$13,5 Trillion for Clean Power, Clean Hydrogen and CCUS Needed to Help Transition Key Hard to Abate Industries to Net Zero, World Economic Forum Report Finds – Accenture.
The decarbonization of eight production, energy and transport sectors requires an investment of $13.51 between now and 2050 in clean power, clean hydrogen, and infrastructure for carbon capture utilization and storage (CCUS), according to the World Economic Forum’s Net Zero Industry Tracker 2023 Report.
The second edition of this report, produced in collaboration with Accenture, takes stock of progress towards net zero emissions for eight industries: steel, cement, aluminum, ammonia, excluding other chemicals, oil and gas, aviation, shipping and trucking. They depend on fossil fuels for 90% of their energy demand and pose some of the most technological and capital-intensive decarbonization challenges, with transparency lacking on their emissions, targets and transformation pathways.
Roberto Bocca, Head of Energy, Materials and Infrastructure, World Economic Forum, said:
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Decarbonizing these industrial and transport sectors, which emit 40% of global greenhouse gas emissions today, is essential to achieving net zero, especially as demand for industrial products and transport services will continue to be strong.
“Significant infrastructure investments are required, complemented by policies and stronger incentives so industries can switch to low-emission technologies, while ensuring access to affordable and reliable resources critical for economic growth.”
To address these issues, the Net Zero Industry Tracker proposes a comprehensive framework of emissions drivers and enablers to provide a measure of progress and gaps, scorecards for each industry, and opportunities for cross-sector collaboration. Building on the 2022 edition, the updated report includes transportation sectors and applies the framework to identify strategies for net-zero industrial transformation.
Its findings underscore the urgency for creating a robust enabling environment, including low-emissions technologies, infrastructure, demand for green products, policies and investments. Besides increasing capital expenditures to decarbonize existing industrial and transport asset bases, further investment is needed to build the clean-energy infrastructure.
According to the report, carbon pricing, tax subsidies, public procurement and development of strong business cases can support in mobilizing necessary investments. But raising capital for high-risk projects with unproven technologies could be challenging in the current macroeconomic environment. Institutional investors and multilateral banks; however, can play an important role by providing access to low-cost capital linked to emissions targets, and equally vital is adapting financial models to the needs of various industries and regions.
Espen Mehlum, Head of Energy Transition Intelligence and Regional Acceleration, World Economic Forum, said:
It is imperative that action is taken soon to both decarbonize and improve energy efficiency; otherwise, unabated fossil-fuel demand in the key industry sectors, which have grown 8% on average the past three years, will increase very significantly by 2050.
“But industrial leaders can respond through new collaborative ways of working and innovating, for example within industrial clusters and by fostering best practices, sharing infrastructure in important areas like clean hydrogen and CCUS and building demand for lower-emissions products.”
The majority of the technologies needed to deliver net zero emissions are expected to reach commercial maturity after 2030, highlighting the need for collaborative approaches to research, develop, and demonstrate and scale them. This includes substituting legacy technologies with low-emission alternatives, increasing efficiency of processes and machinery, electrification, and driving circularity.
Muqsit Ashraf, who leads Accenture Strategy, said:
Collaboration between the public and private sectors is critical to a successful energy transition, and technology can be a key enabler in both managing affordable and reliable access to clean energy and addressing the incremental cost of decarbonization.
“Widespread scaling and adoption of clean power, carbon capture and storage, and energy efficiency technologies across sectors are vital for progress. Additionally, business model innovations can also help stimulate demand and accelerate industrial decarbonization—achieving net zero objectives and a resilient energy transition.”
The report acknowledges that recent policy developments can nudge the industrial net-zero transformation in the right direction. While some advanced economies are enacting large-scale policy measures, emerging economies that will account for a larger share of future demand for industrial products and transport services, will need help accessing low-emission technologies and solutions.
The report also calls for industrial sectors to focus on the following five areas, and details specific actions for each of the sectors as part of its individual scorecard:
- Technology – Prioritize clean power technology across most sectors, commercially scale CCUS in cement, and improve technology to reduce costs for clean hydrogen development.
- Infrastructure – Promote shared infrastructure, such as industrial hubs and clusters.
- Demand – Create a standardized framework for low-emissions products, a simple emissions-intensity calculator and an auditable carbon-footprint assessment process, improving consumer transparency.
- Policy – Align on emissions reduction requirements globally, with policies customized to suit individual country needs and enhance market transparency to increase emission intensity visibility.
- Capital – Improve transparency for low-emissions and low-carbon alternatives, strengthen demand signals and reduce capital expenditures through shared infrastructure development.
Stephanie Jamison, global resources industry practice lead and sustainability services lead at Accenture, said:
The Net Zero Industry Tracker 2023 report’s insights explore in detail how low-carbon solutions and infrastructure will contribute to increasing the pace of decarbonization in hard-to-abate industries.
“This depth is essential to help companies create sustainable value and impact as they strive to achieve net zero carbon emissions.”
1The $13.5 trillion is derived from average clean power generation costs (solar, offshore wind, onshore wind, nuclear, geothermal), electrolyzer costs for clean hydrogen and carbon transport and storage costs.
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$13,5 Trillion for Clean Power, Clean Hydrogen and CCUS Needed to Help Transition Key Hard to Abate Industries to Net Zero, World Economic Forum Report Finds – Accenture. source
