COP26: 5 leaders from tough-to-decarbonize industries explain how to get to net zero
- Energy and power providers, infrastructure, chemicals and cement are some of the toughest sectors to decarbonize - but they are critical to meeting Paris Agreement targets.
- The use of green technology is a gamechanger in the transition of 'hard to abate' industries.
- Launching at COP26, the First Movers Coalition brings the collective purchasing power of global companies to drive market demand for low-carbon tech.
As COP26 talks are underway this week, the need for global action to save our planet is front and centre. Despite some momentum to transform the world’s energy systems, coupled with clean-energy technology developments that give cause for optimism, the UK Prime Minister, Boris Johnson, warns, “there’s a huge way to go”.
The COVID-19 pandemic subdued global energy demand in 2020, but the IEA suggests demand is now set to increase by 4.6% in 2021. That’s 0.5% above 2019 levels. And the total amount of electricity generated from coal has been on an upward trajectory over the past 10 years.
While there has been encouraging progress in areas such as rising levels of investment and political commitment, progress has been far slower in translating ambitions into actions and in rethinking the energy system structure itself. It’s now up to businesses to step in and drive change.
After the power sector, heavy industry is the second-largest source of CO2 emissions, accounting for 27% of all CO2 emissions worldwide. Four materials – steel, cement, aluminium, and chemicals – are responsible for 60% of current industry emissions.
Identifying viable ways to manage the decarbonization of these “hard to abate” sectors is critical to the transition and technology is a gamechanger. Rather than slowing the race to net zero, these industries are now leading the charge.
The World Economic Forum and Secretary John Kerry are teaming up with 25 such companies to drive a new market for clean green tech.
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Launching at COP26, the First Movers Coalition brings the collective purchasing power of global companies to drive market demand for low-carbon tech. 50% of the emission reductions needed to reach net-zero by 2050 rely on technology not ready for market. Unlocking their potential in time for global adoption before 2050 requires clear signals today from businesses to suppliers. This is the bridge the First Movers Coalition provides.
Phase 1 targets four emission-heavy sectors (aviation, shipping, steel and trucking) and every company that joins has made at least one commitment to purchase zero emission technology now.
We spoke to five leaders from energy and power, infrastructure, chemicals and cement, who are part of the coalition and whose companies are successfully closing the gap between intention and action.
‘Build new businesses on the shoulders of existing capabilities’
Oyvind Eriksen, President and CEO, Aker ASA
Aker was established as a mechanical workshop in Oslo, Norway in 1841. Oil and gas has been an important part of our business and our portfolio for the last five decades.
In the recent years, Aker has transitioned its portfolio of industrial activities into renewable and clean technologies. Our approach is to build new industrial businesses on the shoulders of existing industrial capabilities. Hence, our oil and gas engineering competency, project execution experience and fabrication capabilities are all important to the transition to green opportunities.
What's so exciting today is to see the private sector as a driving force to decarbonize different industries and different societies all around the world.
Public-private collaboration has probably never been more important. At the same time, it's vital to focus on initiatives that can be scaled up globally. For example, Norway accounts for a small percentage of global CO2. The projects we are working on in Norway to decarbonize different industries, will not make a difference at the global scale. What will make a difference is when companies like Aker are able to develop new technology and new solutions that can be exported and scaled to other regions and companies around the world.
So we're starting with ourselves, but keeping in mind how we can make a difference by exporting and scaling our solutions to others.
‘I place my bets on carbon capture’
Mahendra Singhi, MD and CEO, Dalmia Bharat
Innovation is required in every area and has supported us to become one of the most energy efficient cement companies globally, with the creation of a low-carbon cement, or blended cement.
We are fully focused on R&D and we seek solutions to minimize our reliance on fossil fuels, finite resources and waste management.
The solution for the cement sector can be met by carbon capture. The technology, which we call CCU – involves capturing CO2, making it usable and driving revenue from it. By 2030, we’re hoping that CCU technology will be like a vaccine for the climate crisis. I place my bets on carbon capture.
The green tech market is improving, but such technology innovations require financing. Banks and financial institutions have to be ready to share the risk. The cost of ignoring the problem of climate change would be very, very high. As business leaders, we also need to come together with countries, and societies to find solutions. If we don't act now, if we don't collaborate now, if we don't cooperate now, it will be difficult to assure the future.
‘Collaborate across the entire value chain’
Jan Jenisch, CEO, Holcim
You have to accept the challenge and you have to set targets that you want to decarbonize and be part of the solution to stop climate change. I think that's the first step, and this is not a small one. That's a big commitment for any company. Holcim set a roadmap to net zero and we've worked to find solutions for the circular economy and smarter design solutions like 3d printing. The desire for change is huge - that gives me confidence that we will make this happen.
Decarbonization starts with innovation but requires collaboration. We collaborate with cities that want to build greener and with governments that want to develop their building codes. We also work with customers who need the right information to make better choices.
What we already have today is the choice of building products with more than 30% reduced carbon footprint. This is something that we very actively promote. At the same time we have to accelerate the circular economy. We already use up to 20% of demolition waste to create cement and up to 50% of demolition waste can be put back into concrete.
You can save up to 70% of the material being used by having a 3d structure via the use of 3d printing, instead of two-dimensional panels. We work with robotics specialists, with architects, designers and computer specialists. It’s very exciting to see the innovation put in place.
We tend to focus on our products and the impact for our customers, but green procurement is also critical. Logistics, for example, is key to our business. We are a company that might have more than 100,000 trucks on the road every single day to deliver to materials. Most of those trucks don't belong to us. If we work with our suppliers to become more sustainable, I think we can make an even more profound impact.
‘The demand will change faster than the tech. Sustainability is just good business’
Anna Borg, President and CEO, Vattenfall
The time window for mitigating climate change is getting increasingly narrow. I think you can approach that in two ways, either you can monitor the development, try to figure out what's going to happen and adapt, or you can actually drive the change and be part of shaping something new, developing business models that are sustainable and profitable.
The solution is to think about the entire value chain and think about how we can apply existing technology in new ways, but also how we can develop new kinds of technology and innovations to boost this development. The demand will change faster than the tech. Sustainability is just good business.
At Vattenfall, we have set very clear targets We have decided that we will be in line with the 1.5-degree trajectory of the Paris agreement. That goes for our own operations, but it also means that we are putting demands on our suppliers and making sure that the offerings we're bringing to our customers match them.
Green tech is here to stay – there’s a lot of funding going into it. Not everything will succeed, of course, so it's important to understand what kind of business you want to transform and what is needed to do that. I also think it's important to be specific, to do things here and now. I have three examples at Vattenfall: We're building what will be the world's largest offshore wind farm; we are participating in the hybrid initiative regarding fossil fuel free steel; and we are building out the infrastructure for charging electric cars in Europe.
'The strength of the private sector is to bring solutions and to do so at scale'
Svein Tore Holsether, President and CEO, Yara International
Yara International works with farmers to improve their yields and help them to run farms more sustainably, more profitably and with more resilience. The strength of the private sector is to bring solutions and to do so at scale. One of our initiatives is to improve digital competence among farmers. With the introduction of technology – particularly the smartphone – agronomic competence and expertise that in the past would have been reserved for huge farms, is now accessible to smallholdings.
Through an app that we've developed, farmers have access to hyper-local weather predictions, so they know when to plant seeds or when to fertilize and when to harvest and so on. Another example is the combination of fertilizer products with digital technology to locate where they are needed most in the world in order to increase yields.
Personally, I don't really like the term hard to abate because it implies that it is something difficult. It's not difficult. A lot of the technologies are already here. But the first steps can be costly. It's therefore important that we bring scale. The additional cost to fully decarbonize value chains, is in the range of 1% to 4% to end consumers. These are very small amounts compared to the cost of not decarbonizing. In our own company, we need to make decisions now to invest in new technologies and new ways to produce, to be ready to deliver fossil-free products by 2030.