The road to net zero: overcoming the challenges of setting climate targets

The Intergovernmental Panel on Climate Change (IPCC) states that we need to reach net zero CO₂ by 2050. In doing so, we can bring the planetary boundaries back within a safe operating space for humanity.

The transition to net zero is a complex task that requires us all to pull together. Companies and businesses are vital part of that. To make their own contribution towards this goal, companies set targets for themselves. It takes ambition to set them and resilience to stick to them.

What targets can companies set and why are they important? 

Total industrial and corporate greenhouse gas (GHG) emissions, both direct and indirect, collectively added more than 47 billion metric tons of CO₂ equivalent to the atmosphere in 2020, despite the interruption of the COVID-19 pandemic. Cutting these emissions goes beyond the companies themselves. Doing so can have a knock-on impact all along the supply and value chains, complement government efforts and align with international policy.

To help companies set targets to reach net zero, their GHG emissions are sorted into different categories. These are known as Scope 1, 2 and 3 emissions and can be used by organizations to track and manage their carbon footprints more effectively.

1. Scope 1: These are the direct emissions produced by sources directly owned or controlled by the company, such as burning fuel in company vehicles, boilers, or manufacturing processes. Fugitive emissions, i.e., leaks from company equipment, also fall under Scope 1 emissions.
2. Scope 2: These are indirect emissions generated by electricity, steam, heating, or cooling that a company buys and uses but does not produce itself.
3. Scope 3: These cover all other indirect emissions that occur outside a company’s direct operations but related to its activities and value chain, including emissions from transportation, suppliers, product use, waste disposal, and employee commuting. This is often the largest and most complex category to measure. For large companies, they can contribute more than 90% of their emissions footprint.

The challenges of sticking to targets

Companies – especially multinational ones – in energy-intensive industries are large and complex. That brings with it a myriad of factors that can affect their ability to set realistic targets and stay on course to achieve them. From a failure to accurately track all the emissions required within Scope 1, 2 and 3 emissions, to technology limitations that hinder sustainability goals.

All this can result in a company missing their climate targets. In fact, a 2022 report by Accenture found that 93% of companies will miss their net zero goals without at least doubling their rate of carbon emissions reductions by 2030. 

The impact from these prominent setbacks could delay climate progress, making it much more difficult to achieve global goals set out in the Paris Agreement.

What it takes to stay on track

It is only by sticking to ambitious targets that companies can substantially contribute to limiting global warming. To stay or get back on track, companies should redress the immediate balance by setting near- and long-term targets in line with keeping warming to below 2°C.

To reach net zero there must be huge declines in the production and use of fossil fuels. To do this, companies need to focus on integrating sustainability into their core business strategies, improving transparency and accountability, investing in innovation and collaboration, and accelerating the pace of emissions reductions. 

At OMV we are set on achieving a 30% reduction in our Scope 1 and 2 emissions by 2030, and a 60% reduction by 2040. For Scope 3 we aim to cut those emissions by 20% by 2030 and 50% by 2040. These targets are in line with our ambition to reach net zero by 2050 in alignment with the IEA’s 2050 Net Zero scenario.

One of the ways we are doing this at OMV is by reducing our liquid fossil fuel production and sales in line with customer demand. We intend to reduce our production rate to around 350,000 barrels of oil equivalent per day and cut our crude distillation throughput of 15.1 million metric tons by 2.6 million metric tons by 2030.

This shift also comes as we grow our sustainable fuels, another key pillar in meeting our climate targets. This is both in terms of sourcing and purchasing and producing our own from renewable feedstocks such as plant and waste sources. We plan to grow production of renewable mobility fuels and sustainable chemicals to approximately 1.5 million metric tons by 2030.

Our Low Carbon business is focused on developing sustainable sources of energy for the future, including geothermal projects, Carbon Capture and Storage (CCS), and renewable power solutions. We will be investing EUR 5 bn by 2030 to drive future growth. For example, we’re working with Wien Energie in a joint venture called “deeep” to develop deep geothermal plants in the greater Vienna area. Our goal is to establish multiple plants with a combined capacity of up to 200 MW – enough to supply carbon-neutral heat to 200,000 homes. 

For CCS we intend to offset absolute emissions both from captive use and third parties. By 2030, we aim to store 3 mn metric tons of CO₂ per year, which corresponds to a target market share of 10% in the European Union. 3 mn metric tons are equivalent to the emissions of six cement plants or 12% of Austria's annual industrial emissions. Our main focus is on the North Sea, where we hold two storage licenses with partners.

It’s important to remember that the contribution of each individual project, whilst small, can add up to significant CO₂ savings. Each one is worth doing in order to meet our climate emissions targets and limit global warming.