At the latest B20 summit— the policy group comprising global businesses that support the G20[i]— participants confirmed the critical role business has to play in fighting climate change. They asserted that, drawing on its innovative capabilities, the business community must work with governments to drive a transition to carbon neutral energy. In other words, governments can’t and shouldn’t do it alone.
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But while all businesses need to support government efforts to fight climate change, the power, utilities, and renewables (PUR) sector has a unique role to play. The reduction of fossil fuel use through electrification and renewable energies are the linchpins in most strategies to decarbonize. That means PUR has to embrace its heightened role when it comes to climate change and actively work to coordinate decarbonization efforts across industries.
A holistic approach to tackling emissions
Many businesses have already committed to achieving net-zero carbon emissions, and they are doing things to act. According to Deloitte’s 2022 CxO Sustainability Report, 66% of CxOs surveyed say their companies are increasing their energy efficiency, 67% are using more sustainable materials, and 57% are using energy-efficient or climate-friendly machinery. Additionally, many companies are identifying decarbonization opportunities in their operations and working to mitigate emissions across their value chains. But this approach can only take us so far before the need for coordination among disparate groups becomes apparent.
According to the Deloitte Insights article, “Leading in a low-carbon future: A ‘system of systems’ approach to addressing climate change,” what’s needed is a holistic view of how carbon reduction among businesses and industries interconnect—and then coordinating their actions. The carbon-reducing solution of one company may require infrastructure provided by another sector to make it feasible. Others may need companies outside of their industry to aid in boosting demand or developing a market for a certain green product. Still other industries will recognize the critical role they play in supporting the efforts of businesses and governments across the board.
The PUR sector sits squarely in this last group, along with other sectors such as finance and technology. It’s the PUR sector that will provide the decarbonized power production that will allow all other industries to electrify their operations—and take a significant bite out of their emissions.
Where does PUR fit in? Finding your place
For the PUR sector, its role as the provider of low-carbon energy means that taking action sooner rather than later is critical. By collaborating with other players within their decarbonization ecosystem, issues like mismatched supply and demand or lacking infrastructure can be addressed. Below are a few steps set out in “Leading in a low-carbon future” that PUR companies can take to start identifying these connection points and the opportunities they present.
- Take a system-wide view. By understanding how the economy as a whole will look as it decarbonizes, companies can develop their strategies with a holistic approach rather than based on current sector frameworks. Modeling can help develop this viewpoint.
- Identifying value: The opportunities in the energy transition can boil down to using less energy, emitting less carbon, regenerating or restoring natural resources, and monitoring progress toward net zero. It is important to understand where your PUR company can gain value in any of these categories—and where value may be diminished in the energy transition.
- Assess timelines and scale: Identify which opportunities—such as improving efficiency—are short-term and which are longer—as well as how efforts can scale. Accelerating these efforts can be enhanced by finding those collaborators that can help move adoption forward.
Small incremental steps without coordinated action will not be enough given the current climate challenges. Not only will it not provide the impact needed, it can leave your business isolated and obsolete in a new net-zero economy.
The need for seeing the bigger picture when it comes to decarbonization is a critical step in addressing the climate crisis. The PUR sector comes into play within this picture, especially when you consider the B20 policy recommendations concerning energy and resources. These include accelerating the “transition of the energy system towards a sustainable and carbon neutral energy mix,” and providing “effective policy pathways to foster sustainable growth and secure the energy transition.”[ii]
Clearly, the business community as a whole recognizes how without the one piece of the puzzle—clean energy—the other pieces will not fall into place. Taking up the call to action in a coordinated, collaborative manner across the systems that make up the energy transition is the next step.
To learn more or visit our Future of energy site on Deloitte.com.
[i] The G20 is an international forum that brings together the world’s major economies
[ii] B20 Italy: Final Communiqué, Policy Recommendations to the G20.
