Carbon Intensity Explained: What It Is and How to Reduce It

Two competing companies both report a 10% reduction in carbon emissions - an impressive achievement at first glance. However, Company A achieved this with a 15% drop in production, while Company B accomplished this while growing by 5%. These identical reductions suddenly tell very different stories about environmental efficiency. 

This scenario highlights the importance of carbon intensity - a critical, but often overlooked metric that reveals whether organisations are genuinely improving efficiency or merely downsizing. It’s the difference between genuine innovation and misleading statistics. 

In this blog, we’ll explain carbon intensity, how it works across different sectors, and provide practical strategies for measuring and reducing it within your own organisation. 

Understanding Carbon Intensity 

Carbon intensity measures the amount of carbon dioxide equivalent (CO₂e) emitted per unit of activity, output, or product. While total emissions reductions often make headlines, carbon intensity tells us how efficiently we’re operating, regardless of scale. This metric helps compare businesses of all sizes and industries, showing who’s making the most progress towards truly efficient operations.

Organisations increasingly track carbon intensity alongside absolute emissions to gain a comprehensive view of environmental performance. For instance, a business might see an increase in total emissions due to growth but could still be operating more efficiently if its carbon intensity decreases. On the other hand, a company could reduce total emissions by scaling down operations yet become less efficient if its carbon intensity rises. 

The relationship between absolute emissions and carbon intensity can be expressed as: 

Carbon intensity = Total Carbon Emissions/Activity Level 

This also means: Total Emissions = Carbon Intensity x Activity Level 

This formula proves an important point: reducing carbon intensity doesn’t automatically lead to lower total emissions. If a company improves its carbon intensity by 10% but increases production by 15%, total emissions will still rise by roughly 3.5%. This is why organisations committed to climate action need both intensity and absolute targets. 

Carbon Intensity in Different Sectors

Carbon intensity is measured differently across industries, depending on their operations and outputs. A brewery in Yorkshire switching from gas-powered boilers to electric ones using renewable energy might cut its carbon intensity by nearly half overnight. Meanwhile, a London restaurant chain might spend years implementing efficiency programmes, such as reducing food waste and optimising refrigeration, to achieve a notable intensity reduction. 

Energy Sector

In electricity generation, carbon intensity is typically measured in grams of CO₂e per kilowatt-hour (gCO₂e/kWh). The UK’s grid carbon intensity has declined dramatically, from around 450 gCO₂e/kWh in 2013 to approximately 160 gCO₂e/kWh in 2023, reflecting the shift away from coal and towards renewable energy sources.

Carbon intensity varies significantly by energy source:

• Coal: ~820 gCO₂e/kWh
• Natural Gas: ~490 gCO₂e/kWh
• Solar PV: ~48 gCO₂e/kWh
• Wind: ~11 gCO₂e/kWh
• Nuclear: ~12 gCO₂e/kWh

These figures illustrate the substantial carbon savings achievable by transitioning to renewable energy sources.

Food and Beverage Manufacturing 

In food and beverage manufacturing, carbon intensity is typically measured in tCO₂e per tonne of product or per £million revenue. UK benchmarks show considerable variation:

• Dairy Processing: 1.8-2.5 tCO₂e/tonne
• Meat Processing: 2.0-4.5 tCO₂e/tonne
• Brewing: 0.2-0.3 tCO₂e/hectolitre
• Soft Drinks: 0.1-0.2 tCO₂e/kilolitre

These variations reflect different energy requirements, raw material inputs, and process efficiencies. For instance, dairy and meat processing have higher intensities partly due to significant upstream emissions from animal farming, while brewing intensity varies based on heating methods and packaging choices.

Services and Transport

Service companies typically report carbon intensity relative to financial metrics, such as tCO₂e per £million revenue or per employee. For example, professional services firms might operate at 20-30 tCO₂e per £million revenue, while retail banking could range from 15-25 tCO₂e per £million.

Transport emissions are measured in gCO₂e per passenger-kilometre or per tonne-kilometre for freight. For instance, UK domestic flights have an intensity of approximately 273 gCO₂e per passenger-km, while electric rail operates at around 30-35 gCO₂e per passenger-km.

Why Carbon Intensity Matters

Carbon intensity provides a fair way to compare environmental efficiency across companies of different sizes. A small brewery producing 10,000 barrels annually can’t compete with the absolute emissions of a global beer conglomerate, but it might achieve a better carbon intensity per barrel through innovative practices and local sourcing. 

This metric also accommodates business growth. The UK’s Climate Change Committee (CCC) recognises that many sectors need to grow while decarbonising - a balance that absolute targets alone cannot capture.

Regulatory frameworks increasingly incorporate intensity metrics. The UK’s SECR regulations require qualifying companies to report at least one intensity ratio alongside absolute emissions. Similarly, the Task Force on Climate-related Financial Disclosures (TCFD) recommends intensity-based metrics for better comparability. 

Investors use carbon intensity to assess efficiency and carbon pricing risks. The ISO 14064 standard includes intensity metrics, helping organisations track emissions relative to their business  activity for more accurate sustainability reporting.

Carbon intensity helps businesses identify inefficiencies, showing which processes or products contribute the most emissions, and where to improve. 

Calculating Your Own Carbon Intensity 

Determining appropriate activity metrics is the first step. Good metrics should: 

• Directly relate to emissions
• Scale proportionally with business activity
• Be easily measurable
• Be understandable to stakeholders

For food and beverage companies, common denominators include:

• Manufacturing: Tonnes of product or units produced
• Services: Revenue or full-time equivalent (FTE) employees
• Real Estate: Floor space (m²)
• Transport: Passenger-kilometres or tonne-kilometres

Data collection requires comprehensive emissions data across Scopes 1, 2, and 3, ensuring consistency in reporting methodologies and boundaries.

Common calculation pitfalls include: 

1. Inconsistent emissions/activity boundary definitions 
2. Ignoring major year-over-year business changes  
3. Using inappropriate or complex metrics that don’t correlate with emissions
4. Inconsistent inclusion of Scope 3 emissions across reporting periods 

Choosing the right denominator is essential. For example:

• Revenue-based intensity (tCO₂e/£m) enables comparisons within a sector
• Physical intensity (tCO₂e/tonne of product) reflects operational efficiency
• Employee-based intensity (tCO₂e/FTE) is useful for service businesses
• Production-line intensity (kgCO₂e/production hour) isolates manufacturing efficiency

Setting Carbon Intensity Targets 

Effective carbon intensity targets should align with climate science while reflecting sector-specific challenges. The Science Based Target initiative (SBTi) provides sector-specific guidance on intensity reduction pathways compatible with limiting warming to 1.5ºC.

Balanced Target-Setting Approach:

• Short-term (1-3 years): Focus on immediate efficiency improvements 
• Medium-term (5-7 years): Implement deeper structural changes
• Long-term (10+ years): Align with net zero goals 

When communicating intensity targets to stakeholders, provide context on how they relate to absolute emissions and overall climate strategy. Companies like Tesco have effectively engaged stakeholders by linking their intensity target with their broader zero-carbon commitment, demonstrating how efficiency improvements support their long-term climate ambitions. 

Setting appropriate carbon intensity targets requires a careful balance of ambition and realism. For food and beverage companies, this process involves several important considerations that deserve careful attention. 

Science-Based Approach to Target Setting 

The food sector faces unique challenges in decarbonisation, with significant emissions from agricultural supply chains. Sector-specific guidance from initiatives like the SBTi provides valuable frameworks for setting credible targets. The SBTi’s Sectoral Decarbonisation Approach (SDA) offers intensity trajectories aligned with Paris Agreement goals, helping companies understand what their reduction pathway should look like. 

Balancing Absolute and Intensity Targets

The relationship between intensity and absolute emissions creates a fundamental tension. A rapidly growing food company might reduce its carbon intensity while still increasing total emissions. On the other hand, a company with declining sales might see improving absolute emissions while its processes become less efficient. 

The strongest approach combines both types of targets:

• Intensity targets drive operational efficiency improvements 
• Absolute targets ensure total emissions move in the right direction
• Combined, they create a comprehensive approach to carbon management

Strategies for Reducing Carbon Intensity 

Energy Efficiency Improvements: 

The UK’s Climate Change Act has led to significant improvements in energy efficiency. widespread efficiency gains. Practical measures include upgrading to LED lighting (cutting lighting energy use by 50-70%), implementing smart building management systems, and optimising HVAC controls. Unilever reduced its manufacturing carbon intensity by 65% from 2008 to 2020 through a combination of efficiency projects and renewable energy adoption.

Renewable Energy Procurement:

Switching to renewables through Power Purchase Agreements (PPAs) or on-site solar PV installations can significantly reduce carbon intensity, particularly for energy-intensive industries. For instance, Belu has achieved a 72% reduction in its carbon intensity since 2010 by implementing sustainable practices and utilising renewable energy sources.

Process Optimisation: 

Lean manufacturing techniques, such as value stream mapping, help pinpoint carbon hotspots in production. Improving scheduling to reduce machine idle time can lower energy consumption by 10-15%.

Supply Chain Engagement:

Scope 3 emissions often account for over 70% of a company's total footprint. Companies like BT actively engage their suppliers to set science-based targets, thereby amplifying emission reductions across the supply chain. Through such initiatives, BT has encouraged numerous suppliers to commit to lowering their carbon intensity.

Tracking Progress

Accurate measurement begins with establishing a clear baseline year. Business changes require careful consideration - the GHG Protocol provides specific guidance on handling acquisitions and divestments, recommending approaches like recalculating the baseline to maintain comparability.

External verification enhances credibility. While not universally required, third-party assurance of carbon intensity data is increasingly expected by investors. The ISAE 3410 standard provides a framework specifically for greenhouse gas statements, including intensity metrics.

Visualising carbon intensity data effectively can significantly improve stakeholder understanding. Year-on-year intensity graphs alongside absolute emissions help illustrate the relationship between efficiency improvements and total impact.

Key Takeaways on Carbon Intensity

Carbon intensity offers an efficiency metric through which to view and improve organisational efficiency. It reveals opportunities that absolute emissions alone might mask and provides a fair basis for comparison across organisations of different sizes and growth trajectories.

Reducing carbon intensity isn’t just good for the plant - it’s good for business. It often means:

• Improved efficiency and cost savings
• Less risk from carbon pricing
• Enhanced competitive positioning
• More resilience to energy price fluctuations

Companies that lower their carbon intensity often perform better financially than their competitors. A study by MSCI found that from 2015 to March 2023, companies in high-emission industries saw faster earnings growth when they focused more on renewable energy or energy efficiency, compared to their peers

Next Steps 

• Calculate your baseline carbon footprint across relevant scopes
• Identify appropriate activity metrics that meaningfully represent your operations
• Establish your current intensity and benchmark against sector peers
• Develop an intensity reduction roadmap with clear, time-bound targets
• Implement monitoring systems that track progress regularly

By focusing on becoming more efficient while also addressing absolute emissions, you create a pathway for sustainable growth that supports both economic and environmental goals. The journey starts with measurement but leads to innovation and transformation—benefiting both business and planet.

At Zevero, we help businesses navigate carbon intensity measurement, set impactful targets, and implement strategies to drive efficiency.

Get in touch with our team today to start reducing your carbon intensity and building a more sustainable future.

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