Supply chain linked: ACT’s bold plan to reduce its emissions for everything, everywhere

There has been a flurry of climate commitments made in recent years, with net zero targets bandied about like 2050 is a distant prospect. Governments and companies are jumping on board and pledging to reduce their greenhouse gas emissions.

But not all emissions reductions targets are made equal. Indeed, one Australian city – our nation’s capital, no less – has a bold plan to address greenhouse gas emissions that most climate commitments neglect.

Called Scope 3 emissions, these are heat-trapping greenhouse gases emitted in the production, manufacture and transport of all the food, coffee, clothes, toys, vehicles, barbecues and raw building materials that a city like Canberra and the Australian Capital Territory (ACT) consumes.

These are not the emissions generated by its cars, buses, garbage trucks, local farms or industrial activities (that’s Scope 1) or the emissions associated with the grid-supplied electricity that powers people’s homes, shops, offices, government buildings and air-conditioning (that’s Scope 2).

Scope 3 are the emissions that accumulate along global supply chains and are the sum total of so-called “embodied energy” that goes into making products themselves. And for a wealthy consumer city like Canberra, which imports almost everything it needs and produces very little, it turns out Scope 3 emissions make up a huge chunk of its total carbon footprint: a whopping 94%, according to an investigation led by climate scientist Sophie Lewis.

Scope 3 are the emissions that accumulate along global supply chains.

“It surprised us [to see] there was that quantity of greenhouse gases that were not being accounted for in emissions reduction targets,” says Lewis, who stepped into the role of ACT Commissioner for Sustainability and the Environment not long after the city’s electricity supply hit 100% renewable.

With the ACT’s Scope 2 emissions effectively at zero and the city’s transport system headed the same way, Lewis says she saw a huge opportunity to make further emissions reductions by looking at what Canberrans – as individuals, households, businesses and government – are buying.

“One city alone doesn’t have the ability to reduce Scope 3 emissions down to nothing,” explains Lewis. “That’s not realistic and that’s not what we’re aiming for.”

Instead, it’s about looking at where goods are coming from, what they are made of, and if they could be substituted, Lewis says. The ACT plan also recommends ramping up initiatives to encourage recycling and reduce waste, from households and in construction, which could produce community-wide carbon savings.

“What are products that can be substituted for a low-carbon option, or the ones that can be procured more locally?” Lewis continues. “What are the easy wins we can make that have a really big impact on those overall emissions occurring from the city?”

No other city in Australia (or possibly the world) has attempted to fully account for its carbon footprint the way the ACT has now calculated its Scope 3 emissions, so it’s a big move for our national capital.

“What are products that can be substituted for a low-carbon option, or one that can be procured more locally?”

Sophie Lewis

“I’m pretty sure I’ve never seen a country, region or city anywhere in the world openly take responsibility for Scope 3 emissions,” says Ketan Joshi, a climate and technology analyst based in Norway. “I reckon this is a world first – and something the ACT deserves very serious credit for.”

Some people might argue that one city’s Scope 3 emissions are just someone else’s Scope 1 or 2 emissions – another jurisdiction’s problem – and that addressing them amounts to double-counting, so why bother?

“But really,” Joshi says, the ACT’s move to tackle emissions released outside its borders is “just a way of extending influence and responsibility in a positive way. It’s empowering.”

Business analyst Wei Sue, of ClimateWorks Australia, tends to agree, although she notes how difficult it can be to pin down exactly where emissions arise in complex supply chains.

“Addressing Scope 3 emissions is something that has become increasingly important in the last year or so amongst corporates,” says Sue, whose team recently examined the climate commitments of the top 30 Australian companies.

“But this is a really progressive move for a government to actually put forward a plan to address its Scope 3 emissions.”

Emissions per dollar spent

Identifying the source of emissions is the first step to reducing them, which is what the Lewis-led investigation set out to do.

Using a method that ties greenhouse gases to financial transactions at each step of the supply chain, Lewis and collaborators at the University of New South Wales found that households contribute around 60% to the ACT’s total Scope 3 emissions, while government operations rack up roughly a third, and businesses 8%.

Breaking it down by sector, food items and retail trade each account for nearly 12% of the capital’s Scope 3 emissions. Construction adds another 9.3%, largely due to the massive amounts of steel and cement used, which globally account for over 10% of all CO₂ emissions.

In other words, only considering the carbon emitted when you drive a car or flick on a light doesn’t give the full picture of our carbon-intensive lifestyle when you consider all the energy and materials that have gone into manufacturing the products that we buy.

Emissions stem from how food is produced, harvested, processed, packaged, transported, warehoused and sold.

Take food, for example. Emissions stem from how food is produced, harvested, processed, packaged, transported, warehoused and sold, from the land cleared to make way for agriculture through to refrigeration in supermarkets.

“All of that energy and resources that have gone into food production can be wasted [if] food goes directly into the bin,” says Lewis. But diverting food scraps into compost, made easier with council kerbside collection services, can result in sizeable reductions in methane emissions from landfill.

As for construction, reducing the amount of steel and cement used in new builds through efficient designs, refitting existing structures to optimise usage, recycling materials and switching to timber could together make huge inroads in reducing embodied emissions of the built environment.

Low-carbon concrete, which uses industrial waste instead of cement as its binder, is another technological solution capable of slashing emissions at scale, especially in public infrastructure such as stormwater drains, roads and bridges.

Corporate climate commitments

It’s a similar story with climate commitments in business. Over 1000 companies have set net zero by 2050 targets in the past year or so. But only a small fraction are committed to reducing emissions from their supply chains and finished products, as well as their everyday operations – which is a much higher bar to clear.

Microsoft is leading the pack, pledging to reduce carbon emissions along its entire supply and value chain by more than half by 2030 – and remove all historical carbon emissions from the atmosphere by 2050.

It’s a huge task reliant on nascent carbon capture and storage technologies, transparent reporting from suppliers and an internal carbon tax now covering Scope 3 emissions – which accounted for three-quarters of Microsoft’s total emissions in 2020, or 12 million tonnes.

On Australian shores, just a handful of companies have committed to addressing their Scope 3 emissions, according to ClimateWorks’ latest analysis. And only two out of 30 – metals giant Fortescue and property developer Dexus – met all four best-practice principles for setting emissions reductions targets that limit global heating to 1.5 degrees. 

“What we quickly found is that not all net-zero commitments are the same,” says Sue.

On Australian shores, just a handful of companies have committed to addressing their Scope 3 emissions.

Dexus, for example, has committed to reducing the embodied emissions of its buildings as well as sourcing renewable electricity for its tenants. Fortescue is banking on fuelling its business and global shipping with green hydrogen made using renewable electricity, to meet its goal of net zero Scope 3 emissions by 2040.

But if you dig deeper than net zero by 2050, Australian companies consistently underestimate how ambitious interim targets need to be to slash emissions this decade, and many commitments are not backed by sufficient action. Global analyses also show very few companies explicitly rule out offsetting emissions like the ACT plan does.

“Commitments today are all well and good, but they really need to be backed up by tangible and credible actions,” says Sue. Actions that directly reduce emissions from a company’s operations should be prioritised over offsets, which should be reserved for unavoidable emissions and hard-to-abate sectors, she adds.

The language used in corporate commitments is also inconsistent and often vague, Sue found. Sometimes key information is not made publicly available either, making it difficult for analysts – let alone customers – to figure out if a company’s net zero commitment is indeed a credible one.

When benchmarking companies, Sue had to ask questions such as: “When you say carbon neutral, what do you mean by that? Are you looking at reducing offsets or are you looking to invest in technologies or solutions that will [directly] reduce emissions from your business?”

Money matters

Official climate commitments aside, Lewis hopes the analysis of the ACT’s emissions helps people to appreciate on a practical level that deliberate purchases can have a big impact. And also to recognise that products are valuable in much more than a monetary sense, for all the energy and materials that have gone into manufacturing them.

But she’s quick to clarify that the onus doesn’t solely lie with individuals, and that governments and business must step up, too – to implement policies incentivising change, create circular economies and invest in low-carbon technologies.

“By measuring and looking at reducing these emissions, we can really accelerate decarbonisation.”

Sophie Lewis

“That’s something we’ve really grappled with in writing the report,” admits Lewis. “As individuals, we’re not solely responsible for this climate emergency and there is really no value in people feeling guilty and responsible.

“But also, our individual decisions are important and the way we spend our money is important. And by having this information, people do feel empowered.

“It’s really important that we’ve taken this step,” she continues. “It’s easy to say Scope 3 emissions aren’t our responsibility.

“But by measuring and looking at reducing these emissions, we can really accelerate decarbonisation. We’re not waiting for other people to improve their manufacturing processes. We’re taking action on what is truly associated with our lives and, in that sense, we are responsible.”