The latest insights from the We Mean Business coalition

May 20, 2022

Net-zero transition – latest signals of change (20.05.22)

We Mean Business Coalition

Here are just some of the signals of change from the past week, demonstrating the transition to a resilient and inclusive net-zero economy.

Net-Zero Economy

On Wednesday the European Commission presented its  €300 billion RepowerEU plan laying out how the bloc will wean itself off Russian fossil fuels. Among the positive aspects were a rise in the EU’s energy mix target for green power from 40% to 45% by 2030, and an increase in its energy savings target from 9% to 13%. Additionally impressive was its ‘solar rooftop initiative’ which includes a legal obligation to install solar panels on new public, commercial and residential buildings.

CLG Europe, which coordinated a letter urging a doubling down of the European Green Deal within the plan, welcomed its publication while underlining risks around creating new gas infrastructure. Others highlighting risks of the plan included Dutch MEP Bas Eickhout (vice-chair of the European Parliament’s environment committee) who condemned moves to invest in liquified natural gas and oil infrastructure, and the continued use of coal-fired power plants for longer than initially expected.

Six months on from COP26 in Glasgow, British Climate Chief Alok Sharma is calling on world governments to make good on their climate commitments despite the geopolitical crisis in Ukraine and other concerns such as Covid-19 and food and energy security challenges. He voiced concerns that leaders may renege on a key clause in the Glasgow Climate Pact asking all countries to ‘revisit and strengthen’ their 2030 emissions reductions targets by the end of this year.

Meanwhile, in light of an apparent underspend in the UK government fund set aside to tackle net zero, analysts suggested that the UK could get its climate strategy back on track by developing shorter-term climate goals. This would enable each sector to measure its progress towards the bigger milestones such as 2050, and is especially needed in the agriculture and building sectors.

Japanese multinational Sony has announced plans to bring forward by 10 years its net zero commitment to achieve carbon neutrality in its value chain. The firm’s Road to Zero initiative was first introduced in 2010 and was originally set for 2050. Under a revamp of its targets, Sony plans to be carbon neutral across its own operations (scope 1 and 2) and reach 100% renewable energy by 2030 with a goal of full carbon neutrality (including scope 3) by 2040.

Finally, carbon neutrality by 2040 is the new goal for a group of six Scottish Islands. Announced in the Scottish Parliament this week, Hoy, Islay, Great Cumbrae, Raasay, Barra and Yell have been selected to be part of the Scottish government’s Carbon Neutral Islands project.

Energy

The UN Secretary-General Antonio Guterres yesterday called for greater global action to speed up the deployment of battery technology, urging countries to ease intellectual property constrains to hasten the transition away from fossil fuels. He also called for greater scaling up and diversification of supply chains for renewable energy technologies and raw materials, appealing to banks and the financial system to triple investment in renewable energy to the tune of $4 trillion USD.

Guterres’ plea comes as the World Meteorological Organization (WMO) released its annual State of the Climate report underlining how, without immediate action to accelerate the renewable energy transition, a climate catastrophe is unavoidable. It found that four key climate change indicators – greenhouse gas concentrations, sea-level rise, ocean heat and acidification – all set new records in 2021.

Meanwhile, in a move seen by campaigners as necessary to pivot the US away from fossil fuels towards renewables, the Biden administration is cancelling oil drilling lease sales in the Gulf of Mexico and Alaska’s Cook Inlet. His actions are backed up by research by the International Energy Agency last year which said that countries must stop approving new oil and gas projects to prevent the planet from dangerously overheating.

Germany, Belgium, the Netherlands and Denmark have committed to build at least 150 gigawatts of offshore wind capacity in the North Sea by 2050 – representing a tenfold rise in capacity. This would be enough energy to power 230 million European homes. The energy is also intended for use in green hydrogen and green fuels for heavy industries.

G7 governments pledged this week to help Iess developed countries to shed their dependence on coal. This will come in the form of financial and technical support to accelerate decarbonisation and renewable energy capabilities. The first countries to benefit from this support will be Indonesia, Vietnam, India and Senegal. The initiative will tap into the Asian Development Bank’s planned fund and financing scheme for the early transition away from coal in Southeast Asia.

Former mayor of New York City, Michael Bloomberg is launching a $242 million effort to promote clean energy in 10 countries: Bangladesh, Brazil, Colombia, Kenya, Mozambique, Nigeria, Pakistan, South Africa, Turkey and Vietnam. The investment is part of his wider push to shut down coal production across 25 countries. According to Bloomberg, success in these 10 countries will be instrumental in showing the world that renewable energy can help and not hinder economic growth.

UK renewable energy firm Drax is ‘ready to move mountains’ for its new hydro power project. The firm is submitting a planning application to build a new underground hydroelectric power station deep within the Scottish mountain Ben Cruachan. Subject to planning approval, construction will begin in 2024. The site aims to be operational by 2030 and will generate 1.04 gigawatts and an estimated 900 green jobs.

Transport     

Northvolt, the Swedish battery developer, and Norwegian aluminium and renewable energy company Norsk Hydro have announced that they are expanding their joint battery venture, Hydro Volt, by setting up their first factory in Norway. They plan to recycle 1,500,000 batteries per year by 2025, rising to half a million by 2030. Their fully automated recycling process allows up to 95% of EV battery materials to be reclaimed. Among the materials recovered is black mass, a powder containing nickel, manganese, cobalt and lithium which are currently mined as raw materials.

Electric vehicles displaced roughly 1.5 million barrels of oil per day last year, according to new analysis from BloombergNEF. This figure has doubled over the last six years. When it comes to the kinds of EVs doing this displacement, the figures may surprise you. Two-three wheeled EVs made up 67% of the oil demand avoided (due to rapid adoption across Asia) followed by buses (16%) and then passenger vehicles (13%).

New Zealand’s new emissions reduction plan is paving the way to a net zero future with the launch of a help to buy scheme for electric vehicles. Among the plan’s most significant initiatives is the clean car upgrade programme aimed at lower- and middle-income families. This offers a trial for people to trade in their vehicles and receive support to buy an electric or hybrid vehicle. More than $1.2bn has been allocated to the plan, which is expected to reduce emissions equivalent to taking more than 180,000 cars off the road by 2035.

New research from the International Council on Clean Transformation has found that zero emissions vehicles (ZEVs) could reduce road transport CO2 emissions 73% by 2050 compared to 2020 levels. Heavy duty ZEVs represent approximately half of this emissions reduction potential. The research also found that among G20 economies, actions to ensure that all new heavy duty vehicles are ultra-low or zero-emission could avoid 3 million premature deaths by 2050, equivalent to $5 trillion USD in health benefits. This comes as all-electric trucks have already started hitting the road in California.

Heidelberg Cement have joined a public-private partnership between the US State Department, the World Economic Forum and various forward-thinking companies, aimed at making emerging clean technologies accessible and scalable. As part of their membership of the First Movers Coalition, Heidelberg Cement has committed to the sector ambition of 30% of new heavy-duty truck purchases and 100% of its medium-duty new truck purchases to be zero-emission trucks by 2030.

Chinese electric carmaker Nio has brought the concept of battery swapping to Norway. Although widespread in China, the new Power Swap Station outside of Oslo is Europe’s first battery swapping station. Electric vehicle drivers can book a slot on the Nio app and drive into the station to have their batteries replaced for fully charged ones in a process that takes five minutes. Nio hopes to attract customers who are concerned about range or simply don’t want to wait for a full charge.

Also this week Scorpio Group, a Monaco-based shipping group, made a significant investment in UK electric vehicle battery start-up Britishvolt. Neither firm has disclosed the value of the investment, but one knowledgeable source told Reuters that the deal was worth in the “single-digit millions” of pounds. Together the two companies will research battery power and storage options for maritime shipping.

Land and Nature

On Monday, Canada launched a public consultation on its national climate adaptation strategy. During the three-month consultation Canadians can give their input on how communities and businesses should prepare for climate-related disasters like wildfires, rising sea levels and melting permafrost. The climate in Canada is warming twice as fast as the global average, and the consultation comes as recent flooding has displaced communities in Manitoba and the Northwest Territories.

Offshore energy giant Ørsted and ARK, a leading rewilding organization and founding partner of Rewilding Europe, are partnering to set up a Marine Field lab for rewilding. The project will focus first on the restoration of shellfish reefs in the North Sea ecosystem – where few sites for the formation of new reefs remain. The lab will test and develop the best ways for wind farms to support such sites and bolster biodiversity with an aim to expand the process globally.

In response to new European regulations for deforestation-free products which are due to come into force in 2023, a Peruvian multi-stakeholder platform, the Sustainable Production Coalition, is on a mission to create a deforestation-free supply chain. Made up of 19 organizations, the initiative is developing tools for the monitoring and traceability of cocoa.

Blended investment fund &Green has invested $12 million USD as an 8-year loan facility in Indonesian palm oil firm PT Hilton Duta Lestari (HDL) to create an inclusive palm oil supply base in West Kalimantan, Indonesia that ensures no deforestation, no peat and no exploitation. &Green was established to de-link deforestation from tropical agricultural commodity production. This venture aims to reduce deforestation across four districts and improve incomes for up to 85,000 inhabitants, mainly indigenous (Dayak) communities.

Farmers in East Anglia, UK, have received funding from a collaboration backed by Nestlé to implement regenerative agriculture practices and nature-based solutions across 4,335 hectares of farmland in the East of England. Measures are focused on preventing soil erosion, improving water quality and supporting soil health, which stand to benefit the local environment and lessen to toll of agricultural production on the land. East Anglia is an important sourcing region for both Nestlé cereals and pet food products.

The Climate Pledge is collaborating with the National Geographic Society to support 15 National Geographic Explorers to document the global climate crisis as part of the Society’s Global Storytellers Fund. The Second Assistant Program will also support up to 45 mentees made up of early career women and storytellers of colour by training them and placing them in the field alongside National Geographic Explorers.

Built Environment and Heavy Industry 

Dutch residents are being hit by record gas prices and 71% of Dutch homes are currently heated by fossil gas. In response, Dutch government has announced this week that it plans to ban new fossil fuel-centric heating system installations from 2026, making heat pumps or connections to district heating mandatory.

A new IEA report aimed at G7 countries calls for leadership in reducing emissions from heavy industry. The report was requested by 2022 G7 President Germany to inform policy makers and industrial leaders. The analysis sets out a toolbox for the G7 and recommends that they set out ambitious long-term energy transition targets for heavy industry while supporting demonstration and early commercial projects through targeted finance and other risks mitigation measures.

There were clear signs of industry interest in green steel this week. H2 Green Steel has announced that it has already signed off-take supply agreements for over 1.5 million tonnes of its so-called green steel, which will be produced from 2025 onwards at the Swedish company’s Boden-based steel plant. Meanwhile, carbon dioxide emissions from the world’s steel sector are expected to fall 30% by 2050 compared with last year as more mills turns to less-polluting electric arc furnaces (EAF), consultancy Wood Mackenzie said in a study on Tuesday.

Finally, a new coalmine proposed for Cumbria is likely to be redundant before it even opens because the steelmakers that are its target market are moving rapidly away from fossil fuels. Analysis from green campaigners suggests that the export market for coking coal from the site is unlikely to materialise, as steelmakers across Europe are moving rapidly to green production methods. The analysis cites recent renewable energy and green hydrogen announcements from steel producers ArcelorMittal, Salzgitter and SSAB as evidence for this shift.

Commitments:

22 companies joined the SBTi through the science-based target pathway:

AMADA CO.,LTD. – Japanese machinery manufacturer

Cabletica S.A. – Costa Rican telecommunications company

Cary Group Holding AB – Swedish automobile repair company

CHALCO Ruimin Co., Ltd. – Chinese aluminum company

CLAYENS NP – French technology and hardware company

Edelmann Group – German packaging company

Ellab A/S – Danish calibration solutions company

Embracer Group – Swedish video game and media company

Flexential Corp. – American data center

MIRAIT Holdings Corporation – Japanese holding company