Forum Institutional

Why cross-sector collaboration may succeed where policy cannot

The private sector has a special responsibility when it comes to achieving net zero goals - and driving new collaboration.

The private sector has a special responsibility when it comes to achieving net zero goals - and driving new collaboration. Image: Vestas

Henrik Andersen
Chief Executive Officer of Vestas Wind Systems A/S and Chair, Electricity Industry Action Group
Martin Lundstedt
CEO and President, Volvo Group
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This article is part of: World Economic Forum Annual Meeting

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  • Supportive policies are critical in decarbonization, and must keep pace with industry, but the private sector is the key driver of the necessary machinery to achieve net zero.
  • Permitting delays should be removed and collaboration between hard-to-abate sectors, like transportation, needs to be strengthened.
  • Through collaboration, we can harness green hydrogen and wind energy infrastructure to decarbonize transportation.

There is no single road that leads to a carbon-neutral future. More often than not, the global dialogue around decarbonization centres around policy – mostly climate policy, energy policy and, as we learned in 2022, security policy. Recent debates on climate breakdown lament COP27 for failing to deliver more ambitious climate pledges. Pledges are not translating into plans quickly enough, and those we do have are not translating into enough zero-carbon energy projects.

Supportive policy is critical in the journey to cut global carbon emissions. In the energy transition, the mission to scale-up renewable energy is often thwarted by permitting delays. In Europe, for example, there is four times more renewable capacity caught in process permissions than under construction. The only way to solve the issue is through more attention from policymakers.

Decarbonisation, however, is a game of scale, and supportive policy is not the whole story. Many of the technologies needed to solve the carbon challenge already exist, and, like the proposed wind projects still tangled in red tape, many are waiting to develop into an economy of scale.

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The private sector drives the machinery of decarbonisation. Think combustion engines, transport networks, and production facilities – all components most directly commanded by the private sector and the primary spaces where climate pledges are met. Thus, building a scalable environment for sustainable technologies therefore calls for more collaboration across sectors. While a greener future has quickly become a unifying destination for both public and private spheres alike, many roads are yet to be explored.

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How is the World Economic Forum fighting the climate crisis?

From brown to green transport

As the industrial sector with the highest reliance on fossil fuels, transport is undergoing a significant transformative journey. Beyond the obvious technological shift from diesel-powered vehicles to electric transport solutions, there’s also the question of shifting behaviours, building competencies, reforming operations and even changing mindsets – all parallel tracks that must accelerate at equal speed.

Hard-to-abate sectors like transport are a critical frontier in the journey towards decarbonisation. They are a challenge to be solved on two fronts. Firstly, we need to scale up renewable energy capacity by removing permitting delays and strengthening the political will. Secondly, we need close collaborations between hard-to-abate sectors and renewable technology providers.

Decarbonisation is a game of scale, and supportive policy is not the whole story.

Commanding one of the largest transportation footprints in the world, Volvo Group is tackling this challenge head-on with ambitious climate targets (like achieving carbon neutrality by 2040) and an even more ambitious executional approach. The manufacturer of trucks, buses, and marine and construction solutions identified early on that building a more sustainable future for all these transport segments couldn’t be reached quickly enough by working in isolation.

Electric trucks, like those manufactured by Volvo, aren't possible without new collaborations and partnerships.
Electric trucks, like those manufactured by Volvo, aren't possible without new collaborations and partnerships. Image: Volvo

At its core, Volvo Group’s transition relies on technologies like battery electric vehicles (EVs), fuel-cell EVs and biofuels - all of which are power sources that require access to green electricity and renewable infrastructure to be truly sustainable. Building the solutions was a critical first step but securing more environmentally responsible power sources for these solutions to be quickly brought to market would require radical thinking. It was a journey that would progress slowly in isolation but could accelerate significantly with help from beyond the borders of its own business.

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How is the World Economic Forum promoting sustainable and inclusive mobility systems?

Building inroads across sectors

Riding the tailwinds of public support and accelerating innovation, wind energy has grown from a niche, heavily-subsidised alternative energy source to one of the most viable answers to the question of fossil fuel volatility. Having spearheaded a rapidly maturing economy of scale, Vestas presented an opportunity for Volvo Group to carve out new territory for its decarbonisation journey. By collaborating on hydrogen filling stations and access to green electricity for production facilities, with an open agreement to explore further, the partnership shows the benefits of green hydrogen and wind energy infrastructure.

Perhaps more important than sharing expertise, access to technology, or diffusing risk, the partnership accelerates the scale-up of nascent sustainable technologies. Vestas lends its insight, Volvo Group its footprint, and suddenly there forms a sandbox that matures innovation at a rate that would be difficult to surpass with policy frameworks. And while innovation can often fall to the wayside in periods of volatility, the union demonstrates the value of leadership in a challenging business environment.

Such innovation is the first step towards an even faster decarbonisation pathway: business growth. With many transport customers working towards their own carbon-neutral goals, a strong sustainability offering is no longer a niche option but a purchasing requirement. And as demand for green electricity grows across the private sector, wind energy has become the most cost-competitive technology to meet this demand. With the era of subsidies now firmly behind us, policymakers can support this growth mechanism by removing permitting bottlenecks as fast as possible.

If we are to limit carbon emissions in line with the Paris Agreement, and revive 1.5 degrees from its terminal state, the private sector must grow to become the engine of decarbonisation - an engine powered of course, by green electrons. And while a drastic scale-up of wind energy is critical to this journey, what’s missing most urgently is the fuse to light it all: permitting. Where policymakers can unblock the road to green energy abundance, cross-sector collaboration can harness its potential and bring us closer to a future where the industry can thrive without a carbon footprint.

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