Energy as important component of net-zero
Updated: May 18
Are you interested in “net-zero” and curious how to implement this in your company? Do you want to learn more about impactful strategies and measures? Read along to get a better understanding of effective strategies of reaching net-zero.
At a glance
For long, the discussion around climate change was centred around reducing GHG (greenhouse gas) emissions. Recently, the debate has moved away from just “reducing” to “cancelling” emissions.
Net-zero is achieved when global GHG emissions are counter-balanced, or neutralised, by GHG absorptions of the same volume.
Emissions offsetting should be treated as a last resort when trying to reach net-zero or carbon neutrality. Indeed, reducing emissions is the pre-requisite and should not be substituted by compensation.
To achieve net-zero in the most sustainable way, the energy hierarchy should be used. This hierarchy prioritise energy reduction over generating renewable energy and compensating emissions.
Contributing to net-zero can lead to increased efficiency, reduced energy costs and prepares your company for the future.
What is net-zero?
In our recent article on “Why should “net-zero” be your company’s next target?”, you can find more about the definition of net-zero. This section consists of a short recap of this article. For more information, we recommend reading the full paper here.
The IPCC defines “net-zero emissions” as the “state in which anthropogenic GHG emissions no longer accumulate in the atmosphere, but instead are balanced by anthropogenic removals over a specified period.” Put simply, this means that net-zero is achieved when global GHG emissions are counter-balanced, or neutralised, by GHG absorptions of the same volume.
This does not mean that net-zero requires a complete stop of GHG emissions. One way to move towards net-zero is by compensating GHG emissions through the use of renewable energy or “emission offsetting”, for example by planting trees that absorb the total GHG emissions emitted. When GHG emissions are completely balanced, the final sum of emissions to the atmosphere is zero, hence the name “net-zero”. In this article, we will focus on the energy system aspect of emissions and how to reduce these emissions as much and as effective as possible. As energy supply was the largest sector in terms of GHG emissions in 2019 in the EU, reducing the energy demand can have a significant impact on the total GHG emissions.
Figure 1 - Greenhouse gas in the EU in 2019 in million tonnes of CO2-equivalent, by sector. The sector Energy supply comprises fuel used in electricity and heat production, but not vehicles. Data from EEA.
The energy hierarchy as guidance
A common strategy for claiming “carbon neutrality” and “net-zero emissions” is to purchase low-cost carbon credits and certificates. However, this “offsetting” strategy merely focusses on damage control after the GHGs have already been emitted and does not address the root cause of GHG emissions. To be credible, a claim of “neutrality” or “net-zero” must be aligned with the ambition set by the Paris Agreement, which cannot be achieved solely through offsetting. To reduce the GHG emissions impact of scope 1 and 2 in the most efficient and impactful way, we recommend following the energy hierarchy, as shown in Figure 2.
Figure 2 - Energy hierarchy
Step 1: Energy saving
The first step is to avoid emitting GHGs by reducing or eliminating unnecessary energy use and waste. By performing an energy audit, unnecessary leakages can be detected. Examples range from lights simply left turned on when nobody is in the room to heaters that are turned on too early or turned off too late. Simple changes, such as a presence detector for the lights or behavioural changes in the use of machinery, can already have a significant impact and save money directly. Re-engineering the factory or plant design can result in the elimination of specific machines or even entire installations, enabling a large reduction in the energy consumption.
Step 2: Energy efficiency
After reducing the energy consumption by eliminating unnecessary processes, improving energy efficiency can lower the consumption even further by reducing the loss of energy. This is both relevant on the demand-side and supply-side of the energy system. Improvements on the demand-side are often achieved by using more modern and high-efficiency facilities, reducing frictional losses, and reducing heat losses. With a more thorough energy audit, opportunities for improving the energy efficiency can be detected. These opportunities can be on a small scale, such as replacing light bulbs and halogen lamps with LED, and on a large scale, by upgrading old machinery to new, (energy) efficient models. Similar to the energy saving step, measures to improve energy efficiency also have a relatively short payback period.
Step 3: Renewable energy
The next step is to ensure that the remaining energy demand can be fulfilled by clean energy sources such as wind and solar energy. The option to locally generate energy from renewable sources is favourable over importing because of issues such as transportation losses and grid congestion. With the current rise of energy demand and renewable energy supply, network congestion is becoming a significant issue. Several grid operators have already stopped connecting renewable energy plants to the grid to ensure grid stability.
Furthermore, self-generated renewable energy almost always offers a better business case because it decreases the demand for external energy, which in turn reduces energy costs. When coordinating energy generation and consumption, renewable energy can be used even more efficiently. For example, by adjusting the use of heavy machines to when the sun is brightest, the generated solar energy can directly be used. If this coordination is not (fully) possible, energy storage, such as batteries, can be used to bridge the time difference.
Step 4: Low carbon energy
For some applications, renewable energy is not (yet) an option. In these cases, low carbon technologies can often be applied. Options are natural gas, blue hydrogen or other combinations with Carbon Capture and Storage (CCS) or Carbon Capture and Utilisation (CCU). For example, steel production inherently emits CO2. By capturing these emissions and storing them, the CO2 is not released into the atmosphere. However, CCU and CCS are not yet sufficiently developed for large scale implementation.
Step 5: Conventional energy with offset
When neither renewable energy, nor low carbon technology and CCS are valid options, the last step is to compensate the emissions through carbon offsetting. This is clearly the least preferred option and should therefore only be used when no other method is sufficient. Offsetting does not tackle the issue of GHG emissions at its root but is only a measure for damage control.
How could your organisation benefit from a net-zero strategy?
Using the energy hierarchy to make your company more net-zero has many advantages. Not only can you have a real impact on climate change mitigation, but the first three steps can also significantly reduce your energy costs. The reduction of energy consumption has a quick and sustainable impact, and the payback period of renewables is getting shorter and shorter every year. Furthermore, this strategy is aligned with the high ambitions of the Paris Agreement and can help achieve those. It makes your net-zero claim on scope 1 and 2 credible. In the long term, this might even result in tax benefits or business opportunities that are only available for companies that are on the net-zero journey.
Taking your organisation to net-zero through the energy hierarchy will lead to increased efficiency, reduced energy costs and will prepare your organisation for the future.
Interested in net-zero?
 Intergovernmental Panel on Climate Change. 2018. Annex I: Glossary [Matthews, J.B.R. (ed.)]. In: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. [Online].  Network congestion occurs when there is more electricity demand or supply than the network can handle.
 There are currently four ‘colours’ of hydrogen, referring to the environmental impact of the production processes. Green hydrogen is produced by the electrolysis of water using renewable energy. Grey and brown hydrogen are made from fossil fuels and the production processes also produce GHGs. For blue hydrogen, these GHGs are captured or stored to prevent emitting them.