How to deliver on climate pledges? Look at these industries transitioning to net zero
“We don’t believe you (...) but I am here to say, prove us wrong.”?These were the words spoken by the Ugandan climate justice activist Vanessa Nakate on the penultimate day of COP26. While many applauded a wave of climate action pledges made by industry leaders, financial institutions and governments during the negotiations in Glasgow, Nakate voiced the frustration of a growing number of people who have become sceptical about the ability or willingness of those making pledges to implement them.
Two important developments at COP26 could significantly contribute to this decade of delivery. Firstly, the public-private nature of the meeting and the involvement of an unprecedented number of industry leaders, many of whom committed to ambitious net-zero targets and are working with their counterparts in their sectors and across the value chain to achieve 50% emissions cuts by 2030. Secondly, bringing forward the 2050 target of net zero through tangible and measurable 2030 goals, in line with the?Glasgow Breakthrough Agenda. This recognizes that the technologies that will be required to deliver major industrial emissions cuts in the 2030s and 2040s have to be commercialized and scaled in this decade.
The net zero transition: What's needed by 2030
The net zero industry transition work that the?Mission Possible Partnership?supports in the seven hard-to-abate sectors of aviation, shipping, trucking, steel, aluminium, concrete and chemicals, gives us a powerful and tangible example of where we need to be by the end of this decade if we want to stand a chance of decarbonization and keep the 1.5℃ target alive.
From ongoing sectoral analysis, we know that by 2030 we need:
As analysis continues, including in the aluminium, concrete and chemicals sectors, we’ll get an ever-improving and granular view on what key targets for this decade are.
The net zero transition: Key levers for progress
To reach these targets, both at an industry and global level, levers in five crucial areas must be considered – supply side, demand side, finance, policy-making and just transition. We will need to see coordinated movement across each of these levers:
As an example, early movers from automotive, construction and renewable energy sectors are lining up to signal demand for green steel. More than 10 companies have signed up to the Climate Group’s voluntary?SteelZero initiative, pledging to secure 100% net-zero steel by 2050 at the latest. Similarly, the?First Movers Coalition?has brought together a group of companies to collectively signal demand and work with their supply chains to scale the supply of low-carbon technologies. Taking advantage of the collective purchasing power of these companies sends a strong and credible demand signal, incentivizing the development and deployment of emerging technologies that are critical to reaching net zero in some of the hardest-to-abate sectors.
In sectors with a large number of public consumers, ambitious public procurement commitments are required to ensure that near-zero-emissions materials and products go from niche, premium products to mainstream commodities. Public and private finance will need to bridge the gap from demonstration to commercialization of large, first-of-a-kind industrial plants while large-scale markets for these products emerge. Meeting this uptick in demand for greener materials will also require large amounts of affordable, renewable-based electricity and hydrogen. Policy-makers will need to take timely and strategic decisions about the ownership and regulation of this infrastructure, where to build it and how to fund it. (See the figure above for a visualization of some of the vital interventions and factors to be considered across policy, demand, finance, policy and just transition to develop and deploy net-zero industry technologies.)
Coordination is needed within individual countries and internationally as industrial sectors operate across national borders. Changes in procurement policies, subsidy mechanisms for cleaner production and tighter regulation all have implications for international competitiveness. Strong public-private international coordination will be required to ensure a level playing field that can expedite the race to net zero and reward first movers. Rather than prioritizing short-term profits and short-lived competitive advantages (often with negative externalities for nature and human health), this coordination should be underpinned by the principles of?stakeholder capitalism.
The net zero transition: Taking action
To develop and scale pre-commercial technologies by 2030, all domains need to be engaged but not all actors across all domains need to move at the same time. Our best bet is to get a critical mass of leading stakeholders in these domains working together to reach the tipping points that will get us to net-zero by mid-century. What makes this mission possible is that a critical mass of first movers can, with the right orchestration, get this process started.
The Davos Agenda 2022 virtual event?is a crucial moment in time to help industry leaders and public actors understand that it will require truly stakeholder-driven, public-private collaboration and choreography, not just across value chains, but with the finance sector and governments. Turning the industrial commitments made in Glasgow into the type of action that will deliver these tangible outcomes is now critical if we are to prove Vanessa Nakate and those who feel the same way wrong. We hope this event will not just be an important milestone on this journey but also a launchpad for this type of action.
This blog was first published on the World Economic Forum web site on the 17th January 2022 and co-authored with Johanna Lehne, E3G and Rob Van Riet, World Economic Forum.