The latest insights from the We Mean Business coalition

April 14, 2023

Net zero transition – the latest signals of change: April 14, 2023

We Mean Business Coalition

Signals of change in the net zero transition this week include a call for G7 countries to phase out fossil fuels, and multinationals’ investing in nature.

Net Zero Economy

G7 Energy and Environment ministers meet in Sapporo, Japan this weekend ahead of next month’s Leaders’ Summit. The We Mean Business Coalition has published an open letter calling for an acceleration of the just transition to a more stable, clean energy system, and away from fossil fuels. The letter recommends policy measures that would send clear signals to business on the speed and direction of travel away from fossil fuels, remove barriers to rapidly scaling renewables, and ensure the most effective and efficient private sector investment and just transition pathways.

A new report from Ember predicts that carbon emissions from global electricity generation will decline from this year onwards. Authors of the Global Electricity Review analyzed data from 78 countries representing 93% of global demand, finding record growth in wind and solar power, which accounted for 12% of the world’s electricity generation last year. The study shows that Europe’s position as leader of the renewable revolution has been overtaken by Oceania, which now receives 1/5 of its electricity from wind and solar, while North America and Asia are also catching up fast.

France has shared new proposals for green industry incentives in the latest move to stay competitive in the global green economy. The measures, which include tax credits and subsidies, would target producers of batteries, electrolyzers, heat pumps, and other renewable energy technologies. Lawmakers and business leaders will take part in a public consultation on the amounts and scope involved before the package is brought to the French parliament this summer.

Energy

Democratic Republic of Congo-based solar startup Nuru is close to concluding a $60 million funding round. The company, which already runs four solar mini-grids, will use the funds to add a further three, increasing its capacity ten-fold to almost 14 MW. Mini-grids powered by renewables are seen as a key energy solution in the DRC, where only about 10% of the 100 million inhabitants have access to electricity.

Consumer goods giant Kimberly Clark has confirmed that the wind farm that will serve its first UK-based green hydrogen project will come online by the end of the year. The 126 MW wind-to-hydrogen project has won public funding support, with green hydrogen production projected to commence in 2025. The company plans to offtake green hydrogen from the project to replace gas in its paper mills in Cumbria, Kent and North Wales. Until hydrogen production begins, Kimberly Clark will use renewable electricity from the wind farm via a Power Purchase Agreement.

In the US, outdoor clothing company Recreational Equipment Inc announced a new commitment to source locally generated renewable energy in each of its 181 stores and support clean energy projects. In addition to measures such as deploying more rooftop solar across its locations, REI has shared strategies aimed at benefiting local communities. This includes working with utilities to offer renewable power programs to small- and medium-sized businesses and partnering with project developers to simplify transactions, making it easier for businesses of all sizes to procure renewable energy.

Transport

Volkswagen is to set up a new academy in China’s Hainan province, working with local authorities, to train local talent for the electric vehicle industry. The academy will be the second such facility established this year by VW – which is the top-selling car brand in China – in support of their €15 billion electrification plan in the country. Hainan province aims to end the sale of petrol vehicles by 2030.

The US Environmental Protection Agency has proposed new EV targets to ensure that two-thirds of new passenger cars and a quarter of new heavy trucks sold in the country are all-electric by 2032. Currently, less than 6% of new cars sold in the US are EVs, and under 2% of trucks. Though it can’t directly mandate that carmakers sell a certain number of EVs, the EPA can limit the pollution generated by the total number of cars each manufacturer sells. Michael S. Regan, EPA Administrator, said the measures “will accelerate our ongoing transition to a clean vehicle future, tackle the climate crisis head on and improve air quality in poor communities all across the country.”

In South Korea, Hyundai Motor Group has announced an $18 billion investment in domestic EV manufacturing. The conglomerate, which includes Hyundai and Kia, aims to become one of the world’s top three EV makers by 2030, expanding its domestic production to 1.5 million units and its global production to 3.6 million. To speed up product development, the automaker plans to unveil a manufacturing platform for each vehicle class, with one for passenger EVs to roll out in 2025.

Land & Nature

Companies including GSK, Bayer and Ørsted are scaling up investments in nature via in-house projects, Bloomberg reports. GSK has said it will prioritize carbon removal, as opposed to avoidance, for its 2030 targets, while for its 2045 target only removal offsets will be allowed. Endangered mangrove forests – which can sequester up to 50 times more carbon in their soils by area than tropical forests – are of particular interest to the company.

Salesforce has launched a new Nature Positive Strategy as part of its Climate Transition Action Plan. The strategy has three main pillars: reducing impacts on nature, leading nature restoration at scale and supporting customers to start their own nature positive journeys. Specific measures include the conservation, restoration and growth of 100 million trees by 2030 and distributing $100 million through its Ecosystem Restoration & Climate Justice Fund.

In Canada, multinationals including Mars, Nestlé and 3M have partnered with the Tsay Keh Dene First Nation people to support their forest protection efforts. Local indigenous people control the companies’ access to lumber and wood pulp – used for product packaging needs – across the 3.2-million-hectare area to ensure sites of cultural significance are preserved. Groups like the Earthworm Foundation and the Rights + Resources Initiative are supporting such efforts to accelerate corporate best practices and build direct relationships with local forest communities.

Built Environment & Heavy Industry

Laing O’Rourke, a founding member of ConcreteZero, has introduced a mandate to switch to low-carbon concrete on all new UK projects, in a move predicted to reduce Scope 3 emissions by more than 25% compared to its current concrete usage. The company is switching from conventional concrete to alternatives that incorporate Ground Granulated Blast-furnace Slag and Pulverized Fly Ash, which are industry by-products.

Germany’s Heidelberg Materials has signed a memorandum of understanding with the Canadian government, who will support the company’s carbon capture utilization and storage unit at its cement plant in the country. If the project goes ahead it will create North America’s first carbon-neutral cement plant and is expected to capture over 1 million tonnes of CO2 annually. Energy infrastructure firm Enbridge is developing the carbon sequestration hub where emissions will be stored.

And in South Korea, plans are afoot to add 4 GW of solar power to the rooftops and parking lots of industrial complexes across Gyeongsang province. Companies including Korea East-West Power, Korea Hydro & Nuclear Power, Hanwha Asset Management and Hyundai Electric & Energy System are in discussion with the Energy Ministry regarding their participation. The country, which is short of available land to ramp up its solar capacity, had around 21 GW installed at the end of 2021.

Company Commitments

2 companies joined RE100:

Lotte Wellfood – South Korean food company

Umicore – Belgian recycling company

37 companies committed to set science-based emissions reduction targets through the SBTi Net Zero pathway:

ACS Dobfar S.p.A. – Italian pharmaceutical company

Alsico Group – Belgian textiles company

Amer Sports Corporation – Finnish clothing company

BNG Bank – Dutch bank

Boyd (Shenzhen) Thermal Systems Ltd – US-based hardware company

Boyd Plastic and Metal Parts (Shenzhen) Co. Ltd – US-based hardware company

Boyd Vietnam Company Ltd – US-based hardware company