 1 (VIDEO)

Biomethane. or renewable natural gas, plant

Biomethane Purchase Agreements

Biomethane, a renewable natural gas produced from organic materials, offers numerous advantages for corporations aiming to reduce their emissions. In Europe, this market is experiencing significant growth driven by favourable policies, environmental benefits, and the rising demand for renewable energy.

By opting for biomethane, companies not only align with global decarbonisation goals but also gain a competitive edge through enhanced sustainability and economic benefits. As such, implementing biomethane purchase agreements (BPAs) — also known as gas purchase agreements (GPAs) — enables businesses to significantly reduce their carbon footprints and associated scope 1 emissions by substituting fossil fuel-based natural gas.

Watch our video, part 1, to learn about the key benefits of BPAs and whether they are a suitable choice for accelerating your organisation’s sustainability efforts.


Prefer this content as an article
?  Read on below.

Biomethane, also known as upgraded biogas, is a renewable solution for scope 1, hard to abate greenhouse gas emissions, particularly in temperature processes and manufacturing. 

In Europe, many large users of natural gas, such as food and beverage, agricultural, and chemical companies, are embracing biomethane as a sustainable alternative solution to electrification, seamlessly integrating it into their production equipment lifecycle strategies. 

Why is biomethane getting more traction? 

Organic waste from manure to agricultural residues and food scraps are feedstocks that hold the key to unlocking biomethane’s potential. For companies equipped with biological waste streams, biomethane production becomes not just an option, but a strategic advantage. 

Similar to an organisation using power purchase agreements, PPAs, to procure large amounts of renewable electricity, more companies are signing biomethane purchase agreements (BPAs), also referred to as gas purchase agreements (GPAs).  

A BPA is a long-term contract between a producer of this energy source, known as a seller, and the corporate offtaker, known as a buyer, to secure a supply of biomethane. 

Let’s look at some of the benefits. BPAs allow for:

  • The selection of specific biomethane production facilities aligned with sustainability goals
  • Reduction of emissions and growth of new clean energy projects 
  • Fixed price contract structures, which can help mitigate volatility, in natural gas and biomethane certificate prices 

So, whether you are a corporate giant or an emerging innovator, biomethane holds the key to a sustainable future, capturing the attention of forward-thinking companies across the EU. 

In our next episode, we will delve deeper into understanding the European green gas market. Stay tuned. 

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Interested in learning more about how RNG can be integrated into your company’s climate action plan? Get in touch with us. 

3Degrees’ Erin Craig Interview in Carbon Pulse on Supplier Emissions

Renewable energy procurement in Europe

“..it’s not easy for a supplier to just say ‘yes’ when its big-name customer asks it to buy renewable power or lower its emissions,” Craig said. “We would like suppliers and customers to have more open, shared information about these realities, so they can plot a way through together.”

Erin Craig, chief sustainability officer and vice president of customer solutions and innovation at 3Degrees, was recently featured in an interview by Carbon Pulse, where she shared her insights on supply chain emissions and 3Degrees’ innovative SupplierREach platform. SupplierREach is an action-oriented renewable energy portal designed to assist large companies and their suppliers in transitioning to renewable energy.

In the interview, Craig highlighted the financial realities faced by suppliers in shifting to renewables. “The data makes clear that most suppliers will have to pay to shift to renewables,” she stated. “Out of the 150-plus combinations of countries and options that 3Degrees has priced, fewer than five would likely save the company money. However, all of those are through PPAs, which are complex and not available to all companies.”

Craig emphasized that while the additional costs may not be substantial, they are significant for suppliers operating on thin margins. “In most places, it adds roughly 5% gross value to a customer’s energy bill. But the companies we are talking about are suppliers with thin margins and substantial expertise in keeping costs down.” Thus, Craig stressed the importance of open communication and collaboration between suppliers and their customers. 

The interview, ‘For suppliers under pressure to cut emissions, renewables still come at a cost,’ underscores the critical role of SupplierREach in facilitating this dialogue and providing actionable solutions to help companies and their suppliers achieve their renewable energy goals.

Sign up for Carbon Pulse’s free trial and read the full article here.