Ørsted: Transforming your business model in line with 1.5°C

By Ørsted | October 3, 2022

At Ørsted, we believe that business has a central role to play in efforts to limit global warming to 1.5°C and avoid climate breakdown. Since the late 2000s, we have therefore taken a holistic approach to climate action, working across the 4 Climate Pillars outlined in the 1.5°C Business Playbook. We’ve come a long way – but there’s much more to do. Together with partners across our value chain and in the wider climate ecosystem, we are committed to transformational change. Here’s a quick overview of the action we’ve taken so far and the actions we’re planning.

Reducing own emissions

Over the last decade, we’ve transformed from one of the most coal-intensive energy companies in Europe to a global green energy leader, ranked by Corporate Knights as the most sustainable energy company in the world. Thanks to this transformation, we have reduced the emissions intensity of our energy generation by almost 90 percent. We’re now on track to meet our industry-leading emissions reduction targets and become carbon-neutral in 2025 in our operations and energy generation (scope 1-2). Our objective is to reduce emissions intensity from our own operations by at least 98 percent compared to 2006 levels.

Reducing value chain emissions

Reducing our own emissions is the first step in achieving our long-term target of net-zero emissions across the entire value chain by 2040 – a target that has been validated by the Science-based Targets Initiative as aligned with its Net Zero Standard. Ørsted is the first energy company and one of only seven companies to achieve this validation when the Standard was launched.

The next frontier for us is the decarbonization of our supply chain, which accounts for the majority of emissions related to renewable energy generation. Through our Supply Chain Decarbonisation Programme, we engage with our strategic suppliers, who account for more than 65 percent of our total procurement spend. We help these suppliers to:

  • Disclose emissions and set science-based targets
  • Use 100% green electricity – including this year an expectation that all suppliers will do so by 2025
  • Optimise vessel fleets and develop road maps to power vessels with renewable energy

In addition, we aim to support the development of solutions in key sectors where there are few or no immediate replacements for fossil fuels, such as steel and heavy shipping. For instance, this year we signed a landmark agreement with Maersk to develop a Power-to-X-facility on the US Gulf Coast to fuel Maersk’s newly ordered fleet of 12 methanol-powered vessels.

Integrating climate in business strategy

In 2007, Ørsted was DONG Energy: a fossil fuel-based utility, with 92 percent of our power and heat production coming from fossil fuels. But a decision was made, in recognition of likely long-term energy trends, to switch from fossil fuels to renewables. In 2012 this was accelerated when the company came under intense financial pressure from a drop in power prices, leading to the formation of a global renewable energy portfolio.

In 2017 DONG divested the last of its oil and gas assets and changed its name. Today, Ørsted is the world leader in offshore wind and a global leader in green energy. By recognizing the early signals and pressures, and by understanding the trajectory of global climate action, Ørsted became not just a greener company but a more profitable one, outperforming the 2007 version of the company by over 50 percent. Over 95 percent of our earnings now come from renewables.

Our vision is a world that runs entirely on green energy. Having transformed our own business, we offer products and solutions that will allow other companies and governments to work towards science-based emissions reductions targets.

We are also investing in technologies and opportunities beyond our core portfolio that will play a key role in climate change mitigation. We are piloting projects to develop green hydrogen, which will figure prominently in the energy systems of the future both for generating power and for decarbonizing areas like heavy transport through the production of green fuels.

Influencing climate action in society

While we are proud of the contribution we make through our core business activities, we recognize that wider action is needed to drive global emissions reductions at scale. We therefore work to influence climate action in society.

One important step is to collaborate with peer companies, NGOs, and other actors to send demand-side signals for green solutions. This is why we joined the SteelZero initiative and hosted its inaugural summit, proposing policies to decarbonise the steel industry and raising a collective demand-side voice for low-carbon steel. We are also a patron sponsor of the UNGC Climate Ambition Accelerator, a program that provides resources and guidance for companies to set science-based climate targets.

We also leverage our own transformation to encourage and support other companies and governments on the path to climate action. Through white papers, advocacy at global events, and regular communications campaigns, we highlight the need for urgent emissions reductions and make clear what is possible.

Finally, we recognize that global climate action requires widespread support and must therefore deliver benefits for all. We work to ensure that renewable energy projects provide well-paid local jobs, are built in harmony with nature, protect and uphold human rights, and contribute to national economies. We believe that green energy projects can and must deliver positive impact – far beyond zero-emissions energy.

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