6 October 2020, source edie newsroom
A survey of 300 large energy and utilities companies has revealed that more than one-third (37%) are planning to slow or postpone investments in low-carbon infrastructure or offers because of Covid-19 - despite seeing clean power as a key driver of revenue.
While global investment in fossil fuels has decreased rapidly, the pandemic has also impacted clean energy
Conducted by Capgemini’s in-house think-tank, Capgemini Research Institute, the analysis tracked how corporates in the sector across Europe are preparing for stricter climate legislation and are weathering the financial fall-out of the pandemic. In total, 600 professionals collectively representing 300 firms were polled – one C-suite member and one senior sustainability professional from each company.
Almost two-thirds (64%) of the respondents said their business has driven an increase in revenues through more sustainable operations in the past two years. They cited reduced operational costs through improved efficiencies, alongside growing consumer and investor demands for stronger ESG frameworks and low-carbon tariffs and packages.
But for most companies, low-carbon offerings represent a small part of the business. Capgemini Research Institute claims that just 6% of the companies assessed are currently aligned with the Paris Agreement. This means that the majority of companies will need to change their models, processes and offerings to bring more renewables online and to neutralize emissions from all scopes. The pandemic will make this more difficult; the report warns.
Moreover, most of the companies surveyed are not yet adept at reducing their own emissions. Just four in ten have “mature” practices for tackling Scope 1 (direct) emissions and this proportion decreases to 3% for Scope 3 (indirect) emissions. This is particularly concerning for fossil fuel majors, as Scope 3 sources typically account for the bulk of their emissions footprint.
“Setting an ambitious strategy and vision is one thing – but delivering against it is a major challenge, notably on Scope 3 emissions,” Capgemini’s global head of energy and utilities Philippe Vié said.
“In the ‘decade of delivery’, aiming low is a mistake, given the huge transformation required to meet the Paris Agreement targets and the EU player mandate on Energy Transition. For energy and utilities organisations, the message is simple: the scale of the challenge is huge and continues to grow further. Companies that do not act with urgency face loss of revenue, alienated investors, and heightened risk of losing their social license to operate.”
Capgemini Research Institute’s findings on the sector’s ability to tackle Scope 3 emissions chime with recent conclusions from Carbon Tracker and the Transition Pathway Initiative (TPI). Both organisations believe that energy majors are deliberately designing net-zero targets which enable them to shirk responsibility for their indirect climate impact.
Change of direction
The report does not present a one-sided picture of doom and gloom for the sector’s climate impact – it also provides practical advice on how key players can ramp up decarbonization efforts.
Corporates must set time-bound, numerical targets for reducing investments in new fossil fuel projects, the report recommends, and divert this capital into new renewable generation capacity and processes for dealing with emissions from all scopes.
As for existing high-carbon assets, phasing-out plans should be developed sooner rather than later and should include measures to support workers.
These moves should help businesses make their long-term climate goals more credible. For example, BP faced much criticism over its 2050 net-zero target but has since unveiled plans to sell off its petrochemicals business ahead of schedule and to cut fossil fuel production by 40% by 2030.
Capgemini Research Institute has also emphasised the role of digital technologies in the energy transition. Machine learning and AI can, for example, maximise the outputs of renewable arrays and alert operators to the need for maintenance work.
Click a keyword to see more stories on that topic, view related news, or find more related items.
© Faversham House Ltd 2020. edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.