Strategy
Getting to Near-zero Emissions Takes More than Buying Electricity from Solar and Wind farms
August 28, 2024
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7 min read
When it comes to planning your company's greenhouse gas (GHG) emissions reductions, spreadsheets may seem like a convenient tool. However, to paraphrase famous literature; spreadsheets are the best of tools, and the worst of tools. In my experience, those spreadsheets can quickly become a liability. For an excellent and entertaining treatise on how we all misuse spreadsheets, I recommend reading Herb Caudill’s great piece in Medium. The reality is that planning your company’s GHG emissions reductions is more complex and dynamic than spreadsheets can handle. Here are 5 reasons why:
The reality is that actual emissions often deviate from your forecast. Whether due to unexpected changes in production, energy usage, or external factors like weather fluctuations, the gap between forecasted and actual emissions can widen quickly.
Updating an emissions forecast with new information in a spreadsheet is often difficult and time consuming for the architect of the spreadsheet—and almost impossible for anyone else. When your plan is rooted in an outdated forecast, it can erode stakeholder confidence in your sustainability efforts, threatening your ability to meet reduction targets.
Corporate budgets are rarely set in stone. Priorities shift, new projects arise, and economic conditions change. When the budget for emissions reduction projects fluctuates, your plan may no longer be feasible.
A colleague at a Fortune 500 company had the unenviable task of redeveloping a multi-year emissions reduction plan in a handful of weeks when his budget was suddenly cut in half. This work was made significantly more difficult because the creator of the spreadsheet-based plan was an outside consultant with limited availability. The practical effect was that his internal team had to drop all other activities to focus on building a new in-house spreadsheet plan from scratch — sadly, creating the same cycle all over again.
Corporate mergers, acquisitions, and divestitures, as well as site openings and closings, are increasingly common in today’s business environment. Each of these events can profoundly impact your GHG emissions inventory and reduction plan.
Incorporating these changes into a spreadsheet forecast is not only cumbersome but also prone to error. The manual nature of spreadsheets means that every change requires careful re-entry of data and recalculation of projections—each step an opportunity for mistakes.
The prices of both technology and energy are notoriously volatile. A sudden spike in energy prices or a drop in the cost of renewable technologies can drastically alter the economic calculus of your emissions reduction plan.
Recalculating project economics based on new pricing information is a manual, error-process in spreadsheet-based plans. Also, it often comes too late. Processes to update forecasts of key prices are often not integrated into spreadsheet-based plans.
Without the ability to routinely adjust your plan based on new pricing information, you risk either missing out on opportunities, getting projects canceled at the last stage of review — or worse, implementing projects with poor return on investment, undermining future plans.
Government policies and utility incentives are key drivers of corporate decarbonization efforts, but they’re also subject to change. New legislation can offer incentives that alter the financial landscape for your projects and sometimes incentives diminish over time putting your return on investment at risk.
Spreadsheets struggle to keep pace with these regulatory shifts, leaving you with outdated assumptions and inaccurate projections. By the time you’ve updated your spreadsheet, the window of opportunity may have closed, or new risks may have emerged. Your emissions reduction platform needs to be agile enough to respond to policy changes as soon as they happen.
The complexities of GHG emissions reduction planning demand more than what spreadsheets can offer. From fluctuating budgets and operational changes to new technologies and evolving prices and incentives, the variables influencing your plans are constantly in flux. Relying on static, manually updated spreadsheets leaves you vulnerable to inaccuracies and missed opportunities.
Resist the urge to add that 15th tab to your spreadsheet model. It is 2024, you can adopt a more dynamic, integrated planning platform. By moving beyond spreadsheets, you can ensure that your emissions reduction plan remains relevant, accurate, and actionable, no matter how the landscape changes.
Ready to upgrade your emissions reduction platform? Explore how Permilyon’s solutions can help you stay ahead of the curve with planning tools that can support your emissions reduction ambitions over the long haul.
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