By 2040, we aim to have net-zero emissions across our entire value chain. We already have a plan in place for gradually phasing out natural gas from our business operations. The next frontier is to reduce emissions in our supply chain.
Why are we focusing on decarbonising our supply chain?
At Ørsted, we have the most progressive decarbonisation targets in the energy sector, and we aim to reach net-zero greenhouse gas emissions across our whole value chain (scope 1-3) by 2040. This sustainability programme is focused on reducing our scope 3 emissions – those that come from our supply chain and the use of the natural gas we sell.
We need to find ways to decouple the growth of our build-out from the growth of emissions in our supply chains.
We’re gradually phasing out natural gas sales from our business portfolio. This will eliminate the vast majority of our scope 3 emissions. But it still leaves those emissions linked to our supply chain, including the manufacture, installation, and transportation of our renewable energy assets.
Supply chain activities are beyond our direct control, and we’ll rely on them more and more as we continue to accelerate the build-out of green energy. This makes supply chain decarbonisation one of the most important and difficult parts of our work to reach net-zero. .
What are we doing?
We can only succeed in cutting our supply chain emissions if we collaborate actively with our suppliers – and their suppliers – to cut their emissions.
We do this in three ways:
- Tracking carbon progress: We’re using life cycle assessments (LCAs) to more accurately quantify supply chain emissions from the manufacture, installation, and transportation of our renewable energy assets.
- Engaging with suppliers: We’re working with our strategic suppliers to help them set science-based targets, work towards 100 % renewable energy usage by the end of 2025, and optimise their vessel routes. These suppliers represent more than 60 % of our procurement spend and form some of the most carbon-intensive parts of our supply chain.
- Cross-sector collaboration: We’re working with our industry peers to send crucial demand signals to suppliers, form partnerships to mature decarbonisation solutions, and engage with global policymakers.
How are we doing?
We track our scope 3 greenhouse gas emissions, including and excluding gas sales. Each measure has a different science-based target.
Latest updates from 2022
Increasing transparency in our offshore wind supply chain
This year, for the first time, we started to report on supply chain emissions from our offshore wind assets using asset-specific life cycle assessments (LCA). LCA is a scientific approach that enables us to quantify the environmental impacts from the manufacture, installation, and transportation of our offshore wind farms more accurately.
Previously, we relied on LCA studies of an average wind farm to calculate our supply chain emissions – a common approach in the industry – which do not reflect specific asset characteristics.
Taking an asset-specific approach will significantly improve our data accuracy, as we’ll now report more accurately on the supply chain emissions for specific assets. This means that our numbers will more correctly reflect design choices and amounts and types of materials – for example the amount of fuel used by installation vessels during the installation of our offshore wind farms.
Working for a common standard for life cycle assessments
We also co-founded a task force in WindEurope and established a joint industry programme together with the Carbon Trust and ten energy peers to develop a common standard for measuring life cycle emissions from offshore wind farms.
Companies in today’s offshore industry use different methodologies to gauge this, making it difficult to understand and compare supply chain emissions across offshore wind farms.
A common standard will improve transparency within the industry and allow customers to compare the carbon footprint of different solutions from different offshore wind developers.
Other highlights from 2022
- Almost all our strategic suppliers (>90 %) disclosed their emissions data to CDP. 40 % have now set or committed to setting a science-based target (up from 0 % in 2020). More than 69 % have adopted 100 % renewable electricity or committed to doing so by the end of 2025 (up from 21 % in 2020).
- We expanded our expectation for strategic suppliers to cover their electricity consumption with 100 % renewable electricity by the end of 2025 so that this requirement now applies to all tier 1 suppliers. We also developed guidelines to support them in achieving this.
- We began exploring ways to direct scrap steel from decommissioned assets back into the renewable energy value chain (steel represents over 50 % of the supply chain emissions from our offshore assets).
- We became a founding member of the First Movers Coalition’s concrete commitment, pledging to procure at least 10 % ‘near-zero’ concrete per year by 2030. This means concrete with a 75 % reduction in carbon emissions.
- We reduced our scope 3 emissions beyond our 50 % reduction target for 2032. However, this was due to generally lower demand for gas following Russia’s invasion of Ukraine and ceased deliveries from our gas sourcing contract with Gazprom Export. We expect our scope 3 emissions to increase again in 2024 once the Tyra gas field is reopened and deliveries under our long-term gas sourcing contract with DUC are resumed. We remain on track to meet our 2032 target.
We’ll continue developing tools and methods to help our suppliers with their individual green transformations. We’ll also keep working with various partners to build a common standard for measuring supply chain emissions within the offshore wind industry – while improving transparency.
- First Movers Coalition: Drive market demand for technologies key to decarbonising our supply chain (steel and concrete)
- SteelZero: Drive market demand for low-carbon steel and develop shared global policy frameworks and standards for low-carbon steel
- Salzgitter AG: Scale the production of renewable hydrogen for the steel industry and direct scrap steel from decommissioned assets to build new offshore wind farms
- Green Fuels for Denmark: Scale production of green fuels for heavy transport and aviation
- 1.5 °C Supply Chain Leaders Exponential Roadmap Initiative: Drive leading climate action of global supply chains together with other sustainability leaders, such as IKEA and Unilever
- The Carbon Trust
Accountability lies with our Head of Global Stakeholder Relations and Chief Operating Officer. The programme is anchored in a steering committee with broad representation from the business.
This programme contributes towards the following Sustainable Development Goal: