Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) in mitigating climate change is a key component of the Paris Agreement. Whilst some progress has been made on integrating the CBDR-RC principle into allocating the global carbon budget between nations, very little attention has been given at the corporate level. Many current corporate climate-target setting methodologies rely extensively on grandfathering principles (e.g., Sectoral Decarbonisation Approach (SDA)), thereby favouring high emitting incumbents. In this study, we explore the allocation of carbon budgets derived from the SDA approach with allocations based on different principles of equity. We illustrate our method using companies in the cement sector, which is a hard to abate sector and crucial for sustainable development in emerging countries. Our comparative exercise clearly shows a stark contrast between which companies bear the mitigation burden when employing the SDA methodology versus considering principles of equity. The findings make a compelling case for the thoughtful inclusion of equity in the net zero governance of the private sector, for a global just transition is to be realised.
Research Article
Towards the inclusion of equity principles in corporate climate aligned transitions.
https://doi.org/10.21203/rs.3.rs-3396847/v1
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The 2015 Paris Agreement triggered a proliferation of net-zero pledges, at national, sub-national, and corporate levels, which to date represent around 92% of the world economy 1. However, the Net-Zero Stocktake 2023 reports that only 929 companies of the Forbes 2000 have net zero targets, with companies headquartered in G7 countries faring poorer than the global average. It further could not identify any emission reduction targets for 734 of the world’s largest publicly traded companies 1.
In this burgeoning landscape, a lack of transparent and universally accepted standards has enabled disingenuous efforts such as delaying action through setting only long-term targets, undue reliance on offsets and potentially unrealistic dependence on removals. To address the integrity, transparency, and accountability of the net-zero pledges by non-state entities and to establish clear standards and criteria, the UN High-Level Expert Group set out ten practical recommendations at COP 27. It made the case for the pledge, targets and pathways to net zero to be derived by a robust methodology and verified by a third party such as the Science Based Targets initiative (SBTi), the Partnership for Carbon Accounting Financials (PCAF), the Paris Agreement Capital Transition Assessment (PACTA), the Transition Pathway Initiative (TPI), or the International Organization for Standardization (ISO), among others 2. The approaches and methodologies adopted by most of these organizations mostly employ carbon intensity metrics and often rely on grandfathering, which favours current high-emitting companies, located predominantly in OECD nations. Grandfathering has been found to be central to seven of the most prominent climate target methodologies 3. Among them, the widely adopted Sectoral Decarbonisation Approach (SDA) is viewed critically as it does not reconcile with the “common but differentiated responsibilities and respective capabilities” (CBDR-RC) principle of the Paris Agreement 4. This is surprising given that equity and justice are widely considered foundational for effective international cooperation on climate action. The principle of CBDR-RC was first acknowledged by 197 nations at the 1992 UNFCCC and later ratified by them in the Paris Agreement in 2015. However, this principle finds scant mention in climate governance of the corporate sector. The omission of historical emissions also raises questions of equity in approaches embedded in the currently adopted methodologies.
Understanding the implications of different ways of assessing companies’ alignment with the goals of the Paris agreement and taking equity considerations into account seems important in evaluating corporate climate risks. Companies are increasingly exposed to risks of climate-related lawsuits, particularly so for Carbon Majors 5. Whilst almost half of the corporate cases in 2021 were filed against fossil fuel companies (others were in food, agriculture, transport, plastics, and finance), it is anticipated that the next targets will be the steel, cement, textiles, shipping, and aviation sectors. Notably there is also growing acknowledgement of the human rights responsibilities of corporate actors e.g. in the Milieudefensie v, Royal Dutch Shell plc. Case 6. Premised on both human rights and climate law interpretations, the District Court of The Hague required Royal Dutch Shell to increase climate mitigation efforts by reducing its carbon dioxide emissions from its activities by at least 45% by 2030, relative to its 2019 emissions 6. The ruling also provides a legal precedent for requiring companies to reduce absolute emissions (rather than emission intensity) to address climate risks 6,7. The legal arguments in these climate litigations also espouse our rationale of considering the principles of equity such as equal per capita and equal cumulative per capita in our analysis and resonate with our advocacy for them in corporate net zero governance. Another lawsuit of particular importance to the principle of historical responsibility is Asmania et al. v Holcim, a Swiss-based cement producer being sued by four residents of the Indonesian island of Pari for its responsibility for climate damages to the island 8. They are supported by three NGOs, among which HEKS/EPER (Swiss Church Aid) who expressed scepticism of SBTi’s cement sector-specific methodology 9. They highlight SBTi’s indifference to principles of equity and cite the lack of independent oversight of its governance practices, as it is both a standard setter and a validator.
Prior work has derived equitable country-company-specific decarbonisation targets 10 to acknowledge the challenges for companies operating in developing and resource-rich nations in setting GHG targets. It makes the case that the companies in a given country contribute to the national emissions inventory, implying that instead of universal sector-specific targets, the differentiated responsibilities of that country towards climate action should translate to the differentiated commitments of the companies as well.
In this study, we explore operationalising principles of equity at the company level and compare the results with the widely applied Sector Decarbonisation Approach (SDA) which employs the grandfathering principle. We further focus on the mitigation challenges imposed by these allocation approaches to the companies, in the context of the CBDR-RC principle.
We use the cement sector as a case study to demonstrate how the dimensions of historical emissions and equitable transition can be operationalised. We chose this sector because it is a hard-to-abate, carbon-intensive industry, and a major contributor to global emissions (close to 8% 11). The cement and construction industry are also crucial to infrastructure development and urbanisation in developing economies. To derive carbon budgets using the SDA approach, we employ the SBTi’s modified IEA Net Zero 2050 Scenario 12. IEA-NZE is the mostly widely adopted pathway and this was the only open-source IEA 1.5°C cement sector pathway data available. SBTi opts for the IEA Net Zero by 2050, as it provides a detailed narrative on emission reductions and a more up-to-date base year of 2019. However, the broader regional context within which current and future cement companies operate impacts on their ability to mitigate emissions, thereby eliciting the salience of the “respective capabilities” principle of CBDR-RC of the Paris Agreement. Historical emissions in the cement sector and market realities in emerging economies are briefly illustrated in the supplemental material section.
To derive carbon budget allocations based on principles of equity such as historical responsibility, we would require the historical emissions data of individual companies. However, due to the paucity of data at the company level we conduct a two-step analysis. First, we apportion the remaining cement sector carbon budget to individual nations, based on equity principles, which employ these indicators: historical emissions, population, GDP (PPP) and current emission trends. Second, we apportion these budgets to the companies in each country based on their current domestic market share, which we assume to be constant until 2030. The market share approach has also been used in climate litigations to apportion liability to the damages caused 13. It is important to note is that cement is mostly a domestically traded commodity, alleviating concerns of emissions leakage due to trade.
Thus, we operationalise principles of equity at the international stage and employ the grandfathering principle at the domestic level.
Employing a grandfathering approach for allocating national carbon budgets to the sub-national level has been found to be more appropriate than capability or egalitarian allocations [39]. We compare these budgets with the company carbon budgets derived by the SDA methodology and discuss the implications of the findings in the context of the mitigation challenges for the companies. To provide another perspective on fairness in the mitigation burden, we illustrate the production versus consumption approach in the supplemental information section. Due to limited operability of the data, we exclude multinational companies and companies based in China (the methods section further explains the rationale behind considering the selected companies for our study).
Fig.1 Schematic Diagram of the carbon budget allocation comparison exercise. The left box represents the apportioning of the global cement sector carbon budget for 2030 prescribed by the IEA NZE to nations, by employing the different approaches and respective indicators. The results are distilled to the company level by their domestic market share. The network on the right illustrates the company carbon budget derived using the SDA methodology which is operationalised using the company emissions data and the IEA-NZE pathway for the cement sector.
Carbon Budget and Effort-Sharing Approaches at a national level. Previous studies focussing on fairly sharing the remaining carbon budget among nations, frequently evoke the following equity principles: need, responsibility, capacity, and equality, as they resonate with the CBDR-RC principles of the Paris Agreement 14. Other sharing principles include but are not limited to equal cumulative per capita emissions, and staged approaches 15 16.
The effort sharing literature can be classified into two categories: emission allowances/pathway approach 17 16 15 18 19 20 21 22, and the carbon budget approach 23. The carbon budget approach primarily focuses on CO2 emissions and provides the actors with the flexibility to decide on their pathway in line with the allocated budgets.
Among the many allocation approaches, we have chosen the following which capture the principles of equality, sovereignty, responsibility, and ability to pay. Table 1 illustrates the approaches, respective principle, and indicators considered in our analysis. Note that this list of approaches is not exhaustive. Due to limited access to regional-level emissions projections for the cement sector, we have excluded a few widely adopted approaches from our study (e.g., greenhouse development rights based on the responsibility-capability index, ability to pay based on correction factor).
Table 1. The different carbon budget allocation approaches considered in our study. The rationale for selecting these approaches is attributed to the data availability and operability, the list is by no means exhaustive.
The grandfathering approach takes the view that prior emissions increase entitlements to future emissions 24. The approach usually assumes a later starting point or base year and perpetuates the status quo into the future. Traditionally high emitting actors benefit from this approach which at the same time creates cascading biases against traditionally low emitting actors 25. To note here is that the variations of the grandfathering principle is not a measure of equity14, it was included only for a comparative exercise.
The equal per capita allowance is based on the egalitarian principle that every person is entitled to an equal share of the remaining carbon budget, and it finds support in the human rights-based approaches. As it does not acknowledge prior emissions, it sometimes leads to equality of unequals. We calculate the fair share allocation of emissions per person using the 2019 population and 2030 projected population of the country and the world.
The historical responsibility approach captures the role of historically high emitters, and their responsibility to address the consequences of harmful historical choices and policies 26. It is partly a backwards-looking perspective of equity 14, implying that an actor with higher historical emissions has an obligation to reduce emissions more 27.
The equal cumulative per-capita approach combines two principles: equality (population) and historical responsibility (historical emissions). New actors have an advantage as technological advancement and innovation contribute to increase in energy efficiency in industrial production processes. This advantage is accounted for by discounting the historical emissions by the rate of emission efficiency improvement (0.8%-2.0% per year 17 28). Past emissions also have a relatively smaller impact due to decay (0.8% removal per year 29). To account for these two factors, a median estimate of 2% is used in our calculations, in line with prior literature 30. In addition, we consider the historical population shares (2019) to calculate the debt emission allowance and the 2030 population estimates to calculate the future emission allowances.
The per capita convergence (PCC) approach mainly captures three effort-sharing approaches; grandfathering (sovereignty), equal per capita (sovereignty and equality) and ability to pay (capability and need). Ability to pay/capability principle is based on the premise that richer nations have a greater capacity to reduce emissions, whilst poorer nations are provided with less ambitious targets to cater for their development needs. It is an exclusively forward-looking perspective of equity 14, and the approach usually adopts GDP per capita or the Human Development Index as indicators to determine the fair expectation of ambition 27. The PCC approach is a simplified form of the contraction-and-convergence algorithm applied to the total cumulative emissions. A weighting factor is used to quantify the impact of each principle on the final allocated carbon budget. We have considered two variations of the sharing principle: emissions (grandfathering) and population (equal per capita); and emissions (grandfathering), population (equal per capita), and GDP (ability to pay).
Step 1. Apportioning the global cement sector carbon budget to different nations. We set 2019 as the base year, as the IEA NZE we employ starts in 2019 [PCP paper]. We consider 2030 as our threshold year, as near-term trajectories are pivotal for companies to track towards Paris Compliance. Further, 2030 is the target year for achieving the Sustainable Development Goals and the cement sector is salient to urbanisation and achieving the SDG Target 11.1 (“ensure access for all to adequate, safe, and affordable housing and basic services, and upgrade slums”).
Figure 2 Allocation of budgets to 19 largest economies based on different approaches (GtCO2). (a) represents the comparison between cumulative historical emissions from 1880–2018 and Equal Per Capita (EPC) (2019 & 2030 pop.), Equal Cumulative Per Capita (ECPC) and Historical Responsibility (HR) (2019 & 2030 pop.). (b) illustrates the comparison between cumulative emissions and variations of the Per Capita Convergence approach (pop. and emissions: Grandfathering Shares w = 0, Balanced w = 0.5, Equal per Capita w = 1); (emissions, 2019&2030 population and GDP PPP: Emissions wf = 0.5, GDP PPP wg = 0.5, Population wp = 0.5). Refer to the methods section for details on operationalisation.
From the vantage of national historical emissions from 1880–2018, China ranks as the largest emitter (13.2Gt), followed by the USA (2.67Gt), India (2.21Gt), Japan (1.93Gt), Russia (1.60Gt), and Germany (1.17Gt). By the principle of grandfathering (GF w = 0), i.e., based on current emission trends (inertia), the same countries are rendered with large portions of the remaining 31Gt CO2 (2019-30) budget. In contrast, accounting for historical responsibility on a per-capita basis (2019, 2030) would result in negative budgets for a few countries such as Japan (-0.76Gt,-0.87Gt), South Korea (-0.41Gt,-0.45Gt) and Germany (-0.40Gt,-0.45Gt) (high historical emissions relative to population) which has also been observed in previous carbon budget studies 26,30. In reality, the negative carbon budget values would translate to the countries needing to decarbonise rapidly to net-negative emissions and the residual carbon budget being granted to less developed countries 26. The results also endow large economies with low historical emissions (per capita basis) like India (10.55Gt), Indonesia (1.89Gt), and Brazil (1.25Gt), with a significant share of the remaining carbon budget for the cement sector,
Using principles based on equality, EPC (2019, 2030) and ECPC, nations with significantly larger populations are endowed with larger allowances, such as India (5.59Gt,5.93Gt)(6.03Gt), China (5.69Gt,5.35Gt)(5.25Gt) USA (1.33Gt, 1.40Gt)(1.38Gt), Indonesia (1.09Gt,1.08Gt)(1.09Gt) and Brazil (0.86Gt,0.86Gt)(0.87Gt)
The PCC approach, accounting for capacity for mitigation (GDP PPP per capita) (wg = 0.5), renders rich nations (higher GDP PPP per capita), such as the USA(3.31Gt), UK(0.55Gt), France(0.57Gt), Germany(0.85Gt), Australia(0.21Gt), and Canada(0.33Gt) with higher emission allowances, when compared to approaches weighted towards emissions (wf = 0.5) and population (wp = 0.5). In general, the influence of emissions and GDP on sharing renders similar results23.
Step 2. Allocating national budgets to individual companies. In the second step of our analysis, we consider the ten highest emitters, based on scope 1 emissions, in the cement sector. Based on the domicile country of the company, we apportion the remaining national cement sector budget derived from the first part of the analysis to companies based on their current domestic market share. Apportioning carbon budgets across international borders is complex and due to the unavailability of regional emissions data of multinational companies (e.g., Holcim, Heidelberg) in the public domain, they are not included in our analysis. Companies based in China are also excluded due to limitations in data availability. Also, in reality, the production and consumption of cement is also highly localised and trade is mostly regional or within trade blocks 31.
SDA Carbon Budgets. The carbon budgets for companies are calculated by employing the carbon intensities of the IEA NZE (SBTi) 1.5 pathway for the cement sector. Based on the emissions and activity performance of the companies from 2019-21, the SDA approach is used to project carbon budgets for the companies from 2019–2030.
Figure 3 Comparison of Company Carbon budgets derived from different approaches with SDA-IEA NZE Budgets. 2(a) illustrates the comparison between budgets derived from equality (EPC, ECPC) and Historical Responsibility, with SDA-IEA NZE budgets. 2(b) illustrates the contrast between variations of the PCC approach with SDA-IEA NZE budgets.
Hist. Responsibility and Equality. Companies inherit the distinguishing allocation endowments of the country in which they are domiciled (Fig. 2). Companies in India and Indonesia are at the greatest advantage with historical responsibility, EPC and ECPC and conversely for companies in Turkey and Thailand. This is because Turkey and Thailand are deemed to be a significant historical emitter (per-capita), and the companies domiciled here inherit the national-level predisposition.
PCC approach renders companies located in India, Indonesia and Colombia with the largest budgets when weighted by population, when compared to cumulative emissions (wf = 0.5) and GDP PPP (wg = 0.5). The anticipated growth in population and GDP PPP in these countries in 2030 also significantly influence allocated carbon budgets to these companies. Companies in Turkey and Thailand benefit the most when allocation is weighted towards emissions (wf = 0.5).
Principally, considering all approaches, the exercise indicates that companies in India, Indonesia and Colombia are most disadvantaged with the PCC approach and vice versa for companies in Turkey and Thailand.
SDA (using IEA NZE) approach endows companies in Turkey, Colombia and Thailand with budgets greater than all the other approaches. At the same time, it allocates very modest budgets to companies in India and Indonesia, whilst being agnostic to principles to historical responsibility, equality (EPC, ECPC) and capacity (GDP PPP). We further investigate the agnosticism of the SDA approach by evaluating the mitigation burden imposed by different allocation approaches.
Mitigation Challenges. To reconcile our results with the reality of current emission trends in the cement sector, we consider the percentage of company emissions in 2019 with the 2030 company budget derived from allocation principles. Since the Sectoral Decarbonisation Approach implies all companies in the sector converge to decarbonise towards the same carbon intensity in the final modelled year, the ratio of a company’s 2019 emissions to its 2030 budget is almost consistent for all companies, approximately 9%. Since Turkey and its domiciled cement companies are rendered with a negative (although minuscule) budget based on high historical emissions, the ratio of 2019 emissions to the 2030 company-allocated budget yields a significant negative value, an outlier compared to the rest of the outcomes. However this negative value result is commonly observed in other studies 19,32,33 when emission ratios are calculated relative to the base year.
Fig. 4 Mitigation Burden – Comparing 2019 emissions to the 2030 carbon budget under different approaches. Comparing the mitigation burden of various allocation approaches, specifically with the burden imposed by SDA-IEA NZE. Historical Responsibility approach renders companies based in Turkey with high negative %2019/2030 values (Akcansa -438.4, -593%GtCO2) (Cimsa -240, -324.6%GtCO2).
For companies domiciled in India and Indonesia, the 2019 to 2030 share of their SDA-IEA budget is much higher than using principles of responsibility and equality (only GF w = 0 is higher). This would imply that the SDA approach imposes a stringent decarbonisation burden for these companies when compared to historical responsibility (approx. 4 times for Indian companies, approx. 3-5.8 times for Indonesian companies) and equality principles (approx. 2 times for Indian companies, approx. 1.7–3.4 times for Indonesian companies). On the contrary, for companies in Turkey and Thailand, their 2019/2030 share of SDA-IEA NZE budgets is lesser than under all other approaches, i.e., imposing an inferior decarbonisation burden (approx. 0–1 times for Turkish companies, 0.1–0.5 times for the company in Thailand) compared to all the equity principle-based approaches.
The Paris Agreements’ Common but Differentiated Responsibilities and Respective Capabilities is a desired component in companies’ Paris-alignment but is lacking in currently employed methodologies 34. The Sectoral Decarbonisation Approach (SDA) is a prevalent approach adopted by leading international initiatives, such as the Science Based Targets initiative and Transition Pathway Initiative, but its innate limitation is grandfathering 35: endowing companies with a higher initial intensity (CO2e/activity) with a greater share of the remaining carbon budget. In this study we evaluate the extent of SDA’s agnosticism to the CBDR-RC principle by employing different equity principles to develop company carbon budgets and compare these to SDA allocated carbon budgets. We find large differences, particularly when accounting for cumulative emissions and population shares, as well as with the weighted approach (PCC). The results substantiate the notion that grandfathering unduly burdens companies located in countries with low historical per capita emissions. The analysis of the 2019/2030 mitigation burden imposed by SDA-IEA NZE highlights its indifference to the capability principle as well, i.e., the capacity to abate emissions. At the same time, it rewards historically high per capita emitters with more time to achieve their climate ambitions. Finally, it also illustrates the indifference to the broader context within which companies located in politically and economically diverse geographies operate.
In the coming decades, significant population growth is anticipated and a global population of approximately 9.6 billion is expected to be reached in 2050, with 68% to be living in urban areas by 2050 (compared to 57% in 2021) 36. As a result of urbanisation in emerging markets, mainly in Asia and Africa, the surge in demand for cement and concrete is expected to continue, to meet the needs of infrastructure development. Currently, emerging markets already drive 30–40% of global demand 37. Uratani et al. 31 find that, to achieve the in-use stock per capita levels of use in the developed countries, countries with the largest urban population growths between 2021–2050 - the Democratic Republic of Congo, Egypt, Ethiopia, India, Indonesia, Nigeria, Pakistan, Philippines, Tanzania and Uganda - together would require 73.8Gt of cement by 2050, adding cumulative emissions of 45.8Gt CO2 by the year 2050. With regards to carbon budget allocation, these findings tie to the broader discourse on just transition in climate target setting methodologies. The above realities make a strong case for equity principles based on human rights. In this context, employing a grandfathering approach would grossly violate the principle of a just and equitable transition.
China and India’s production fleet are relatively young and energy efficient 38 and although they employ the best available technologies, the high volume of emissions from their cement industries is mostly attributed to high domestic demand 31. Emerging economies such as Indonesia and Vietnam too have a younger fleet which rank high on energy efficiency. In comparison, the United States, the third largest producer of clinker, ranks very poorly in terms of heat and energy consumption, mainly attributable to its ageing fleet 38. In such cases, the onus of climate action is on the concerned actors in rich nations, as they have access to capital and the newer energy efficient technologies. Rewarding them with a bigger share of the cement sector carbon budget by employing any kind of grandfathering principle (emissions or GDP), would go against all equity principles, and would be morally perverse.
From the lens of historical responsibility, nearly two-thirds of the carbon dioxide emitted since the 1750s until 2010 can be traced to the 90 largest fossil fuel and cement producers 39. This ties to the broader conversation on climate justice and the ongoing climate litigations against some of the biggest emitters such as Shell and Holcim. Adopting any kind of grandfathering methodology to render a greater share of the remaining carbon budget to such actors, without accounting for liability for past emissions, does not constitute a just transition practise.
Further, fairness principles of climate justice do not necessarily reconcile with climate mitigation scenarios 40,41. There are ethical and value judgements embedded in climate modelling exercises as well (see supplementary section). Without acknowledging the needs and capacities of companies in emerging markets, employing scenarios like the IEA NZE into climate-aligned finance activities will result in a restrictive definition of net-zero compatible finance 42, and by doing so, it would perpetuate the inequalities in the corporate sector as well. In this context our study makes a compelling argument for inclusion of equity in target setting methodologies.
Companies that subscribe to initiatives like the SBTi currently have a combined market capitalisation of $38 trillion and 27% have a significant emissions footprint 43. The UN High level Expert Group (HELG) acknowledges the SBTi as a best practice to advance climate ambition, however, it has been argued to be incumbent driven with its governance influenced by some of biggest corporate companies 40. In addition, our study reveals a complete disregard by this widely adopted supposedly best practice to critical issues of the Common but Differentiated Responsibility and Respective Capabilities of the Paris Agreement.
Article 4.1 of the Paris Agreement emphasises the achievement a global balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty 44. In view of the upcoming Global Stocktake of the Paris Agreement in 2023, the results of our study provide an essential contribution to the broader discourse on equity, its salience, and we strongly advocate for its inclusion in governance and regulatory frameworks of climate targets in the corporate sector.
Data Process. Demographic Data: We use the projected GDP PPP45 and Population data (2030)46 from the SSP2 IAM marker scenarios. We choose SSP2 demographic data as the IEA-NZE is an SSP2 scenario. We use the World Bank open data for the current GDP PPP (constant 2017 international $) and population data 47.
The Global Carbon Project provides a comprehensive data source for historical emissions in the cement sector, contributed by Andrew’s (2019)11 study on global emissions from cement production (1928–2018). The database increases the reliance on official and reliable data sources and reduces reliance on assumptions, compared with previous efforts.
Emissions and Activity of Companies: We obtain data on the highest emitting cement companies and their annual activity from the Refinitiv database, using the variables CO2 Equivalent Emissions Direct, Scope 1 (tonnes) and Cement CO2 Equivalents Emission. Any missing data was supported by data obtained from the annual reports of companies. Companies with insufficient continuous data were excluded. Among them, we further refine our selection with emissions data of companies since 2019, which mostly cater to their domestic markets. Multinational companies and companies based in China are excluded.
Consumption emissions: The export and import data of cement from 1992–2018 is sourced from the World Integrated Trade Solution (WITS). The cement production data is sourced from Andrew (2018)11 and the corresponding emissions factor is calculated for each nation in that year. Consumption is calculated by the formula, Consumption = Production + (Import - Export). This data is then converted to consumption emissions by applying the calculated emission factors.
Effort Sharing Principles – Formulas Equal per capita allowance (Equity principle – Equality): The fair share of emissions for the regions is calculated based on the current population of the region and the world.\(EPC\text{C, 2019|2030}=\left(\frac{pop\text{C,2019|2030}}{POP\text{W,2019|2030}} . Budget\text{S,2019-2030 }\right)\)C = country, W = world, S = sector
Historical Responsibility (Equity Principle – Responsibility): This approach captures the notion of historical responsibility, and the operationalisation follows Kanitkar et al.(2022) 26 on equity assessments. The total carbon budget for the cement sector is the sum of the cumulative historical CO2 emissions (1928–2018) (provided by the Global Carbon Project) and the remaining cement sector budget (2020–2050) and is sourced from the IEA NZE SBTi cement sector pathway. The per capita fair share for each region is then calculated by deducting this total from the actual historical emissions of the region. We calculate the per capita fair share based on 2019 and 2030 population estimates.
$$Hist. Resp.\text{C 2019|2030}=\left(\frac{pop\text{C,2019|2030}}{POP\text{W,2019|2030}} . Budget\text{S,1880-2030}\right)-emissions\text{C,1880-2018}$$
Equal Cumulative per-capita allowance (Equity principle – Equality and Historical Responsibility): To account for the rate of emission efficiency improvement, and decayed past emissions, we employ a median estimate of 2% from the literature 30 as the discount rate.
$$Debt\text{C,2019}=\left(\frac{pop\text{C,2019}}{POP\text{W,2019}} . Emissions\text{W,1880-2018 }.discount rate\right)- \left(emissions\text{C,1880-2018 }.discount rate\right)$$
$$ECPC\text{C}=\left(\frac{pop\text{C,2030}}{POP\text{W,2030}} . Budget\text{S,2019-2030 }\right)+Debt\text{C,2019}$$
C = country, W = world, S = sector, discount rate = 2%
Per capita convergence (Grandfathering, Equal per capita and Ability to pay): This is a simplified form of the contraction-and-convergence algorithm applied to the total cumulative emissions. We have considered two variations of the sharing principle: emissions and population; and emissions, population, and GDP PPP. (Grandfathering: principle – Sovereignty) (Equal per capita: Equity principle – Sovereignty/equality) (Ability to Pay: Equity principle – Capability/Need).
The sharing index ‘\(w\)’ varies between 0 and 1, with \(w\) = 1 resulting in the equal per capita principle, and \(w\) = 0 resulting in the grandfathering principle. The sum of shares must equal one.
In the emissions-population combination, we consider the 2030 population estimates and vary the weights between \(w\) = 0 (grandfathering), \(w\) = 0.5 (balanced), and \(w\) = 1 (equal per capita). In the emissions-population-GDP combination, we consider three variations (\(w\text{F}\) =0.5, \(w\text{G}\) =0.5 and \(w\text{P}\) =0.5) for both 2019 and 2030 population data.
IEA-NZE-SBTI’s 1.5°C aligned pathway for the cement sector
Based on data from the IEA Net Zero by 2050 Scenario. The cumulative emissions over the period 2020–2050 are 35-41Gt CO2 (Scope 1) and their pathway renders 31.3GT CO2 (calculated) from 2019–2030. The demand for cement is assumed to be flat over the 2020-50 period which is mainly attributed to the optimised use of cement and concrete, along with unknown or breakthrough technologies to account for removal of process emissions.
Competing interests: The authors declare no competing interests.
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- ManuscriptV5SupplementalSection.docx
Towards the inclusion of equity principles in corporate climate aligned transitions. Supplemental Information.