Decarbonization has become a solution not just to reduce greenhouse gas emissions but also to increase business profits. However, to do so, businesses must understand what is decarbonization, it’s impact on buisnesses and how it will benefit them. This blog entails all the information you need to start your decarbonization journey.

Over the last decade, consumers have become more aware of climate change and are actively choosing businesses that are taking initiatives to reduce their carbon footprint. 

Keeping in view of the above data, is decarbonization the answer to reducing greenhouse gas emissions?

What is decarbonization?

Decarbonization is the process of reducing the production of greenhouse gas emissions that industries create; that is reducing the emissions per unit of electricity generated.

This includes increasing the importance of low-carbon power generation and reduction in the use of fossil fuels. It particularly involves using renewable energy sources like wind power, solar power, and biomass, among others for every creation. 

How is decarbonization helping businesses?

Decarbonization doesn’t only help the environment but also aids companies’ financial growth if they create environmentally sustainable strategies. So instead of viewing the process of decarbonization as an additional cost, it can be seen as a long-term investment. 

Here are a few ways that decarbonization is helping businesses- 

Cost-effective

Decarbonization initiatives such as energy efficiency allows businesses to lower costs and increase revenue. For long-term electricity plans, Power Purchasing Agreements (PPAs) can protect against price volatility. 

When businesses manage their assets better it can drastically change their profit margins. For example, monthly electricity bills are not fixed and can fluctuate. Using solar energy and understanding which solar designs will be the most cost-effective can change the game. 

Through decarbonization, businesses can also find cost-effective alternatives as low-carbon technologies have been getting cheaper. This benefits the country as well because if multiple companies opt for low-carbon technologies, it boosts the country’s economic strategy. 

Increased consumer traction

Businesses must measure their carbon output and focus on reducing their carbon footprint. This is possible by building a decarbonization strategy in line with the industry. A carbon-neutral label gives brands a positive marketing tag they can advertise. 

Consequently, it exhibits the company’s awareness and willingness to work on climate issues through sustainable methods. This is beneficial as seven out of ten consumers are interested in what companies are doing to address social and environmental issues. 

What have countries done to achieve decarbonization?

The transport sector is becoming more electrified which helps reduce the use of carbon power. Today, renewables produce a third of the power capacity worldwide. By increasing the share of low-carbon energy sources, renewables, in particular, decarbonization is being achieved. 

The Intergovernmental Panel on Climate Change (IPCC) stated that – ‘virtually full’ decarbonization of the power sector by 2050 is crucial to meet the Paris Agreement’s target of closing the global temperature rise at 1.5°C. 

The Paris Agreement

The Paris Agreement is a legally binding international treaty on climate change that was adopted by 196 Nations at COP (Conference of the Parties) 21 in Paris. The goal of this treaty is to limit the damage of climate change by reducing global warming to below 2℃, with 1.5℃ as an ideal goal. Hence, to achieve carbon neutrality by 2050, countries must cut their greenhouse emissions. 

Following The Paris Agreement, the UK government committed to reaching a target of net-zero greenhouse gas emissions by 2050. The Committee on Climate Change said this is a feasible target that is also cost-effective.

How can companies overcome decarbonization obstacles?

Before trying to overcome obstacles, it’s essential companies understand what these obstacles are. This will give them a better understanding of how to proceed further. 

Lack of knowledge

Many organizations are willing to make accommodations to reduce greenhouse gas emissions. However, the lack of relevant information makes this process tedious and time-consuming. Some organizations have made necessary changes but cannot do more because they lack data about the sustainability impact as well as practical and financial implications. 

Solution

Giving these organizations the right and tailored information will encourage them to be more involved in the decarbonization process. 

Lack of urgency

One of the primary aims of any organization is to provide a positive experience for its consumers whilst increasing business profits. Many organizations don’t feel the need to act urgently as it will affect their immediate targets. 

Solution

Helping organizations understand that decarbonization measures that are set in place take all these factors into account. Showing them how inaction will cost them more in the future due to higher energy costs will motivate them to act. 

Lack of financial resources

Many emission reduction measures are profitable over a 15-year investment horizon. This means organizations will need upfront investments. Some measures might also not be as profitable, hence, it requires a long-term commitment from organizations. 

Solution 

Since financial investments play such a crucial role it makes subsidies more important than loans. 

End note 

According to The Economist Intelligence Unit, since 2016 there has been a 71% increase in the search for sustainable goods. A study released in 2021 by the journal Environmental Management found that 79% of people surveyed are willing to pay a premium for sustainable food products.

Since decarbonization is important for sustainability, taking steps to reduce the carbon footprint will help companies stand out. Each company should have clear goals – Limit carbon dioxide emissions and increase revenue. 

This can easily be done by understanding what works best for your business. Our services are here to help you benefit – saving the environment is a bonus we can all benefit from. 

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