Every year, sustainability comes up at the World Economic Forum (WEF), focusing largely on low-carbon energy. But this year I sensed that like me, the other business leaders who met in Davos will go back to their companies with a renewed mission to work through how our organizations will steer towards a cleaner, more sustainable
26 February 2020, Lower Saxony, Langenhagen: Jan Schröder from Enercity connects a Renault electric … [+]
solution at scale across all industry sectors.
I have worked more than 30 years across the energy, chemicals, metals and mining and financial services industries. While I have seen, and been part, of our utilities clients successfully shifting their portfolios towards renewable generation over the last decade, I feel a huge amount of excitement that across the resources sectors, the energy transition is now a top priority. If we are to achieve 70% renewables penetration by 2050, as the IPCC says we must to avoid climate catastrophe, all sectors, all companies and all stakeholders, will need to accelerate the progress made to date in clean energy.
It was evident at Davos that business leaders now understand that the energy transition and sustainability are part of a structural macro-economic trend on the same scale or bigger than globalization or digital transformation. As with both these earlier trends, it will drive a wholesale change of our economies, and one that will play out over a decade or more.
The face of change
We already are starting to see what many of these changes will look like for energy and utilities companies. We know the power companies can increase renewable energy production significantly, and they have the supporting project-development pipelines. But we need to update the industry infrastructure to get the increased penetration of renewables well beyond 30%.
Transport companies must continue the rollout of electric vehicles and build frontier solutions for commercial transportation. And oil and gas companies must further decarbonize their processes and accelerate the integration of renewables, for example.
It is often overlooked that today nuclear power is the largest single source of zero-carbon electricity in the United States, France and UK generation ecosystems. Governments and industries must create an affordable, scalable and innovative plan to sustain and grow this part of the energy mix including the potential to drive small modular reactors and nuclear fusion, both of which would be game-changing technologies.
We also cannot forget that two-thirds of methane emissions — approximately 15% to 20% of greenhouse gas emissions — come from agriculture, municipal solid waste, and wastewater, and a significant portion can be abated by putting these waste streams to productive use as renewable gas blended into our existing gas networks. Those gas networks could also be adapted for hydrogen — produced from wind, solar, nuclear or natural gas with carbon capture and storage — to provide much needed energy storage.
The key now is to identify similar sector pathways for other industries. All businesses will need to come up with whole new innovation approaches, supply chain mechanisms, finance structures and consumer propositions. These will vary sector by sector, but it’s crucial that work starts immediately and progresses at pace.
Take the tech industry. As it expands, it demands ever more resources. This includes huge amounts of energy to power data centers — which in the United States alone currently use 2% of U.S. energy — but also vast rare-earth materials to manufacture devices. The Internet of Things revolution sounds great but we need to remember the amount of carbon that will go into producing and running the 22 billion devices expected to be active by 2025.
It’s an issue that the industry is making more progress on: Microsoft, for instance, has committed to becoming net carbon negative by 2030 – i.e. removing all the carbon the company has emitted directly or by electrical consumption since it was founded in 1975. It plans to fund this through an internal carbon levy that extends across its supply chain partners, investing the money in innovation programs to accelerate the development of carbon reduction, capture, and removal technologies.
Similar initiatives will need to be a core part of most, if not all, tech companies in the years ahead. But further systemic change// will be necessary.
Unlike previous energy transitions, today’s is demand-led. We will need residential customers and industrial and commercial customers to be willing to optimize self-generation including rooftop solar, heating solutions such as heat pumps and micro combined heat and power, and electric-vehicle charging. Ideally, consumers would even be willing to support the electricity distribution system operators in increasing the flexibility of the network. They can do this themselves or use third-party providers.
All of this means building entirely new energy production, storage and consumption propositions.
Business leaders recognize that innovation in this area is needed. According to our just released survey of more than 6,000 business and IT execs conducted in conjunction with the Accenture Technology Vision 2020, executives rank climate change, sustainable development and energy as society’s biggest challenges that technology innovation, in the form of scientific research and advances, can address.
For instance, simply building more efficient devices will only go part of the way towards making the industry more sustainable. Manufacturers will also need to consider whole new models that prioritize device longevity and material recycling over the continual product refreshes we have today.
Pervasive changes like these seem daunting. But based on my experiences at Davos and in helping serve clients in the resources industries – all of which serve every other industry – I believe that 2020 will be the year we launch a decade of delivering a more sustainable world. And with no immediate signs of cooler temperatures, it’s not a moment too soon.
