Companies are considering greenhouse gas (GHG) reduction goals and there is significant stakeholder enthusiasm. However, there is a general unfamiliarity with the relevant science, lack of technical resources and guidance, and more scientific knowledge than what is currently being considered. What is a cost-effective GHG emissions goal for an individual electric power company? What are important considerations for a company in setting a GHG goal? These are important questions. This study derives technical insights relevant to company GHG goal setting based on assessment of the relevant science and new modeling analysis analyzing cost-effective targets for illustrative electric power companies. From these analyses, we derive scientific insights and principles for company GHG goal setting. For instance, we find that companies will have different practical GHG goals, and the same goal for all companies is not cost-effective for society. Furthermore, we find that policy design and non-policy uncertainties matter when setting and evaluating goals, and goals will have risks that need to be assessed and managed, including uncertain costs. We also apply our technical insights and principles to a prominent third-party GHG goal setting methodology, the Science Based Targets Initiative (SBTi) methodology. We find that the SBTi methodology’s scientific basis is very limited, and the methodology is not designed to identify a cost-effective target for each company, facilitate overall cost-effective decarbonization, or help a company evaluate and manage its low-carbon transition risk. Finally, we note that the technical insights and principles from our study represent the foundation for a well-grounded company GHG goal validation alternative to SBTi.
Authors Steven Rose