Decarbonization has become an increasingly relevant topic for businesses and governments, driven by growing investor and societal pressure to transition toward sustainable energy solutions. In this article, we explore what decarbonization is, the key strategies, challenges, and opportunities for the coming years.
The analyses presented are based on a study conducted by BIP, which examined over 50 major industry players, historical data, real-world case studies, and expert insights.
What is Decarbonization?
Decarbonization refers to the process of reducing and, in the long term, eliminating carbon dioxide (CO₂) emissions caused by human activities. It is a critical measure to combat global warming, as CO₂ is one of the primary greenhouse gases (GHGs) responsible for climate change.
To achieve decarbonization, it is essential to invest in renewable energy sources such as solar, wind, and biomass, which emit far less CO₂ than traditional fossil fuels like coal, oil, and natural gas. Additionally, other key measures that contribute to decarbonization include:
✅ Improving energy efficiency in industries and households
✅ Reforestation and environmental conservation
✅ Reducing raw material waste, as the production of new materials generates CO₂ emissions
Decarbonization Strategies: Concepts and Approaches
Companies can follow different pathways to achieve decarbonization, but a fundamental first step is conducting a carbon inventory. This assessment estimates the volume of greenhouse gas emissions (GHGs) for which a company is responsible.
The carbon inventory serves as a guideline for an organization’s strategy and actions, covering the three scopes defined by the GHG Protocol:
1️⃣ Scope 1: Direct carbon emissions from owned and controlled operations, such as factories and internal logistics (mandatory under the GHG Protocol)
2️⃣ Scope 2: Indirect carbon emissions from electricity, heating, cooling, or steam purchased or consumed by the organization (mandatory under the GHG Protocol)
3️⃣ Scope 3: All other indirect emissions related to a company’s value chain, including suppliers, logistics, and product use
Once the carbon inventory is completed, companies set decarbonization or offsetting goals, measuring and managing emissions using various global frameworks, such as:
- Science Based Targets Initiative (SBTi)
- GHG Protocol
- Task Force on Climate-Related Financial Disclosures (TCFD)
With goals in place, companies can implement various strategic initiatives, categorized into three key approaches (WRI Brazil):
1. Carbon Removal: Extracting CO₂ from the atmosphere and storing it permanently or long-term, through:
- Forest Management (Reforestation and conservation of native forests)
- Agriculture (Carbon sequestration in plants and soil)
- Marine Ecosystems (Protection and restoration of mangroves and wetlands)
- Carbon Capture Technologies (Post-combustion capture using chemical solvents to separate CO₂)
2. Emission Reduction: Decreasing GHG emissions by:
- Optimizing industrial processes
- Transitioning to a cleaner energy matrix
- Shifting transportation methods
3. Carbon Offsetting: Compensating for unavoidable emissions by purchasing carbon credits.
The choice of decarbonization initiatives depends on a company’s emission profile, which varies significantly across sectors. For instance, transitioning to renewable energy sources primarily impacts Scope 2 emissions.
By analyzing these scopes, businesses can define targeted actions to reduce or offset emissions where they are most significant.
Decarbonization Landscape in North America
BIP Group analyzed companies across various industries, gathering insights from executives and sustainability experts. The study revealed that businesses are actively engaging in decarbonization, identifying new business opportunities in the process.
However, the U.S. still faces major challenges, such as:
❌ Economic and market barriers
❌ Regulatory and policy uncertainty
❌ Technology challenges and investment needs
❌ Public and community pushback
According to the World Economic Forum (2023), achieving a sustainable transition will require $13.5 billion in investments by 2050, particularly in manufacturing, energy, and transportation.
Despite these challenges, investment in energy transition technologies continues to accelerate:
✅ Global investment in energy transition reached $2.1 trillion in 2024 (Financial Times)
✅ As of January 2025, the Inflation Reduction Act (IRA), along with the Infrastructure Investment and Jobs Act and the CHIPS and Science Act, has catalyzed over $1 trillion in private investment, including $215 billion in clean power and $93 billion in clean energy technology manufacturing and infrastructure (Wikipedia)
✅ AI is playing a growing role in energy efficiency, with discussions at CERAWeek 2024 highlighting its potential to modernize the power grid (Houston Chronicle)
However, power demand in the U.S. is soaring, requiring significant investment and regulatory reforms to sustain the energy transition (Reuters).
Additionally, some corporations are scaling back their net-zero commitments due to political and economic pressures, reinforcing the need for consistent policies and market incentives (Time).
While challenges remain, momentum continues to build, and companies that embrace decarbonization will be best positioned to thrive in a low-carbon economy.
What to Expect for Decarbonization in 2025?
Key trends to watch in 2025 include:
🔹 Federal Energy Strategies – focus on bolstering fossil fuel production to restore economic security
🔹 Technological and industrial developments – investment in carbon capture and storage (CCS) technologies to mitigate emissions from data centers.
🔹 Energy transition projections – The US is projected to reduce its greenhouse gas emissions by approximately 37% from 2005 levels by 2030
Source: https://www.statista.com/statistics/1536390/us-project-2025-emission-projections/
How Can BIP Help?
BIP provides strategic decarbonization consulting, guiding companies in:
✅ Developing new sustainable business models
✅ Implementing carbon management strategies
✅ Tracking & reporting emissions (Scope 1, 2 & 3)
✅ Communicating sustainability commitments to stakeholders
