Defining Decarbonization in Sustainability and Carbon Accounting

What is Decarbonization?

Decarbonization means reduction of carbon. Specifically, carbon dioxide (CO2), the greenhouse gas (GHG) most commonly used in emissions measurement. Carbon released into the Earth's atmosphere from manufacturing, industrial agriculture, burning fossil fuels, and other sources is the leading cause of climate change and global warming.

Established scientific and carbon accounting methods can convert other emissions like methane and nitrous oxide into carbon equivalents (CO2e), another reason carbon's become the international standard for measuring a country or company's net emissions. Decarbonization is the process of reducing those carbon emissions through various strategies.

Decarbonization Definition Chart Example

Common steps companies and countries take to decarbonize include:

  1. Reducing energy consumption and usage through energy efficiency and smart grid improvements
  2. Using clean energy (solar, wind, water, nuclear) instead of fossil fuels (oil, gas, coal)
  3. Replacing fossil fuel transportation with electric vehicles
  4. Reducing industrial agriculture and introducing more sustainable farming and land practices
  5. Replacing inputs and raw materials with more sustainable alternatives
  6. Value chain efficiency optimization and supply chain sustainability improvements
  7. Improved circularity, re-use, recycling, and end-of-life treatment for finished and discarded goods and products
  8. Carbon capture, tree planting, kelp farming, and other methods to remove and sequester atmospheric CO2

Today, most companies and governments pursuing decarbonization use most if not all of these tactics to reduce their environmental footprint.

Absolute vs. Intensity Decarbonization

In business, there are different types of decarbonization approaches and ways to measure it. Two common approaches are absolute and intensity-based decarbonization. Absolute emissions reduction reduces total or net carbon. As a simple example, if our company emits 1,000 metric tons (MT) of CO2e in 2021 and our goal is to reduce absolute emissions by 20% in 2022, we need to reduce annual emissions by 200 MT year-over-year from 1,000 to 800 MT of CO2e.

Decarbonization Definition

By comparison, intensity decarbonization reduces carbon per unit of economic activity. Examples could be revenue-based (i.e., MT of CO2 per million dollars in sales), per capita or per employee, per building or facility, or per unit or finished product. The physics problem with emissions intensity reduction is - from a climate change and global warming perspective - our planet and economy need governments and companies to achieve absolute reduction. Intensity reduction is like trying to walk down an escalator that's going up.

In this sense, a global company with a slower growth rate may have a clearer path to decarbonization compared to a fast-growing startup. A high-growth company might achieve intensity-based emissions reductions but still end up increasing its absolute GHG emissions at the same time, an overall negative for the environment.

One place intensity-based emissions targets can be beneficial for decarbonization though is operational clarity and tracking within an organization. If I'm a manager running a manufacturing line at one facility within a larger company, it may be easier for me to benchmark, baseline, and measure my own sustainability effectiveness using intensity indicators. Used thoughtfully, intensity-based emissions targets can be useful, but they should lead to - or be paired with - absolute emissions reduction.

So is sustainable or green growth even possible? Yes, it is, but decarbonization is much easier in a degrowth environment.

GHG Emissions Decarbonization Example - United Kingdom

One encouraging example of economic decarbonization is the United Kingdom. The British economy's CO2 emissions peaked in 1973 and declined significantly between 2003 and 2020, faster than any other major country.

How did the UK achieve such impressive decarbonization results? Primarily by using less energy, and more clean energy.

UK Country Decrabonization Example

Transitioning from coal-fueled electricity production to (cleaner) natural gas and renewable energy accounted for 36% of the UK's decarbonization success. Reducing industrial and household energy usage contributed another 31%. Together, these two transition steps contributed more than two thirds of British decarbonization over one and a half decades. During this same period - outside the 2008-2009 financial crisis and 2020+ COVID-19 pandemic - the UK achieved steady 2-3% annual GDP growth.

These same decarbonization steps - greater energy efficiency, lower energy consumption, and increased use of renewable energy - can be achieved by companies as well, not just governments, with similar outcomes.

Worldwide, 32 countries have begun decoupling their emissions growth from GDP growth, including the US and Germany. But as scientists, researchers, and degrowth advocates note, the decoupling isn't happening fast enough. The global economy isn't decarbonizing as a whole. Atmospheric carbon is at record highs. The ongoing challenge is how do we decarbonize more, faster.

The Relationship Between Decarbonization and Degrowth

A recent study published in Nature looks at the relationship between decarbonization and degrowth - an intentional, limited reduction in economic growth designed to fight climate change without reducing social well-being and people's quality of life.

"Thus far, the integrated assessment modelling community and the IPCC have neglected to consider degrowth scenarios, where economic output declines due to stringent climate mitigation," write the study's authors. "Hence, their potential to avoid reliance on negative emissions and speculative rates of technological change remains unexplored... Here we find that the degrowth scenarios minimize many key risks for feasibility and sustainability compared to technology-driven pathways, such as the reliance on high energy-GDP decoupling, large-scale carbon dioxide removal and large-scale and high-speed renewable energy transformation. However, substantial challenges remain regarding political feasibility. Nevertheless, degrowth pathways should be thoroughly considered."

Overall, moderate degrowth together with decarbonization leads to significantly lower global emissions compared to the IPCC's baseline scenario which only looks at decarbonization. The researchers' suggestion? The best way to decarbonize is to shrink the global economy by 0.5% a year, indefinitely.

Decarbonization Emissions Chart Climate Change Example

At a time in history where we need every climate solution we can get, decarbonization is an important tool any government, company, or even individual can use to help secure a more sustainable, livable future for everyone. And, as always, if your organization is working towards decarbonizing and needs help with strategy, carbon accounting, sustainability measurement, or emissions forecasting, please get in touch and we'll see if there are ways we can support you.