Kingspan to set internal carbon price of €70 per tonne
Building materials giant Kingspan will introduce its first internal carbon charge next year, with the price set at €70 per tonne of CO2e.
The move was confirmed in the company’s latest annual sustainability report, which is the second to have been released since it updated its sustainability strategy with targets through to 2030.
Kingspan’s headline targets on emissions are to reduce absolute operational emissions by 90% by 2030, against a 2030 baseline, and then to offset the remainder to achieve net-zero.
There is also a commitment from the firm to reduce Scope 3 (indirect) emissions by 42% within the same timeframe. Primary suppliers have been asked to halve their emissions intensity within the decade to help deliver this aim. Those targets were verified in line with the Science-Based Targets initiative’s (SBTi) 1.5C pathway last August.
The new internal carbon price should help to drive progress towards these goals, by making high-carbon options less affordable in comparison to lower-carbon processes, solutions and materials.
According to the sustainability report, Kingspan’s absolute operational emissions were down just 4.3% in 2021, from 2020 levels. Challenges to delivering a greater level of decarbonisation included the growth of the business – it had 166 manufacturing sites in 2020 and added more than 30 new locations to its portfolio in 2021. Revenue growth was also up by 42% year-on-year as lockdown restrictions began to ease in many geographies.
“Delivering a programme of this scale against a background of rapid business growth takes huge effort and determination and I would like to thank and commend the incredible efforts of our people across the world to achieve positive progress against the majority of our targets for the second year in a row,” said Kingspan’s group head of sustainability Bianca Wong.
The report confirms that while Kingspan’s internal carbon price will start at €70 per tonne of CO2e, the price will likely be increased over time.
The price is right
As the net-zero movement continues to grow in the private sector, with listed companies representing 75% of global total revenues having set targets, internal carbon pricing is becoming more common.
Research published by CDP last year revealed that more than one-third of the world’s large businesses are already using a carbon price internally or are planning to implement one by 2023. The organisation estimates that there has been an 80% uptick in corporates using internal carbon pricing since 2015.
CDP’s research, published last April, revealed that the average carbon price stood at $25 per metric tonne of CO2e for Asian firms and $28 per metric tonnes for European firms.
Some companies with net-zero goals are still using prices significantly below these levels. Microsoft, for example, revealed in January that it is pricing Scope 1 and 2 emissions at $15 per tonne and Scope 3 emissions at $5 per tonne. The company is working towards carbon-negative operations and supply chains by 2030 and to remove the equivalent of all historic emissions by 2050.