Prior to the Covid-19 crisis, the world was beginning to wake up to the enormity of climate change and the urgency of transitioning to a climate-neutral economy. Governments, corporations, investors and the public were starting to drive activity at a pace not previously seen. Then Covid arrived. Economic activity plummeted, corporate revenues declined and government debt rose to at an all-time high.
At the end of April, over one third of the world population was in some form of lockdown; production facilities, global supply chains and transportation of goods and people came to a grinding halt; shops, offices, schools remained closed for weeks, leading to a contraction of GDP never before seen in our lifetimes. The Bank of England believes that world GDP could fall by over 20% in Q2-2020, and world trade is expected to contract by around twice as much in 2020. Yet the IEA estimates that carbon emission will fall by only 8% this year. This shows what a monumental challenge it will be to truly decarbonise the economy, and that the Covid-induced recent changes to how live, travel, and run our economies were merely the tip of the iceberg. What is required to become carbon neutral is much more fundamental and will impact every aspect of our day-to-day lives. What we eat; where we go and how we get there; what we buy, what the products we buy are made from, and where and how they were made.
As the reality of the economic impact becomes clear, governments are developing their plans for economic stimuli. A plethora of voices is calling for the stimuli to be linked to addressing climate change, a ‘Green Restart’. Additionally, Covid has forced a fundamental change to the way many industries operate. Changes that might have taken 10 – 20 years in any normal economic evolution have been forced upon industries in a matter of weeks. With this backdrop, organisations have a compelling opportunity to embed carbon neutrality at the heart of their future focus – either as a condition of government funding or at the core of a purpose-led strategy.
Of equal importance are the structural changes required to how we produce energy, how we heat our buildings and how we decarbonise heavy industry. Hand in hand with that goes the exercise to educate and inform, so people can make the right decisions day to day.
Baringa have been leading in this push for the past ten years, helping organisations determine their correct decarbonisation strategy or investment decisions, identifying new commercial opportunities/risks and helping them structure and run more effective low carbon businesses.
In this series, we explore the critical success factors to make this journey successful. We look into the roles of governments, investors and corporations, discuss opportunities and risks that climate change poses to organisations, and introduce some of key new technologies and what the path ahead might look like for hydrogen, heat, transportation, batteries and carbon capture. We’ll also look at how to measure your carbon footprint and how to reduce it.
Delivering net zero is an immense undertaking, but it is one that we don’t have a choice but to make a success.