President Biden has set a new ambitious goal for the USA: to halve carbon emissions by 2030.
As problem solvers striving to create sustainable infrastructure and energy for future generations, Wood welcomes this vision for the role of US in the energy transition.
It is a bold and necessary step if we are to get the 2015 climate goals back on track. It also re-establishes a global leadership position for the US on the pressing issue of climate change and decarbonisation.
However, it is only a target and achieving it will be considerably harder than setting it. Delivering a 50% reduction in less than a decade will require sweeping changes in every part of the nation’s economy, and a massive restructuring of how we generate, distribute, and consume energy.
So how do we do it? How do we rise to meet the challenge before us? Here are some of my thoughts on the actions, challenges and critical questions ahead.
Roadmap the journey, don’t just state the destination
Recently, I have been reflecting, on what we have witnessed as a “say net zero now, work out how later” convention among global corporates. ESG is a hot topic in the executive C-suite and in the all-important financial community. Many corporations have loudly stated commitments to reach net-zero by 2050, but we need to see more action, roadmaps and spending plans to achieve their commitments.
The Climate Action 100 benchmark in March 2021 looked at over 150 companies, finding that while 72% have committed to TCFD climate reporting and 52% have set a net zero target, still only 9% have a clear, decarbonisation strategy to deliver on their ambitions.
The time has come to move from conversations and pledges to solutions and action. The “what” (net zero by 2050) sounds terrific. The “how” (solutions and actions to get there) is of much greater interest for those of us in the engineering and scientific community that want to realize a cleaner environment, meet the demands of society and the economy, stimulate growth and profits, create jobs, and meet regulatory requirements.
At Wood, we have been developing a structured and dynamic process to bring together the breadth of our expertise and innovative technology solutions, that can chart the journey to achieving decarbonisation goals. We call it our SCORE methodology and it is helping clients understand the right substitution, capture, and offsetting options, and evaluate their economic and operational potential.
Quantify resiliency & sustainability to help finance the transition
The same what and how challenge is true for governments and nations, which bring even greater complexity and uncertainty. Also, governmental entities traditionally struggle even more than businesses to secure capital investment in the kinds of projects that will deliver more sustainable and resilient outcomes.
I expect the biggest debate surrounding President Biden’s latest infrastructure proposal and the decarbonisation goal will not be whether we need better roads, cleaner power generation, a modern rail system, and improved water treatment facilities. The challenge will be how the combination of user fees, gas taxes, corporate taxes, tax incentives, private-sector funding, and other financial mechanisms will raise sufficient money to make these improvements happen.
Wood is working closely with a number of clients – importantly governments and financial institutions - to apply tools like ResilienceLens that can quantify complex criteria, enabling sustainability and resiliency to be integrated into the very fundamentals of capital investment and new projects.
Innovate, engineer and adapt new solutions for net zero
While there are many paths to get to the target, and actions will vary across geographies and end market sectors, the common theme is that they all require huge scale transformation. We need to have a laser focus on what will deliver the most emissions reduction in the fastest time.
So, what will this involve? We will need to identify the assets, emissions sources, and locations to prioritise. We will need to define the criteria of new projects. We will need to understand the technologies and solutions to be deployed, be it carbon capture, energy efficiency improvements, renewable power, hydrocarbon feedstock substitution, hydrogen vectors, and electricity storage and distribution. And we will need digital tools like Wood’s ENVision platform to track and report in real time on impact emission footprint.
As the transformation will not happen immediately, we will also need to efficiently design, operate, maintain, retrofit, and optimise the conventional energy assets that will be part of the energy mix during the period of time necessary to accomplish the energy transition. In tandem, governments will need to assess the policies, regulations, pricing schemes, and laws required to facilitate a rapid transition.
A successful transition needs the commitment of a nation
Beyond the ingenuity and investment required, the scale of the transition will require new skills and mindsets. It is going to mean a new normal.
We have a phrase in the US that comes up often in energy, environmental, and infrastructure discussions: “Not in My Backyard (NIMBY).” Of course, we need that waste management facility, but not in my backyard. Yes, the faster and cleaner rail transit line is a terrific idea, but I want it at the lowest cost, regardless of the resilience to future issues. A developer has recently secured approval to build a 5 MW solar power facility in the farmer’s field about 750 feet from my house – great but what does that mean for the power station that is the heart of this local economy and community?”
These are the challenges and opportunities that we are going to have to address to deliver the changes needed to meet this goal:
- An exponential increase in power generation from renewable sources such as wind, solar, geothermal, or hydropower.
- New natural gas facilities with state-of-the-art carbon capture, while remaining coal plants will shut down.
- A majority of new cars will need to be battery-powered, industrial process industries will need to be bound by new energy-efficiency targets.
- And the nation’s green spaces would expand with natural climate solutions used to preserve important wetlands and forested areas that play a role in carbon capture.
Cultural change is popular MBA-speak in big business, but it is not just a buzzword. It is exactly what is going to be needed if we are going to create the right environment, build public support, cultivate the right talent, and develop the right solutions to achieve the carbon reduction goals at the same time as meeting demands of society and the needs of an energy-hungry economy.
During this historic period, the energy transition will lead to significantly reduced carbon emissions that will require both technical and people solutions. This is the journey that Wood is taking with many of our clients around the world, and we are glad that President Biden is on board. This is our space race, and we can win it.