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 supply chain decarbonisation?
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 emissions linked to our supply chain, including those from the manufacture, installation, and transportation of our renewable energy assets – activities that all need to grow as we accelerate the built-out of green energy.
This makes supply chain decarbonisation one of the most important and complex parts of our work to reach net-zero.
What are we doing?
In this area, there are no competitors, only partners. Supply chain emissions are beyond our direct control, and many of them come from hard-to-abate sectors like shipping, steel, and heavy manufacturing. Our success depends on succeeding with others.
Our work on supply chain decarbonisation focuses on three areas.
- Tracking carbon progress: To track emissions performance across our supply chain towards our net zero target in 2040, we have developed a carbon tracking model based on life cycle assessments (LCAs) of our offshore wind farms.
We use asset-specific LCAs to accurately quantify environmental impacts from the manufacture, installation, and transportation of our renewable energy assets.
Our asset-specific approach means that our numbers reflect design choices and the amounts and types of materials we use – for example the actual amount of fuel used by installation vessels during the installation of our offshore wind farms. This stands in contrast with the general approach in the industry today, which do not reflect the characteristics of specific assets.
- Engaging with suppliers: We’re working with our strategic suppliers to help them set science-based targets, work towards 100 % renewable electricity usage by the end of 2025, and develop roadmaps to transition to renewable energy. These suppliers represent more than 60 % of our total 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 scale up and create early market demand for breakthrough technologies like renewable hydrogen that are crucial for decarbonising hard-to-abate sectors like steel. We’re founding members of the Climate Group’s SteelZero initiative and the World Economic Forum’s First Movers Coalition. Here we have committed to procuring future volumes of low-carbon concrete and steel.
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
- We started to report on supply chain emissions from our offshore wind assets using asset-specific life cycle assessments (LCA), providing us with more accurate data on the actual emissions for specific wind farms.
- We 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.
- 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 transitions. 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: