The net zero path in transportation, oil & gas, industrials and utilities

02 November 2023 Consultancy-me.com 6 min. read

The World Governments Summit has teamed up with Arthur D. Little to chart a successful course for the net zero transition in four high emitting sectors: utilities, industrials, transportation, and oil & gas.

The 40-page report titled ‘Net Zero: The Countdown Has Begun’ explores the challenges of global warming to society, and outlines how the four sectors taken under scrutiny can move their emissions into the right direction.

The study highlights that while the burning platform is clear, and commitment has been widespread, real results are still a far cry away. “70 countries, which account for 90% of global GDP and 76% of total emissions, have pledged to reach net zero. But that now needs to be translated into real action,” said Adnan Merhaba, a partner at Arthur D. Little.

The net zero path in transportation, oil & gas, industrials and utilities

Source: Arthur D. Little

Highlighting the case for urgent change, the report emphasizes that the world has less than 400 billion tonnes of carbon dioxide equivalent left to spend until 2050 if it wants to achieve its Paris goals. Putting that number into context: data from the Global Carbon Project estimates that annual emissions are at around 36.4 billion tonnes per year. In other words, the world needs to compress over 25 years worth of emissions into about 10.

“Simply put, the outlook is grim. But there is hope,” said Merhaba. That hope he is referring to would need to see a multitude of actions enacted, including major contributions from the private sector.

“Now is the time for corporate leaders to deliver on their net zero promise while charting for green, sustainable growth. Our report with the World Governments Summit aims to support these leaders on that journey,” Merhaba said.

The lens of four key sectors

In a sector-by-sector approach, the authors of the report unpack what needs to be done in every sector, and what can be done now, and in the future. This includes walking through opportunities and challenges in leadership, strategy setting and implementation, technology choices, operations and supply chain, and more.

The net zero path in transportation, oil & gas, industrials and utilities

Source: Arthur D. Little

For example, in the transportation industry, which is responsible for 16% of the global greenhouse gas emissions, the key area of focus should be on improving the footprint of road transport.

Of the total emissions, 78% are attributed to road transport, with 65% coming from passenger travel and 35% from road freight. Maritime is responsible for 11% of emissions, while the aviation industry contributes 10% of the total emissions in the industry, with 81% stemming from passenger travel and 19% from freight.

The net zero path in transportation, oil & gas, industrials and utilities

Source: Arthur D. Little

Of the four sectors assessed, the authors said oil & gas is the most emitting. Today, Today, oil & gas operations account for around 15% of total energy-related emissions globally, the equivalent of 5.1 billion tonnes of greenhouse gas emissions.

Yet taking a broader lens, the picture for the sector becomes more worrying. Altogether, fossil fuels (coal, oil and gas) are estimated to account for 75% of global greenhouse gas emissions and nearly 90% of all carbon dioxide emissions.

A massive transformation will therefore need to be realised. “To achieve net zero, emissions from the oil & gas industry must decrease by a huge 45% to 50% by 2030. The challenge is immense, but on a positive note, several decarbonisation initiatives are underway across all areas of the sector,” said Merhaba.

Further readingWhy hydrocarbons will remain pivotal in the global energy mix.

In the industrials segment, the emissions footprint varies across sectors. In hard-to-abate segments such as cement and steel, embarking on the journey to decarbonisation is a notoriously difficult challenge, while in other segments, net zero realisation can be achieved with simpler measures.

The net zero path in transportation, oil & gas, industrials and utilities

Source: Arthur D. Little

The World Governments Summit and Arthur D. Little report makes note of Schneider Electric (France) and Siemens (Germany) as standout companies in the sector when it comes to decarbonisation.

While utility companies also have a significant CO2 carbon footprint to manage and enhance, they are at the same time regarded as key enablers of the path to decarbonisation through their facilitation of renewable energies and more sustainable deliveries of energy, water, waste, and more.

The net zero path in transportation, oil & gas, industrials and utilities

Source: Arthur D. Little

High-impact actions

Bringing all their findings together, the report’s authors said that five high-impact actions will be key for leaders – irrespective in which of the four sectors they operate:

Driving a bold net-zero transformation
Continuously revisit the scope of the emissions target, execute an integrated and technology-led whole-of-company transformation programme, and take stock of decarbonisation progress on a regular basis.

Addressing emissions reduction and capture growth opportunities
Explore future profit pools resulting from the energy transition while driving down own emissions, work with customers to uncover growth opportunities, look for ways to leverage technology and innovation, and pursue new business models.

Putting people at the heart of the net-zero transformation
Focus on upskilling/reskilling the current workforce, develop a focused talent development strategy, and nurture/onboard new talent.

Ensuring the supply chain is keeping up
Collaborate inside and outside of siloed organisational boundaries to anticipate and bring together supply chain initiatives that need to be in place to get major decarbonisation projects off the ground.

Bringing stakeholders along for the journey
Work with different stakeholders to develop common understanding of the plan and action, and involve funding organisations to find innovative solutions to pressing funding challenges for net-zero programmes.