SDA Tool Version 8 now available

We are happy to announce that the SDA tool V8 will be publicly available starting on February 27th 2017. We strongly recommend companies use this new version (date of revision: 02/27/2017) instead of V7 as it uses the most up-to-date IEA ETP data (2016). Note that targets modeled using previous versions of the SDA tool can only be submitted to the SBTi for an official validation within six months of the revision date (see SBTi Criteria C8 on Method Validity).

Please contact [email protected] to obtain an excel version of the tool or for any other assistance.
In addition, the following sector pathways in the SDA tool need critical refinements. The Science Based Targets initiative is currently working on these.

Car manufacturers: The Excel version of the SDA tool can be used for car manufacturers Scope 1 and 2 targets but should not be used to estimate car manufacturers Scope 3 targets.

Chemical and petrochemical companies: The Excel version of the SDA tool should not be used to estimate Scope 1 and 2 targets for companies in the chemical and petrochemical sector.

Find out more about other science-based target setting methods

We are in the process of developing a new science-based target setting tool

The new tool will be more comprehensive, and will incorporate a wider range of science-based target setting approaches, including the Sectoral Decarbonization Approach (SDA). Our intention is that the new science-based target setting tool will provide an improved user experience, and facilitate science-based target setting by a wider range of companies.

If you would like to participate in the beta-testing of the new tool, please let us know [email protected] and we will contact you with further details once the tool is available.

In the interim, please contact the team directly [email protected] to obtain an Excel version of the SDA tool and for any other assistance.

SDA Methodology

Download more information about the Sectoral Decarbonization Approach

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Sectoral Decarbonization Approach:  A method for setting corporate emission reduction targets in line with climate science

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Quick guide to the Sectoral Decarbonization Approach

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FAQs about the Sectoral Decarbonsation Approach

How does the sectoral decarbonization approach work?

The Sectoral Decarbonization Approach (SDA) allocates the 2°C carbon budget to different sectors. This method takes into account inherent differences among sectors, such as mitigation potential and how fast each sector can grow relative to economic and population growth.

Using the detailed sector-scenarios from the International Energy Agency’s 2°C Scenario (IEA 2DS) model available in the Energy Technology Perspectives (ETP), it is possible to estimate the 2°C-compatible carbon intensity for any detailed-sector scenario by dividing the total direct emissions of the sector in any given year by the total activity of the sector in the same year. This yields a sector intensity pathway. Within each sector, companies can derive their science-based emission reduction targets based on their relative contribution to the total sector activity and their carbon intensity relative to the sector’s intensity in the base year.

Why do the decarbonisation pathways show an increase in early years (peak and decline)?

Less aggressive targets, or targets that even allow for some increases in emissions, until around the year 2020 are due to the peak and decline emissions trajectory used in the IPCC’s 5th Assessment Report. This peak in emission reflects the projected timeline for when emissions reductions technologies will become widely available and cost-effective.

From the four different emission scenarios assessed by the IPCC 5th Assessment Report: Working Group III, the one that holds the best chances of limiting global warming to less than 2ºC is the “Representative Concentration Pathway (RCP 2.6)” (IPCC, 2014b). This concentration pathway represents a peak-and decline model that reaches a maximum level of radiative forcings of 3.1 watts per cubic meter (W/m2) by midcentury and then declines to about 2.6 W/m2 by the end of the century. This scenario would stabilize concentrations of GHG emissions in the atmosphere at about 450 parts per million (ppm) by 2100. The IEA’s 2DS scenario describes an energy and industrial system consistent with an emissions trajectory that, according to climate science, has a good chance of limiting global warming to less than 2ºC. The correspondence between the RCP 2.6 and 2DS scenarios has been assessed and validated (Schaeffer & Van Vuuren, 2012).

Therefore, although the SDA decarbonization pathways show a peak and decline figure as in the IEA´s 2DS, the model is based on the widely-accepted globally agreed upon target of limiting global warming to less than 2ºC. The latter shouldn’t be interpreted by companies as the allowance to start decarbonization strategies in late stages. On the contrary, investing in deep decarbonization in early stages can avoid paying extra costs and making the company more profitable earlier in time. It could also avoid lock-in for several technologies.

What is the probability of staying below 2 degrees of global warming when applying the tool?

Please refer to section 2.4 ‘Assumptions in the method’ of the Sectoral Decarbonization Approach (p.34) for a detailed description of assumptions made in the SDA Approach.

What are the main assumptions of the energy technology perspectives from the IEA?

The IEA developed a two degree low-carbon scenario (2DS) in its 2014 Energy Technology Perspectives (ETP) report that is consistent with the representative concentration pathway (RCP 2.6) scenario of the IPCC AR5. The scenario was created using the ETP-TIMES model (IEA 2014). It was used to determine the least-cost technology mix needed to meet the final demand for the industry, transport, and buildings sectors. Please refer to Appendix V. ‘Energy Technology Perspectives (ETP) - 2 Degree Scenario (2DS) of the Sectoral Decarbonization Approach for a detailed description on the scenario’s assumptions.

What is the probability of staying below 2°C global warming when applying the SDA?

The SDA method uses the ETP modelling from IEA which is compatible with the IPCC’s RCP 2.6 scenario, which gives the highest likelihood (probability of 66–100 percent) of staying below 450 ppm CO2e, thus keeping the average global temperature rise below 2 °C in 2100.

However, the recommendation is that companies check on a regular basis the validity of their projections, and the assumptions made in the method. For more information on the revision of the method to section 2.3 ‘Periodic revision of method and target adjustment’ of the Sectoral Decarbonization Approach.

How does the methodology take into account structural changes such as mergers or acquisitions?

The SDA methodology takes into account structural changes such as mergers, acquisitions and divestments for homogeneous sectors by changing the carbon intensity in the base year used for the target. For example, Company A and Company B, decide to merge in 2014. Both companies pertain to the cement sector and have comparable production (ton cement) in the base year 2010. However, Company A had a more carbon efficient activity in 2010 compared to Company B. When merging, the new carbon intensity in 2010 will be somewhere between both intensities. This means that Company A by merging with Company B became less carbon efficient in 2010, while Company B became more carbon efficient. According to the SDA methodology all companies in the sector will converge with the sector´s carbon intensity in 2050. Consequently, when both companies decided to merge, their carbon intensity pathway changed as well as their annual percentage reduction (slope change in the decarbonization pathway).

Does the SDA take into account regional differences?
Please refer to section 2.4.2. ‘Regional Differences’ of the Sectoral Decarbonization Approach.

HOW DOES THE SDA RECOGNIsE ACTION TAKEN BY COMPANIES BEFORE THE BASE YEAR?
Please refer to the box ‘HOW DOES THE SDA METHOD RECOGNISE EARLY ACTIONS BEFORE THE BASE YEAR?’ within section 2.3 Periodic revision of method and target adjustment’ of the Sectoral Decarbonization Approach.

WHAT ROLE DOES CARBON CAPTURE AND STORAGE (CCS) PLAY IN THE SDA/IEA SCENARIOS?

IEA notes that “achieving the ETP 2014 2°C scenario (2DS) does not depend on the introduction of breakthrough technologies. All technology options introduced in ETP 2014 are already commercially available or at a stage of development that makes commercial-scale deployment possible within the scenario period. Costs for any of these technologies are expected to fall over time, making a low-carbon future economically feasible” (IEA 2014). CCS is considered in the IEA ETP 2014 for different sectors as possible ways to achieve additional emission reductions, for example: Cement, Iron and Steel, Chemicals and Petrochemicals. For more information, please refer to Appendix I ‘Insights into sectoral 2°C decarbonization pathways’ of the Sectoral Decarbonization Approach.

HOW IS VALUE ADDED DEFINED IN THE SDA?
Please refer to section 2.4.4. ‘Value-added as a monetary indicator’ of the Sectoral Decarbonization Approach.

Sector related questions

WHAT ARE HOMOGENEOUS AND HETEROGENEOUS SECTORS? HOW ARE THE SECTORS IN THE SDA CLASSIFIED?

Homogeneous sectors are those that can be described using a single physical indicator (e.g. tons of cement produced for the cement sector, tons of aluminum produced for the aluminum sector). In the SDA they are: power generation, iron and steel, cement, aluminum, pulp and paper, aviation passenger transport, light-duty road passenger transport, heavy-duty road passenger transport, rail passenger transport, and service buildings. The SDA is most robust for these sectors.

Heterogeneous sectors are those that can’t be described using a single physical indicator. For example, the chemical sector is heterogeneous because it produces a diverse array of chemicals that each have unique characteristics and traits and are difficult to compare to one another. In the SDA they are: chemicals and petrochemicals, other industry, other transport.

Scope 1, 2 and 3

How are Scope 1 targets for homogenous sectors estimated ?

Please refer to section 2.1.4.1. ‘Homogeneous sectors’ of the Sectoral Decarbonization Approach for information on how Scope 1 targets for homogeneous sectors are estimated.

How are Scope 1 targets for heterogeneous sectors estimated ?

Please refer to section 2.1.4.2. ‘Heterogeneous sectors’ of the Sectoral Decarbonization Approach for information on how Scope 1 targets for heterogenous sectors are estimated.

How are Scope 2 targets estimated?

Please refer to section 2.1.5. ‘Treatment of scope 2 emissions’ of the Sectoral Decarbonization Approach for information on how Scope 2 targets are estimated.

How are Scope 3 targets estimated?

Please refer to section 2.1.6. ‘Treatment of scope 3 emissions’ of the Sectoral Decarbonization Approach for information on how Scope 3 targets are estimated.

How is double counting of emissions addressed in the SDA?

Please refer to sector 2.1.7. ‘Double counting’ of the Sectoral Decarbonization Approach