Questions & Answers
Is it an absolute requirement in paragraph 30 that 90-95% of GHG emission reduction needs to be performed before giving the option to work with GHG Removals?
- GHG removal
- GHG emission reduction
Background
ESRS E1 Disclosure Requirement E1-4 refers to ‘Targets related to climate change mitigation and adaptation’.
ESRS E1 paragraph 34 (b) states: ‘GHG emission reduction targets shall be disclosed for Scope 1, 2, and 3 GHG emissions, either separately or combined. The undertaking shall specify, in case of combined GHG emission reduction targets, which GHG emission Scopes (1, 2 and/or 3) are covered by the target, the share related to each respective GHG emission Scope and which GHGs are covered. The undertaking shall explain how the consistency of these targets with its GHG inventory boundaries is ensured (as required by Disclosure Requirement E1-6). The GHG emission reduction targets shall be gross targets, meaning that the undertaking shall not include GHG removals, carbon credits or avoided emissions as a means of achieving the GHG emission reduction targets;’
ESRS E1 paragraph 60 states: ‘In the case where the undertaking discloses a net-zero target in addition to the gross GHG emission reduction targets in accordance with Disclosure Requirement E1-4, paragraph 30, it shall explain the scope, methodologies and frameworks applied and how the residual GHG emissions (after approximately 90-95% of GHG emission reduction with the possibility for justified sectoral variations in line with a recognised sectoral decarbonisation pathway) are intended to be neutralised by, for example, GHG removals in its own operations and upstream and downstream value chain.’
Annex II Acronyms and Glossary of Terms: ‘GHG removal and storage – (anthropogenic) removals refer to the withdrawal of GHGs from the atmosphere as a result of deliberate human activities. These include enhancing biological anthropogenic sinks of CO2 and using chemical engineering to achieve long-term removal and storage. Carbon capture and storage (CCS) from industrial and energy-related sources, which alone does not remove CO2 from the atmosphere, can remove atmospheric CO2 if combined with bioenergy production (Bioenergy with Carbon Capture & Storage – BECCS). Removals can be subject to reversals, which are movements of stored GHG out of the intended storage that re-enter the atmosphere. For example, if a forest that was grown to remove a specific amount of CO2 is subject to a wildfire, the emissions captured in the trees are reversed.’
Annex II Acronyms and Glossary of Terms: ‘Carbon credit – A transferable or tradable instrument that represents one metric tonne of CO2eq emission reduction or removal issued and verified according to recognised quality standards.’
Answer
ESRS E1 does not mandate undertakings to work, or prevent them from working, with GHG removals. While the (extent of) use of carbon removals remains the undertaking’s decision, ESRS E1 aims at ensuring transparency. It requires to differentiate between:
(a) the established GHG emissions reduction targets (that shall not include carbon removals per ESRS E1 Disclosure Requirement E1-4);
(b) targets related to net-zero (ESRS E1 Disclosure Requirement E1-7 paragraph 60, which requires GHG emission reductions of approximately 90-95%); and
(c) the climate neutrality claims involving carbon credits (ESRS E1 Disclosure Requirement E1-7 paragraph 61).
Undertakings can work with GHG removals before achieving 90-95% GHG emission reductions near the point of net-zero. If they claim to have set a net-zero target, however, they need to explain how they expect to neutralise the outstanding residual emissions after a 90-95% of GHG emissions reduction has been achieved.
Relations
Paragraph | Content |
|---|---|
In the case where the undertaking discloses a net-zero target in addition to the gross GHG emission reduction targets in accordance with Disclosure Requirement E1-4, paragraph 30, it shall explain the scope, methodologies and frameworks applied and how the residual GHG emissions (after approximately 90-95% of GHG emission reduction with the possibility for justified sectoral variations in line with a recognised sectoral decarbonisation pathway) are intended to be neutralised by, for example, GHG removals in its own operations and upstream and donwstream value chain. | |
The undertaking shall disclose the climate-related targets it has set. | |
If the undertaking has set GHG emission reduction targets , ESRS 2 MDR-T and the following requirements shall apply: | |
In the case where the undertaking discloses a net-zero target in addition to the gross GHG emission reduction targets in accordance with Disclosure Requirement E1-4, paragraph 30, it shall explain the scope, methodologies and frameworks applied and how the residual GHG emissions (after approximately 90-95% of GHG emission reduction with the possibility for justified sectoral variations in line with a recognised sectoral decarbonisation pathway) are intended to be neutralised by, for example, GHG removals in its own operations and upstream and donwstream value chain. | |
If the undertaking has set GHG emission reduction targets , ESRS 2 MDR-T and the following requirements shall apply: | |
The undertaking shall disclose the climate-related targets it has set. | |
If the undertaking has set GHG emission reduction targets , ESRS 2 MDR-T and the following requirements shall apply: | |
In the case where the undertaking discloses a net-zero target in addition to the gross GHG emission reduction targets in accordance with Disclosure Requirement E1-4, paragraph 30, it shall explain the scope, methodologies and frameworks applied and how the residual GHG emissions (after approximately 90-95% of GHG emission reduction with the possibility for justified sectoral variations in line with a recognised sectoral decarbonisation pathway) are intended to be neutralised by, for example, GHG removals in its own operations and upstream and donwstream value chain. | |
If the undertaking has set GHG emission reduction targets , ESRS 2 MDR-T and the following requirements shall apply: | |
In the case where the undertaking discloses a net-zero target in addition to the gross GHG emission reduction targets in accordance with Disclosure Requirement E1-4, paragraph 30, it shall explain the scope, methodologies and frameworks applied and how the residual GHG emissions (after approximately 90-95% of GHG emission reduction with the possibility for justified sectoral variations in line with a recognised sectoral decarbonisation pathway) are intended to be neutralised by, for example, GHG removals in its own operations and upstream and donwstream value chain. |