Decarbonization – A Global Initiative

Decarbonization is emerging as a key strategy the world over as nations and countries look to limit carbon emission and address climate change. While developed countries are leading the way, emerging economies too are focusing on establishing the requisite infrastructure for developing sustainable processes and techniques. Major organizations globally have also taken up the cudgels to build a sustainable environment by targeting net zero emissions in the medium to long term. Will this suffice to achieve the objective set by the Paris Agreement?

Over the last few years, the adverse impact of climate change has increased in intensity and number globally. Rising temperatures, forest fires and other natural disasters have forced leaders worldwide to take a note of the rising pollution levels. Under the Paris Agreement of 2015, many countries committed to net zero emission between 2030 and 2050. However, to achieve this, sectors need to decarbonize, implying implementation of the decarbonization strategy by governments and the corporate sector.

Decarbonization essentially refers to the elimination or curtailment of carbon emissions to reach net zero. It also includes replacing traditional fossil fuels with alternative and renewable energy sources such as solar and wind power.

Decarbonization by countries

While developed countries may be leading the race to decarbonize, several emerging economies too are implementing ‘green solutions’ to reach net zero emission.

The UK government has set the target to decarbonize its power sector by 2035. To this end, the country is working towards generating electricity from low carbon hydrogen and phasing out fossil fuels from vehicles and home heating as well as from various industries. The government is implementing low-carbon measures, such as switching to offshore wind, pursuing carbon capture, producing low-carbon hydrogen, promoting electric cars, increasing energy efficiency, installing heat pumps, and planting trees in phases.

The US is transitioning to clean energy by promoting solar and wind technologies, prioritizing clean fuels, cutting down the wastage of energy, and reducing methane and other non-CO2 emissions.

At the COP26 Climate Change Conference, India, as part of its efforts to make a positive impact, committed to increase its non-fossil fuel energy capacity to 500 GW. The country will take steps to meet 50% of its energy requirements from renewable energy. It also aims to cut down carbon emissions by one billion tons, bringing down the country’s carbon intensity below 45%, by 2030.

Brazil, in line with its ambitious net-zero target, is taking steps to prevent deforestation and further degradation of land by 2030.

Developed versus emerging economies

While the road to energy transition is more or less the same for both developed and emerging economies, in terms of application of technologies and adoption of renewable energy, the difference lies in the scale of progress made and the rate of change. Developed economies already have the infrastructure required, with several innovative technologies under development. Emerging economies, on the other hand, are still building up on these, a key reason being limited resources at disposal. Since emerging countries do not have the requisite resources to develop or implement the regulatory mechanism, implementation is not as effective; plus, there are loopholes in dispute resolution.

Being at a relatively advantageous position, developed economies have progressed faster in implementing green energy solutions. However, if both developed and emerging economies come together, the transition to decarbonization would be faster and more effective.

A step in this direction is the Clean Energy Ministerial’s Industrial Deep Decarbonization Initiative (IDDI) launched in June 2021. It is an international coalition of governments and companies, co-led by the UK and India. The objective is to develop low-carbon sustainable alternatives for industrial materials, such as for steel and cement, that are currently the most carbon-intensive commodities. The coalition is working to bring together least 10 countries to commit to purchasing the low-carbon substitutes of these essential materials. The other members of this initiative are Canada, Germany, and the UAE, with more countries expected to join soon.

Companies bringing about a change

Around 53 companies across sectors and countries have pledged to achieving net-zero carbon emissions by 2040. They are signatories to The Climate Pledge, an initiative to decarbonize processes.

Some of these companies are Colis Prive, ACCIONA, FREE NOW, Cranswick plc, Daabon, Generation Investment Management, and Green Britain Group.

The signatories are required to:

• Regularly measure and report their greenhouse gas emissions
• Design and implement innovative decarbonization strategies as per the Paris Agreement across processes
• Ensure neutralization of any remaining emissions in a way which is socially beneficial
• Achieve net-zero annual carbon emissions by 2040, 10 years before the 2050 deadline set by the Paris Agreement

These companies are working to develop sustainable solutions that would have impact across a broad spectrum.

For example, Colis Prive, a last mile delivery firm, has implemented ISO 50001 energy standards that would contribute to building a sustainable energy management system.

Another well-known brand Cranswick plc, one of the largest food producers, has switched to 100% renewable grid-supplied electricity, removed tonnes of plastic from its operations, and reduced edible food waste down to 0.4% of total production.

US-based company Duke Energy added renewable energy sources such as 4 GW of solar power and replaced coal units with natural gas units. This helped it to reduce its carbon emissions by 31% since 2005.

Travel company FREE NOW, which provides logistics solutions, is committed to make 50% of its vehicles across Europe emission-free by 2025. It plans to achieve this by investing in electric vehicles.

Other companies incorporating sustainability in their corporate strategies are Unilever, which has aligned its core business with sustainability; Finland’s Neste, which has become the world’s biggest producer of renewable diesel; and Denmark’s Ørsted, which used the carbon challenge to build the offshore wind market.

Outlook

A zero-carbon future could be the answer to the looming threat from climate change. However, to transition to a carbon-free economy, governments and the corporate sector need to work hand in hand. Favorable policy frameworks can go a long way in supporting this initiative. Companies, on the other hand, will do well to strategize prudently based on thorough due diligence (covering processes as well as availability of low-cost electricity, biomass, hydrogen, and carbon-storage capacity) and ensure effective implementation. Collaboration for investing or research is a good way forward. It is time we woke up to the reality and faced it head-on.