Ørsted becomes first energy company in the world with a science-based net-zero target

18.11.2021

The Science Based Targets initiative (SBTi), the global body enabling businesses to set emissions reduction targets in line with science, recently launched the world-first Net-Zero Corporate Standard. Ørsted is delighted to be among the seven companies with science-based net-zero targets verified by the SBTi, and the first energy company in the world with a validated net-zero target.

Mads Nipper, CEO, says: “Ørsted strongly welcomes the SBTi’s new Net-Zero Standard, which provides much needed clarity on what’s required for corporate net-zero targets to actually fight climate change. We’re proud to be the first energy company in the world to receive validation of our 2040 net-zero target as being fully aligned with what climate science requires.”

He continues: “We see growing ambitions from businesses to reach net-zero, and that’s absolutely necessary to reach a net-zero world. However, it’s critical that these goals meet the requirements of climate science to decarbonise. I encourage all business leaders who want to have a real impact on the climate to commit to the necessary near-term and long-term reductions under the new SBTi standard.”


What are Science-Based Targets?

Science-Based Targets are greenhouse gas (GHG) reduction targets, through which a company commits to cutting emissions at a high enough pace to do ‘their part’ to limit global warming to 1.5C – in line with climate science. Previously, SBTi approved only near-term emissions reduction targets. The new standard enables SBTi for the first time to assess which long-term net-zero targets are aligned with climate science. For a company to have an SBTI-validated net-zero target, net-zero must be achieved primarily through emission reductions (not offsetting) and the target must cover all three scopes (Scope 1, 2 and 3).


What were Ørsted’s previous science-based targets?

Ørsted was one of the first energy companies to set a near-term science-based target validated by SBTi. This was our target of a 98 percent reduction in carbon intensity by 2025 (compared to 2006), covering direct emissions from our energy generation, operations, and administration (Scope 1); and indirect emissions from our energy consumption (Scope 2). Given current performance and planned actions, we are well on track to reach this target. Beyond this science-based reduction target, Ørsted plans to go a step further by reaching net-zero in Scope 1-2 by 2025.

Carbon intensity of energy generation

Looking deeper into our supply chain, we then set a target of 50 percent absolute reduction of emissions across our value chain by 2032 (compared to 2018), covering indirect emissions from construction contractors, wholesale buying and selling of natural gas, and purchased goods (Scope 3).

In 2020, we launched our commitment to net-zero emissions across the full value chain by 2040. We’ve since worked with the SBTi to pilot their Net-Zero Standard and put into concrete terms what a science-based net-zero target looks like for an energy company.


What is new with this Net-Zero Standard?

Our 2040 net-zero target is now science-based because we’ve substantiated it through specific long-term reduction targets:

  •  99.8 percent reduction in GHG emissions from energy generation and operations in Scopes 1-2 – down from targeted 10 grams CO2 per kilowatt hour (kWh) in 2025 to 1 gram
  • 99 percent reduction in GHG emissions in Scopes 1-3 from our entire energy portfolio to 2.9 grams CO2 per kWh compared to 2018
  • 90 percent reduction in the absolute Scope 3 GHG emissions from use or sold products by 2040 compared to 2018 – including our natural gas portfolio

Finally, any remaining, or residual, emissions that we can’t abate by 2040 will be offset through certified carbon removal projects.

 

How do we plan to meet our targets?

We are already on track to meet our 2025 net-zero target, including phasing out coal in 2023. To reach our 2040 target we will:

  • Continue working to reduce emissions from the generation of heat and power and from our operations and maintenance, including the vessels servicing our wind farms, our vehicles, and our sites
  • Gradually phase out our trading of natural gas · Help key suppliers to disclose and reduce their emissions as part of our supply chain decarbonization programme
  • Collaborate across our industry and with other industries to tackle major common challenges where immediate solutions are not available. These challenges include steel, which accounts for around half of our value chain emissions, and where we are already working with other companies through the SteelZero initiative and the First Movers Coalition.

Emissions across the lifecycle of an Ørsted average offshore wind farm (gCO2e/kWh produced)

Our 2040 target is ambitious, and we do not have all the solutions today. However, we believe that science-based targets will spur greater action and innovation both inside our company and across our industry.


Join the movement for science-based climate action

To build the credibility and reputation of corporate climate action, climate targets must be backed by and aligned with science. And the science is clear: to keep a 1.5°C future within reach, we need rapid and deep emission cuts to achieve net-zero. We therefore encourage all companies to align their climate strategies with the SBTi Global Net-Zero Standard.