New net-zero tracker gives heavy industries a platform to catch up on climate goals
The World Economic Forum released a first edition of a report on the state of the net-zero transition in key industrial sectors, the Net-Zero Industry Tracker 2022. The report highlights the need to fully understand the scope and scale of the challenge for these sectors and identifies a significant gap versus the pace of decarbonization necessary to achieve net-zero goals to limit global warming to 1.5C by 2050. The urgency for industrial decarbonization is reinforced by high energy prices and energy supply chain disruptions.
This initiative, launched by the World Economic Forum in collaboration with Accenture, establishes a common, fact-based understanding of the industrial sector’s net-zero transformation enabling cross-industry and multistakeholder collaboration. The report introduces a holistic framework for a 360-degree perspective and standard metrics needed to measure progress, as well as key recommendations for industrial firms, policymakers, consumers and other stakeholders.
Progress-tracking and transparency are essential to help industries determine the trajectory of their decarbonization, maintain steady progress, and inform necessary course corrections along the way.
“While there are efforts under way and climate commitments being made, we currently lack a robust and comprehensive mechanism to understand the pace and direction of the progress of transformation of heavy industries, which account for 30% of global greenhouse gas emissions,” said Roberto Bocca, head of Energy, Materials and Infrastructure, World Economic Forum. “Several industrial sectors and individual companies have set up targets with the aim of reaching net zero emissions. We believe that bringing transparency to closing net-zero gaps and reporting on this progress is critical to achieve these ambitious goals.”
The report provides qualitative and quantitative measures to track the evolution of key enabling dimensions such as maturity of technology, access to enabling infrastructure, supporting policy frameworks, demand for low-emission products and availability of capital for investments in low-emission assets. It assesses the state of these enablers, which need to advance simultaneously, and highlights sector-specific accelerators and priorities in five heavy industries – steel, cement, aluminium, ammonia, and oil and gas, which together generate 80% of industrial emissions, according to Accenture analysis.
Given the cross-sector nature of barriers and priorities for industrial net-zero transformation, innovative forms of partnership within and across sectors, and with other stakeholders, will be fundamental to addressing the challenge. Other measures include consensus on defining “low-emission” industrial products and processes, robust and stable green demand signals, and risk-sharing mechanisms to attract necessary capital in technology and infrastructure development.
The report points out that over $2 trillion will be required to make low-emission industries a reality and that the first full-scale commercial projects still hold significant risks for companies to invest in.
Espen Mehlum, head of Energy, Materials and Infrastructure Programs for Benchmarking, World Economic Forum, said: “Investments in low-emission assets are riskier for companies due to their dependencies on new technologies and infrastructure. Collaboration will be at the heart of making the enablers of policy, fuel demand, technology, capital and infrastructure all pull in the same direction to accelerate progress towards climate goals.”
Muqsit Ashraf, a senior managing director and global Energy industry lead, Accenture, said: “Accelerating the transformation of industries, and in particular hard-to-abate industries such as cement and steel, is critical to realize net-zero ambitions. In addition, in today’s high energy and material prices environment, reducing the energy intensity of industries will also become a source of competitive advantage. Along with innovation, regulation and investments, the Net-Zero Industry Tracker will become an essential tool by bringing transparency to the decarbonization and energy efficiency journey.”
The report underlines that concerted efforts also should include policy-makers, financial institutions and consumers.
“Companies are at a sustainability inflection point, where embedding sustainability by design deep into their enterprises is no longer an option,” said Kathleen O’Reilly, global lead, Accenture Strategy. “To lead in this moment, companies must focus on multi-stakeholder collaborations — for example, helping customers reshape demand, teaming with industry peers to bring technology costs down and developing shared infrastructures and working with policy-makers on regulations to create differentiated markets for low-emission products.”