Questions & Answers
ESRS E1 paragraph 60 mentions the words ‘after approximately 90-95% of GHG reduction’.
(1) Does this mean that under ESRS my claim to net-zero will not be recognised if I neutralise 20% of my total reduction target to reach net-zero through removal techniques?
(2) Is capturing and storing CO2 emitted through my own operations considered to be ‘reduction’ or ‘removal’?
- Net-zero targets
- GHG removals
Background
Regarding the net-zero target, 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, [the undertaking] 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 Defined Terms defines net-zero target: ‘Setting a net-zero target at the level of an undertaking aligned with meeting societal climate goals means (1) achieving a scale of value chain emissions reductions consistent with the depth of abatement at the point of reaching global net-zero in 1.5˚C pathways, and (2) neutralising the impact of any residual emissions (after approximately 90-95% of GHG emission reduction) by permanently removing an equivalent volume of CO2.’
Regarding GHG removals, ESRS E1 paragraph 56 states: ‘The undertaking shall disclose:
(a) GHG removals and storage in metric tonnes of CO2eq resulting from projects it may have developed in its own operations or contributed to in its upstream and downstream value chain …’.
Annex II Acronyms and Defined Terms defines 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 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 reduce atmospheric CO2 if it is combined with bioenergy production (BECCS). Removals can be subject to reversals, which are any movement of stored GHG out of the intended storage that re-enters the surface and 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.
The European Commission refers to this process as follows: ‘Capturing carbon dioxide directly from the atmosphere (DACCS) or from the combustion or fermentation of biogenic carbon (BECCS) has the potential to achieve negative emissions (carbon removals). The captured carbon is subsequently either stored underground or utilized in the production of synthetic materials such as fuels, chemicals, and building materials’ (see here for more information). For storage, CO2 is captured from its source and compressed and transported to geological formations, including oil and gas reservoirs, unmendable coal seams and deep saline reservoirs where it will be stored.
Answer
(1) Does this mean that under ESRS my claim to net-zero will not be recognised if I neutralise 20% of my total reduction target to reach net-zero through removal techniques?
Net-zero target means neutralising the impact of any residual emissions (after approximately 90-95% of GHG emission reduction) by permanently removing an equivalent volume of CO2 (see the definition of net-zero target above in the background). As such, neutralising more than 10% (e.g. 20%, as stated in the question) of carbon removals would not qualify to a claim of achieving a net-zero target in accordance with the ESRS definition. As stated in ESRS E1 paragraph 60, the 90-95% of GHG emission reduction is subject to sectoral variations, which may be reflected in the undertaking’s net-zero target.
(2) Is capturing and storing CO2 emitted through my own operations considered to be ‘reduction’ or ‘removal’?
Please refer to the above definition of GHG removal and storage in the background section to determine whether capturing and storing CO2 emitted through the undertaking’s operations would qualify as removal. It will be considered a removal if it results in the withdrawal of GHG from the atmosphere because of deliberate human activity (such as, for example, BECCS or carbon stored in soil through enhanced agriculture practices). It should be noted that all carbon capture and storage technologies have adverse effects that should be considered.
If an undertaking is capturing and storing CO2 that it has emitted through its own operations, this does not necessarily represent a removal. If the carbon is of fossil origin, it may represent a transfer of CO2 into geological storage (see article 49 of Commission Implementing Regulation 2018/2066 of 19 December 2018), and for the purposes of ESRS Disclosure Requirement E1-6 – Gross Scopes 1, 2, 3 and Total GHG emissions reporting, an emission reduction. In all cases – whether removals or transfers of fossil CO2 – there needs to be a policy to monitor reversals from the storage pools (geological or otherwise). In case of reversals of removals (ESRS E1 paragraph AR 58 (g)) or transfers of fossil CO2, it shall be accounted as a CO2 emission under ESRS E1 Disclosure Requirement E1-6. Removal reversals may also be reported in a separate line item, as per ESRS E1 paragraph AR 60.
Relations
Paragraph | Content |
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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. | |
GHG removals and storage in metric tonnes of CO2eq resulting from projects it may have developed in its own operations, or contributed to in its upstream and downstream value chain; and | |
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. | |
GHG removals and storage in metric tonnes of CO2eq resulting from projects it may have developed in its own operations, or contributed to in its upstream and downstream value chain; and | |
GHG removals and storage in metric tonnes of CO2eq resulting from projects it may have developed in its own operations, or contributed to in its upstream and downstream value chain; and | |
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. | |
GHG removals and storage in metric tonnes of CO2eq resulting from projects it may have developed in its own operations, or contributed to in its upstream and downstream value chain; and |