Reducing our own emissions and those of our customers
In 2015, 194 countries around the world gathered in France to discuss the best way to combat climate change. The result was the Paris Agreement – a unique and multi-lateral commitment to creating a dramatic reduction in CO2 emissions. The agreement sets out a global action plan to put the world on track to avoiding dangerous climate change. Its goal is to keep global warming well below 2°C and preferably below 1.5°C. At SHV Energy, we are fully committed to delivering our contribution. Our approach is two-fold:
To reduce our own CO2 emissions through energy savings and the use of renewable energy;
To reduce our customers’ emissions by enabling them to switch from polluting fuels to our cleaner power sources as LPG, LNG biomass and Bio-LPG.
Managing and embedding climate change
In 2017, SHV Energy installed a global energy monitoring and demand reduction programme. This programme will also look into lowering indirect emissions by working together with suppliers and by providing low carbon products to customers.
We aim to use our already-existing organisational structures as much as possible as we track our carbon emissions performance. This includes our year plan process, management performance review cycle and investment proposals. This integration with existing structures will ensure that we don’t create a ‘silo’ approach for something of such importance.
We distinguish between two important principles as we look into our carbon emissions: our carbon footprint and our carbon impact. Our Carbon Footprint involves lowering our direct and indirect emissions (Scope 1, 2 and 3) throughout the entire value chain, and is based on the Greenhouse Gas Protocol (ISO 14064-1). Our Carbon Impact involves offsetting our emissions by considering the effect of our products or services on our customers’ carbon footprint. For instance, if we sell a customer one ton of LPG which reduces their coal use, we can save more than three tons of CO2 emissions from this one switch. The introduction of Bio-LPG and Renewables in 2018 will play a key role in helping our customers reduce their carbon footprint – as well as SHV Energy’s.
- 1 This calculation takes the caloric values and efficiencies of both coal and LPG into account.
Our climate change policy
As a company, as a department or as an individual, lowering carbon emissions is about taking responsibility and determining the best role to play in delivering a low carbon economy. From an SHV Energy perspective, we know that our influence is comprehensive. This influence is due in part to the size of our business, as well as to the energy intensity from our own operations, which include filling & product handling, distribution and storage. Our influence is even more extensive if we also consider our indirect influence on the extraction and production of our products, and the use of our products by customers.
We therefore challenge our departments to look for innovative ways to lower emissions. A number of departments play a key role in this area, including procurement (clean shipping, selective sourcing), operations (efficient logistics, truck fleet management, renewable on-site energy) and marketing & sales (consulting customers).
Of course, we also challenge individual employees to work together as they share ideas and embrace new ways of working. This is in line with our overall purpose of: ‘Advancing Energy Together’. Sustainability is a team effort, and we have 16,000 employees across three continents. This represents 16,000 creative minds who can contribute to our overall target of reducing our carbon emissions.
Our climate change targets
We have set an ambitious emissions target: a 25% reduction in CO2 per mT LPGeq distributed by 2025. This means an accumulated reduction of 5 million tonnes of CO2 by 2025.
This 25% reduction target represents SHV Energy’s overall target. It does not necessarily mean that each individual business unit will have the exact same target. Instead, we will develop business unit- specific targets in 2018 that depend on a variety of key indicators such as the maturity level of sustainability performance, market conditions and nature of operations.
Our 2017 initiatives – fixing the basics
2017 was about designing and building an organisation that understands and reports on its environmental impact, including carbon emissions.
We installed a global energy monitoring system in 2017, with some very useful components that help us understand potential savings opportunities. We distinguish between emissions from controlled (Scope 1and 2) and non-controlled operations (Scope 3), as well as between the different levels of data quality that we measure, calculate and estimate. This information helps us to understand the reliability of our numbers and find ways to increase their accuracy.
SHV Energy took another important step forward through the introduction of an Internal Carbon Price (ICP) for carbon emissions in our investment proposals. We use the ICP as a shadow price that can be added to future investments and operational costs. There is already considerable momentum behind carbon pricing around the world, and an increasing number of regional, national and local schemes are now becoming a reality. Implementing a mechanism such as ICP therefore has a dual purpose: it prepares our company for the future effects of carbon pricing schemes (risk mitigation) and drives our organisation to look into cleaner investment opportunities.
2017 also saw us achieve some other important milestones. We integrated carbon emission KPIs into our year plan cycle and performance updates, and we organised workshops for all business units to identify improvement actions for 2018.
In 2017, our carbon emissions – expressed as an intensity factor of kg CO2 per sales volume – increased by 1.6% compared to our 2016 baseline. However, this was performance was expected: 2017 was about fixing the basics and preparing for visible improvement.
Our 2018 initiatives – moving the needle
2018 will be about moving the needle, and we expect more from our carbon emission performance.By clearly defining what results constitute a win, we can make objective, data-driven decisions both internally and for our clients. We will start implementing the initiatives we defined in our 2017 sustainability workshops. These include increased efficiency and alternative fuels in transportation methods, lowering energy consumption, the increased installation of renewable energy sources in our facilities and helping more customers to lower their carbon emissions.
We will also start developing communication strategies necessary to ensure internal awareness and external reach across industrial, governmental, and non-governmental organisations. And last but not least, we will build and join successful alliances to help us to address our impact and discover even more improvement solutions.