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Development of a Simulation Tool to Support the Process of Setting Climate Targets – An Exploratory Study at IKEA

Sander, Patrik LU and Skoog, Simon LU (2017) MTT820 20171
Engineering Logistics
Abstract
Background
The world’s governments agreed in 2010 to work towards limiting global warming to a two-degree warming compared to pre-industrial temperatures with the presumption that this would suffice in order to avoid the worst effects of climate change. Meeting this goal would, according to The Intergovernmental Panel on Climate Change, require a reduction of global emissions by 41–72 percent by the year 2050. In order to reach this goal, all companies are required to minimise emissions throughout the whole value chain. To assess policies and actions required to achieve said reduction by 2050, simulation is deemed applicable.

Purpose
The purpose of this master’s thesis is to develop a simulation tool to support the process of setting... (More)
Background
The world’s governments agreed in 2010 to work towards limiting global warming to a two-degree warming compared to pre-industrial temperatures with the presumption that this would suffice in order to avoid the worst effects of climate change. Meeting this goal would, according to The Intergovernmental Panel on Climate Change, require a reduction of global emissions by 41–72 percent by the year 2050. In order to reach this goal, all companies are required to minimise emissions throughout the whole value chain. To assess policies and actions required to achieve said reduction by 2050, simulation is deemed applicable.

Purpose
The purpose of this master’s thesis is to develop a simulation tool to support the process of setting climate targets with respect to indirect emissions resulting from value chain activities.

Research Questions
1. Which are the emission drivers relating purchased goods and services, and use of sold products in IKEA’s Scope 3 emission system?
2. Which parameters can be applied to allow steering on the emission drivers?
3. How should a simulation tool be designed to address and capture the behaviour and characteristics of the emission drivers in the Scope 3 emission system?

Methodology
The research study consists of a systems approach, abductive methodology and a single-case strategy. To understand the underlying problem, literature review, data gathering and workshops were conducted. A gap analysis was then conducted to analyse emission drivers found both in literature and at the workshops. A simulation model was then constructed by combining spreadsheet and system dynamics modelling.

Results
The result is a spreadsheet simulation model which can be used as a policy evaluator on all quantifiable drivers found in the scope.

Conclusion
The study found the major driver of the identified scope 3 emissions. The performed gap analysis, however, showed that the problem did not lie in identifying the driver but rather to quantify their impact on the system. By not being able to quantify all drivers’ impacts, steering parameters will be limited to quantifiable drivers. A framework for developing a simulation tool to support the climate target process is suggested and consists of five ingoing factors; (1) requirements, (2) emission drivers and steering parameters, (3) GHG inventory, (4) scenarios and policies, and (5) the business as usual scenario. A benefit of the simulation tool is that it facilitates an iterative, flexible and fact-based approach for setting climate targets. Furthermore, the model mitigates the risk of too optimistic projections as it takes overlap of various policies into consideration. The constructed spreadsheet model is deterministic; thus, it lacks stochastic variables which entail limitations in the accuracy of the simulation results. Furthermore, the scope of the project entails constraints to map all relevant emission drivers required to predict the Scope 3 system behaviour. (Less)
Abstract (Swedish)
Bakgrund
De ledande världsekonomierna kom 2010 överens om att begränsa den globala uppvärmningen till två graders ökning jämfört med förindustriella temperaturer i hopp om att det räcker för att undvika den värsta effekten av klimatförändringar. För att nå detta mål skulle det, enligt The Intergovernmental Panel of Climate Change, krävas en absolut reducering av utsläpp med 41–72 procent till 2050. För att detta ska bli verklighet, måste alla företag reducera utsläpp inom hela värdekedjan. Simulering anses vara ett passande verktyg för att avgöra vilka policys och medel som krävs för att nå dessa mål.

Syfte
Syftet med det här examensarbetet är att utveckla ett simuleringsverktyg som stödjer i processen att sätta klimatmål med avseende... (More)
Bakgrund
De ledande världsekonomierna kom 2010 överens om att begränsa den globala uppvärmningen till två graders ökning jämfört med förindustriella temperaturer i hopp om att det räcker för att undvika den värsta effekten av klimatförändringar. För att nå detta mål skulle det, enligt The Intergovernmental Panel of Climate Change, krävas en absolut reducering av utsläpp med 41–72 procent till 2050. För att detta ska bli verklighet, måste alla företag reducera utsläpp inom hela värdekedjan. Simulering anses vara ett passande verktyg för att avgöra vilka policys och medel som krävs för att nå dessa mål.

Syfte
Syftet med det här examensarbetet är att utveckla ett simuleringsverktyg som stödjer i processen att sätta klimatmål med avseende på indirekta utsläpp som sker inom värdekedjan.

Frågeställning
1. Vilka är emissionsdrivarna associerade till köpta produkter och tjänster samt användning av produkter inom IKEA:s Scope 3 emissionssystem?
2. Vilka parametrar är kan nyttjas för att tillåta styrning på emissionsdrivarna?
3. Hur ska ett simuleringsverktyg utvecklas för att adressera och fånga beteendet och karaktärsdragen hos emissionsdrivarna inom Scope 3?

Metod
Den använda forskningsmetoden bygger på ett systeminriktat tillvägagångssätt, en abduktiv metod och enfallsstudie. För att förstå det underliggande problemet har en litteraturstudie, datainsamling samt workshops upprättats. En skiljeanalys tillämpades sedan för att analysera emissionsdrivare som identifierats både under litteraturstudien och workshops:en. Ett simuleringsverktyg utvecklades sedan genom att kombinera kalkylblads- och system dynamics-modellerande.

Resultat
Resultatet består av en kalkylbladsbaserad modell som kan nyttjas för att utvärdera policys på alla kvantifierbara emissionsdrivare identifierade under skiljeanalysen.

Slutsats
Studien fann de största emissionsdrivarna inom projektets omfattning av Scope 3. Skiljeanalysen visade på att problemet inte låg i att finna emissionsdrivarna utan snarare att kvantifiera deras påverkan på systemet i dess helhet. Då kvantifiering inte kunde göras på somliga emissionsdrivare blev även styrparametrarna limiterade till att enbart kunna påverka kvantifierbara drivare. Drivarna och styrparametrarna utgjorde sedan en god grund för att utveckla ett simuleringsverktyg. Ramverket för simuleringsverktyget bestod av; (1) kravspecifikation, (2) emissionsdrivare och styrparametrar, (3) växthusgasinventarium, (4) scenario och policys samt (5) ett ”business as usual” scenario. En förmån med simuleringsverktyget är att det underlättar iterativ, flexibel och faktabaserad tillvägagångssätt för att sätta klimatmål. Vidare reducerar modellen risken av att sätta för optimistiska projiceringar då den tar hänsyn till eventuella överlapp av policys. Simuleringsverktyget är deterministisk, därav saknas stokastiska variabler vilket medför begränsningar i simuleringsresultatens precision. Dessutom utgör projektets avgränsning en begränsning för att kartlägga alla emissionsdrivare som krävs för att förutse Scope 3 emissionssystems beteende. (Less)
Please use this url to cite or link to this publication:
author
Sander, Patrik LU and Skoog, Simon LU
supervisor
organization
alternative title
Utveckling av ett simuleringsverktyg som understödjer processen att sätta klimatmål – En explorativ studie på IKEA
course
MTT820 20171
year
type
H2 - Master's Degree (Two Years)
subject
keywords
scope 3, value chain, science-based targets, policy evaluation, sustainability, simulation, system dynamics modelling, simulering, hållbarhet, policyutvärdering, värdekedja
report number
5847
language
English
id
8921657
date added to LUP
2017-08-07 12:15:42
date last changed
2017-08-07 12:15:42
@misc{8921657,
  abstract     = {Background
The world’s governments agreed in 2010 to work towards limiting global warming to a two-degree warming compared to pre-industrial temperatures with the presumption that this would suffice in order to avoid the worst effects of climate change. Meeting this goal would, according to The Intergovernmental Panel on Climate Change, require a reduction of global emissions by 41–72 percent by the year 2050. In order to reach this goal, all companies are required to minimise emissions throughout the whole value chain. To assess policies and actions required to achieve said reduction by 2050, simulation is deemed applicable.

Purpose
The purpose of this master’s thesis is to develop a simulation tool to support the process of setting climate targets with respect to indirect emissions resulting from value chain activities.

Research Questions
1. Which are the emission drivers relating purchased goods and services, and use of sold products in IKEA’s Scope 3 emission system?
2. Which parameters can be applied to allow steering on the emission drivers?
3. How should a simulation tool be designed to address and capture the behaviour and characteristics of the emission drivers in the Scope 3 emission system?

Methodology
The research study consists of a systems approach, abductive methodology and a single-case strategy. To understand the underlying problem, literature review, data gathering and workshops were conducted. A gap analysis was then conducted to analyse emission drivers found both in literature and at the workshops. A simulation model was then constructed by combining spreadsheet and system dynamics modelling.

Results
The result is a spreadsheet simulation model which can be used as a policy evaluator on all quantifiable drivers found in the scope.

Conclusion
The study found the major driver of the identified scope 3 emissions. The performed gap analysis, however, showed that the problem did not lie in identifying the driver but rather to quantify their impact on the system. By not being able to quantify all drivers’ impacts, steering parameters will be limited to quantifiable drivers. A framework for developing a simulation tool to support the climate target process is suggested and consists of five ingoing factors; (1) requirements, (2) emission drivers and steering parameters, (3) GHG inventory, (4) scenarios and policies, and (5) the business as usual scenario. A benefit of the simulation tool is that it facilitates an iterative, flexible and fact-based approach for setting climate targets. Furthermore, the model mitigates the risk of too optimistic projections as it takes overlap of various policies into consideration. The constructed spreadsheet model is deterministic; thus, it lacks stochastic variables which entail limitations in the accuracy of the simulation results. Furthermore, the scope of the project entails constraints to map all relevant emission drivers required to predict the Scope 3 system behaviour.},
  author       = {Sander, Patrik and Skoog, Simon},
  keyword      = {scope 3,value chain,science-based targets,policy evaluation,sustainability,simulation,system dynamics modelling,simulering,hållbarhet,policyutvärdering,värdekedja},
  language     = {eng},
  note         = {Student Paper},
  title        = {Development of a Simulation Tool to Support the Process of Setting Climate Targets – An Exploratory Study at IKEA},
  year         = {2017},
}