The United Nations’ Sustainable Development Goals (SDGs) include ambitious energy conversion efficiency targets and to significantly accelerate the deployment of renewable energy by 2030. Along with the Paris Agreement, these international frameworks for action show that the transformation of the energy sector is critical if we are to meet our sustainability targets. Fortunately, technology to reduce carbon emissions are in development, but the change is not happening fast enough to meet the energy and climate policy objectives. A more rapid transition to clean energy is needed.
Innovation is required to drive the energy transition process and decarbonise the energy sector. To reach net zero emissions and limit global warming to less than 2C requires a reduction of energy related carbon dioxide (CO2) emissions of nearly 70% from 2015 levels. Many governments and multi-national organisations have recognised that there is insufficient investment in research and innovation to achieve the performance improvements and cost reductions at the pace needed to transition the world’s energy systems to low carbon by 2050.
To supercharge innovation in the energy transition, companies need to consider the conditions required to nurture innovation and produce new technologies for a low-carbon future. Professor Tadhg O’Donovan, Deputy Vice Principal and Head of School of Engineering & Physical Sciences at Heriot-Watt University in Dubai, discusses how companies can develop business models that support innovation along with the key technologies that can accelerate the transition to a low-carbon future:
Digital business models
As electrification becomes more prevalent across industries and energy-demand patterns shift, deep structural changes within the energy system are required. According to the IEA’s Net Zero Emissions by 2050 (NZE), 240 million rooftop photo-voltaic solar systems and 1.6 billion electric cars need to be integrated into the power system by the middle of this century, while more than 85% of the world’s existing building stock must be retrofitted to meet zero-carbon standards. Smart business models that could yield extensive insights and optimise operations are necessary to meet the pace of changes required to achieve these goals.
Fortunately, innovative technologies and access to new types of data increased the potential of digital business models to facilitate clean energy transitions. Digital business models can give access to more granular data. Combined with advanced analytics capability, companies can accurately quantify the benefits their solutions bring to customers. This can also help speed the development of new products and services. Digital tools and platforms can ease and accelerate the energy transition by facilitating efficiency and demand-side flexibility. At the same time, digitalisation creates new business opportunities and revenue streams for energy service providers, while helping consumers to better understand their energy use and adapt energy usage patterns to lower their bills.
Transitioning industrial clusters towards net zero
The World Economic Forum, in collaboration with Accenture and EPRI, launched the initiative ‘Transitioning Industrial Clusters towards Net Zero’ at COP26 in Scotland, to accelerate the transition of industrial clusters globally toward net zero emissions. According to Accenture, almost 70% of the global economy has committed to net zero. To meet these commitments, industrial clusters will have a key role to play. Through the initiative, a structured approach to financing, policy, technology and partnerships, combined with best practices from committed clusters, will enable other global clusters to accelerate their alignment on net zero targets. Additionally, multi-stakeholder collaboration is required to align on cluster-level goals. By 2024, the initiative aims for 100 industrial clusters to be signed up.
Industrial clusters are geographic areas that comprise co-located companies representing either a single or multiple industry. The presence of multiple industrial energy consumers in proximity creates opportunities to scale low-carbon technologies by aggregating demand and forming a captive market. With the ability to share risk and resources among multiple partners, industrial clusters also allow for the creation of a digital integrated system that is cleaner and more reliable. This will inevitably facilitate the integration of renewables given it includes a significant contribution from renewable energy sources and support of behavioural change to live more sustainably.
Innovation requires a multidisciplinary, portfolio approach.
Because the most attractive new solutions are often found at the interface of different areas, such as between the energy sector and ICT (Information and Communications Technology), a multidisciplinary approach is always encouraged. Innovation policy frameworks need to ensure a balance between potentially competing approaches and include public investment in research. Aside from technology in the initial R&D (research and development) stages, innovation should cover the complete technology lifecycle. Investing in R&D in isolation will not yield results. Finally, innovation policy design should include flexibility as low carbon-technologies may need to undergo changes as the transition pathways evolve and technology progresses.
Overall, international cooperation is key in the energy transition. Strong collaboration between the government, private sector and civil society are indispensable to achieving SDGs by 2050. There is an enormous potential for innovative technologies to accelerate the transition to a low-carbon future. However, behavioural change and commitment to live more sustainably should not be underscored.
