Addressing climate change is an urgent need, driving accelerated action in public and private sectors. Federal, state and local infrastructure investments offer cities and businesses significant opportunities to decarbonize their operations, energy usage and supply chains.

The Infrastructure Investment and Jobs Act (IIJA)¹ and Inflation Reduction Act (IRA)² have already catalyzed an estimated $227 billion in public and private investments for utility-scale solar, energy storage, wind and hydrogen production.³ More than 10,000 companies have announced climate action goals, and 7,800 have adopted targets under the Science Based Targets Initiative (SBTi).⁴ As of early 2023, these companies represented 34% of the global economy by market cap.⁵

However, committing to decarbonization and achieving it are entirely different outcomes. Businesses must identify significant emission sources, find the right partners for holistic change, set timelines for achieving targets, and establish methods to monitor and measure progress.

Managing Emissions Can Benefit Businesses

Decarbonization is prudent, especially amid growing concern that increasing greenhouse-gas (GHG) emissions are causing irreversible damage to our climate. It offers several business benefits,6 such as:

1. Competitive Advantage: A decarbonization strategy can help your business gain an advantage by improving access to market ecosystems and supply chains with environmental ambitions.

2. New Market Opportunities: Early movers may gain access to new markets by leveraging the growing demand for lower-carbon solutions. You may also be able to leverage collaborations with governments, industry partners and financial institutions.

3. Cost Savings: Increasing energy and resource efficiency across your production and distribution processes — such as your buildings, equipment and mobility assets — can lower operational costs, especially as renewable energy costs fall.

4. Improved Resiliency: Moreover, decarbonizing compliantly can play a part in future-proofing your operations against market and regulatory changes. This can help improve resilience, especially for long-lived fixed assets.

Businesses vary in their approach to decarbonization. For some, it's a core strategy, while others prioritize it only if it doesn't disrupt operations. Ultimately, decarbonization must be profitable with a reasonable timeline for return on investment.

Approaching the Journey

Companies considering decarbonization might approach the journey in a few ways. You might consider decarbonization by emissions scope, which tiers emissions under varying levels of directness to your business operations. You might consider decarbonization by solution, thinking about the various initiatives to decarbonize across one or more scopes. Finally, you might consider decarbonization by timeframe, which segments your journey into short- and long-term impacts, regardless of scope or solution.

At the outset of a decarbonization journey, you might see more challenges than opportunities, from heavy up-front investments to an uncertain regulatory environment. It’s equally important to establish targets and project economics. Only then can businesses evaluate investment strategies and adequately finance their decarbonization efforts. Trusted partners can drive a few practical advantages: collaboration, access and scale, and benchmarking.

You don’t have to go it alone. Outside collaborators can bring a few practical advantages. If multiple organizations, such as your business and a key supplier, commit to collaboration in a collective effort to reduce emissions, it can achieve far-reaching results.

Your Business’s Decarbonization Roadmap

With these thought starters in mind, it’s helpful to consider your decarbonization roadmap through three major phases: benchmarking, reducing and monitoring.

1. Identify & Benchmark Emissions Across the Organization: First, businesses need an energy audit to learn about their emissions. They should collect data across all facilities to benchmark their current output and measure against it down the road.

2. Implement an Emissions Reduction Strategy: A strategy of retrofits and upgrades can reduce or even avoid Scope 1 emissions. This might include investing in lower-carbon solutions or energy sources. For hard-to-abate activities, businesses can compensate for unavoidable emissions through carbon credits, including those recognized by major carbon compliance programs (e.g., The Regional Greenhouse Gas Initiative or Carbon Offset Program).

3. Monitor, Report and Optimize: Once your energy and carbon-management solutions are in place, you’ll want to monitor and measure performance to meet decarbonization targets. This includes collecting and analyzing real-time energy usage and data around emissions reductions, getting granular insights on how business assets perform, collating and formatting data to align with regulatory disclosures, and adapting the plan to fit evolving business needs.

Every Journey is Different

While change is never easy, Shell Energy can help make the process easier by collaborating on a path to decarbonization that works best for your organization. We offer a mix of power, gas and renewable products, along with behind-the-meter solutions, to meet your business’s energy needs.
Every organization is unique, and no two processes are the same. With exceptional expertise and integrated solutions, Shell Energy has a broad suite of products and services to build a bespoke energy roadmap for you.

Works Cited:

Rep. DeFazio, Peter A. et al., "H.R.3684 - 117th Congress (2021-2022): Infrastructure Investment and Jobs Act," U.S. Congress, November 15, 2021, https://www.congress.gov/bill/117th-congress/house-bill/3684.

Rep. Yarmuth, John A., et al., "H.R.5376 - 117th Congress (2021-2022): Inflation Reduction Act of 2022," U.S. Congress, August 16, 2022, https://www.congress.gov/bill/117th-congress/house-bill/5376.

Marlene Motyka et al., “2024 Renewable Energy Industry Outlook,” Deloitte Insights, Deloitte, December 4, 2023, https://www2.deloitte.com/us/en/insights/industry/renewable-energy/renewable-energy-industry-outlook.html.

James Newcomb et al., “Corporate Climate Action: Analyzing the Recent Surge of Climate Commitments,” RMI, November 29, 2023, https://rmi.org/corporate-climate-action-analyzing-the-recent-surge-of-climate-commitments/.

Nikolaeva, Aleksandra, et al., “SBTi Monitoring Report 2022,” Science Based Targets Initiative, August 1, 2023, https://sciencebasedtargets.org/resources/files/SBTiMonitoringReport2022.pdf.

The Task Force on Climate-Related Financial Disclosures, “Recommendations of the TFCD,” TCFD, June 3, 2017, https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf.