A near-term target submitted to SBTi today is calculated under the Corporate Net-Zero Standard (CNZS) V1.3.1. The dynamic rate method in the April 2026 Method Appendix gives a minimum linear annual reduction for each scope, and for scopes 1 and 2 that rate never drops below 4.2%. V2.0 was published in June 2026, but the "Methods, Metrics and Pathways" document that defines its pathways is still a draft open for public comment. The target tells you how many tonnes have to go; a marginal abatement cost curve (MACC) tells you which measures get you there and what each tonne costs.
We cover both together here because, done separately, they tend to end the same way: the target goes to the board, and nobody puts it side by side with the list of measures.
V1.3.1 or V2.0: which one applies to you
SBTi's V2.0 page sets out the timeline. The validation portal for V2.0 submissions is expected to open in Q1 2027. From Q1 2027 until 31 January 2028, companies can submit under either V1.3.1 or V2.0; after that, V2.0 is mandatory for all submissions. The same page strongly encourages companies planning to set, update or renew targets in 2026 to prepare them under V1.3.1 at the earliest opportunity.
One inconsistency is worth knowing about. Page 6 of the V2.0 PDF says Version 1 "will remain open for setting targets until the end of 2027", a month earlier than the web page. If your submission plan runs close to the end of 2027, check the date with SBTi before you rely on it.
The second point matters more in practice: the document that turns V2.0 into target numbers is not final. The cover of Methods, Metrics and Pathways (MMPs) reads "Version for public commenting, June 2026", the version history gives an effective window of June to August 2026, and the disclaimer calls the content "preliminary and subject to change". Building a board paper on percentages from that draft means rebuilding it when the final version arrives.
For 2026 submissions there is one more constraint. Footnote 19 of the Near-Term Criteria V5.3.1 says the most recent inventory year can be no earlier than 2024, so it has to be 2024 or 2025. Applying one year's data to another (proxy years) is not allowed.
How the V1.3.1 minimum target is calculated
The method in V1.3 produced very steep rates for base years after 2020; the Method Appendix itself cites 8.4% a year for a 2025 base year and 10.5% for 2026. V1.3.1 replaces it with a dynamic rate: the rate depends on the time left between the most recent inventory year and the pathway's net-zero year, and each target type has a floor.
The parameters are in Table 2 of the Method Appendix:
| Target type | Net-zero ambition (NZA) | Net-zero year (NZY) | Minimum annual rate (LARR_min) |
|---|---|---|---|
| Scope 1 | 90% | 2050 | 4.2% |
| Scope 2 | 100% | 2040 | 4.2% |
| Scope 3, 1.5 °C | 90% | 2050 | 4.2% |
| Scope 3, well below 2 °C (WB2C) | 75% | "NA" in the table | 2.5% |
The 2040 date for scope 2 reflects the assumption that the power system decarbonises by 2040. Equation 1 gives the initial rate: dLARR = NZA / (NZY − most recent year). For a combined scope 1+2 target, the rate is weighted by the scope 1 and scope 2 shares in the most recent inventory. The following equations express the target first from the most recent year, then from the base year, and apply the floor.
Worked example (hypothetical company)
Base year 2022: 11,000 tCO₂e. Most recent year 2024: 10,000 tCO₂e (6,000 t scope 1, 4,000 t scope 2). Target year 2030, submitted in 2026.
- Initial rate: 0.6 × 0.90/26 + 0.4 × 1.00/16 = 4.577% a year.
- Reduction from the most recent year to the target year: 4.577% × 6 = 27.46%. Target-year emissions: 10,000 × (1 − 0.2746) = 7,254 t.
- The same target expressed from the base year: (11,000 − 7,254) / 11,000 = 34.06%, or 4.26% a year over 8 years.
- 4.26% is above the 4.2% floor, so the floor does not apply.
The minimum target to disclose: a 34.1% absolute reduction by 2030 against 2022. Target-year emissions are 7,254 t, which is 2,746 t below the 2024 level.
The reference values in Table 1 of the Method Appendix show how much the scope 1/scope 2 mix matters. For a 2026 base year, a 50:50 mix gives 5.45% a year and a scope 2-only company 7.14%; a scope 1-only company comes out at 3.75%, which is raised to 4.2%. A site that burns a lot of gas and buys little electricity will usually sit on the floor.
The timing rules in the same criteria: the base year cannot be earlier than 2015, scopes 1 and 2 use the same base year, and the target covers 5 to 10 years from submission. Choosing 2030 as the target year exempts a company from the 5-10 year window (R7). Whichever scope 2 method you use, location-based or market-based, must be used for both setting and tracking the target (C8).
Scope 3: 40%, 67% and the V2.0 5% threshold
V1.3.1 and V2.0 handle scope 3 differently, and the two get mixed up.
V1.3.1 (Near-Term Criteria V5.3.1): if scope 3 is 40% or more of total scope 1+2+3 emissions, it must be included in near-term targets (C4). Companies selling or distributing natural gas or other fossil fuels set a separate scope 3 target for use of sold products regardless of the share. Targets must together cover at least 67% of scope 3 (C6); for long-term targets the figure is 90% (Net-Zero Criteria). Exclusions from the inventory and target boundary may not exceed 5% of scope 1+2 or 5% of the scope 3 inventory (C5).
V2.0: companies are first classified as Category A or B under Table 2. Net turnover of €450 million or more, or 1,000 or more full-time equivalents, puts a company in Category A in any country. In high-income countries, scope 1+2 emissions of 10,000 tCO₂e or more, or meeting two of the balance sheet, turnover and headcount tests, also leads to Category A. Geography follows the jurisdiction of the ultimate parent, classified by World Bank income group, and thresholds are assessed on consolidated group figures averaged over the two most recent financial years. A near-term scope 3 target is required for Category A and optional for Category B.
A Category A company identifies and reports every scope 3 category that accounts for 5% or more of categories 1-14, based on the physical inventory (C5.7). The near-term scope 3 target covers at least those categories (C14.1). Category 15 (investments) is not in the denominator, and optional emissions outside the minimum boundary do not count towards significance. C14.2 allows a few exclusions, such as cradle-to-gate emissions of second-hand goods in categories 1 and 2, category 3 where it is mitigated through scope 1 and 2 energy reductions, all of category 7 (employee commuting), and leased-asset or downstream transport emissions the company has no means to influence.
The 5% figure shows up once more in V2.0, as the base-year recalculation threshold. If the cumulative effect of changes reaches 5% in any scope, or a scope 3 category newly crosses or drops below the 5% line, the base year is recalculated (C8.3). Switching to a newer emission factor set can trip this on its own, so check before you recalculate the inventory.
MACC: putting a price on the pathway
The target gives you a gap in tonnes. A MACC ranks the measures you have listed to close it by annual cost per tonne. There are three steps:
- Capital recovery factor: CRF = r(1+r)ⁿ / ((1+r)ⁿ − 1), where r is the discount rate and n the lifetime. At 8% over 10 years, CRF = 0.1490295, so each euro invested costs about €0.149 a year over ten years.
- Annualised cost: capex × CRF + change in annual operating cost (savings are negative).
- Cost per tonne: annualised cost / annual abatement (€/tCO₂e).
Measures are sorted from lowest to highest cost per tonne. On the chart, each bar's width is its annual abatement and its height the cost per tonne. A bar below zero means the measure pays for itself over its life at the chosen discount rate.
Three-measure example
The inputs below are hypothetical; the discount rate is 8%.
| Measure | Capex (€) | Change in annual opex (€) | Life (years) | Annual abatement (tCO₂e) | CRF | Annualised cost (€) | €/tCO₂e |
|---|---|---|---|---|---|---|---|
| LED retrofit | 60,000 | −18,000 | 10 | 70 | 0.1490295 | −9,058 | −129.40 |
| Rooftop solar (self-consumption) | 400,000 | −34,000 | 25 | 330 | 0.0936788 | 3,472 | 10.52 |
| Forklift electrification | 240,000 | −12,000 | 8 | 45 | 0.1740148 | 29,764 | 661.41 |
The curve runs LED, solar, forklifts from left to right. With an internal carbon price of €80/t, the first two fall below it: 400 t a year. At €661/t, the forklifts are by far the most expensive item on the list.
Now back to the target. The company in the earlier example has to close a 2,746 t gap between 2024 and 2030. The three measures add up to 445 t, about 16% of it. That ratio is the real output of the MACC. If your list covers a sixth of the target, the problem is not the ranking but the list. On a gas-fired site the big tonnes are usually in heat, and until expensive, high-volume options such as fuel switching or heat pumps are on the curve, the target only exists on paper.
Common mistakes when reading a MACC
Treating measures as additive. The curve assumes measures are independent. Two measures acting on the same source, such as a boiler efficiency upgrade and a fuel switch, abate less together than the sum of their separate estimates. In the example, the LED retrofit cuts demand; if solar output then exceeds the remaining consumption, part of the solar abatement never happens.
Picking the discount rate quietly. Cost per tonne is sensitive to the discount rate, and long-lived, capital-heavy measures like solar are the most sensitive. The rate is a finance decision. It should not sit in a spreadsheet as a default; write down who chose it and why.
Counting abatement under the wrong scope 2 method. Self-consumed solar reduces grid draw, so it shows up in both location-based and market-based scope 2. Buying certificates only changes the market-based figure. If your target is location-based, certificates are not abatement on your MACC (C8).
Abating more than you emit. A measure's annual abatement cannot exceed the total of the scope it affects in the last complete inventory year. If it does, either the abatement estimate or the inventory is wrong.
Mixing currencies. Lira and euro measures cannot sit on the same curve. Pick an exchange rate and a year, convert everything, and record that choice.
How Carbolyt handles it
Carbolyt's reduction targets module calculates the target from the inventory. Once you choose base, most recent and target years, scope totals come from the calculated inventory and the SBTi minimum is shown before you save, using Equations 1-8 of the Method Appendix. Checks for base year, 5-10 years or 2030, the 40% scope 3 trigger and 67% coverage are listed with their criterion references; criteria the software cannot measure, such as coverage of all seven gases, are left for manual confirmation rather than marked as passed. For V2.0, Category A/B and the significant scope 3 categories at 5% are calculated; no V2.0 target percentage is produced until the MMPs are final. More on the platform page.
Abatement measures are entered with capex, change in operating cost, lifetime and discount rate. The discount rate is mandatory with no default, and measures in different currencies are not put on the same curve. The curve shows how much of the target gap is covered, with implemented and planned measures shown separately. To see it with your own data, request a demo; the standards and regulatory calendar behind the targets are on the regulation page.
Frequently asked questions
Which version of the standard should a company use to submit targets in 2026?
V1.3.1. According to SBTi's V2.0 page, the validation portal for V2.0 is expected to open in Q1 2027; from then until 31 January 2028 either version can be used, after which V2.0 becomes mandatory. The V2.0 PDF itself says Version 1 stays open until the end of 2027, so confirm the current date with SBTi before you plan a late-2027 submission.
Can I calculate a V2.0 target percentage today?
Not on a final basis. The V2.0 standard is published, but the Methods, Metrics and Pathways document that supplies the pathways is dated June 2026 and labelled 'Version for public commenting'. It describes its content as preliminary and subject to change.
What does the 5% scope 3 rule mean?
Under V2.0, Category A companies identify every scope 3 category that accounts for 5% or more of categories 1-14 (C5.7), and the near-term scope 3 target must cover at least those categories (C14.1). In V1.3.1 the 5% figure is something else: the maximum share that can be excluded from the inventory and target boundary (C5).
What does a negative cost on a MACC mean?
The annualised capital cost of the measure is smaller than the operating savings it delivers, so at the chosen discount rate it pays for itself over its lifetime. The result is sensitive to the discount rate and to the savings assumption.
Sources
- SBTi, Corporate Net-Zero Standard V2.0 page
- SBTi Corporate Net-Zero Standard V2.0 (June 2026, PDF)
- SBTi CNZS V2.0 Methods, Metrics and Pathways, version for public commenting (June 2026, PDF)
- SBTi CNZS V1.3.1 Method Appendix v1.0 (14 April 2026, PDF)
- SBTi Corporate Near-Term Criteria V5.3.1 (April 2026, PDF)
- SBTi Corporate Net-Zero Standard Criteria V1.3.1 (April 2026, PDF)
This article is for information and is not legal advice. Dates and rates reflect the official texts at the time of publication; check the current text before acting.