Decarbonisation refers to the process of reducing or eliminating the amount of carbon dioxide (CO₂) in the atmosphere directly or indirectly caused by industrial processes.
In practice, this may be achieved in one of two ways - by adopting renewable energy sources to ensure the elimination of future carbon emissions, or by removing existing carbon via afforestation and reforestation, cookstove projects, or other offsetting solutions.
No matter how businesses choose to decarbonise, however, the requirements remain the same: businesses are mandated by the Intergovernmental Panel on Climate Change (IPCC) to remove 45% of their greenhouse gas (GHG) emissions by 2030 and achieve Net Zero by 2050.
All low carbon efforts, whatever the scope, must meet these targets.
At CFP Energy, we provide a diverse range of carbon emission reduction strategies. To purchase voluntary carbon credits, contact our separate dedicated team here.
Why Supply Chain Decarbonisation Matters
Supply chains are sustainability’s new frontier. Where it was once possible to mitigate climate impact by tackling direct emissions alone, broader interpretations of climate responsibility mean that narrow, local definitions of carbon reduction no longer hold.
New regulatory frameworks, like the CDP's supply chain disclosure standards and the GHG Protocol's extended Scope 3 framework, mean that effective carbon reduction strategies are now an essential part of operating and maintaining a sustainable supply chain.
Far from marginal, research has shown that supply chain emissions make up more than half of a company's carbon expenditure. In some cases, they may account for more than three quarters of a company’s carbon footprint, with many finding their indirect emissions exceed their direct emissions.
As a result, it’s essential to include Scope 3 emissions in your carbon strategy. Failing to do so may mitigate or undermine your climate targets, leaving you vulnerable to market risk as accountability standards continue to evolve.
Ensuring End-to-End Compliance: Upstream and Downstream Emissions
To ensure full accountability of your carbon footprint, it’s equally important to distinguish between what are called ‘upstream’ and ‘downstream’ emissions. Understanding the difference will be crucial to achieving a comprehensive, cross-operational strategy.
Upstream emissions typically refer to emissions that occur before a product reaches your company. These are emissions that derive from activities including:
- Extraction and production of raw materials
- Manufacturing processes
- Transportation and distribution of goods to your company
- Business travel and employee commuting
- Waste generated in operations
Downstream emissions occur after a product leaves your company. These are emissions from activities such as:
- Transportation and distribution of finished goods to customers
- Processing of sold products by other companies
- Use of sold products by consumers
- End-of-life treatment of products (e.g., disposal, recycling)
- Emissions from leased assets and franchises
Mapping Your Carbon Footprint
Having identified all your Scope 3 emissions (upstream and downstream), mapping out your carbon footprint should be much easier. But to achieve your environmental goals, the next step will be to conduct a thorough life cycle analysis of your business.
Although there are various ways of achieving supply chain decarbonisation, in practice, most companies use third-party environmental assessment tools. The most common of these are:
Life Cycle Assessment (LCA): Evaluates the environmental impact of a product or service throughout its lifecycle - from raw material extraction to eventual disposal.
Greenhouse Gas (GHG) Inventory: Measures and logs Scope 1, 2 & 3 emissions, providing a comprehensive overview of your total greenhouse gas emissions.
Environmental Impact Assessment (EIA): Assesses the environmental risk of proposed projects or new developments, including Scope 3 supply chain emissions.
It’s important to remember that these tools fulfil different goals. GHG Inventories are designed to facilitate corporate-wide emissions reporting, while an EIA ignores historical data in favour of forecasting, so determining your long-term objectives will also determine which environmental assessment tool is most appropriate.
Strategies for Success: A Roadmap to Reducing Your Supply Chain Emissions
Alongside supply chain optimisation, broader emissions strategies remain essential to decarbonisation. Covering direct (Scope 1) and some indirect (Scope 2) emissions, how these strategies are implemented will depend on your industry and customer base.
From data centres and shipping to manufacturing and aviation, each industry has its challenges, along with a distinct set of demands for winning over stakeholders.
Data centres
Reducing data centre carbon emissions is a major challenge for technology companies as the demand for online and AI services continues to grow at an exponential rate. But creating a green data centre isn’t a fantasy, immediate solutions are here today, including:
- Clean Energy Contracts: Power Purchase Agreements (PPAs) allow data centres to secure long-term renewable electricity directly from generators. This provides cost stability, reduces Scope 2 emissions, and supports the development of new clean energy infrastructure aligned with digital sector growth.
- ETS Compliance: as emissions regulations expand, some large-scale or co-located data centres may fall under ETS-like schemes. Budgeting for these outcomes by creating a carbon risk management plan helps proactively manage and reduce potential future compliance costs.
- Renewable Energy Certificates: data centres can purchase green certificates like REGOs or GOs to prove the use of renewable electricity, supporting energy transition goals, lowering Scope 2 emissions, and enhancing credibility with customers, regulators, and investors.
- Biofuels: while not widely used for electricity, biofuels can power backup generators or on-site logistics. Switching from diesel to renewable alternatives lowers carbon emissions and improves alignment with sustainability targets and clean energy standards.
- Data Management: reduce data duplication where possible and improve data storage efficiency to minimise unnecessary energy use.
- Energy Efficiency: implement energy-efficient hardware and optimise cooling systems.
Shipping
The shipping industry faces unique challenges due to the scale and nature of maritime operations. Regulations are set to tighten - ignoring these changes will only increase future costs. Key decarbonisation strategies include:
- Energy Efficiency: implement measures such as hull optimisation and slow steaming to reduce fuel consumption.
- ETS Compliance: shipping is being phased into the EU ETS and may follow in the UK. RECs and biofuels provide well-established pathways to reduce emissions exposure and meet sustainability targets.
- Green Certificates: ports and shipping terminals can use Renewable Energy Certificates to demonstrate renewable electricity usage in shore power, loading equipment, and buildings, helping reduce Scope 2 emissions and enhance sustainability credentials with logistics partners and regulators.
- Biofuels: sustainable fuels, such as FAME and HVO, are increasingly used in marine engines to replace traditional bunker fuel. These biofuels offer significant reductions in CO₂ emissions and particulate matter, aiding compliance with tightening international maritime emissions regulations, including IMO 2020 and others.
- On-board Carbon Capture: explore technologies, such as post-consumption capture systems, to retrieve and store CO₂ emissions directly.
Aviation
As the aviation industry grapples with the urgent need to reduce carbon emissions, airline operators are already facing challenges in the form of CORSIA regulations and free allowances soon being phased out in the Emissions Trading System (ETS). Immediate solutions include:
- ETS Compliance: Airlines operating in the UK and EU are subject to emissions trading schemes (ETS), requiring them to monitor, report, and surrender carbon allowances. Navigating these regulations by strategically managing allowance portfolios and supplementing with voluntary carbon credits for broader climate goals helps avoid penalties and supports climate compliance.
- SAF Credits: SAF credits allow airlines and corporate travellers to claim the environmental benefits of SAF without direct fuel use, using Book & Claim systems. These verified credits support emissions reduction reporting, help meet voluntary climate goals, and stimulate SAF market growth in line with UK and EU aviation decarbonisation targets.
- Voluntary Carbon Credits: Airlines and travel providers use voluntary carbon credits to compensate for hard-to-abate emissions from air travel. These verified credits support climate reporting, contribute to Net Zero targets, and enable near-term impact while longer-term decarbonisation plans are implemented.
- Operational Efficiency: enhance flight operations to minimise fuel use, from optimising flight paths to improving air traffic management with machine learning.
- Alternative Propulsion Technologies: research and develop electric and hydrogen-powered aircrafts via advanced propulsion systems.
Optimising Operations: Efficiency Gains for a Greener Footprint
Streamlining your supply chain is a key strategy to achieving carbon emission reductions. But optimising internal operations, such as onsite electrification or waste management systems, is also important.
Just like logistics and operational pipelines, these processes can be optimised too, ensuring a fully integrated decarbonisation strategy.
Lighting: smart lighting systems that adjust based on occupancy and natural light levels can further optimise energy use. Ensure internal efficiency by upgrading onsite lighting. Modern LEDs can reduce electricity consumption by up to 75% compared to traditional lighting.
Employee engagement: alongside hybrid working (a practice that is estimated to reduce carbon emissions by up to 70%), carbon emissions can be mitigated by other workplace strategies. Reduce carbon emissions by investing in carpooling programmes, or by increasing incentives for public transportation or cycle to work schemes.
Equipment Maintenance: well-maintained systems work more efficiently, consume less energy, and, as a result, enjoy much longer lifespans. Establish equipment maintenance programmes to reduce emissions associated with replacement.
Sustainable Sourcing: Partnering for a Low-Carbon Future
Transforming supply chain relationships from transactional to collaborative environmental partnerships is a key element in securing a low-carbon future.
When connecting with a new supplier or looking to negotiate with your current one, ensuring their climate commitments align with your own is essential.
To ensure mutual sustainability alignment, look for suppliers who use transparent emissions reporting. Make sure reporting is done through recognised frameworks like the Carbon Disclosure Project (CDP), and the Greenhouse Gas Protocol (GGP).
Effective partners should be able to demonstrate their emissions trajectory over time - implementing progressive carbon reduction strategies under climate targets, while providing breakdowns of carbon hotspots across their operations and value chain.
The Power of Green Logistics: Reducing Transportation Emissions
By streamlining your logistics network, carbon emissions can be reduced even further. To refine your end-to-end transport pipeline, focus on multi-modal transportation that prioritises rail and shipping over road freight, while - for last-mile delivery - choose electric or alternative fuel vehicles over traditional fossil fuel-based equivalents
Minimising transport emissions also means embracing new technology. AI-powered route optimisation is a new technology that provides real-time data processing, machine learning algorithms, and predictive analytics, to track weather and traffic patterns to determine the best routes. Such tools, once implemented, can significantly reduce carbon emissions while cutting travel times and reducing potential delays.
Investing in Innovation: Embracing Technology for Decarbonisation
Together with AI Route Optimisation, technologies like digital twins and AI-powered emissions simulations are creating new decarbonisation opportunities.
Digital Twins: a digital twin is a virtual replica of a physical object or system. In the context of decarbonisation, modelling the impact of different energy sources, digital twins can help define real-world strategies for reducing carbon emissions.
Emissions Simulations: providing detailed insights into where emissions are generated, these AI-powered simulations help businesses develop more effective emission reduction strategies. Through the virtual testing of emission-reduction strategies, processes can be optimised before real-world implementation.
Blockchain and IoT Solutions: blockchain technology, combined with the Internet of Things (IoT), enables unprecedented verification of environmental claims. Blockchain provides an immutable ledger for tracking emissions data, while IoT devices, collect real-time data on environmental metrics to optimise workflows even further.
Exploring technologies like these, as well as investing in incremental improvements, should put you on the path to decarbonisation as your business continues to grow.
The Road to Net Zero: Decarbonisation - A Long-Term Investment for a Sustainable Future
The journey to Net Zero offers many different paths, and this guide has hopefully shown some of the most effective strategies to effectively decarbonise your business. From building a low carbon supply chain to utilising new technologies like AI route optimisation and IoT solutions, there are many ways to affect environmental change.
At CFP Energy, we specialise in reducing Scope 1, Scope 2 & Scope 3 emissions.
To see how we can help, contact our carbon team today to start instantly reducing your carbon emissions
