The collaborative challenge of decarbonization

By Mariana de Pablo, executive director of Accenture Chile.

The global effort to reach net zero by 2050 faces a huge challenge. Against this backdrop, if heavy industries such as steel, metals and mining, cement, chemicals, and freight and logistics fail to decarbonize, their scope 1 and 2 emissions become scope 3 emissions for other industry groups. Simply put, if heavy industry fails to get on track towards net zero, the entire sector fails.

Utilities have a key role to play in making industrial decarbonization affordable. This is vital because, at present, the costs of low-carbon energy and hydrogen are too high to allow green industrial products to compete with higher-carbon alternatives. Without urgent action, they are unlikely to be price-competitive in the near term.

In addition to cutting prices, utilities also need to massively increase the supply of low-carbon power and hydrogen to give heavy industry confidence that their demand will be met. Without certainty of supply, it is difficult to invest in decarbonizing heavy industry. The World Economic Forum and Accenture’s Net Zero Industry Tracker 2023 report estimates that US$13.5 trillion will be needed to build the clean energy infrastructure needed to decarbonize eight manufacturing sectors. New energy infrastructure will include a mix of renewables, nuclear, green and blue hydrogen, and broader carbon management solutions. But decarbonization also depends on a massive expansion of the electricity grid.

There are a number of important strategies that will help put industrial decarbonization on track towards net zero. First, reducing the costs of new infrastructure will be key, and digitization plays a huge role, as does collaboration. As low-carbon technologies mature, their costs will naturally decline. The market is already factoring in some significant cost reductions through to 2050. However, our Powered for Change research found that a lack of coordinated investments across the value chain has led to a vicious cycle of inaction. Currently, companies invest individually or in small groups. To reach the scale we need, utilities’ investments in low-carbon infrastructure need to be aligned with heavy industry. That requires much closer and more purposeful collaboration.

The energy system of the future will be more complex, distributed, flexible, intelligent and interconnected. It will also be more interdependent. To build this future, many parties, often with different interests, must work towards a common goal.

Decarbonizing heavy industry will be a decades-long program. Utilities will evolve their strategies over that period. However, it is vital that they have a plan. Crucially, utilities must define the role they want to play in industrial decarbonization and be prepared to collaborate more deeply and broadly than ever before. The clock is ticking, and what happens in the next three years will shape overall success in the run-up to 2050.

The content is the sole responsibility of the author and does not necessarily reflect the opinion of BNamericas. Interested parties are invited to participate as a guest columnist to submit an article for possible inclusion. To do so, contact the editor at electric@bnamericas.com