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Contemporary issues in Commercial Management: Net-Zero/ Carbon Neutrality

ENGM 63012: Lecture 7

Speaker: Judy Too 17 March 2023

NET-ZERO/ CARBON NEUTRALITY CONCEPTS IN CM

At the end of this session you will be able to:

• Understand the concepts of net-zero and carbon neutrality.

• Apply these concepts in Assignment 3

• Apply these concepts in CM practice

Intended Learning Outcomes

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3

▪ BSc. Environmental and Biosystems Engineering-

University of Nairobi, Kenya

▪ Assurance Associate – PricewaterhouseCoopers Ltd

▪ MSc. Engineering Project Management – University of

Manchester:

➢ Dissertation: A resilient approach to modelling the supply

and demand of platelets in the UK BSC

➢ MCC: Route to handover, Lessons learnt from batch

procurement and dashboard reporting system

▪ PhD Management of Projects/ Infrastructure

Engineering (Dual PhD) – University of Manchester +

University of Melbourne: Standardising carbon neutrality

in delivery of complex projects

ABOUT MYSELF

SOCIAL VALUE AND THE NET-ZERO

TRANSITION

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Source: (AECOM, 2022)

The five critical themes of Social Value are:

• Jobs: Promote local skills and employment

• Growth: Supporting growth of responsible

regional business

• Social: Healthier, safer and more resilient

communities

• Environment: Decarbonising and safeguarding our

world

• Innovation: Promoting social innovation

AIR POLLUTANTS

5 Source: (Zheleva, 2012)

Take the forms of dust, gas and Particulate Matter:

• PM10, PM2.5, PM1 (Ejohwomu et al., 2022)

• GHG (e.g. COX, CH4, NOX)

• SOX

CO2 is the most responsible for climate change (Onat

& Kucukvar, 2020).

CLIMATE CHANGE: HOW DO WE KNOW?

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Source: (climate.nasa.gov, 2022)

DISTRIBUTION OF CO2 BY COUNTRY (2020)

Note(s): Worldwide; 2020; Based on total emissions of 34,807 million metric tons of carbon dioxide

Source(s): Global Carbon Project (Global Carbon Atlas); Expert(s) (Friedlingstein et al. (2021)); ID 271748

30.64%

13.53%

7.02%

4.53%

2.96% 2.14% 1.85% 1.79% 1.71% 1.69% 1.53% 1.34% 1.29% 1.12% 1.12% 1.02%

0%

5%

10%

15%

20%

25%

30%

35%

S ha

re o

f C

O 2 e

m is si

o ns

• Total emissions: 34,807

million metric tons of

carbon dioxide

• The world's top five

largest polluters were

responsible for roughly 60

percent of global CO2

emissions in 2020.

• 2019- Record high.

• As per capita GDP

increases, emissions

increase i.e. the scale

effect (Cederborg &

Snöbohm, 2016).7

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Sources: National Geographic (2014); Financial Times (2019); Reuters (2021)

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European heatwave, hurricanes in the North Atlantic, severe droughts in Australia,

extreme rainfall events and floods in parts of Africa, tropical cyclones in Asia (Handmer

et al., 2012).

NET-ZERO TARGETS

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2060

2050

2070

2060

2050

No target

▪ Paris Agreement 2015 (COP 21;26)

▪ Intergovernmental Panel on Climate

Change (IPCC) (2018; 2021)

▪ Reduce emissions by 50 to 85%

between 2000 and 2050 to limit

global warming to two degrees

Celsius.

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Go to www.menti.com and use

the code 3328 2560

MENTIMETER QUIZ

WHAT DOES NET-ZERO MEAN?

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Source: (Vishnubhotla, 2021)

The concept of net-zero can be achieved when the amount of CO2

produced is no greater than the amount removed.

WHAT IS CARBON NEUTRALITY?

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Carbon offsetsReduce emissionsAccount for emissions (Scope 1, 2, 3)

• We are not on track to reach the carbon neutrality target by 2050 (Becker

et al., 2020; Wimbadi & Djalante, 2020).

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EMISSION CATEGORIES

SCOPE 1 SCOPE 2 SCOPE 3

Definition

Direct emissions controlled or

owned by the organisation that

releases these emissions straight

into the atmosphere

Indirect emissions that are a

consequence of the

organisation’s activities but

the sources are not owned nor

controlled by the organisation

Emissions that are a

consequence of the

organisation’s activities but not

directly owned or controlled by

it and not classed as scope 2

Examples

• Fuel use (petrol, diesel and

gas used in company

vehicles)

• On-site electricity generation

• Combustion in boilers,

furnaces

• Chemical production in

process equipment

• Consumption of purchased

electricity

• Heating, cooling, ventilation

and lighting appliances

• Purchased materials, waste,

staff commute to work,

freight, business travel and

accommodation, office

paper and water use.

• Indirect emissions from the

extraction, production, and

transport of fuel at

generation.

WHAT WILL IT COST? WHAT WILL IT BRING?

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• We need to reduce carbon emissions by

50% this decade and a further 50% in the

next decade.

• Impact of COVID-19: 8.8% decrease in

global CO2 emissions in the first half of

2020 (Liu et al., 2020)

• Solving the net-zero equation cannot be

divorced from pursuing economic

development and inclusive growth.

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IS THE WORLD ON TRACK?

SOLUTIONS FOR REDUCING GHG EMISSIONS

16

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▪ Policy, technology and

behaviour changes

▪ Energy efficiency and fuel

switching measures

▪ Structural and economic

transition in a just manner.

CHINA’S PATH TO NET-ZERO

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• China plans to have 84 percent of

their total energy sources be from

non-fossil fuels.

The plan includes:

✓ Cutting back on fossil fuel

production and consumption (esp.

coal).

✓ Increased focus on clean energy.

✓ Electric vehicles.

AUSTRALIA’S PATH TO NET-ZERO

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The plan includes:

✓ Clean hydrogen

✓ Low-cost solar

✓ Energy storage

✓ Low emission steel and

aluminium production

✓ Carbon capture and

storage

https://www.industry.gov.au/sites/default/files/October%202021/document/the-plan-to-deliver-net-zero-the-australian-way.pdf

UK’S PATH TO NET-ZERO

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The plan includes:

✓ Decarbonised power system

by 2035

✓ 2030 ban on fossil fuel car

sales, 2040 for heavy duty

vehicle sales

✓ Construction of 40 GW of

offshore wind capacity by

2030

✓ Removal of all diesel-only

trains from rail network by

2040

20 https://climateactiontracker.org/countries/china/net-zero-targets/

▪ Net-zero target: Poor

▪ The target is not yet enshrined in law

▪ Emissions coverage only for carbon dioxide

▪ China provides no information on whether it intends to cover international aviation and shipping.

▪ A net zero target aiming for zero carbon dioxide emissions in 2060 would mean that other countries have to reach net zero CO2 well before 2050

▪ Due to the size of China’s emissions, this difference can make up to 0.1°C more or less warming in 2100.

OVERVIEW OF CHINA’S TARGETS

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OVERVIEW OF AUSTRALIA’S TARGETS

▪Australia submitted its updated NDC to the UNFCCC on 28 October 2021

▪Australia committed to a 26–28% reduction of greenhouse gas emissions by 2030 below 2005 levels

▪The update did not increase the ambition of Australia’s mitigation target, despite requirements under the Paris Agreement for countries to increase ambition with each update.

https://climateactiontracker.org/countries/australia/

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OVERVIEW OF UK’S TARGETS

▪ Net-zero target: Acceptable (meets good practice for most of the benchmarks, but some elements remain undefined or lacking)

▪ The target is enshrined in law by way of revising and amending the Climate Change Act 2008 in 2019

▪ The UK’s target covers all sectors and gases, including emissions from international aviation and shipping.

▪ Key strength is its periodic carbon budgets and associated intermediate targets (5-Year plans) i.e. clear timelines.

https://climateactiontracker.org/countries/uk/

BHUTAN: THE WORLD’S FIRST CARBON NEGATIVE COUNTRY

▪ A ban was placed on log exports.

▪ The constitution - forested areas would

not drop below 60%.

▪ Free hydroelectric power instead of

less environmentally friendly fossil

fuels.

▪ Free electricity is provided to rural

farmers.

▪ Population: 763,092 (2019)

▪ Least developed country

▪ Structural challenges, underdeveloped

private sector, high youth unemployment

rate

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CARBON-NEUTRAL/NET-ZERO CONSIDERATIONS IN CM

• Planning GHG reductions in the planning and design phases of the project (lifecycle approach)

• Exploring relevant technologies and designs; circular economy

Project planning

• Embedding carbon neutrality/ net-zero into social value scoring; environmental protection, local material sourcing (procurement), local labour etc.

• Smart selection of contractors – who are ‘carbon- neutral/ net-zero’ conscious

Procurement

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• Engage stakeholders to design and implement low carbon strategies

Stakeholder engagement

ANY OTHER CONSIDERATIONS?

ACTIVITY

The Wrekin Housing Group is a social housing provider

with approximately 12,500 domestic properties in its

portfolio. In addition to the housing portfolio, they also

operate 27 sheltered/care home buildings, a large head

office and many smaller buildings such as offices, shops,

and commercial buildings.

Objective:

Wrekin have approached you to help them in identifying a

strategy to move towards net-zero carbon across the

business. To achieve this, they need you to determine ways

to reduce carbon and energy use within their buildings and

business operations.

https://www.anthesisgroup.com/case_study/developing-a-net-zero-carbon-strategy-for-the-wrekin-

housing-group/

MOVING FROM AMBITION TO ACTION

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▪ Develop a baseline

Quantify average annual emissions

Identify emission hotspots including supply chain

▪ Form a strategy

Identify key areas to be targeted in the decarbonisation plan

Consider how these plans impact and change projects

▪ Take a systems level approach

Work with partners across your value chain to drive emission reductions

Building alliances within your industry and across your industry to create meaningful carbon

reductions (Break down silos)

Share knowledge of best practice

▪ Share your vision

Engage your stakeholders

Keep the company accountable and contribute to a change in industry norms

https://www.apm.org.uk/blog/net-zero-how-we-can-go-from-ambition-to-action/

CASE STUDY

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Tesco Plc- How does a large organisation identify which of

its activities release GHG emissions into the atmosphere?

• What to include in the reported carbon footprint: All

operations over which Tesco or its subsidiaries has direct

control.

• Where to focus emissions reductions measures: Within the

business, as well as providing a comprehensive and

transparent picture for external stakeholders.

Adopted from DEFRA

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The main direct emissions-

generating activities:

1. Operation of stores and

distribution centres

(“property”),

2. Transport of goods

(“distribution”) an;

3. Employee

business travel.

QUANTIFYING ANNUAL EMISSIONS

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1

2

3

4

5

MOVING FROM AMBITION TO ACTION CONT..

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Framework for standardising carbon neutrality in building projects

9

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Go to www.menti.com and use the

code 4961 7718

MENTIMETER QUIZ

CHALLENGES & OPPORTUNITIES TOWARDS NET-ZERO/CARBON

NEUTRALITY TRANSITION

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OPPORTUNITIES:

▪ Whole lifecycle approach and circular

economy

▪ Technologies that increase energy efficiency

▪ Renewable energy options

▪ Sustainable construction materials

▪ Off-site plant based construction

▪ Improving efficiency of equipment

▪ Carbon capture and storage technologies

▪ Carbon taxes

▪ Burden sharing

CHALLENGES:

▪ More emphasis on offsetting than reducing

emissions

▪ Poor record keeping and unavailability of

data

▪ Burden shifting

▪ Lack of universally accepted definitions and

hence lack of standardised methodology

(boundary conditions)

▪ Political interests

▪ Credibility and transparency- carbon

credits.

CONCLUSION

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Intended Learning Outcomes:

At the end of this session you will be able to:

▪ Understand the concepts of net-zero and carbon neutrality.

▪ Apply these concepts in Assignment 3

▪ Apply these concepts in CM practice

RESOURCES

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PhD opportunities

https://www.findaphd.com/

https://www.manchester.ac.uk/study/postgraduate-research/

Funding sources:

https://www.manchester.ac.uk/study/postgraduate-research/golden/

✓Dual-award between The University of Manchester and The University of Melbourne

✓Dual-award between The University of Manchester and Tsinghua University

https://www.manchester.ac.uk/study/postgraduate-

research/funding/opportunities/results/?subjectArea=Any&nationality=China&submit=

Search (Chinese nationals)

Contact Dr Obuks Ejohwomu if you are interested in pursuing a PhD in this area or

any other related area.

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