Net zero transition – the latest signals of change: January, 16, 2024We Mean Business Coalition
Happy New Year. To kick off 2024, we have pulled together examples of business and government action towards a net zero economy from across the 2023 end of year round-ups.
Here are 2023’s signals of change towards…
A just transition from fossil fuels to clean solutions
Amid largely worrying analyses of 2023 climate trends, climate scientists have marked 2023 as ‘the beginning of the end’ for the fossil fuel era with experts cautiously optimistic that emissions from energy use have started to peak. Chiming with calls from our Fossil to Clean campaign, Fatih Birol, Head of the IEA, spoke about the end to the era as not a question of ‘if’, but of ‘how soon’.
And evidence of the transition is already writ large. The first half of 2023 saw energy generated by fossil fuels hitting a record low in the EU, making up just 33% of electricity generation across the bloc. This tracks with new IEA research just in, showing the world added 50% more renewable capacity in 2023 than in 2022. Renewables capacity is expanding at the fastest rate in three decades, giving the world a real chance of hitting the target of tripling renewables set at COP28.
2023 also saw the first impacts of the U.S. Inflation Reduction Act coming to fruition, with 170,600 clean energy jobs created since its inception. Initiatives including the The American Climate Corps are skilling up 20,000 young people to build renewable energy capacity and restore ecosystems.
New strides were made in transmission. The world’s longest land and subsea interconnector between Lincolnshire, UK and Denmark started operating on 2 January 2024. Spanning 475 miles, the project can transmit enough clean electricity to power 2.5 million homes.
2023 also saw the expansion of clean energy firms into new markets. Denmark’s Ørsted won the rights to build South Korea’s biggest offshore 1.6 GW wind farm in November. Meanwhile, Abu Dhabi’s Masdar announced plans to develop 10 GW of renewables capacity by 2035 in Malaysia.
In road transport, there were marked shifts away from the internal combustion engine towards electric vehicles. Overall EV sales grew by 26% and 78% respectively in the European and North American markets last year, while China saw record monthly sales in October 2023 – despite an end to subsidies for buyers.
In an example of government policies designed to boost EV uptake, France announced new cash incentives for electric vehicles to come into force from January 2024. Factoring in emissions from production, critical raw materials, and assembly, the ‘green bonus’ will reward the greenest EVs made in France and the EU with up to €7,000 available per car.
Meanwhile, technological breakthroughs could ensure the more efficient use of the minerals critical to producing EVs. Swedish scientists have developed a method for recycling electric car batteries that allows for the recovery of 100% of the aluminium and 98% of the lithium.
And more automotive companies are signalling the switch to electric. In September, Volvo Cars announced that it will cease production of all diesel-powered vehicles by early 2024, responding to shifts in consumer demand for electric vehicles and stringent emissions regulations. Several automakers have already committed to phase out ICE vehicles ahead of 2030, including Jaguar Land Rover (2025), Alfa Romeo (2027) and Vauxhall (2028).
While in freight, Tesla and Volvo Trucks are now bringing long-haul trucks to market. Reliable charging infrastructure is crucial to the success of electric freight: a two-year study announced by U.S. National Grid announced with partners including RMI to develop a Northeast Freight Corridors Charging Plan for the electrification of commercial fleets, focusing on major highways.
And in shipping, Danish company Maersk launched the world’s first green container ship, powered by green methanol produced using solar power. The 172-meter-long vessel is the first of 25 methanol-powered ships ordered by Maersk, aiming to save 2.75 million tonnes of CO2 annually. 2023 also saw a worldwide doubling in the announcement of green shipping lanes to 44.
2023 Highlights from the We Mean Business Coalition
Our policy and advocacy work with partners around the G7 and G20 showed once more how the business voice can be a catalyst for change. Ahead of COP28, 200+ businesses called for a just and equitable transition from fossil fuels to clean solutions through our Fossil to Clean campaign, helping to pave the way for the world’s first global agreement – however imperfect – to phase out fossil fuels.
On the road to Dubai, our Corporate Climate Stocktake supported by the Climate Champions Team and Bain & Company gave a unique snapshot of corporate climate action in eight hard-to-abate industries. The findings highlight the major barriers to action, and policies to overcome them.
Together with Ecosystem Marketplace we published evidence that companies engaged in the voluntary carbon markets outperform their peers in accelerated climate action. It built on our research with Conservation International released in January, which found that 89% of business leaders see the responsible use of carbon credits to protect and restore nature, as important to reducing emissions (89%).
In 2023 we launched new tools and consolidated guidance to help companies achieve their climate targets in line with science and The 4 A’s of Climate Leadership Framework, including:
- Greenhouse Gas Reporting Guidance for Accounting and Finance Professionals
- The Responsible Policy Framework
- The Just Transition Resource Platform
- EU Green Taxonomy in Practice: White Paper 2023
As of the start of 2024, 7,100 small and medium-sized businesses are now accessing tools and resources through the SME Climate Hub, which is now available in Arabic. Meanwhile, early adopters have signed up to create tangible action throughout the supply chain via the Supplier Cascade, launched with Coalition partners in September.
2023 saw high-profile partnerships inked between Swedish start-up H2 Green Steel, producer of green hydrogen-based steel, and several leading companies. First Movers Coalition member Scania placed its first order in June, supporting the firm’s efforts to reach 100% green steel in its truck manufacturing – each truck is made of about four tonnes of steel. Mercedes-Benz signed up to receive ~50,000 tonnes of green steel to its European production annually. Volvo Group secured a long-term agreement to receive near-zero emissions steel, starting from mid-2026. IKEA ordered green steel for warehouse racking, the firm currently accounts for 50% of the global warehouse racking demand. And Porsche signed an agreement in October, for up to 15% of its steel demand.
2023 also saw an upswing in the announcement of green hydrogen agreements and infrastructure development. The UK and Germany announced a clean hydrogen partnership to advance the development of hydrogen as a net-zero fuel. A month later, Scotland’s Net Zero Technology Centre (NZTC) secured £200,000 in government funding to conduct critical research on the feasibility and economic potential of exporting hydrogen from Scotland to Germany.
October saw the U.S. Department of Energy announcing a $7 billion initiative to build seven Regional Clean Hydrogen Hubs nationwide, aiming to expedite the deployment of affordable, clean hydrogen. These hubs, collectively producing three million metric tonnes annually, will contribute significantly to the 2030 US hydrogen production target, lowering emissions in challenging industrial sectors.
Meanwhile at COP28, the Cement and Concrete Breakthrough Initiative was launched by Canada and the UAE, with a focus on international collaboration to decarbonize the cement and concrete industry and achieve net zero by 2050.
While heat pumps outsold gas boilers in other European countries last year, the UK has been slower on the uptake. However, new moves are making heat pumps more accessible to UK residents. UK renewable energy supplier Octopus Energy announced its £3,000 heat pump, offering free installation for well-insulated homes under the government’s boiler upgrade scheme. Hot on their heels, in December Swedish clean energy company Aira announced plans to invest £300m in UK academies to train installers, to help 1 million UK households shift from gas boilers to heat pumps.
November saw a boost for the U.S. heat pump market, with the U.S. Department of Energy announcing $169 million for nine projects, under President Biden’s Inflation Reduction Act and the Defence Production Act. The move is expected to create 1,700 green jobs and will accelerate electric heat pump manufacturing at 15 sites across the country.
Meanwhile, a group of world’s largest companies have made Sustainability’s 2023 top ten list for the most sustainable headquarters. The list, which features Amazon, Apple, Google, and Microsoft, showcases green buildings with a gold LEED rating or above. Salesforce cinches the number one spot for its Platinum LEED rated Salesforce Tower in San Francisco, which sources 100% renewable energy and uses 50% less energy per square foot than the median U.S. office building.
New standards introduced in 2023 are set to help finance flow to the most sustainable companies. In June 2023, the International Sustainability Standards Board (ISSB) published its first two global sustainability reporting standards, including requirements for reporting Scope 3 emissions and material information on climate-related risks and opportunities. Regulators of the world’s top stock exchanges then endorsed the standards as being ‘fit for purpose’ for capital markets. The standards are expected to impact 100-130,000 companies in countries outside the US and EU.
In July the European Commission adopted the European Sustainability Reporting Standards (ESRS), covering climate change, biodiversity, and human rights, and ensuring interoperability with global standards. The ESRS will impact around 50,000 European companies and non-EU companies with significant operations within the bloc.
Lastly, in October, California passed the US’s first mandatory climate reporting laws, requiring up to 10,000 large, listed and unlisted companies with activities in California to disclose their environmental data and risks from 2026.
Protecting and restoring nature:
The U.S. rounded off 2023 with an announcement that the Environmental Protection Agency had conducted a record number of on-site inspections of polluting industrial sites in 2023, opening nearly 200 criminal investigations. Meanwhile, the Biden administration moved to protect old-growth forests and limit logging to address climate change threats.
There was good news for Brazil too. During the first six months of President Luiz Inácio Lula da Silva’s term, deforestation dropped by 34%, marking a positive shift from the previous four years of rising destruction under former president Bolsonaro. Lula also declared six new indigenous reserves, covering approximately 620,000 hectares, including a vast area of the Amazon rainforest, with a ban on mining and stricter rules for commercial farming and logging.
The EU moved to tackle deforestation head on in June with a new law to prevent the import of coffee, beef, soy, and other goods linked to deforestation. The law requires companies to provide due diligence statements on their supply chains’ environmental impact or face fines, aiming to combat deforestation responsible for 10% of global greenhouse gas emissions.
June also saw the UN adoption of the world’s first-ever treaty to protect marine life in the high seas, covering almost half of the Earth’s surface.
2023 saw more firms invest in the potential of agrivoltaics – combining farming with renewable energy production. French utility firm Engie unveiled its 66 MWp solar farm in Sicily, which will provide electricity to power online retailer Amazon’s Italian operations. The move marks the first agrivoltaic project in Italy resulting from a corporate Power Purchase Agreement contract between two private companies.
Meanwhile, Nestlé announced plans to transition 100,000 acres of its wheat supply chain to regenerative agriculture for its DiGiorno frozen pizza brand. Partnering with ADM and Ardent Mills, it will support US wheat farmers with financial assistance and technical resources. The global food giant wants regenerative agriculture to make up 20% and 50% of sourcing by 2025 and 2030 respectively.
Decarbonizing global supply chains
February saw IKEA expanding its renewable supply chain programme to more than 10 countries, providing direct suppliers with bundled framework agreements and Power Purchase Agreements to enable the procurement of renewable energy. The expansion follows news that in 2022, increased clean energy procurement delivered a 5% reduction in the company’s climate footprint.
Over a third of public companies now report Scope 3 emissions according to a report from MSCI launched in May. But despite improvements in disclosure, direct emissions from these companies have yet to drop in line with the cuts needed to limit global temperature increases to 1.5°C.
The SBTi published new guidance for companies on Scope 3 decarbonization in June 2023. The guidance advises larger companies on how to engage with their supply chains to encourage suppliers to establish their own science-based targets and on how best to address significant environmental impacts in their supply chains.
Meanwhile in November, AB InBev partnered with South Pole to establish a renewable electricity group buying initiative aimed at accelerating supply chain decarbonization across Europe. The network will allow suppliers to source power purchase agreements and access training. Scope 3 emissions made up 85% of AB InBev’s total emissions in 2022.
Companies taking action
2023 saw a 41% increase in company commitments to Coalition-supported climate initiatives as compared to 2022.
As of this month, over 14,000 companies are taking action through Coalition partner initiatives. See all companies who committed in the past month on the We Mean Business Coalition website.
Companies setting their ambition for net zero include:
- 7164 companies are working to cut their emissions in line with science through SBTi
- 7170 small and medium-sized enterprises are working to cut emissions with the SME Climate Hub
- 464 companies have now signed the Climate Pledge, to reach net zero by 2040.
Meanwhile, companies are driving down emissions through the following demand-side initiatives:
- 130 companies are accelerating the transition to electric vehicles with EV100, and 5 companies are kickstarting the transition to zero-emission medium- and heavy-duty vehicles with EV100+.
- 128 companies are committed to improving their energy efficiency through EP100.
- 426 companies have committed to 100% renewable energy with RE100
- 38 companies have joined ConcreteZero to create a market for net zero concrete
- 45 companies have committed to SteelZero to create a market for net zero steel
World Economic Forum Annual Meeting – 15-19 January
Africa Green Economy Summit 21 – 23 February
10th World Water Forum 18-24 May 2024
FT Moral Money Summit 22 – 23 May 2024