Differentiation of greenhouse gases in corporate science-based targets improves alignment with Paris temperature goal

Abstract

Companies are increasingly setting greenhouse gas (GHG) emission reduction targets to align with the 1.5 °C goal of the Paris Agreement. Currently, companies set these science-based targets (SBTs) for aggregate GHGs expressed in CO2-equivalent emissions. This approach does not specify which gases will be reduced and risk misalignment with ambitious mitigation scenarios in which individual gas emissions are mitigated at different rates. We propose that companies instead set reduction targets for separate baskets of GHGs, defined according to the atmospheric lifetimes and global mitigation potentials of GHGs. We use a sector-level analysis to approximate the average impact of this proposal on company SBTs. We apply a multiregional environmentally extended input output model and a range of 1.5 °C emissions scenarios to compare 1-, 2- and 3-basket approaches for calculating sector-level SBTs for direct (scope 1) and indirect (scope 2 and upstream scope 3) emissions for all major global sectors. The multi-basket approaches lead to higher reduction requirements for scope 1 and 2 emissions than the current single-basket approach for most sectors, because these emission sources are usually dominated by CO2, which is typically mitigated faster than other gases in 1.5 °C scenarios. Exceptions are scope 1 emissions for fossil and biological raw material production and waste management, which are dominated by other GHGs (mainly CH4 and N2O). On the other hand, upstream scope 3 reduction targets at the sector level often become less ambitious with a multi-basket approach, owing mainly to substantial shares of CH4 and, in some cases, non-CO2 long-lived emissions. Our results indicate that a shift to a multi-basket approach would improve the alignment of SBTs with the Paris temperature goal and would require most of the current set of companies with approved SBTs to increase the ambition of their scope 1 and scope 2 targets. More research on the implications of a multi-basket approach on company-level SBTs for all scope 3 activities (downstream, as well as upstream) is needed.