Breakneck Race to Net Zero
Introduction
The negative effects of climate change have worryingly increased in magnitude and frequency in recent years and by witnessing the destructive power of these phenomena, we finally realize the severity of the impact of human activity on the health and balance of our planet.
Since the 1980s, global warming has been one of environmentalists’ main concerns, but despite the stark warnings by scientists and activists of the accelerating speed of climate change, Governments, Businesses and the Civil Society as a whole have been slow to fully acknowledge the gravity of the problem and take timely and adequate action.
We are now facing a last resort scenario and, whatever action we take, it might be too late to stop or reverse the damage already done.
“There’s no going back from some changes in the climate system…"
"Many changes due to past and future greenhouse gas emissions are irreversible for centuries to millennia, especially changes in the ocean, ice sheets and global sea level."
In November the UK will host in Glasgow COP26 (26th Conference of the Parties), the 2021 edition of the United Nations Annual Climate Change Conference an “event many believe to be the world’s last best chance to get runaway climate change under control.”
The climate challenge is so big and complex and the time at our disposal is so limited that only a collective, cooperative global response can generate meaningful results.
Understanding Climate Change
When we talk about climate change, we refer to the effects of global warming caused by greenhouse gas emissions in the atmosphere.
Greenhouse gases are heat-trapping pollutants — specifically carbon dioxide, methane, nitrous oxide, water vapor, and synthetic fluorinated gases. They absorb sunlight and solar radiation that have bounced off the earth’s surface.
Normally this radiation would escape into space, but these pollutants, which can last for years to centuries in the atmosphere, trap the heat and cause the planet to get hotter.
Our planet is getting hotter at an accelerated rate.
Nine of the 10 warmest years on record have occurred since 2005 and the 5 warmest years have all occurred since 2015.
According to the National Oceanic and Atmospheric Administration (NOAA), global temperatures in July 2021 were higher than any other July on record — making it likely the hottest month the world has seen since records began in 1880.
The main sources of pollution are directly attributable to human activity and specifically to our burning of fossil fuels such as coal, oil, gasoline, and natural gas, which results in the greenhouse effect.
Climate change has not only environmental impacts but also adverse economic and social consequences such as displaced people, poverty, loss of life and livelihood, hunger, malnutrition, increased risk of diseases, global food and water shortages.
The Biggest Emitters - Countries and Sectors
Most emissions come from just a few Countries. The top three greenhouse gas emitters — China, the EU and the United States — contribute 41.5% of total global emissions, while the bottom 100 Countries account for only 3.6%. Collectively, the top 10 emitters account for over two-thirds of global greenhouse gas emissions.
"The World’s top three emitters contribute 16 times the greenhouse gas emissions of the bottom 100."
Climate change is a problem created by the richest and most industrialized economies.
The world cannot successfully fight climate change without significant action from the top 10 emitters.
Paradoxically, the Countries and communities most affected by the negative effects of climate change are often those who have contributed the least to it.
When it comes to Sectors, the Energy Sector remains by far the largest contributor to greenhouse gas emissions, representing 73% of global emissions, with Electricity and Heat generation accounting for 30.4% and Transportation accounting for 15.9% of the total. The other polluting Sectors are Industrial Processes, Agriculture, Land Use Change and Forestry, Waste.
"The Energy Sector is the biggest greenhouse gas emitter, but action in every Sector counts."
The Net Zero Pledge - Paris Agreement and COP26 Glasgow
Preventing 'dangerous' human interference with the climate system is the ultimate aim of the United Nations Framework Convention on Climate Change (UNFCCC).
The UNFCCC entered into force on 21 March 1994. Today, it has near-universal membership. The 197 Countries that have ratified the Convention are called Parties to the Convention.
For nearly three decades the UN has been bringing together almost every Country on
earth for Global Climate Summits - called COPs - which stands for Conference of the
Parties.
The Paris Agreement, was signed during COP21 held in Paris in 2015.
The significance of the Paris Agreement lies in the fact that, for the first time ever, almost every Country around the world entered into a legally binding commitment to reduce global warming and build resilience to climate change.
The Agreement overall goal was to limit warming to no more than 1.5 degrees Celsius and reduce carbon emissions to net zero by 2050.
Reaching ‘net zero’ or ‘carbon neutrality’ means we should be producing less carbon emissions than we take out of the atmosphere.
To keep warming to 1.5 degrees Celsius, by 2030 Countries must cut emissions by at least 45% compared to 2010 levels.
In the lead-up to the COP26 climate talks this November in Glasgow, Countries have begun revising their NDCs (National Plans for Emissions Reduction or Nationally Determined Contributions) to strengthen climate action.
Sources: * Energy and Climate Intelligence Unit ** UNFCCC
With science affirming a shrinking window of opportunity, the plans must include urgent actions to cut carbon emissions and reach net zero by 2050.
The Last Warning - Emergency on Planet Earth
The Intergovernmental Panel on Climate Change (IPCC), the United Nations body for assessing the science related to climate change has released in August 2021 its Sixth Assessment Report a dramatic eye opener on the current status of our planet and the impact of human activity on it.
"It is unequivocal that human influence has warmed the atmosphere, ocean and land. Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred."
"Recent changes in the climate are widespread, rapid, and intensifying, and unprecedented in thousands of years."
"Human-induced climate change is already affecting many weather and climate extremes in every region across the globe. Evidence of observed changes in extremes such as heatwaves, heavy precipitation, droughts, and tropical cyclones, and, in particular, their attribution to human influence, has strengthened..."
“Unless there are immediate, rapid, and large-scale reductions in greenhouse gas emissions, limiting warming to 1.5°C will be beyond reach."
Taking Urgent Action
A renewed and pressing sense of urgency is now driving the global agenda and climate change has finally gone from being a fringe issue to a global priority.
Literally 'saving the world' is no easy feat and will require an ecosystem approach where Governments, Financial Institutions, Businesses and the Civil Society come together to tackle this global issue.
Technology and Innovation, Policy and Regulations, Investment, Responsible Consumption and Lifestyles, are key factors to enable a successful transition to a greener future.
Technology and Innovation - The Road to Decarbonization
At the core of the green transition stands an unprecedented technological and innovation effort towards Decarbonization, the process of reducing or removing the carbon dioxide (CO2) output of a Country’s economy.
When it comes to reducing the carbon dioxide (CO2) output, one of the main approaches is to transition the energy required to run high emitting sectors such as manufacturing, construction, transportation, utilities, from fossil fuels to renewable energy.
Decarbonization has seen the greatest progress to date in electricity generation because of the increasing availability of renewable sources of power, such as wind and solar.
In 2020 renewable energy sources provided more electricity than coal for the very first time in US history.
The recent introduction in several Countries of Government policies supporting the electrification of transportation, is significantly accelerating the transition from petrol and diesel vehicles to EVs and the introduction of new means of transportation such as e-scooters and eVTOL aircrafts.
Meanwhile most industrial manufacturers are moving towards the electrification of industrial fleets, processes, and spaces, in line with the broader energy transition taking place across the economy.
Another approach to decarbonization by reduction is based on increasing operational energy efficiency.
Several energy management solutions, both active and passive, have been introduced in recent years, such as smart meters to monitor and balance energy consumption, improved insulation of commercial and residential buildings and the automation of lighting, heating, and ventilation.
At the same time, IoT based solutions are being introduced to create connected and 'intelligent' buildings that can efficiently self-regulate the energy consumption.
Other innovations such as combining solar with local energy storage (batteries) allowing homes to generate and share their own power, can also lead to higher rates of decarbonization.
As mentioned previously, decarbonization can also be pursued be removing carbon dioxide (CO2) from the atmosphere, naturally or through technology.
Natural carbon capture can be achieved by creating new or using exiting carbon sinks.
A carbon sink is a reservoir that accumulates and stores some carbon-containing chemical compound for an indefinite period and thereby lowers the concentration of carbon dioxide in the atmosphere.
Globally, the two most important carbon sinks are vegetation and the ocean. In this context it is evident why the preservation and restoration of our natural resources is so important to maintain our planet’s balance.
There are currently several carbon capture technologies available and in development. To understand how they work it's worth mentioning technologies such as Direct Air Capture (DAC) and Carbon Capture, Utilisation and Storage (CCUS).
The science of Direct Air Capture is straightforward. There are several ways to do it.
The Canadian Company Carbon Engineering, for example, uses fans to draw air containing 0.04% CO2 (today's atmospheric levels) across a filter drenched in potassium hydroxide solution – a caustic chemical commonly known as potash, used in soapmaking and various other applications. The potash absorbs CO2 from the air, after which the liquid is piped to a second chamber and mixed with calcium hydroxide (builder's lime). The lime seizes hold of the dissolved CO2, producing small flakes of limestone. These limestone flakes are sieved off and heated in a third chamber, called a calciner, until they decompose, giving off pure CO2, which is captured and stored. At each stage, the leftover chemical residues are recycled back in the process, forming a closed reaction that repeats endlessly with no waste materials.
Carbon Capture, Utilisation and Storage (CCUS) refers to a suite of technologies that can play an important and diverse role in meeting global energy and climate goals.
CCUS involves the capture of CO2 from large point sources, including power generation or industrial facilities that use either fossil fuels or biomass for fuel. The CO2 can also be captured directly from the atmosphere. If not being used on-site, the captured CO2 is compressed and transported by pipeline, ship, rail or truck to be used in a range of applications, or injected into deep geological formations (including depleted oil and gas reservoirs or saline formations) which trap the CO2 for permanent storage.
Cooperation, Diversification, Convergence
“To thrive through the energy transition, forthcoming regulatory changes, and green energy adoption, old rivalries must give way to new ecosystem partnerships. In the new energy future, collaboration will dictate competitive advantage.”
Decarbonization is not a simple process and the technology and innovations necessary to achieve the net zero goal by 2050 will require substantial investments and a joint, cooperative effort from all key players.
The green transition has shaken the foundations of our industrial and economic systems and has initiated a fundamental transformation of Industries and Sectors.
On one hand we are witnessing the birth of innovative Start-Ups and the proliferation of vibrant ecosystems focused on the development of green, low-carbon, environmentally friendly products and solutions.
Companies like Tesla and Rivian in the EVs sector, for example, in just a few years have captured the hearts and imagination of millions of consumers and accelerated the transition to a greener future by showing that 'change is achievable' through technology.
On the other hand, Big Corporations operating in high emitting sectors such as energy, are working hard to gradually convert their businesses to low-carbon energy consumption and operations, and at the same time are actively pursuing diversification strategies by entering the green tech space through acquisitions and partnerships.
Notable recent acquisitions are Shell acquiring ubitricity, a leading European provider of on-street charging for EVs and EDF acquiring Pod Point, one of the UK’s largest EV charging Companies.
In an opinion piece, energy giant E.ON states, “We need to replace our old 'make-or-buy' thinking – where we choose between producing internally or buying externally – to one where 'collaboration' is a viable third choice... We’re getting very good at creating eco-systems. We’re building a community of partners – each bringing different capabilities and technologies in areas like connectivity, energy, mobility, banking, sustainability and urbanisation."
We are effectively witnessing a momentous shake-up, and the consequent 'convergence', of Industries and Sectors.
In April 2021, Amazon, the e-commerce powerhouse, has become the largest corporate buyer of renewable energy globally, after announcing nine new utility-scale wind and solar energy projects in North America and Europe, while in August 2021 IKEA, the world's biggest furniture brand, has announced that it is branching out into selling renewable energy to households, starting with home market Sweden.
Policy and Regulations
Governments and legislators cover a fundamental role as enablers of the green transition. They must regulate, educate, remove friction, provide tools and resources in order to facilitate and encourage the development of a thriving green economy.
Green policies and incentives, plus the development of adequate infrastructure, are essential to support Businesses, fuel innovation and instigate behavioural changes in the Civil Society towards responsible and sustainable lifestyles.
As an example, several Governments have recently announced plans to ban new fossil fuel vehicles in the next few years. In Norway sales of new fossil fuel vehicles will be banned from 2025 while in UK, Germany, Ireland and the Netherlands from 2030. In California the ban will be effective from 2035.
The immediate impact of these policies, coupled with incentives for zero- and low-emissions vehicles, can be seen, for example, in the staggering acceleration of electric cars adoption in Europe in 2020.
Amongst the incentives, fiscal packages to support recovery from the COVID-19 pandemic present a unique opportunity to invest in the transition to a low-carbon economy.
Governments can also help mobilize capital from the private sector by improving investment frameworks, helping create pipelines of bankable projects, and using international public financing effectively.
Green Investment
To achieve the climate goals by 2050, every Company, every Financial Firm, every Bank, Insurer and Investor will need to change strategy, focus and approach.
The scale and speed of the changes needed will require all forms of finance. Public finance for the development of infrastructure to transition to a greener and more climate-resilient economy and private finance to fund technology and innovation, and to help turn the billions of public money into trillions of total climate investment.
Green investment is crucial to enable the transition to a low-carbon economy.
We cannot underestimate the fact that radically transforming our energy system will require large investments to be scaled up to finance the shift from fossil fuels to renewables as well as for smart electricity networks, energy efficiency measures, and electrification in sectors like transportation, construction, and manufacturing.
In many sectors, while reducing emissions comes with a higher upfront investment associated with building new infrastructure, it brings a lower recurrent cost due to a reduction in fuel consumption. Investments to improve energy efficiency follow a similar path.
As a result, the investment is hump-shaped, with an increase in the next 20 years and a decrease to recent historical levels after that.
An estimated additional $6 to $10 trillion in global investments, both public and private, are needed in the next decade to mitigate climate change. This amounts to a cumulative 6-10% of annual global GDP.
According to International Energy Agency data, about 30% of additional investment, on average globally, is expected to come from public sources — that is a cumulative 2-3% of annual GDP for the decade 2021 to 2030. The remaining 70% would be private.
Developing Countries, in particular, will need financial support. Wealthier, industrialized Countries are responsible for most greenhouse gas emissions. As a consequence, it has been argued that it's these Countries that are morally responsible to pay for a lion's share of the cost of climate mitigation worldwide, including costs of the transition of less developed and least developed Countries.
Despite the creation of a Green Climate Fund during COP16 in 2010, in Cancun, and the goal of raising $100 billion a year by 2020, to date, the developed Countries have contributed only a fraction of what was committed.
The Role of Civil Society
The role of Civil Society in the achievement of a greener future is of fundamental importance. Only the commitment of each and every individual towards more sustainable and environmentally conscious lifestyles can help achieve the Paris Agreement goals.
Citizens, NGOs, activists, scientists, environmentalists can all contribute to raise awareness, educate, and evangelize environmentally friendly behaviours. They hold the collective power to influence Governments and Business Leaders and to drive change towards a sustainable and circular economy.
It's our responsibility as a Society to be aware of, and intimately understand, climate change and on the base of this knowledge make conscious decisions, small and big, day after day, to dramatically reduce the negative impact of human activity on our planet.
Responsible Consumption and Production is the 12th Sustainable Development Goal (SDG) and its aim is to “use and produce in sustainable ways that will reverse the harm that we have inflicted on the planet.”
From the food we eat, to the clothes we wear, to the energy we consume, to the means of transportation we use, to the way we dispose of our waste, we have hundreds of opportunities to make environmentally conscious choices and add our contribution to tackling one of the biggest challenges we will probably ever face.
Conclusion
Climate Change is real and is happening in front of our eyes.
We have neglected the issue for too long and now we are running out of time.
The challenge is global, vast and complex.
Only an urgent, collective response, involving decisive action from us all, can stop, repair and hopefully reverse the damage we have done to our planet.
Today we live in a world where we have ample access to the talent, the technology and the capital needed to tackle even the biggest challenges and realize the wildest dreams.
So, it is time to stop talking and start doing.
Tackling Climate Change is not about activism, political propaganda, temporary trends or PR stunts. Tackling Climate Change, is about doing 'the right thing'.
At HAUS of VENTURES we are passionate about Innovation and Technology that solve fundamental issues such as Climate Change, and want to play our part in this global challenge. We understand the Innovation and Technologies needed to reduce emissions and to enable more efficient energy management and we actively work with Start-Ups, Corporates and Institutions to build a greener, fairer and more sustainable future.
Sources
- Aboutamazon.com - Amazon has become the largest corporate buyer of renewable energy.
- Accenture.com - Collaborate in ecosystems to win in the new energy future.
- BBC.com - The device that reverses CO2 emissions.
- Deloitte - Electrification in industrials.
- Drax.com - What is decarbonisation?
- Edfenergy.com - EDF acquires Pod Point.
- Globalgiving.org - How Much Would It Cost To End Climate Change?
- Globalgoals.org - 12 – Responsible Consumption and Production.
- IEA.org - Carbon Capture, Utilisation and Storage.
- IEA.org - Global EV Outlook 2020.
- IMF Blog - Reaching Net Zero Emissions.
- IPCC - Sixth Assessment Report.
- ncdc.NOAA.org - Global Climate Report - July 2021.
- NRDC.org - Global Warming 101.
- Reuters.com - IKEA starts selling renewable energy.
- Shell.co.uk - Shell Agrees to Buy ubitricity.
- The Guardian - Earth’s tipping points could be closer than we think.
- UN.org - Climate Action. Net Zero Coalition.
- Wikipedia.org - Carbon sink.
- Wikipedia.org - Environmentalism.
- Wikipedia.org - Green Climate Fund.
- World Resources Institute - World's Top 10 Emitters.
About HAUS of VENTURES
HAUS of VENTURES is a global, full-service, Strategic Innovation and Venture Development Company that provides services in areas of critical importance such as Innovation and Technology Consulting, Business Strategy, Product/Service/Proposition Design and Development, Digital and Business Transformation, E-commerce, Digital Marketing, Customer Experience, Brand and Marketing Strategy, Organizational Design, Change Management. HAUS of VENTURES supports Organizations at all stages of growth, from Start-Up to Enterprise, and covers all Industries, from Technology to Consumer, from Digital to Luxury, from Entertainment to Life Sciences. Headquartered in London, HAUS of VENTURES operates globally through an extensive and reputable international network. For more information please visit www.hausofventures.com.