The journey to Net Zero 2050 is certainly carrying a full cabin of energy and industrial sector believers along the way, but the way forward is less certain than the destination.
Executives working in the energy and industrial sectors are optimistic that their companies collectively can reach lofty emissions reductions goals over the next three decades, but less so in agreement on how they will get to Net Zero by 2050.
This according to the new Energy Transition Report 2022 by Reuters Events in collaboration with research and consulting giant Deloitte. The survey gained responses from more than 2,800 company leaders, including some 900 energy firms.
More than 9 out of 10 responded that strong national government environmental policy is the most important driving factor to achieve extensive greenhouse gas reduction by the 2050 goal. Nearly 90 percent of those executives also pinpointed energy companies as equally crucial to the Net Zero goals, according to the Reuters-Deloitte survey.
Governments are influencing energy transition planning by many companies, the reports reads, yet true federal leadership (pick your country) is apparently flagging in many ways.
“Somewhat worryingly, almost 71 percent of the sample (and nearly 76 percent of C-suite respondents) also said the public sector is failing to drive the transition at the rate required,” the report summary reads. “Nevertheless…more than 56 percent of respondents saying the outcome of COP26 (the United Nations Climate Change Conference) would have a direct impact on business strategy within the next five years. The exact nature of that impact remains unclear.”
See the Reuters-Deloitte Energy Transition report
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Indeed, the Energy Transition respondents seem to be uncertain about numerous mechanisms which may drive emissions down significantly over the coming years. A clear majority of the global executives are banking on achieving Net Zero goals (acknowledging it will be hugely expensive) but a quarter of respondents from the industrials sector have doubts if those companies can cut emissions that much by 2050.
One out of five say their companies are already on the road to net zero as early as 2025. Nearly 40 percent of the respondents are from Europe, 30 percent from North America, about 15 percent from Asia and the remainder spread out across Africa, South America, the Middle East and Australasia.
2050 seems like a long road ahead, and quite a few of the Reuters-Deloitte surveyed executives think that most of those goals will be achieved by technologies which do not yet exist. In fact, they are almost equally divided on whether the energy and industrial sectors currently have the workforce and skills required to achieve net zero goals.
About 50 percent say “definitely or probably yes” on whether those companies are ready now for the Energy Transition, but 20 percent say “probably not” and overall almost half say definitely not, probably not or “may or may not.”
“Moves to decarbonize many industrial sectors have only recently begun in earnest, so it is to be expected that there are diverging perspectives on the optimum pathways,” the report reads. “We expect there to be rapid progress on clarifying these points before 2025.”
The uncertainty and maybe even disconnect extends over to thoughts about the most important resources needed going forward to reach net zero 2050. About 90 percent of responsive executives see hydrogen and electrification as having the greatest impacts on decarbonizing the industrial sector.
Yet, while a third do not believe carbon capture and storage of existing or remaining emissions is commercially possible without a carbon price (or tax), they also ranked it third on the most impactful options for the Energy Transition this decade.
Solar was first in that ranking of those most needed by 2030, with geothermal, carbon capture, digitalization and hydrogen following in order.
Wind power, perhaps surprisingly given the scope of utility-scale wind farm projects already developed onshore and offshore, was last place in the respondents’ ranking. Even “technologies which do not currently exist” was placed above wind.
Many estimates, including those by the International Energy Agency, believe that annual clean energy investment must exceed $2 trillion and perhaps double that amount annually to achieve net zero goals by 2050.
Much of the cost will be borne by energy consumers, the executives agree.
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(Rod Walton, senior editor for EnergyTech, is a 14-year veteran of covering the energy industry both as a newspaper and trade journalist. He can reached at [email protected]).
