How Business Can Contribute to Decarbonization
The world’s dire need for decarbonization – finding alternative ways of living and working that reduce emissions and capture and store carbon in our soil and vegetation – gained even more urgency with the Geneva-based UN weather agency’s report that its close European collaborator found the global average temperature at 2 meters above the Earth’s surface, a standard frame of reference, reached an all-time high of 16.88° Celsius on July 3, breaking the previous daily record of 16.80° from August 2016.
By John Heilprin
July 13, 2023
As the world gears up for its annual UN-brokered climate summit at the end of the year, typically an exercise in raising hope and action that is met with an overall less-than-adequate level of government ambition among the world’s biggest carbon-emitting economies, the important role that businesses can play in tackling the climate crisis rises to the forefront. Decarbonizing business models and reaching net zero emissions has long been a major area of focus for GESDA.
For the past several years the world has pushed to turn the climate cost of doing business into climate action, in keeping with the commitment under the Paris climate treaty to limit warming to no more than 2° above industrial levels while pursuing efforts to limit the increase even further to 1.5° if possible. Some businesses have stepped up their environmental, social, governance (ESG) and net-zero commitments, but reaching those goals is more problematic.
More than 70 countries including China, the United States, and the European Union, the biggest carbon polluters, set a net-zero target that covers about three-quarters of global emissions. Almost 10,000 companies committed to reach net zero by 2050 as part of the United Nations’ Race to Zero campaign. About 40% of Fortune 500 companies set net-zero targets though not all included emissions that represent the full scope of their value chains.
Yet the UN says the world is far off-track its goal of reaching net zero by 2050, with current national climate plans projected to lead to an almost 11% increase in global greenhouse gas emissions by 2030 compared to 2010 levels. That’s why the role of business in decarbonization could be crucial. With concerted action, companies representing several trillion dollars in market cap can contribute even more than some nations to the goal of limiting warming to 1.5°.
A recent report by Knut Haanaes, a Professor of Strategy and Lundin Chair Professor of Sustainability at Switzerland’s top-ranked IMD Business School at Lausanne, said companies must step up action to cut carbon emissions – but progress will accelerate once they realize there are significant business advantages to be gained from decarbonization strategies.
He described three stages in a company’s decarbonization process: 1) building awareness and understanding; 2) making climate action part of the business model; and 3) reaching the point when decarbonization becomes part of the strategy of the business and delivers a competitive advantage.
“At this point it is about playing to win,” he said. “There are a number of trailblazers who have reached this third stage. Finnish company Neste switched from being a traditional oil refining business to become the world’s largest producer of renewable diesel from organic waste. Maersk is leading the way in efforts to decarbonize the shipping industry. And steelmaker ArcelorMittal has set ambitious emissions reduction targets with the aim of driving progress on decarbonization across the steel industry.”
The new Swiss legislation
In Switzerland, for example, Swiss voters in June agreed to back the Climate and Innovation Act, which was Swiss parliament’s alternative to a popular citizen proposal called the Glacier Initiative. Voters approved measures that could serve as an example of how companies can contribute to the adoption of net-zero goals.
Along with more adaptation to and protection against climate impacts, the new Swiss legislation calls for cuts in greenhouse gas emissions plus greater application of “negative emission technologies” such as carbon capture, utilization, and storage – and improved alignment of financial flows with these low-carbon technologies.
The new Swiss legislation, like US and EU plans, emphasizes the use of incentives over penalties. A US Securities and Exchange Commission proposal would require public companies to disclose carbon emissions in their value chains. The EU legislation requires large European and non-European firms with significant operations in the EU to establish a net-zero transition plan.
The case for greener shipping emissions
The UN shipping regulatory agency met during the first week of July to adopt a revised strategy to reduce greenhouse gas emissions from international shipping, which accounts for about 2.9% of total greenhouse gas emissions. That’s been in the crosshairs of GESDA’s work for several years, including extensive discussions at both the first and second annual GESDA Summit based on the work of hundreds of scientists globally contributing to the forward-looking Science Breakthrough Radar.
The Radar and discussions based on its findings emphasize that governments and businesses vowing to achieve net-zero carbon emissions in coming decades face a series of hurdles – political, scientific and technical gaps – in trying to make the jump from burning fossil fuels towards greater reliance on renewable energy and carbon removal technologies.
Since it took at least two decades to scale up solar and wind technologies, GESDA’s Pipeline of Solution Ideas has brought together experts working to identify ways of bringing promising decarbonization technologies to scale much faster by connecting science and diplomacy.
One example is Jim Hagemann Snabe, the Chairman of Siemens and Northvolt. While heading a third major company, Danish shipping and logistics behemoth A.P. Møller-Maersk, he sought to convert green electricity into green liquid fuel to power vessels in a process called “Power-to-X.” In 2018, he committed the company to net-zero emissions by 2050 with no idea of how to achieve the goal. The company even ordered container vessels that would need 600,000 tonnes of green fuel no one made yet. Snabe told a GESDA Summit 2022 session on decarbonization that this “moon-shot approach” was based on “a leadership moment where you have to have the courage.” Others pointed out how scientists and engineers can play a huge role in decarbonization by implementing technologies like renewable energies, batteries and new materials.
Where the science and diplomacy points us
Almost from the start of GESDA in 2019, there has been an understanding among scientists and diplomats that energy transitions are historically slow and their work could be of great use by helping to speed up the global transition to renewable, clean energy sources through the concurrent advancement of many other technologies.
An entire section of the Radar is devoted to decarbonization, including the associated sub-fields of negative emission technologies, energy transition, advanced materials and energy storage. It notes that advanced technologies are needed related to capturing CO2 from large point sources such as power plants, improving energy efficiency within industry and the building sectors, producing synthetic fuels from waste products such as CO2 and biomass, and CO2 storage, both underground and in the form of useful, value added products such as concrete.
But all of these only cut existing CO2 emissions, the Radar says, while a major part of the Geneva-based Nobel Prize-winning Intergovernmental Panel on Climate Change’s solution is to directly remove CO2 from the atmosphere using a range of “negative emissions technologies” (NETs), which can be incentivized through robust CO2 pricing. The Radar further emphasizes that “urgent decarbonization will require coordinated action at every scale as well as a concerted, unified effort across many disciplines, including policy, economics, industry, science, engineering, and technology.”
The findings in the 2022 Science Breakthrough Radar®:
Based on the latest Radar, here’s where we stand in several important areas:
Negative emission technologies
The world is headed for a catastrophic temperature rise above 3° in this century, necessitating the use of NETs to extract carbon directly from the atmosphere. NETs can both impact past emissions and also help manage those emissions from small, dispersed sources, like automobiles. These also could include nature-based solutions, such as afforestation, reforestation, and the use of agricultural soils that can take up and store carbon, but they require rapid and widespread changes in forest and soil management practices – and changing how society manages its land is no small challenge. Carbon pricing is key to help pay for the capture process and promote NET optimization. Radar, page 114.
Anticipation in a nutshell
5-year horizon: The development of a CO2 market
10-year horizon: Mining CO2 from the air is commercially viable
25-year horizon: Large-scale CO2 capture and utilisation begins
Energy transition
As the world population surges beyond 8 billion, the need for energy to power civilization is expected to rise by 50% before 2050. Yet carbon emissions must fall sharply to avert further climate catastrophe, based on a rapid transition away from fossil fuels as a source of electricity generation and transport fuel. This can be done by leaving remaining fossil fuel reserves untapped and embarking on a rapid uptake of renewables such as wind and solar photovoltaics (PV) and the production of fuels from CO2 that is “mined from the air.” Solar energy can be used to produce synthetic hydrocarbons from captured CO2 and “green hydrogen.” Nuclear fusion also is possible. Radar, page 115.
Anticipation in a nutshell
5-year horizon: Embracing the sun and wind
10-year horizon: Managing the energy transition
25-year horizon: Renewable energy comes of age
Advanced materials
Significant advances in the discovery and design of advanced materials are needed for decarbonization technologies such as those related to clean energy production, carbon capture and utilisation, and energy storage. These materials will require optimized efficiencies and exceptional lifetimes combined with a low environmental impact and economic cost for their production. In 2021, for example, researchers designed a solar cell having a record efficiency of 29.5% in the lab by adding an inexpensive, thin film of synthetic perovskite to a standard silicon cell. But creating aggressive carbon capture technology for use at point sources such as power plants remains a challenge. New tools related to data mining, machine learning, and artificial intelligence may accelerate solutions. Radar, page 116.
Anticipation in a nutshell
5-year horizon: Solar shines brighter
10-year horizon: Towards a “Genome Project” for advanced materials
25-year horizon: Decarbonization efforts accelerate
Energy storage
With renewable energy sources such as solar and wind that fluctuate in available, energy storage technologies such as batteries and stored hydrogen (from electrolysis, for example) must grow in parallel. Utility-scale storage capacity ranges from several megawatt-hours into the hundreds. Lithium-ion batteries are by far the most well-developed battery technology but upfront costs for utility-scale storage remains a barrier in the market. Governments could help close this “viability gap” using subsidies and policy incentives. Chemical pathways are also important. Radar, page 117.
Anticipation in a nutshell
5-year horizon: Money into power
10-year horizon: Aggressive cuts to CO2 lead to leap in installed renewable capacity
25-year horizon: Energy storage diversifies
What people say
Eco-regeneration and geoengineering, including decarbonization and ocean stewardship, elicit strong engagement from citizens, according to analysis of more than 6 million social media posts. Radar, page 264.
Opportunities
The Radar observes that to decarbonize our world, we probably will need to combine accelerated R&D efforts with aggressive carbon pricing, major reforestation, and new agricultural and industrial approaches that help create a circular economy.
The opportunities for promising decarbonization technologies and advanced materials will depend on getting them out of the lab and viably scaling them up into the marketplace. It also will depend on ensuring that the burden of decarbonization is shared equitably.
Experts said the “sharpest knife” for accomplishing decarbonization, however, likely would be to set a global price, or tax, on CO2. GESDA can play an active role in communicating what is needed to accomplish this: the need for global CO2 pricing, how urgently the world needs to act, and building trust among all communities.
They emphasized that clean energy provides a better business model than fossil fuels, and business leaders cannot afford to wait any longer to make the transition. Many of the technologies needed are already here. Radar, page 300.