An Overview of the Carbon Budget Tracker Tool

 | Sep 11, 2023 | Articles

In an era of heightened environmental awareness and the pressing need for sustainable practices, companies are increasingly confronted with the imperative to address their carbon footprint. 

The European Union law requires all listed companies in the EU to report on risks and opportunities associated with social and environmental issues and the impact of their activities on people and the environment. Additionally, the Corporate Sustainability Reporting Directive (CSRD) now requires a broader list of large companies to report on their sustainability efforts, with a new specific focus on greenhouse gas emission reduction targets for 2030 and 2050. 

With many large companies now actively tracking their carbon footprint, the next step for them is to design a roadmap to Net Zero: 

1. The initial phase involves the formulation of a comprehensive emissions reduction strategy, coupled with a cost assessment. This endeavour can be facilitated through pre-existing calculation tools tailored to specific industries (refer to the list here), internally generated estimates, or by enlisting the expertise of a carbon accounting/consultancy partner.

2. The following stage entails the computation of requisite carbon removal measures to attain the Net Zero objective. In this context, a dedicated tool developed by CarbonX offers assistance to companies in estimating this metric.

What is the Carbon Budget Tracker?

Many companies are now actively taking the steps required to track their carbon footprint and create a path towards Net Zero accordingly. After calculating their current carbon footprint, companies will likely set in place near-term targets (2030) and long-term targets (2050)  for reducing their emissions by adopting a science-based approach (e.g., Science Based Targets initiative (SBTi), Climate Action 100+, and Climate Pledge).  

Based on a company’s current carbon footprint and targets, our Carbon Budget Tracker Tool calculates a carbon emission abatement budget until 2050, considering the company’s forecasted annual economic growth and an average cost for emission abatement, ideally furnished by the company as this parameter greatly varies from one sector to another. 

According to BCG, the first 60 to 80 % of emission abatements are very affordable for most organisations to undertake, and the last 20 to 40 % are very expensive: as a result, our tool takes into account this variance in abatement expenses based on the advancement within the reduction plan. 

Due to the high cost of carbon removal, companies are strongly advised to reduce their emissions as much as possible and then use removals to offset the last portion that they are unable to further reduce. 

How Does it work?

Our Carbon Budget Tracker calculates the amount of carbon emissions that an organisation would need to remove each year and the average associated costs to achieve net zero by 2050. 

While many of the following variables can be estimated, it is essential that a company has first undertaken a carbon footprint analysis to use this tool. 

Inputs

To calculate the outputs, companies would be first required to provide the following inputs: 

Carbon emissions 

• Base year: This year is the reference point from which a company initiates the calculation of its Net Zero targets.
• Current emissions (annual) as of the base year for carbon accounting. 

Emission abatement

• Forecast company annual economic growth (how much is the company expected to grow organically or through M&A)
• Near-Term Targets (2030)
  • Emission abatement target by the near term (usually 2030) 
  • Total emission abatement % vs base year, before company growth → ideally more than 45% as per the Paris agreement 
• Long-term Targets (2050)
  • Residual emissions after full abatement → ideally less than 10%. SBTi says: “Long-term science-based targets will be equivalent to at least 90% absolute reduction across scopes for many companies, regardless of whether the cross-sector pathway or sector-specific pathways are used.”
• Cost
  • Emission abatement cost for the first 70% of the company’s carbon emissions as of the base year for carbon accounting. Assuming an average cost for this reduction. 
  • Emission abatement cost for the last 30% of the company’s carbon emissions as of the base year for carbon accounting (“BCG has modelled the GHG abatement cost curves for many industries and companies. While reducing the first 60% to 80% of emissions is very affordable for most organisations (assuming sufficient access to renewables and other existing technologies), reducing the last 20% to 40% is very expensive – often well above $150 per tonne”). 

Beyond Value Chain Mitigation & Neutralisation

• Start year for carbon removal credit (CRC) purchase: note this should be at least one year after the base year
• Permanent CRC cost per tonne. → CarbonX suggests $100 as a baseline.

Outputs

From here, the Carbon Budget Tracker Tool will calculate the following outputs: 

• Carbon emission abatement budget until 2050 (tonnes of CO2)
• Purchase of annual CRCs to be Net Zero in 2050 (how many tonnes of CO2 to buy)
• CRC purchase cost until 2050
• Cumulative Emission Abatement & Removal from 2020 to 2050 in tonnes of CO2
• Total Cost for Emission Abatement & Removal from 2020 to 2050 
• Equivalent Cost per tonne for Emission Abatement & Removal

As such, using our Carbon Budget Tracker Tool will allow companies to understand the amount of carbon removal they need to purchase while estimating the costs involved. 

Final Remarks

To help organisations in their net zero journey, Carbonx has developed the Carbon Budget tool that will assist in calculating the carbon removal measures to attain net zero emissions. This tool enables organisations to gauge their carbon removals needed and associated expenses. 

If you are interested in leveraging our Carbon Budget Tracker tool to figure out how much carbon removals you would need to reach net zero over short and long-term goals, feel free to reach out to us at contact@carbonx.world or book a meeting directly here.

In an era of heightened environmental awareness and the pressing need for sustainable practices, companies are increasingly confronted with the imperative to address their carbon footprint. 

The European Union law requires all listed companies in the EU to report on risks and opportunities associated with social and environmental issues and the impact of their activities on people and the environment. Additionally, the Corporate Sustainability Reporting Directive (CSRD) now requires a broader list of large companies to report on their sustainability efforts, with a new specific focus on greenhouse gas emission reduction targets for 2030 and 2050. 

With many large companies now actively tracking their carbon footprint, the next step for them is to design a roadmap to Net Zero: 

1. The initial phase involves the formulation of a comprehensive emissions reduction strategy, coupled with a cost assessment. This endeavour can be facilitated through pre-existing calculation tools tailored to specific industries (refer to the list here), internally generated estimates, or by enlisting the expertise of a carbon accounting/consultancy partner.

2. The following stage entails the computation of requisite carbon removal measures to attain the Net Zero objective. In this context, a dedicated tool developed by CarbonX offers assistance to companies in estimating this metric.