Fast Cars: Carbon
Emissions analysis
BCG Climate & Sustainability Job Simulation
By Forage
Location: Online
The BCG Climate & Sustainability Virtual Experience Program is an interactive, self-paced simulation designed to introduce participants to sustainability consulting. Through this case study on Fast Cars, a fictional automotive company, I analysed carbon emissions, benchmarked industry data, evaluated the costs and benefits of reduction strategies, and identified sustainability opportunities. The program develops key skills such as data interpretation, strategic reasoning, and stakeholder communication, mirroring real-world consulting tasks. It provides a valuable introduction to climate strategy and corporate sustainability initiatives.
Context
The Case study is about a fictional automotive company.
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Fast Cars are under pressure from investors to address climate change.
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They also expect that new government regulations will force a phase-out of Internal Combustion Engines (ICE) used in their cars.
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Fast Cars has set carbon emission reduction targets using the Science Based Target Initiative (SBTi). However, they are still at the beginning of their emissions reduction journey.
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They have engaged BCG to advise them on delivering on their SBTi targets.
What is the SBTi?
The SBTi is a partnership between CDP, the United Nations Global Compact, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). The SBTi call to action is one of the We Mean Business Coalition commitments.
Science-based targets show companies and financial institutions how much and how quickly they need to reduce their greenhouse gas (GHG) emissions to prevent the worst effects of climate change.”
As part of their SBTi pledge, Fast Cars has committed to net-zero Scope 1 and 2 Greenhouse Gas (GHG) emissions reduction by 2030 (from a 2018 base). Fast Cars has not committed yet to reducing its scope 3 GHG emissions but is considering doing so in the future.
First, let’s understand the key terms below, then complete the quick knowledge check to move on to the next task.
Net-Zero
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This is when there is an exact balance between the amount of GHGs that are produced and that are removed from the atmosphere.
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In practice, this means that for every 1 ton of Carbon a company generates, they need to remove 1 ton from the atmosphere.
Scope 1, 2, and 3 emissions
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This provides a great framework for understanding a company’s GHG emissions, including where they come from and whether they are direct or indirect.
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Scope 1 emissions are direct emissions produced from operations controlled or owned by a company (e.g. GHGs created from burning fuel to operate manufacturing plants, furnaces, etc.).
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Scope 2 emissions are indirect emissions that come from sources purchased by a company in order for it to operate (e.g. electricity or steam). So, while a company might not produce electricity, it might rely on buying electricity to power an office or a manufacturing plant.
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Scope 3 emissions are indirect emissions produced in a company’s value chain (e.g. emissions generated by delivering, using, and disposing of a product). These activities are not controlled or owned by a company.
This diagram provides a useful overview of Scope 1, 2, and 3 emissions.
The emission data of Fast Cars
Benchmarking Carbon Emissions using CDP
The Carbon Disclosure Project (CDP) was used to benchmark Fast Cars in the industry.
What is the CDP?
The CDP publishes data every year on the performance of companies that disclose through their program.
Companies are scored within their current level of environmental stewardship. There are 4 levels:
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Disclosure
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Awareness
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Management
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Leadership
Once a company satisfies the score in its current level, it can move up to the next level. Each level has a score band ranging from D- (lowest) to A (highest).
Fast Cars scored B in CDP's 2020 results (based on the problem statement). This has been benchmarked against other companies in the automotive industry.
Insight 1
"From the CDP data provided, I have found 35 companies in the automotive industry that have a score greater than, equal to or two scores below Fast Cars’ score of B. Of this total:
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25 companies (roughly 69.4%) score better than Fast Cars (A or A-),
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3 companies (roughly 8.3%) score the same as Fast Cars (B), and
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7 companies (roughly 20%) score one to two scores worse than Fast Cars (B- or C).
This analysis suggests that Fast Cars is performing worse than the majority of other automotive companies. Therefore, there is room for improvement for Fast Cars to be performing with the top companies. "
Carbon reduction initiatives - Scope 1 & 2
Based on the initial insight, three recommendations were made to focus on and reduce the Scope 1 & 2 reductions of Fast Cars. For this assignment, I used an abatement cost curve to demonstrate a ‘step ladder’ pathway to net zero.
An abatement curve helps us to identify the key levers or initiatives to eliminate emissions. Initiatives are ranked in order of cost per ton of eliminated carbon.
This makes it easy for our clients to quickly understand the investment required to get to net zero and to be able to compare between interventions.
Below is an example image of an abatement curve in an automotive supply chain:
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the x-axis represents the impact of each intervention on emissions, and
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the y-axis represents the cost of the intervention. In the diagram below - you can see the currency on the y-axis is using Euros (€).
Emissions Source: Scope 2 Electricity for Fast Cars Manufacturing Initiative:
Renewable Power in Production (40-55% abatement lever)
Purchased electricity for manufacturing makes up most of Fast Cars scope 2 emissions. Fast Cars can transition their manufacturing facilities to renewable power to significantly cut their carbon emissions. This approach can be coupled with investment in energy efficiency measures to reduce their overall energy demands.
Fast Cars also could influence its suppliers to transition to renewable energy. This could have industry-wide benefits. For example, if Fast Cars is able to require and support its supplier or aluminium to decarbonize its processes, other companies may benefit from access to the same decarbonized aluminium.
Case Study
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Daimler intends to make its assembly plants carbon neutral by 2022 by transitioning to renewable energy. For instance, Mercedes-Benz’s plant in Bangkok, which is expected to achieve carbon-neutral production in 2022, uses large solar-powered systems on its roof to generate electricity.
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Daimler is also requiring its suppliers to adopt its standards for decarbonisation.
Initiative: Renewable Power and New Processes in Battery Production (40-55% abatement lever)
It is expected that Fast Cars will increase their production of electric vehicles, in line with global trends and regulations. However, the energy intensity of making batteries has the potential to increase Fast Cars emissions. For example, producing a BEV can generate up to 60% more CO2 emissions than producing a comparable ICE. We can recommend to Fast Cars that their investment in increased battery production should be powered by renewable energy and, where they use other facilities, Fast Cars should prioritize factories that produce batteries with renewable energy.
Emissions Source: Scope 1 Fast Cars Manufacturing Onsite Gas Boilers
Initiative: Renewable Heat (40% abatement lever)
Fast Cars currently uses onsite gas boilers for heat production in their manufacturing processes. This makes up the greatest proportion of their scope 1 emissions. There are several options to reduce or eliminate these emissions that we could recommend to Fast Cars. These include using high-efficiency burners that recover and use waste heat, as well as using biomass in place of gas.
Case Study
One of Volkswagon’s production plants in the Czech Republic is working to replace the only fossil fuel still used at the plant: natural gas. From 2021 onwards, natural gas will be replaced by CO2-neutral methane from biogas plants. They are combining this with energy efficiency measures such as closing heating circuits to limit wasted heat.
Scope 3 Reduction
Additionally, I made some slides to identify the most concerning Scope 3 emissions, benchmark them against the emission goals of its competitors, and suggest initiatives to reduce these emissions.
Summary of upstream and downstream emissions
From the table below, it is clear that most of their Scope 3 emissions are downstream emissions, with the largest contributor primarily being the use of its cars, which is a similar trend across the automotive industry.
Competitor Analysis
This is high-level research into scope 3 emissions targets set by a selection of Fast Cars competitors. Most of these targets only address the ‘use of products sold’ downstream emission category. This is because it is typically the greatest proportion of total scope 3 emissions for automotive companies. Only BMW (in this sample) is addressing the upstream emissions.
Key Initiatives for Fast Cars
To align with the industry, we recommend that Fast Cars determine a target to address scope 3 use of products sold emissions. Some initial initiatives that could address these emissions are detailed here.
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