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Key takeaways
- The Mitigation Hierarchy and Marginal Abatement Cost Curve (MACC) are essential frameworks and tools that guide companies to prioritise actions from avoiding emissions to offsetting them and to identify the most cost-effective and efficient emission reduction measures
- The MACC helps plot reduction measures based on their cost-effectiveness and potential for carbon reduction, advising companies to start with low-cost, high-impact actions and consider the integration with business operations and stakeholder engagement.
- Combining the Mitigation Hierarchy with the MACC model provides a structured approach for companies to reach their Net Zero targets, emphasising the importance of prioritising actions that offer the greatest impact on emissions reduction at the lowest cost.
What are emissions reduction measures?
Emissions reduction measures are the activities and methods that companies can use to reduce the amount of emissions that they create. Every company is unique, with a different carbon footprint made up of different activities, as well as different environmental impact hotspots. Therefore, deciding what emissions reduction measures to take, and in what amount is unique to each business.
In this chapter, we will guide you on how to identify the most cost-effective and efficient emissions reduction measures for your company. This will help you reduce your carbon footprint and achieve the goals mentioned in the previous chapter.
Tools and frameworks to help decide on emissions reduction measures
Figuring out which measures can reduce emissions most cost-effectively and efficiently for your company is a complex process. Fortunately, there are several tools and services that companies can use to simplify the process. The two most important tools and frameworks to understand when attempting to do this are the Mitigation Hierarchy and the MACC (Marginal Abatement Cost Curve). If you choose to use a professional service to complete this for you, they will most likely use these tools. Let's take a closer look.
The Mitigation Hierarchy
As a company, the next question you might have is what actions should be taken to reduce or avoid avoidable emissions. That’s where the mitigation hierarchy comes in. The Mitigation Hierarchy is a framework that guides companies on how to reduce all environmental impacts, including greenhouse gas emissions which Net Zero aims to reduce. It follows a step-by-step approach: first, avoid emissions where possible, then minimise impacts by using less carbon-intensive processes, then restore affected areas, and finally, offset remaining emissions as a last resort.
This Hierarchy helps organisations reduce their carbon footprint using carbon credits without facing public scrutiny, by focusing on avoiding and reducing emissions, followed by compensating for unavoidable emissions, using carbon credits.
It is important to note that it does not have to be a process with sequential steps. Your company can compensate for unavoidable emissions, or an estimate thereof, as soon as these are known. This will lead to cost savings due to moving early, enabling your company to reach net zero sooner while unlocking the various benefits earlier on.
1. Avoid: The first step in the mitigation hierarchy is to identify opportunities to avoid or eliminate carbon emissions wherever possible. This involves reevaluating processes, practices, and activities within your organisation to identify sources of emissions that can be eliminated.
For example, you can reduce business travel by embracing virtual meetings, which can significantly lower the heavy carbon footprint associated with air travel. Avoidance strategies often lead to the most substantial and immediate emissions reductions.
2. Reduce: After addressing avoidance opportunities, the next step is to focus on reducing emissions that cannot be completely avoided. This entails implementing energy-efficient technologies, optimising supply chain logistics, and adopting sustainable practices.
For instance, a company might upgrade its production equipment to reduce energy consumption or improve the energy efficiency of its buildings by switching to energy-saving light bulbs. Reduction efforts aim to minimise emissions while maintaining necessary business operations.
3. Neutralise: Even after diligent efforts to avoid and reduce emissions, some carbon emissions may still be hard-to-remove or completely unavoidable due to the nature of certain business activities. In such cases, you can turn to carbon offsetting. Carbon offsets involve investing in projects or initiatives that remove or reduce an equivalent amount of greenhouse gas emissions from the atmosphere.
These projects can include reforestation, renewable energy generation, or methane capture from landfills. Offsetting allows companies to balance their remaining emissions by contributing to environmental projects that minimise the impact of their carbon footprint.
Marginal Abatement Cost Curve (MACC)
The Marginal Abatement Cost Curve (MACC) is a tool that helps in ranking strategies for reducing emissions based on cost-effectiveness. It plots the cost per unit of emissions reduced against the total potential emissions reduction. This tool is useful in identifying the most economical options for reducing emissions, which guides decision-makers on investing in options that can have maximum environmental impact at minimal cost. The MACC assists decision-makers in planning strategically on how to achieve Net Zero emissions by showcasing where resources should be allocated efficiently.
As each company is different, each company will have a different MACC, although some generic industry or sector MACC models exist that can give you a general overview of a certain type of company.
How to read a MACC?
- X-Axis: Potential for Carbon Reduction (Low to High)
- Y-Axis: Cost-Effectiveness (Negative values represent cost savings, positive values represent costs)
Each measure is plotted based on its effectiveness and cost. For instance:
- Avoid Measures like telecommuting might be plotted towards the left with high cost-effectiveness due to low implementation costs.
- Replace Measures such as EV fleets might be in the middle, balancing moderate costs with significant reduction potential.
- Reduce Measures could span across the curve depending on the specific technology or process efficiency gains.
- Remove/Offset Measures like R&D in low-carbon tech might be more to the right, indicating higher costs but also high reduction potential in the long run.
How to use a MACC for your company?
1. Prioritise Low-Cost, High-Impact MeasuresIdentify and implement energy efficiency improvements in your operations as they often offer quick returns on investment. For instance, upgrading to LED lighting or improving building insulation can significantly reduce energy consumption with minimal expense.
Recommendation: Conduct an energy audit to pinpoint low-cost, high-impact opportunities and prioritise those with the quickest payback periods.
2. Consider Payback Periods/ Evaluate the time frames for ROI’s. When investing in more substantial emissions reduction technologies, like renewable energy installations or high-efficiency machinery, calculate the expected payback period to ensure alignment with your financial planning.
Recommendation: Use financial models to compare the initial investment against projected energy savings or revenue over time, prioritising projects with favourable return on investment (ROI) timelines.
3. Align With Business Goals and Integrate Business Operations. When investing in more substantial emissions reduction technologies, like renewable energy installations or high-efficiency machinery, calculate the expected payback period to ensure alignment with your financial planning.
Recommendation: Use financial models to compare the initial investment against projected energy savings or revenue over time, prioritising projects with favourable return on investment (ROI) timelines.
4. Stakeholder Engagement. Recommendation: Organise workshops, surveys, and information sessions to gather input, communicate your goals and progress, and explore opportunities for joint initiatives.
5. Establish Robust Monitoring and Reporting. Recommendation: Adopt recognised frameworks and standards, such as the Greenhouse Gas Protocol and CDP frameworks, to ensure your monitoring and reporting practices meet industry best practices and enhance credibility with stakeholders.
Below we have combined the Mitigation Hierarchy and the MACC model, as an example of how a hypothetical manufacturing company can best reach their Net Zero targets.