Ørsted to become carbon neutral by 2025
Denmark-headed energy major Ørsted A/S has declared that it will become carbon neutral by 2025. This will make Ørsted the first major energy company to reach net-zero emissions in its energy generation - far ahead of science-based decarbonisation targets for limiting global warming to 1.5°C. Additionally, Ørsted sets a target of achieving a carbon-neutral footprint by 2040.
Over the last decade, ten years, Ørsted has transformed from a company with fossil fuels at the core of its business – from Danish Oil & Natural Gas (DONG Energy) – to a pure-play renewables company. Ørsted has gradually dismantled its traditional fossil fuel-based business and built a new business in renewable energy which is now among the biggest green energy companies in the world today.
As the leading developer of offshore wind, Ørsted has installed one third of all offshore wind turbines globally. By driving out carbon emissions from its energy generation and operations, the company has reduced its carbon emissions by 86 percent compared to 2006.
Announced in its Sustainability Report 2019 ‘Carbon neutral to stop global warming at 1.5°C‘, Ørsted now takes an additional step in its decarbonisation journey by deciding to become a carbon-neutral company by 2025.
We’ve come very far in reducing our emissions and Ørsted is more than two decades ahead of what is required by science to limit global warming to 1.5°C. We’ve now decided to take an additional step by making Ørsted a carbon neutral company already by 2025. Halting climate change requires action at all levels of society, and we need that action now. Especially within the production and use of energy which accounts for 73 percent of all global emissions, said Henrik Poulsen, CEO of Ørsted.
By becoming carbon neutral by 2025, Ørsted will be the first major energy company to reach net-zero emissions in its operations and energy generation.
We’ve transformed from producing energy based on fossil fuels to produce carbon-neutral energy. We’ve seen a real strengthening of our business and shown that a rapid green turnaround is possible. A decade ago, we were one of Europe’s most coal-intensive utilities, and by 2025, we’ll be carbon neutral, Our change from black to green energy has not been easy but it’s been necessary. I hope that our transformation inspires countries and businesses to take more radical actions than they might think possible. There really is no time to lose if the world is to halve emissions by 2030 and stay below 1.5°C of warming, Henrik Poulsen said.
Road to net-zero
The most important levers that will get Ørsted to carbon neutrality are a complete phase-out of coal by 2023 and the installation of 20GW of offshore and onshore wind by 2025, supported by a commitment to invest DKK 200 billion (≈ EUR 26.76 billion) in green energy in the period 2019-2025.
With its determination to continue the phase-out of fossil fuels and build-out of green energy, Ørsted will see its emissions reduced by at least 98 percent by 2025.
The remaining emissions beyond 98 percent come from a variety of sources, where emissions are harder to abate. Ørsted will strive to push the reduction beyond 98 percent and look for solutions to reduce the remaining emissions. One such solution is Ørsted’s decision to stop buying or leasing fossil-fuelled cars as of 2021 and make its entire car fleet electric by 2025.
Should offsetting become necessary, Ørsted will only engage with projects that are verified, measurable, and additional, meaning that the carbon removal would not have happened without Ørsted’s engagement.
Carbon neutral footprint by 2040
As Ørsted is now only a few years away from net-zero energy generation, the company has decided to embark on the next phase in its decarbonisation journey, which is to address the carbon emissions beyond its own walls and align these emissions with the 1.5ºC pathway. These emissions come from energy trading and from the supply chain.
The company has committed to reducing the emissions that take place outside of Ørsted, but are still linked to its activities, with 50 percent by 2032 compared to 2018. Ørsted now also sets a target to achieve carbon neutrality across the company’s entire carbon footprint by 2040, ten years ahead of the global target for net-zero emissions as required by climate science to limit global warming to 1.5ºC.
To achieve a carbon-neutral footprint, Ørsted will gradually phase out natural gas trading activities while increasing the green share of power traded. Furthermore, Ørsted will engage its suppliers to reduce carbon emissions from the manufacture and installation of renewable energy and encourage suppliers to set emission reduction targets aligned with climate science and to run their operations on green energy.
Ørsted’s carbon emission reduction targets are science-based targets approved by the Science-Based Targets initiative (SBTi). SBTi has validated Ørsted’s targets and classified them as more ambitious than a well-below 2°C trajectory. Moreover, the initiative has preliminarily concluded that Ørsted’s targets align with a 1.5°C trajectory, with SBTi’s methodology to assess this alignment to be launched later in 2020.
Targets in Ørsted’s decarbonisation programme outlined in its Sustainability Report include:
- Phase out coal completely. Over the past decade, Ørsted has shut down three coal-fired power plants in Denmark. Power plants that play a key role in generating heat to Danish households and industry have been converted from coal to certified sustainable biomass. One remaining coal-fired power plant will be shut down by 2023.
- Carbon neutral operations and energy generation.
- By phasing out fossil fuels and installing 20GW of renewable energy, carbon emissions will have been reduced by at least 98 percent by 2025, as compared with 2006.
- Continue to reduce carbon emissions beyond 98 percent by switching to a fleet of electric vehicles in the company car fleet, in line with the EV100 requirements, and finding other reduction opportunities in the energy generation and operations.
- Offset any residual emissions through verified, measurable and additional carbon removal projects.
- Build more than 30GW of green energy across technologies – enough to power more than 55 million people.
- Reduce emissions from energy trading and in the supply chain by 50 percent, as compared with 2018, to align carbon reductions across the entire carbon footprint with the 1.5°C pathway.
- Carbon neutral footprint a decade ahead of the 1.5°C pathway by driving out remaining emissions from energy trading and from the supply chain.