I recently returned from attending COP28 in Dubai. This was my third time attending a COP and it was clear this year that there is increasing agreement that achieving net zero objectives by 2050 will require collective action from governments, nonprofits, and the private sector.
Perhaps the clearest sign of that agreement came at the end of the conference, when nearly 200 nations agreed, in a first of its kind deal, to begin reducing fossil fuel consumption with the goal of avoiding the worst impacts of climate change.
The deal calls for “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner...so as to achieve net zero by 2050 in keeping with the science." Other parts of the agreement include accelerating technologies – like carbon capture utilization and storage (CCUS) – which can help reduce emissions from hard-to-abate industries and tripling renewable energy capacity by 2030.
There was also wide – and well-received - recognition this year that the oil industry must play a key role in the energy transition. That acknowledgement is a sharp departure from my first COP, in Glasgow, where oil and gas companies were not invited to participate in the dialog. While last year brought pragmatism about the oil industry, its necessary capabilities, and its ability to scale key solutions, including CCUS, this year I recognized a pure, clear, and determined realization that the industry is a key player.
And moving forward, it’s about delivery, which is why I fully endorse the goal – pledged by 123 nations last week and included in the final agreement - of tripling renewables and doubling energy efficiencies.
While the pledge to triple renewable energy worldwide represents a significant step forward in efforts to reduce CO2 emissions from fossil fuels in coming decades, it will also come with both significant challenges and opportunities.
While it’s true that solar and wind power generation have grown dramatically in recent years, and today represent nearly a third of global electricity generation, it’s also clear that more work will be needed to hit the target of 10,000 gigawatts of installed renewable energy around the globe by 2030.
A number of factors, including rising costs, permitting challenges and supply chain issues, and the high cost of capital, have stalled renewable efforts around the globe – particularly in the developing world. As projects face, in some cases, years-long delays, the economics change and investors lose interest, some projects are simply abandoned before they get off the ground.
To help drive the growth of renewables, increasing investment from both governments and financial institutions will be needed to make projects more attractive, particularly in regions like Africa, which has received just two percent of global renewable investment over the past 20 years.
As global investment in renewables grows, the boundaries between industries will fade as more and more companies begin to share value chains, technologies and markets.
That trend toward industry convergence has already begun. A number of oil and gas companies have made investments in solar and wind projects in a bid to electrify their operations and reduce emissions, and as a way to gain a foothold in a market estimated to be worth nearly $2 trillion by the end of this decade.
But if the “what” and “why” are clear in the drive to increase renewable energy, it will be critical now to focus on how we fulfill this pledge.
While there is no single pathway for increasing renewable energy resources, there should be little doubt that digital technologies – some new and some not - will play a critical role.
Simulation tools allow companies to precisely manage risk associated with different projects and model the tradeoffs between renewables, battery storage, technology choices and different operating strategies, and integrate safety, all before the first brick is laid. Using that type of “born digital” strategy, offers project proposers a deep understanding of how to mitigate those risks and reduce time to market for renewable projects.
Armed with such rigorous, fact-based analysis, proposers can offer investors a clearer view of the economics of such projects and their return on investment, helping to drive increased investment in carbon-free energy sources.
While there is collective agreement on the need to triple global renewable energy capacity – and there is huge effort and investment being put behind it – I also observed at COP28 that the same commitment and effort is not yet being put behind the charge to ‘Double Efficiencies’.
The benefits that come with such an increase are clear; greater efficiency results in lower consumption of energy and key resources, which in turn translates into lower CO2 emissions.
Again, though, the question posed by the effort to double efficiency is not what or why, but how? For decades, companies have worked to squeeze every ounce of efficiency from their operations; how can they find more?
A key part of the answer will be for companies to look to new approaches – particularly those offered by digital technologies.
The same technologies which for decades have been used to optimize hydrocarbon systems can now be applied to new systems, like hydrogen, biofuels and CCUS, and to help speed the development of new technologies, like new electrolyzers for more efficient hydrogen production or pyrolysis for plastic recycling.
While many technologies exist today to increase efficiency, they still need to be scaled for wider adoption while keeping frameworks in place to handle risks. And there are new technologies and approaches to come, as well as new business models which will put greater emphasis on efficiency and sustainability efforts going forward. As we look toward that future, partnerships and collaborations will remain crucial – as the saying goes, ‘To go far, go together.’
If we hope to reach a net zero economy, it’s clear entire value chains must be reinvented to create an equitable, affordable, and sustainable energy transition. As we look to next year’s COP29, to be held in Baku, Azerbaijan, and to the future beyond, we must unite, we must act, and we must deliver.