What are the biggest challenges and opportunities facing industry leaders as they plan and execute their decarbonisation strategies?
The highlights of the Reuters Events and Deloitte Global Energy Transition Trends 2022 survey reflects the responses from over 2,800 professionals across corporates of all sectors, sizes and geographies, to shine a light on the most pressing issues.
The report covers five main themes:
Delivering net zero
When looking at how industry will deliver net zero, we saw that while governments are still expected to provide leadership on net-zero targets, companies are increasingly seizing the initiative and implementing decarbonisation strategies. The increasing sense of urgency regarding emissions reduction is reflected in the survey findings, with almost 65 percent of respondents saying their organisations were highly committed to energy transition. The implication is that thousands of organisations are now planning and implementing their strategies.
Governance, society, and people
The ability to deliver on net-zero pledges is a key factor in helping companies attract the right skills and the best talent. The growing importance of a route to net-zero within corporate governance frameworks is underlined by the fact that more than 64 percent of respondents said energy transition commitments would be ‘a major factor’ in whether they would work for a company. In contrast, just over eight percent said this would be immaterial in choosing an employer. From the findings it’s clear that skills shortages are likely to become more apparent for those organisations that fail to align to the values of their prospective workforce.
Markets, finance, and investment
Who should bear the cost of a just transition to a more sustainable energy system? The research revealed broad agreement on this point, with almost 80 percent of the sample saying costs should be shared by everyone rather than being shouldered by governments, businesses, or consumers. At a corporate level, it emerged that most companies surveyed had already begun allocating financial resources towards clean energy and sustainability, with almost 31 percent having started this process more than five years ago and a further 36 percent had started investing in the last five years.
Clean technology and electrification
Technology is key to decarbonisation and electrification is viewed as the biggest near-term technology enabler for emissions reduction, but government support is still needed to electrify the industrial sector, particularly in relation to critical areas of access to grid capacity and connections. Companies face a range of challenges in pursuing an energy transition agenda, but from this survey the biggest of these appears to be technology with almost 88 percent of the sample saying technology was a high or very high priority for the transition.
The industry transition
While the transport sector is on its way to decarbonisation, there is still much uncertainty over when and how other hard-to-abate industries could achieve their net-zero emissions. Experts believe a combination of wind, solar and energy storage could help decarbonise up to 90 percent of electricity generation. For other industries it’s not so straightforward – to the extent that around a quarter of the respondents had doubts over whether the industrial sector would be able to cut emissions to zero by 2050.
Its good news that this research reveals optimism over the energy, industrial and associated business sectors’ ability to cut net emissions to zero by 2050, although uncertainty remains over some pathways and timescales. The trend towards a low carbon future has clearly been set and leaders must now harness this momentum and deliver at speed.