The toolbox for net zero by 2050 5 min read
Companies know they have to change the way they operate if they're going to reach net zero by 2050. Net zero has shifted from a corporate and social responsibility priority to being core business—but what technologies are available to help?
In this Insight, we explore four key ways technology can help meet decarbonisation goals, drawing on examples discussed in our recent webinar 'Leveraging technology to accelerate decarbonisation'.
There are four key opportunities that decarbonising technologies present to Australian companies:
- Digitalisation of industry: digital technologies offer a broad range of substitutes for activities that contribute to an organisation’s carbon emissions, and allow for increased energy efficiency of products, processes and people.
- Electrification and fuel switching: electrification technologies offer products and processes that are energised using low-carbon electricity and fuels, as an alternative to their traditional counterparts that are reliant on fossil fuels.
- Scope 3 emissions—creating green supply chains: data technologies such as blockchain and AI can unlock new capabilities to track, measure and report on the carbon footprint of companies' supply chains.
- Investing in and funding technology: funding the technology that will help facilitate net zero calls for a collaborative approach, with opportunities for strategic partnerships to accelerate tech development and commercialisation.
Decarbonisation technologies will play a crucial role in the energy transition. Analysis by Accenture, in collaboration with the World Economic Forum, shows that digital technologies, if scaled across industries, could deliver up to 20% of the 2050 reduction needed to meet the International Energy Agency net zero trajectories in the energy, materials and mobility industries. These industries can already reduce emissions by 4% to 10% by quickly adopting accessible digital technologies.1
As demand for clean technologies increases, companies will have opportunities to create significant value, while helping to curtail emissions, by implementing and investing in clean technologies.
The Joint Statement on the Australia-United States Climate, Critical Minerals and Clean Energy Transformation Compact issued last week calls out the importance to the energy transition of reducing the cost of clean energy technologies and accelerating the development of markets for established and emerging clean technologies. It is encouraging to see the role of technology being recognised in a document of this significance.
During our 'Leveraging technology to accelerate decarbonisation' webinar, panellists Anna Skarbek (CEO, Climateworks Centre), Darryl Kaufmann (Executive General Manager, Siemens), Dominic Anderson (Allens Partner-elect) and facilitator, Kate Axup (Allens Partner, Head of Energy) discussed how organisations can embrace technology as a tool to meet their decarbonisation agendas, and identified four key opportunities and risks.
The simplest way to decrease emissions is to not generate them in the first place. Easier said than done. But the digitalisation of industry is an accessible first step in helping to abate an organisation's carbon footprint.
Digital technologies offer a broad range of substitutes and efficiencies relating to the products, processes and people that contribute to carbon emissions. For example, new manufacturing or materials technologies can leverage alternative inputs and reduce the amount of materials needed in the manufacturing process and eliminate waste.
By a similar token, the advancement of digital twin technology (the creation of virtual replicas of physical objects and processes that can be studied and tested before real-life implementation) presents an opportunity to drive efficiencies across the full lifecycle of assets—from design, through to build and into operations. The use of digital twins enables more effective and efficient R&D processes by providing reliable data about likely performance outcomes. During manufacturing, digital twins can be made to mirror production systems and processes, to identify pressure points and opportunities for efficiency during manufacturing. At end of life, digital twins can inform what should be done with the product—eg by assisting companies to determine which product materials can be harvested for recycling.
A further consideration in a company's decarbonisation agenda should be electrification or fuel switching technologies.
Technologies that facilitate the electrification of, or fuel switching for, existing processes that have traditionally relied on fossil fuels have a key role. Examples of such technological switches include replacing fuel combustion engine vehicles with electric vehicles and replacing natural gas or oil boilers with heat pumps.
Of course, electrification only reduces emissions meaningfully to the extent that electricity comes from low-carbon sources. Technologies that accelerate and improve our renewable generation and storage capabilities will play an important role in securing sources of green power.
As pressure to measure and report on scope 3 emissions increases, a key piece of the net zero puzzle for companies will be creating and establishing 'clean' supply chains.
The first step here is ensuring companies have the capability to accurately measure the amount of emissions they currently produce, together with those produced upstream and downstream of their operations. Traditionally, companies have relied on manual data collection to collate and report on their scope 3 emissions.
Data technologies such as IoT sensors and monitors, cloud-based data platforms and blockchain-enabled tracking systems unlock new capabilities for measurement and tracking of a carbon footprint along each step of the supply chain, and allow for added transparency. Supply chain transparency solutions that rely on blockchain technology guarantee the anonymity, integrity and safety of products—from supplier, to producer, to retailer and, finally, to the consumer.
Companies that take advantage of these technologies can, in turn, improve their management and investment decisions, and their performance against ESG goals.
While net zero targets are a common imperative for Australian companies, investors and governments, private capital investment in climate tech has generally suffered from a longer investment time horizon than other scalable technologies. This is largely a result of longer lead times to market (with a prevalence of hardware-driven solutions), greater runways until positive returns are realised and, in Australia, the nascency of the net zero tech market.
To accelerate tech development, deployment and commercialisation, collaboration between corporates, tech developers, energy providers, researchers and government is vital.
The level of collaboration required highlights the importance of the information economy. Companies will need to work together to build new green supply chains and industrial ecosystems. The Net Zero Authority, announced in the Federal Budget, will assist in supporting new tech investment, bringing coordination at all levels of government to set net zero goals with a localised focus.
Additionally, global policy trends illustrate government willingness to take significant legislative and regulatory action to support and coordinate climate and energy transition priorities.
While much of the narrative in Australia's energy transition has been focused on our changing electricity supply system, we need to remember that economy-wide decarbonisation is needed, and that the deployment of green technology will be vital in getting us there.