Global warming
Global warming is the quick increase in global temperatures over the last decades and continuing. Compared to pre-industrial times, temperatures have increased with 1,2 degrees. Temperatures in the North have increased more than in the South, and the areas around the poles have increased the most, sometimes more than 5 degrees
Global warming is mainly caused by the emission of greenhouse gases from human activity. Greenhouse gases are CO2, methane, nitrous oxide and some other gases. The greenhouse gases absorb the heat from the sun that is reflected in the earth, “trapping” the heat in the atmosphere, working as a greenhouse.
The main source of greenhouse gas emissions is burning fossil fuels (mainly coal and gas) for energy production (72,4% of total emissions). This energy is used in industry (24,2%) (iron and steel production and chemical and petrochemical production), transport (16,2%) (in particular road transport (11,9%) and aviation and shipping), and in buildings (17,5%) (for heating and electricity needs). The second main source is agriculture, forestry and land use (18,4% of greenhouse gases). Livestock production creates direct greenhouse gases, in addition soils, crop burning, and deforestation give greenhouse gases. Some industry (cement and chemicals) (5,2%) and waste processes (3,2%) directly emit greenhouse gases.
The global greenhouse gas emissions have increased from approximately 0 in 1820, 3,5 billion tonnes in 1920, and 35 billion tonnes in 2020. The emissions are still increasing, although the growth has decreased. Historically, Europe and the US were the big emitters. However, the last decades Asia including China has become the largest total emitters. Per person, US still is the biggest emitter.
In Norway, the main sources of greenhouse gas emissions are transportation (road traffic, aviation and marine traffic)(33,7%), oil and gas extraction (which emits greenhouse gases directly and through the burning of gas for energy) (24,5%), manufacturing industries (23,5%), and agriculture (9.4%). Total greenhouse gas emissions in 2023 were 46,6 million tonnes. This was 4,7% lower than 2022, and 9% lower than in 1990. After an increase in the 1990s emissions were relatively stable in the 2000s but started going down from about 2015. These numbers are based on geographic accounting, where only carbon emissions that are released inside Norway are counted. If we include carbon emissions of goods produced in other countries but consumed in Norway, the total emissions were around 70 million tonnes in 2020, around 40% higher than the geographically based accounting.
Consequences of climate change
The consequences of climate change are and will be large for nature and society. How large depends on the temperature increase. With current policies the temperature increase will be around 2,7 degrees by 2100. If all countries manage to achieve what they have promised, the temperature increase will be around 2,1 degrees. The temperature increases and consequences will be distributed unequally around the globe. The impacts of climate change include:
- Increased temperatures give more frequent heatwaves, hurricanes and floods. Large impact on people and nature, including change in ecosystems (plants and animals moving/disappearing) and changes in crops and farming opportunities. Increased sea temperatures cause similar changes in marine ecosystems.
- Rising sea levels: Global warming leads to higher ocean temperatures (leading to expansion of the water) and melting ice, both contributing to higher sea levels. Average sea levels will rise between 30-100 cm. globally, with large regional variations (and towards the low end in Norway.) The rising sea levels give increased flood risks.
- Tipping points: If global warming increases above an (unknown) point, “tipping points” may be reached, where different natural systems are completely changed or destroyed. There is concern that global warming may lead to such tipping points. The world’s coral reefs are already in danger with the current warming. Other ecosystems that may collapse are the rainforests, boreal forests (forests across Russia, Europe, Canada), the arctic ice and ice across Greenland, the Permafrost in Siberia, and most of glaciers in the mountain regions of Europe, Asia and Americas. Some of the air and ocean currents may also change. If the Gulf stream stops completely, Northern Europe including Norway may become much colder.
Understanding and managing global warming
In the 1850s scientists discovered the greenhouse effect, and from the 1980s and forward science has been confident in the existence of global warming due to carbon emissions. Starting in 1988, the Intergovernmental Panel on Climate Change (IPCC) publish an influential climate report every 5 years. In 1992 in the Earth Summit in Rio, the first climate convention was established, obliging countries to measure and report greenhouse gas emissions. In the Kyoto protocol from 1997 countries committed to reducing greenhouse gas emissions with 5,4%. The Paris Agreement from 2015 committed countries to keep global warming below 2 degrees and ideally below 1,5 degrees.
To achieve this, countries implement a range of policies intended to reduce carbon emissions. The policies take many forms, such as bans on different activities, quotas on greenhouse gases, taxes, including a price on carbon emission that emitters must pay, and different types of incentives and subsidies to encourage technology and behaviour that does not emit (as much). Many countries have managed to reduce climate emissions, in particular per person (population numbers have increased in most countries), but the general reduction is limited.
Business and global warming: Measuring and managing greenhouse gases
The business sector is directly or indirectly behind a very large portion of greenhouse gas emissions. When calculating a company’s greenhouse gas emissions, the GHG protocol is normally used. This protocol distinguishes between scope 1, 2 and 3 emissions
- Scope 1 are greenhouse gas emissions from the company’s own operations. Examples are burning oil for heating the company’s buildings, or gasoline from the company cars, directly emitting greenhouse gas emissions.
- Scope 2 are emissions from purchased energy including electricity, where the emissions happen in another place (typically the power plant in the electricity grid)
- Scope 3 are all other greenhouse gas emissions from the company’s operations. These include emissions from the production of purchased goods and services including raw materials that go into the company’s products and services, emissions from employee travel, and emissions from the customers’ product use.
For most companies, scope 3 emissions are the largest. For Apple, for instance, 99% of emissions come from Scope 3 (59%: Product manufacturing, 29%: Product Use, 9%: Product transport, 3%: Business operations). Less than 1% is scope 1 and 2.
At the product level we get a similar picture. Most emissions take place at the raw material and production stages, while transportation, packaging or use has a lower impact. A study of running shoes found that 97% of emissions took place at the raw material and production phase (Cheah et al. 2013).
Reducing greenhouse gas emissions
Stakeholders expect companies to contribute to the reduction of greenhouse gas emissions, and most large companies work on reducing/managing their emissions. This is done in different ways. In scope 1 and 2, energy from fossil fuels is replaced with renewable energy. This is also important in scope 3, but scope 3 typically requires improvements at the supplier or customer, and this is not always easy to achieve for a company. An important measure is to redesign products and services so that they emit less greenhouse gases in their lifetime. A car manufacturer replacing gasoline vehicles with electric vehicles will reduce scope 3 emissions from usage considerably (both in Norway and the US).
Science-based targets is an initiative by a range of global NGOs. A science-based target is a greenhouse gas emissions reduction target that is in line with what science says is necessary to limit global warming to 1,5 degrees. Companies signing up to the science-based targets must reduce climate emissions by 50% by 2023 and by more than 90% by 2050. Any remaining emissions must be removed and stored. Many companies make short-term and unrealistic targets and fail to reach them (Aldy et al 2023).
Google: Increased emissions due to AI. In 2021 Google set new climate goals: to reduce 50% of their combined absolute emissions compared to 2019, by 2030. Things are not going great, total GHG emissions in 2023 were 14.3 million tons CO2, representing a 48% increase compared to 2019. The main reason for the increase is the additional energy use in data centres caused by the company’s new AI products. Google sustainability report, article in the Guardian.
Carbon markets. Some countries and areas have created carbon markets, where a maximum limit of emissions is set (a “cap”) and emission permits can then be bought and sold. The advantage with this system is that carbon emission reductions will happen where they are as cheap as possible. An example is the EU emissions trading systems, which cover certain sectors (energy, industries, aviation, maritime) in the EU and EEA. The cap is reduced with 2,2% each year. Prices in the trading markets were low for many years, around 20 Euro/ton CO2, but have increased considerably the last years, up to 80-90 Euros/ton CO2.
Carbon offsets. A carbon offset is buying a reduction in climate emissions elsewhere (not related to the supply chain of the company). A company can for instance pay for the construction of renewable energy (replacing fossil energy), or for the planting of trees (trees take up CO2 when they grow). Such offsets have been heavily criticized for not delivering as intended, it is difficult to know whether they lead to emission reductions (West et al 2023).
Carbon capture and storage is the permanent capture and removal of CO2, normally by storing the gas underground in rock formations. Carbon capture and storage has been talked about for a long time, and several experimental projects are ongoing, but so far very little carbon is actually captured.
Absolute vs relative improvements. What does reduced greenhouse gases mean? Companies have considerable leeway in how to measure reductions, for instance by choosing the reference year, and by choosing what to include in the analysis. Many companies grow and increase their total emissions, even if they improve their practices. Companies sometimes therefore also emphasis emissions standardized by sales/number of passengers/per unit of production.
Adaptation to climate change
Companies will be heavily affected by climate change. While the specifics will vary between industries and geographical locations, companies may find that they are impacted by the physical changes of increased heat or flooding, directly or indirectly, or through the measures taken to limit climate change. An insurance company must consider the increased risks of flooding in certain areas, and perhaps increase prices for infrastructure insurance in these areas. Airlines may have to adapt to changing regulations and customer preferences, France recently forbid short-haul routes that would take less than 2,5 hours on the train , and large companies have started to encourage video-conferences as alternatives to physical meetings. to save costs and reduce emissions.
Skistar: White winters also in the future? Skistar is a Swedish company operating skiing destinations in Sweden and Norway (Sälen, Vemdalen, Åre, Hemsedal, Trysil, Hammarbybakken). Skistar has set the target to reduced greenhouse gas emissions with 50% by 2030, in line with the Science based targets.
Skistar’s emissions come mainly from scope 3, upstream and downstream emissions. A particular challenge for Skistar is that more than 50% of emissions come from guest travel to the destinations (calculated based on the results of a customer survey). Most of the journeys (86%) are done by car.
To reduce their emissions, Skistar works with their own emissions internally (scope 1), mainly by replacing fossil fuels energy with renewable energy in machines and vehicles, with suppliers (scope 3), mainly by influencing them to have their own climate goals, and with customers (scope 3), to reduce their reliance on fossil fuel travel
Skistar offer free buses to destinations, they build new hotels next to slopes so that the car is not necessary to get to the slope, have plenty of charging points for electrical cars in their hotels and destinations, and they have contributed to the construction of electric charging points in the main routes to the destinations. The share of customers arriving by electric car has gone up from 5% to 10%.
Skistar’s total emissions (Scope 1-3) increased from 127.274 to 150.466 tonnes of CO2 equivalents from 2022 to 2023. This was mainly a result of increased building activity and the inclusion of summer guests in the guest travel emissions (these had previously been excluded).
As an operator of skiing centres, Skistar has a special motivation for limiting climate change. A large percentage of European ski resorts will be hit hard by climate change, which will reduce snow amounts and make the skiing centres even more reliant on producing artificial snow.
Sources: Skistar sustainability report 2023, Skistar sustainability webpage, Carbonbrief
Learn more
- 3 min Youtube with the basics of climate change from National Geographic
- Excellent video about the impact of 3 degrees warming
- Hannah Ritchie from Our World in Data is more optimistic – climate change can be solved
Reflection questions
- Norgesgruppen is the largest food retailer in Norway. What are the sources of the scope 1, 2 and 3 emissions for Norgesgruppen? (check the sustainability report if necessary)
- How will climate change influence Norgesgruppen?
References
Aldy, J. E., Bolton, P., Kacperczyk, M., & Halem, Z. M. (2023). Behind schedule: The corporate effort to fulfill climate obligations. Journal of Applied Corporate Finance, 35(2), 26–34.
Cheah, L., Ciceri, N. D., Olivetti, E., Matsumura, S., Forterre, D., Roth, R., & Kirchain, R. (2013). Manufacturing-focused emissions reductions in footwear production. Journal of Cleaner Production, 44, 18–29.
West, T. A. P., Wunder, S., Sills, E. O., Börner, J., Rifai, S. W., Neidermeier, A. N., Frey, G. P., & Kontoleon, A. (2023). Action needed to make carbon offsets from forest conservation work for climate change mitigation. Science, 381(6660), 873–877. https://doi.org/10.1126/science.ade3535