Ørsted, recently ranked the most sustainable company in the world, has stated it will become carbon neutral by 2025. This would make Ørsted the first major energy company to reach net-zero emissions in its energy generation. Additionally, Ørsted has set a target of achieving a carbon neutral footprint by 2040.
During the last ten years, Ørsted has transformed from a company with fossil fuels at the core of its business 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 one of the biggest green energy companies in the world.
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.
As announced in its Sustainability report 2019, Ørsted now takes an additional step in its decarbonization journey by deciding to become a carbon neutral company by 2025.
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.
CEO of Ørsted, Henrik Poulsen, said,”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.”
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. 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 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.
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.