It's pretty clear that lowering your emissions is key to a thriving business and planet. But sometimes knowing exactly what changes to make is difficult: where would my business get the biggest bang for the investment buck? This is particularly tricky if you don't have a methodology that easily evaluates the positive climate impact of switching from one carbon-intensive product to a cleaner one.
This was the challenge that South Pole and OVO faced in early 2022.
They asked the question: how do we capture that positive environmental impact of a switching to a cleaner product accurately and transparently, and incentivise customers to opt for low-carbon solutions?
So they set out to solve the problem.
OVO is an energy technology company with climate at its heart. Its pathway to net zero focuses on helping its customers use less energy to heat and power their homes, and getting more of that energy to come from low-carbon sources. In early 2022, it was clear that conventional greenhouse gas accounting (like the Greenhouse Gas Protocol) didn't capture the full picture for OVO. A traditional accounting exercise measures the total volume of greenhouse gases emitted as a result of a company's activities, serving as a template for companies to measure the negative impact of their operations, supply chain and services on the climate. What this methodology doesn't do, however, is help a company to calculate the positive impact that selling lower carbon products or services could have by avoiding emissions.
This is particularly important for companies whose carbon footprint is driven by customers using their products (over 99% of OVO's carbon footprint, for example, comes from customer use of electricity and gas).
So South Pole and OVO created a new, open source carbon avoidance methodology which hopefully will be adopted by others in the energy sector. The methodology measures the carbon avoided over a product lifecycle when a customer switches from an energy intense technology (like a gas boiler) to a low-carbon solution (like an air source heat pump).
South Pole's Rob Ellinson explains: “For each low-carbon solution, we calculated a carbon avoidance factor that compared the emissions from a business-as-usual scenario to a low-carbon solution. For example, the emissions that are avoided through replacing an ICE vehicle with an EV."
The methodology reviewed 18 products in OVO's low-carbon solution product portfolio – from roof insulation to electronic vehicle leasing to heat pumps. It threw light on which of OVO's products have the greatest potential to avoid carbon emissions. They learned that fuel-switching technologies (like heat pumps or EVs that take customer energy use from gas, diesel or petrol and can switch it to clean electricity) help reduce carbon emissions. But they also learned that combining smaller, less costly actions could add up to a significant change in emissions – particularly as these are more often accessible to the majority of customers. The beauty of the methodology is that it can be replicated and applied to new products that enter the portfolio.
Through the carbon avoidance assessments, OVO now has an understanding of how much carbon emissions could be avoided by growing the share of low-emission products and services across their portfolio.
Kim van Lieshout, Senior Sustainability Manager at OVO Energy, adds: “Knowing the carbon avoidance factor for each of our products and services means that we can translate our climate targets into commercial targets. For example, how many heat pumps do we need to install to avoid the emission of 1 million tonnes of CO2? This helps us consider the impact of avoided carbon emissions alongside other technical, financial and commercial factors when deciding which products to prioritise, scale up and roll out. This information can then become key to us driving our commercial strategy to meet our net zero ambition."
The methodology also gives OVO a tool to inform customers of the carbon impact of the choices they make across OVO's product range. This is a valuable marketing tool for informed clients, and can help them make their powerful choices and trade-offs to optimise energy use and impact on the environment.
Hopefully this methodology will inspire others to make smarter climate choices. Here is more information on how to leverage the carbon avoidance potential of your business.
You can also speak with one of our experts to learn more about carrying out a carbon avoidance assessment of your product portfolio.
You can also get in touch with South Pole to discuss the right tools and techniques to set meaningful net zero targets and turn your ambition into action. No matter where you are on your Climate Journey, South Pole can help you take the next step.