Blog

Embedding sustainability with carbon intelligence

5-MINUTE READ

October 17, 2023

Ankit is an engineer for an upstream energy company that runs operations for hundreds of small oil and gas wells across the US Midwest. He’s convinced the world must act fast to mitigate climate change, but he also understands the transition needs to be profitable for it to be successful.

Ankit’s firm, like 34% of the 2,000 largest companies globally¹, has set ambitious net zero emissions targets—in his company’s case by 2050. Ankit knows how many greenhouse gases his wells produce each year, but he doesn’t know how many are being produced today. That’s not because the data isn’t technically available. In fact, Ankit has deployed ground-level sensors across his wells and, combined with advanced analytics, these have led to double-digit productivity improvements. These tools could be used to calculate near-real-time carbon performance as well. But, currently, there is no business case to extend these capabilities to carbon emissions.

Pressures are looming, however. Regulations that will make emissions costly are coming, and Ankit knows that his company’s group-wide targets will be allocated to his asset base soon. Ankit would like to optimize his assets for carbon, just as he does for throughput, quality and operating expenditures. He’s run the numbers and is preparing to pitch to his managers about why and how they should treat carbon emissions data and insights just like any other financial or operational metric.

Many middle managers around the world face similar situations to Ankit’s. They all know ‘what gets measured gets managed’—from revenues and costs to employees, production and customers. But, until recently, businesses have had few incentives to measure their emissions, let alone reduce them.

That’s changing. Reasons to manage emissions are now coming from all fronts: carbon markets, taxes and tariffs, reporting and other climate-related regulations are expanding; investors and employees are pressuring businesses for more aggressive climate action and transparency; interest rates and insurance premiums are being linked to carbon performance; customers are demanding low-carbon products and services and verified transparency on their performance; and disruptors leveraging new technologies and business models are out there to grab market share from those that fail to respond. These forces are making carbon emissions expensive and risky for businesses, but also a potential lever for new value.

Becoming carbon intelligent

To meet these challenges and seize the opportunities, businesses need to become ‘carbon intelligent’. Carbon intelligence is a set of capabilities that enables organizations to control, improve and drive value creation by embedding carbon—and broader sustainability—data and intelligence into decision-making across the core businesses.

Carbon intelligent businesses understand that this is a new kind of business intelligence. And just like financial and operational intelligence, it must be actively managed. Accenture is helping companies become carbon intelligent by focusing on:

Information – to diagnose, assess and set the decarbonization strategy, and then monitor and measure carbon performance.

Insight – to record and report emissions with high frequency and granularity, as well as to set and translate targets and decarbonization programs into actionable metrics, and to performance-manage their delivery.

Impact – to leverage these enhanced decision-making capabilities to identify, prioritize and deploy the levers to reduce, replace, optimize and offset emissions; to predict and rebalance the portfolio; and to trade and monetize new products and services.

To embed carbon intelligence into the core of any business, a degree of rewiring is required. Just as businesses need to be wired to understand costs and to become truly digital and data-driven businesses—from the lowest level through to the general ledger—to be carbon intelligent, they will need to understand and integrate carbon data from the lowest level through to a new ‘green’ ledger.

This rewiring won’t happen overnight. It’s a journey that evolves over three overlapping phases:

Initially, companies focus on carbon compliance, developing capabilities to measure and report emissions in response to pressure from stakeholders to provide timely, accurate and auditable emissions inventories and emissions performance information.
Companies then evolve these capabilities into carbon management, the foundation of true carbon intelligence. Across individual but often disconnected use cases, high-frequency and granular carbon data and insights are combined with financial and operational data and integrated into core decision-making systems and processes to improve business performance, and add value to the top or bottom lines, while reducing emissions.
As multiple value-adding use cases of carbon intelligence come online, companies integrate and upgrade data, systems, processes and governance across the enterprise to become truly carbon intelligent. These enhanced and integrated capabilities enable them to capture synergies and economies of scale through the continuous optimization of operations, assets, and portfolios that deliver on carbon performance in sync with the delivery of financial value and operational performance.

While organizations in phase 1 work to get their emissions reporting under control, they should be looking ahead to determine the use cases of phase 2 that will add value to the bottom line and working across the enterprise to establish data, technology and process roadmaps with a vision for how the different components will come together in phase 3.

Carbon intelligence in practice

An integrated energy company set ambitious targets to reduce its carbon emissions. Accenture helped it focus on industrial plants, starting with one refinery. We designed and implemented a solution to process real-time data from existing sensors and tags, limiting up-front investments and impacts to operations. The company can now analyze energy and emissions performance and optimize them in real-time. After the successful first deployment, the solution has been rolled out to other refineries. New capabilities will be added in the future including advanced analytics, predictive modeling, and scenario simulations, and can be deployed beyond refineries to power generation and petrochemical plants.

Starting the journey

To start on the journey, there are short-term actions to get going as well as medium and longer-term actions to embed the carbon intelligence capabilities into a comprehensive net zero transition journey for the business.

Short-term actions for the first 3-6 months include:

Setting up a carbon intelligence task force
Identifying and prioritizing the use of high-value cases
Developing a high-level value case to invest in this new capability
Identifying and consolidating key data streams and agreeing on a future-proof IT target landscape for the long-term

Medium (6-18 months) and longer-term (2-3 years) actions include:

Establishing a value realization office
Collaborating across the ecosystem on industry-wide initiatives
Developing and commercializing low- and zero-carbon products and services and fully embedding carbon intelligence in each focus area of a company’s net zero transition journey

By becoming carbon intelligent, organizations will become better positioned to seize the opportunities, manage the risks and ultimately be more resilient to the rapidly evolving transitional impacts of climate change, such as carbon regulations and evolving commodity markets.

By 2026, in a pathway that is compatible with achieving net zero emissions, the value of permits issued by national and regional emission trading systems could potentially exceed US$1 trillion.² Moreover, the market for energy commodities that are differentiated based on their carbon footprint is projected to reach trillions of dollars by 2030, driven by price premiums. This significant growth is expected to be observed across crucial commodities like crude oil, natural gas, and marine fuels.

As net zero becomes a global journey, individuals like Ankit, along with many middle managers, are just starting to embark on this path. They will be among the first movers enabling their businesses to treat carbon emissions like money—to the benefit of those organizations and our planet.