Recently, Nat Bullard, formerly of Bloomberg New Energy Finance, released his annual presentation on the state of decarbonization for 2023. If you haven’t had a chance to peruse it, block off some time on your calendar because it’s well worth diving in.
The data has so much to tell us about how far we’ve come, where we still need to see change and growth, and the promising possibilities that exist for the near future if we make those changes. One story we want to zero-in on, however, is told across three separate slides:
The first: More than 6,000 companies have committed to a science-based emissions target, with a fair amount of those committing to net zero targets.
The second: Electrification is at the heart of US vehicles improving in efficiency and emissions.
The third: Temperature rise of global assets under management is moving down, across Scope 1, 2, and 3 emissions.
So what story are these three charts telling?
When a company commits to a science-based emissions target, they’re actively working to reduce their greenhouse gas emissions (GHG) in alignment with the 2015 Paris Agreement and 2018 Intergovernmental Panel on Climate Change (IPCC), which aims to half GHG emissions by 2030 and reduce them to net zero by 2050 in order to stay below the 1.5°C average of global warming.
As we can see from the second slide, however, ICE vehicles are holding the US vehicle fleet back when it comes to improvements in both efficiency and emissions. So obviously, switching to EVs plays an important role in a company reducing their greenhouse gas emissions.
But a company’s total GHG isn’t just about what kinds of engines or fuel they may or may not be using. In fact, when a company is looking to reduce their emissions, the Greenhouse Gas Protocol has established 3 scopes they have to consider:
Scope 1: These are the emissions directly produced by a company’s own or controlled operations, for example on-site fuel combustion, industrial processes, and company-owned vehicles. For this reason, these are the emissions a company can most directly influence and control.
Scope 2: These emissions are not occurring on-site or even necessarily within the company’s control, but as they’re the result of the company’s energy consumption, the company remains indirectly responsible. For example, if the energy purchased from the local utility is generated through burning fossil fuels, the resulting emissions are included in scope 2.
Scope 3: This is where companies are forced to look well beyond their own operations and take some responsibility for all the various emissions produced upstream and downstream along the value chain. More simply, they need to consider the emissions that are produced from the extraction and/or production of the goods they’re buying all the way to the emissions that result from a customer disposing of the goods they're producing.
Bringing it back to our story, as we can see in the third slide, the temperature rise of global asset management is moving down across all three scopes. And what’s really exciting for us is that EVs are truly at the heart of this decrease.
3 ways EVs are reducing GHG across all three scopes:
- If your company is starting to adopt EVs into your fleet operations, there’s no question that your Scope 1 emissions are going to decrease. Vehicles under your purview are producing less GHG, full stop.
- After experiencing the many benefits that are possible through the combination of EVs and a robust software solution, your company will likely want to scale EV operations. In this case, you could opt to set up a DER that includes solar arrays in order to better meet energy demand. Fueling-up with renewable energy in turn reduces your Scope 2 emissions.
- While we know Scope 3 emissions are not directly in your control, when you make the transition to an EV fleet, you can become the third-party provider who helps lower Scope 3 emissions for your customers. Which is a win-win for everyone, but most importantly, for the climate.
