How much carbon dioxide is actually in your products?
Production might be out of sight, out of mind, but CO2 is embedded in products through minerals and materials. How do we measure it?
Imagine driving your brand-new electric vehicle along Main Street on a weekday evening. Sleek and silent, you are the envy of the entire town. You know that the carbon dioxide directly emitted from the engine is nil: that was the whole point of buying the thing, wasn’t it? Going a little further — as you are an environmentally conscious owner — you didn’t find it difficult to figure out, and abate, the climate impact of the electricity you used to charge the car: Your local utility offers a green tariff so that you can buy low-carbon electricity.
At this point, you might think that your job of reducing the carbon footprint of your car is pretty much complete. But have you ever thought about the CO2 that was emitted in the production of the car? How far were the materials and components transported? Was the lithium in the batteries extracted in a high-altitude Chilean desert or in a remote part of China? Was the copper in the wires mined in Arizona or in Africa? Was the iron ore for the steel extracted in Australia and then processed in China, or was the steel made from recycled scrap metal?
It’s very likely that you can’t answer any of these questions; the embedded carbon content of any product is largely unknown to the final consumer. Very few consumers are aware of the carbon that has been generated in the production and delivery of products and, as a consequence, virtually nobody takes action to abate these emissions. This is a problem because only 9 percent of carbon emissions come from passenger fuels and 25 percent come from the generation of electricity, while 40 percent of emissions come from the production and delivery of commodities in industrial value chains (31.5 percent from the industrial activities themselves, and 8.5 percent from freight and transport).
What can we do to change this? Because what is out of sight is often out of mind, the first step is to calculate and communicate the CO2 emissions that are embedded in produced goods. Until people know the CO2 footprint of the products they’re using, it will be impossible for them to demand lower-carbon goods.
On the bright side, something already has begun moving: because end-customers are beginning to demand "cleaner" products, companies are starting to develop joint strategies to reduce carbon emissions in coordination with their supply chain partners. For instance, Apple signed an agreement with Alcoa and Rio Tinto to reduce the carbon content of the aluminum in its products. BMW teamed up with Codelco to reduce the environmental footprint of copper, a key input for its electric vehicle fleet. And there is an expectation that green procurement guidelines from the Organization for Economic Co-operation and Development, as well as from the European Union and U.S.-based initiatives such as the Buy Clean Alliance and the Buy Clean California Act will reward tender proposals that have lower emissions along their supply chains.
Is apples-to-apples CO2 comparison possible in the complex minerals sector?
While climate disclosure in the minerals sector is increasing, it remains a challenge to compare CO2 emissions across companies and supply chains. This is mainly due to two factors: the sheer complexity of the sector and the lack of a universal calculation framework.
Broadly speaking, minerals can be metals or nonmetals, and metals can be ferrous or nonferrous. This leads to a natural division of the sector into three industries. However, there is a wide disparity among these three, as well as among materials within the same industry, in terms of volumes produced, energy used and CO2 emitted: Some industrial practices are more energy-intensive than others; some processes are orders of magnitude larger, and/or more intensive, than others.
To complicate things further, the correlation between energy use and emissions is sometimes an oversimplification because of significant non-energy process emissions, such as those in steel and cement. Because of this imbalance, it is not easy to compare intensity and absolute emissions across the board. At this time, there is no methodology providing specific guidance for carbon accounting in the minerals sector, leading to uncertainty for those seeking to use these metrics for their own sustainability strategies; product carbon footprints; science-based targets; environmental, social and governance indexes; or other purposes.
However, the Greenhouse Gas Protocol’s high-level accounting practices make effective parameter specification difficult and allow room for interpretation that can impede comparisons. This has led to a set of sector-specific carbon accounting initiatives that are not always connected across value chains.
The situation is further complicated by various reporting platforms, (the Carbon Disclosure Project [CDP], the Task Force on Climate-related Financial Disclosures [TCFD], the Principles for Responsible Investment [PRI], and the Global Reporting Initiative [GRI]), which have their own accounting principles that may or may not be aligned with the other methods. This complexity has hampered the consolidation of a standard framework for reporting carbon emissions.
Such a framework one day might become commonly adopted, for example, via inclusion in International Accounting Standards Board/Financial Accounting Standards Board standards and, eventually, in an eco-label clearly stating a product’s carbon footprint.
Toward a calculation framework for minerals
The MIT Sustainable Supply Chains initiative, Columbia Center for Sustainable Investment, and Rocky Mountain Institute’s Materials initiative have formed a working group to engage minerals producers, end users, investors and other stakeholders interested in carbon accounting. The group will work collaboratively to develop a joint carbon accounting framework for the minerals industry and its supply chain partners with the goal of it becoming certified as "Built on the GHG Protocol."
This group is going to develop sector-specific guidance for metals and minerals, following the template of successful collaborative carbon accounting initiatives for freight transportation (the Global Logistics Emissions Council [GLEC] Framework) and information and communication technology products (ICT Sector Guidance). The project also will build on the current work of Resolve, which is developing a Climate Smart Mining Emissions Widget that aims to bring alignment and consistency across mining-related standards and initiatives on climate reporting and raise awareness of the need to develop a science-based target methodology for the sector.
This will enable standardized reporting to CDP, TCFD, GRI and others, as well as reliable carbon footprint values that give a true sense of the embodied emissions of metals and minerals used in end products such as renewable energy systems, buildings, electronics and your beloved electric car.
The emissions calculations framework for the minerals industry is the first step in the journey toward carbon transparency that will be needed for consumers and investors to understand and drive the decarbonization of industrial sectors. This is a necessary enabler for anything that comes next. In the words of the Little Prince, "As for the future, your task is not to foresee it, but to enable it." The vision for a low-carbon industry is out there; it is time to focus on the mechanisms that can make it happen.
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