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What is decarbonisation and why is it important for UK businesses?

So, what exactly is decarbonisation? Why does it hold such significance for UK businesses, and what practical steps can they take to help build a sustainable future? Let’s explore.

Key Highlights:

  • Decarbonisation involves reducing greenhouse gas emissions and is a crucial step for businesses to meet the UK's net zero targets and combat climate change.

  • Decarbonisation offers businesses the chance to future-proof operations, save on energy costs, and enhance their reputation.

  • Businesses can reduce their carbon footprint by adopting energy efficiency measures, i.e. switching to electric vehicle fleets.

  • UK businesses must meet specific carbon reporting requirements to comply with government regulations.

Last year (2023), UK businesses were responsible for emitting 66 million metric tonnes of carbon dioxide, accounting for just over a quarter of the total UK greenhouse gas emissions that year. Right now, businesses can lead the charge in fighting climate change by drastically cutting their carbon emissions. We all know this, but do we really know why, or how? Decarbonisation – the effort to significantly reduce carbon emissions – is not just an ethical responsibility, it's a savvy and sustainable business move. So, what exactly is decarbonisation? Why does it hold such significance for UK businesses, and what practical steps can they take to help build a sustainable future? Let’s explore.

What is decarbonisation and why is it needed?

Decarbonisation means systematically cutting down on greenhouse gas emissions, especially carbon dioxide (CO₂), methane (CH₄), and nitrous oxide (N₂O). Ultimately, the crux of decarbonisation is all about moving away from fossil fuels and turning to cleaner energy sources, and this is why…

According to PWC’s Net Zero Economy Index 2023, the world faces a daunting challenge: achieving a year-on-year decarbonisation rate of 17.2% until 2050 to limit global warming to 1.5°C above pre-industrial levels.

In 2023, the world only reduced carbon emissions by 2.5%. Now, to limit global warming to 1.5°C, we need to cut emissions by 17.2% each year - seven times faster than before. However, there's hope: last year (2023) saw a big increase in using renewable energy. This shows that a quicker transition to cleaner energy sources is possible, especially through market-driven initiatives.

Year-on-Year Decarbonisation rates Needed vs. Achieved

Yearly decarbonisation rate needed to reach 2050 target

17.5%

2023 World Decarbonisation rate achieved

2.5%

This means that UK businesses are at a pivotal moment where decarbonisation isn't just a choice, it's a must-do. The undeniable link between industrial activities and climate change has spurred the UK government to set bold net zero targets for slashing greenhouse gas emissions by at least 90% by 2050. Regulations are tightening, with initiatives like the Zero Emission Vehicle (ZEV) mandate accelerating the shift towards a greener future.

Carbon offsets

The Importance of Decarbonisation for UK Businesses

With the UK government's ambitious emissions reduction targets, the pressure's on for businesses to step up and cut their carbon footprint. But it's not all about ticking boxes and following regulations. Decarbonisation offers a golden opportunity for businesses to future-proof their operations and drive cost savings through smart energy practices. By doing so, businesses can boost their reputation among increasingly eco-conscious consumers.

So, what can UK businesses do to actively contribute to decarbonisation within their operations?

What is a decarbonisation strategy and how can UK businesses use one to reduce their carbon emissions?

A decarbonisation strategy takes all the elements of the Net Zero goal and a business’s specific plans and processes to achieve their contribution to it, and sets out a blueprint of action for the entire organisation to offset their carbon emissions with active, decarbonisation practices. The most common features within a decarbonisation strategy and therefore a roadmap for businesses to follow include the following steps:

Implement energy efficiency measures - Implementing energy efficiency measures is a fundamental step in reducing carbon emissions. This includes:

  • Energy audits - Conducting regular energy audits to identify areas of inefficiency and opportunities for improvement.

  • Upgrading equipment - Investing in energy-efficient appliances, lighting systems, and HVAC (heating, ventilation, and air conditioning) systems.

  • Optimising Operations - Streamlining processes to minimise energy consumption, such as scheduling equipment use during off-peak hours and implementing smart building controls.

Switch to an all-EV fleet - Addressing transportation emissions is crucial for businesses, especially those with fleets. Here's how you can make the switch to a greener fleet:

  • Adopt electric vehicles (EVs) - With the UK government's Zero Emission Vehicle (ZEV) mandate requiring all new cars sold in Great Britain to be zero-emission by 2035, now is the perfect time for UK businesses to transition their fleet to EVs before they are pushed. Not only do EVs produce zero tailpipe emissions, but they also offer lower operating costs and reduced maintenance expenses compared to traditional vehicles. Plus, with an ever-expanding range of EV models available, there's a whole lot of choice out there. By converting an entire fleet to EV, a business can significantly lower their scope 3 GHG emissions, which are the indirect emissions from a company’s value chain, including business travel, commuting and waste.

  • Install charging infrastructure -  To support an all-EV fleet, businesses should invest in charging infrastructure at the workplace. This includes installing charging stations in parking facilities to ensure convenient access for employees and visitors. Taking advantage of government grants and incentives available for charging infrastructure installation to offset costs is also a savvy cost-saving move, such as the electric vehicle chargepoint and infrastructure grant.

In addition to switching your fleet to EV, here are two other ways you can reduce your carbon emissions in relation to transport:

Promote sustainable commuting – Businesses can encourage employees to embrace alternative modes of transportation for their daily commute. Provide incentives such as subsidies for public transportation passes, bike-to-work schemes, or carpooling initiatives to incentivise greener commuting choices.

Encourage more working from home - Embrace remote WFH policies to reduce the need for travel altogether.

At Drive Electric, together with AI-powered charging, we’ve created the DriveElectric Plus app that acts as a super smart charging solution and can reduce a business’s carbon emissions by 40%, all the while maximising efficiency and minimising costs. 

Transition to renewable energy - Switching to renewable energy sources can significantly reduce reliance on fossil fuels and lower carbon emissions. Practical steps include:

  • Installing solar panels - Harnessing solar energy through rooftop solar panel installations.

  • Purchasing renewable energy - Procuring renewable energy from certified suppliers or investing in renewable energy certificates.

  • Onsite generation – For much larger businesses, generating renewable energy onsite using wind turbines or biomass systems where feasible.

Choose sustainable supply chain management processes - Collaborating with suppliers to reduce emissions throughout the supply chain is a cost-effective way to reduce carbon emissions. Practical steps include:

  • Supplier assessment - Evaluating suppliers based on their environmental performance and carbon footprint.

  • Local sourcing - Prioritising local suppliers to reduce transportation emissions.

Carbon reporting requirements for UK businesses

In the UK, businesses have specific carbon reporting requirements. Large unquoted companies and limited liability partnerships (LLPs) must report the following:

  • UK Energy Use and Associated GHG Emissions: Companies need to disclose their energy use and associated greenhouse gas (GHG) emissions within their Directors’ Report.

  • Previous Year’s Figures: Reporting should include figures from the previous year for energy use and GHG emissions.

  • Intensity Ratio: At least one intensity ratio related to energy efficiency.

  • Energy Efficiency Actions: Companies should outline actions taken to improve energy efficiency.

  • Methodology Used: The methodology used for calculating energy use and emissions should be transparent.

Decarbonisation is not just a buzzword; it is a critical process for ensuring a sustainable future. For UK businesses, embracing decarbonisation is not only about meeting regulatory requirements but also about reaping economic benefits, enhancing brand reputation, and gaining a competitive edge. By understanding what decarbonisation entails and implementing practical steps, businesses can contribute significantly to a greener, more sustainable world.

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