The role of ESCO companies in decarbonization: addressing greenhouse gas emissions from energy efficiency projects

The growing threat of climate change is pushing society towards greater environmental sustainability. The crucial action is limiting greenhouse gas (GHG) emissions. Decarbonization, which aims to reduce the reliance on fossil fuels, is presented as a key enabler. However, only replacing fossil fuels may not be enough. Energy efficiency plays an important role in achieving climate goals and energy service companies (ESCOs) can accelerate it by investing in energy efficiency projects. Although the environmental benefits of such projects are often praised, the projects still contribute to global GHG emissions. In this paper, we emphasize the responsibility of ESCO companies to understand and manage their impact on GHG emissions. We used GHG Protocol to calculate the carbon footprint of a medium sized ESCO company operating in Eastern Europe. First, a full carbon footprint of the analysed company’s business operations was calculated to determine hotspots. We found that the vast majority of carbon footprint comes from the investments in energy efficiency projects. Further analysis showed that the highest impacting projects either rely on fossil fuels or electricity in regions where electricity’s carbon intensity is high. Careful consideration of both emission factors and expectations about the development of energy systems is needed to predict the lifetime GHG emissions of a given project. By understanding those factors ESCO companies can strategically invest in projects that demonstrate the lowest impact on GHG emissions and thus significantly contribute to the global decarbonization efforts.