Zero-Carbon Transportation: Beyond The Tailpipe
This article series is sponsored by 3Degrees and produced by the TriplePundit editorial team.
Companies seeking a lower carbon footprint are increasingly adopting electric vehicles and alternative fuels that offer zero, or at least carbon neutral, tailpipe emissions. However, fleet tailpipes are just one point in a complex web of emissions that involve vehicle manufacturers, as well as companies and their suppliers, consumers, clients, employees and contractors.
Decarbonizing that web beyond the tailpipe may seem daunting, but opportunities are growing for companies to tackle their transportation footprints through strategic carbon offsets as well as alternative fuels and vehicle electrification.
Historically, coal-fired power plants have been the main driver of greenhouse gas emissions, and the global economic expansion of recent years has contributed to a worrisome increase in emissions from coal power plants.
In the U.S., though, the electricity generation sector has continued to shed coal at a rapid pace. Here, transportation has emerged as the single most impactful source of emissions.
The most recent U.S. Environmental Protection Agency inventory of domestic greenhouse gas emissions shows transportation edging past power generation, at 29 percent and 28 percent of total GHGs respectively.
Transportation emissions have the potential to pull further ahead in the coming years as the U.S. power generation sector continues to decarbonize, with both coal and natural gas giving way to more renewable energy.
Challenges and opportunities
While it's become more common for companies to invest in renewable energy to lower their emissions footprint from power generation, few companies currently attempt to offset transportation emissions.
Part of the problem is the difficulty in taking stock of those emissions throughout the value chain.
Nevertheless, measuring and addressing transportation is a challenge that can pay off on a bottom-line basis, as a strong correlation has emerged between a company’s stock performance and its willingness to disclose and manage greenhouse gas emissions.
For example, in a recent study, CDP (formerly the Carbon Disclosure Project) notes: “Corporations that actively manage and plan for climate change secure an 18 percent higher return on investment (ROI) than companies that don’t—and a 67 percent higher ROI than companies who refuse to disclose their emissions.”
No need to reinvent the transportation wheel
Fortunately, companies seeking an impactful decarbonization strategy for their transportation value chain do not have to engage in guesswork.
Scores of leading global companies including 3M, Ford, General Electric, Shell and many more have already “road-tested” the emissions inventory standards outlined in the Greenhouse Gas Protocol, which is currently the most widely-used accounting tool for greenhouse gas emissions.
The Protocol assigns a group or “scope” to emissions, based on the degree to which companies can exercise direct control over the source. Scope 1 covers emissions from sources that a company owns or otherwise controls. Scope 2 covers emissions that the company can control indirectly, through its energy purchases.
The most challenging group is Scope 3. It covers all emissions in the value chain, both on the supply side and for the end user, including emissions that the company has no control over.
Science-based targets and strategic carbon offsets
Despite the challenges involved in addressing Scope 3 emissions, more than 350 leading companies have already established Scope 3 targets that include transportation emissions as part of the global Science Based Targets initiative (SBTi).
SBTi enables companies to inventory their emissions and focus on strategic hotspots in line with global greenhouse gas targets. This science-based, holistic approach also helps companies focus their offset strategies in areas that directly impact their value chains.
The California-headquartered renewable energy and climate solutions specialist 3Degrees is one firm that recognizes the effectiveness of addressing Scope 3 goals through strategic carbon offsets.
Mark Mondik, the company’s vice president of carbon markets, describes how carbon offsets can be an especially effective strategy for companies that have little leverage over their downstream emissions.
The key is to think about carbon offsets as a “medium-term” solution that has a ripple effect on the entire transportation sector, contributing to decarbonization over the long run, Mondik said.
The online shopping network Etsy provides one example. The company has no direct control over shipping and transportation emissions related to millions of transactions on its site annually.
“We are talking to fleet owners and EV charging equipment owners about using their facilities for carbon offsets, so buyers like Etsy can pay for those offsets and help subsidize new charging stations,” Mondik explained.
Ride-sharing giant Lyft provides another example. The company does not own the vehicles used by its drivers, which means that virtually all of its fleet involves Scope 3 emissions. In turn, Lyft’s offset strategy revolves around reducing emissions in vehicle manufacturing, with an eye toward a future dominated by autonomous electric vehicles powered by 100 percent renewable energy.
The road to zero-carbon transportation
Though individual companies can contribute significantly to the decarbonization of transportation through fleet management and strategic offsets, consensus is building that the pace of change must accelerate globally in order to avoid the impacts of catastrophic climate change.
That means stronger policies and market incentives are imperative. “The fueling infrastructure we have now was built up over many years with public policy incentives,” Mondik noted. Winding down those entrenched incentives is a matter of dismantling outdated policies and creating new ones that address the need to accelerate climate action.
A policy-based approach is especially urgent considering the potential for the transportation sector to grow throughout the foreseeable future.
“The way we’re doing business these days, especially with e-commerce increasing, may have an impact on increasing transportation emissions,” Mondik notes. “Global trade also has a big impact on air and marine emissions. Meanwhile, the cost of transportation has come down and demand has gone up.”
In other words, zero-carbon transportation is not just a possibility. It is a necessity.