By the middle of this century, the world aims to reduce greenhouse gas emissions to as close to zero as possible. Those emissions that remain should be ‘captured’ or absorbed so that global emissions balance out at zero. Getting to 2050 and achieving global ‘net zero’ is some task and the UK has also made it legally binding. So, what does it mean for business? How do we adapt and change? What will a net zero world look like? Read on to find out more about sustainable business and net zero to build a brighter future.
What does net zero mean for business?
There is no getting away from the fact that it means change. Whether we like it or not, some form of carbon pricing is a real possibility for businesses that fail to act. Imagine a business that operates in heavy industry with revenue of £1bn and profits of £100m. If businesses were to be charged $100 per tonne, as some climatologists suggest is necessary, and emissions are 1 million tonnes, there goes the profit. Additionally, the Government has announced that the largest UK firms should declare their net zero plans to an expert panel.
Furthermore, it’s not just your business that is affected. Consider that elements of your supply chain are at different stages of the net zero transition. Those that lag behind and continue to emit greenhouse gases may need to raise prices and that’s bad for you. They may also undermine your own journey to net zero and undermine the proud work you have done. How about selling to customers with a heavy reliance on fossil fuels? In short, there are many obstacles on the road ahead and a radical transformation needed to smoothly navigate them. So, let’s look at what HMG wants to achieve.
UK Ten-Point Plan for Net Zero
Her Majesty’s Government (HMG) has set out a ten-point plan[i] to reach net zero by 2050. These are:
- Wind (Power): Advancing offshore wind by quadrupling capacity by 2030 to help fully decarbonise our power system by 2035.
- Hydrogen (Fuel): Delivering 5 GW of low-carbon hydrogen production capacity by 2030, whilst halving emissions from oil and gas.
- Nuclear (Power): Delivering new and advanced nuclear power to support a doubling of our electricity system by 2050. This involves pursuing large-scale nuclear (e.g. Hinkley Point, Sizewell, Wylfa etc) and investment in Small Modular Reactors (SMRs).
- Transport (Fuel): Removing all road emissions at the tailpipe with the sale of new petrol and diesel vehicles banned from 2030 and moving to zero-emission EVs.
- Public Transport (Fuel): Increasing usage of public transport, investing in zero-emissions vehicles and charging plus increased investment in cycle lanes.
- Jet and Sail (Fuel): Kickstarting zero emissions international travel and investing in the development of clean maritime technology.
- Buildings (Heat): Setting a path to all new heating appliances being low carbon (e.g. heat pumps) in homes and workplaces from 2035.
- Carbon Capture (Emissions): Delivering four carbon capture usage and storage (CCUS) clusters, capturing 20-30 MtCO2 across the economy, including 6 MtCO2 of industrial emissions, per year by 2030. The ambition is to capture 10MtCO2 by 2030 which is the equivalent of absorbing the emissions of 4 million cars.
- Natural Resource (Emissions): Trebling woodland creation in England, contributing to the UK’s overall target of increasing planting rates to 30,000 hectares per year by the end of this Parliament. Moving towards a circular economy, improving resource efficiency and near elimination of biodegradable waste to landfill. Phasing down the use of F-gases in line with domestic regulations and international commitments.
- Finance (Cross-Cutting Action): Supporting the transition across the innovation sector, leveraging private sector green investment, giving options to consumers, working with local Government and also backing training and skills.
How do we adapt and change?
There is no single answer. If you are a manufacturer, chances are that you both use fossil fuels in the production process (industry) and use some non-recyclable materials (waste). But this is just in the factory. The logistics of transporting your inputs of raw materials (fuel) and delivering products to customers (fuel) have an impact. Additionally, you need to heat and light the warehouse (heat & buildings) as well as running all of your equipment and machinery (power).
The good news is that there are lots of ways to contribute, from new sources of electricity supply to removal of natural gas where possible. Perhaps your vehicles of the future are powered by electricity or hydrogen. Maybe your offices are heated with heat pumps. How about Carbon Capture, Usage and Storage (CCUS)? The challenge is to adapt and change our current processes and infrastructure to go green. The great news is that the majority of the public support sustainability. In the short-term, this could help you win business as we race to decarbonise. In the medium-term, this could also enhance your customer experience. Over the long-term, this could be a transformation that leads to sustainable competitive advantage.
What will a net zero world look like?
As we aim to limit the global average increase in temperature to 1.5C and meet our legally-binding 2050 target of net zero, things could be very different. New companies may rise up to be global competitors in sustainable business technologies. Although the exact mix of energy and technologies in 2050 is unknown, one scenario suggests a doubling of UK electricity production. This is heavily reliant on widespread electrification, increased use of renewables and nuclear and carbon capture, usage and storage for gas. Any residual greenhouse gases would also be absorbed by re-forestation or atmospheric removal.
Furthermore, the practical aspects of everyday life could change completely. Examples includes nearly all electric cars, buses and trains. Electric heating. Hydrogen production used for fuels and power generation. Biomass and waste will help to achieve a circular economy where everything is reused. Crucially, this represents a huge opportunity to tap into new markets and pioneer new technologies for export to other COP26 nations. It is also a risk if you do nothing as carbon pricing becomes the norm, with more refined calculation and collection.
Change into a sustainable business
Think Beyond supports businesses with research, planning and change services to enable accelerated time to value. We offer value add solutions to help you find new opportunities and accelerate your business performance. Our change support services include a change consultant, business performance management methodologies for transformation and lead generation improvement for better business outcomes. So, why not see how Think Beyond is different and let us support your change, wherever you are heading.
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Finally, why not read our related articles on business performance and advice.
[i] HM Government Net Zero Strategy