Deloitte has released a roadmap outlining strategic initiatives and cross-sector collaborations to help make net-zero emissions by 2050 a reality.
Edited by Josephine Patterson
In Deloitte’s recent report, “Energy Transition: The Road to Scale,” the business consulting firm explores five strategic verticals that are at the forefront of the energy transition, each requiring scaling in a phased manner, innovation and adaptation to help catalyze impact globally.
“Achieving net-zero goals by 2050 does not offer much flexibility. We must act with urgency, and collaborate across industries, to help ensure a successful energy transition – one where neither the financial nor environmental costs are too high for us to bear on a global scale,” said Stanley Porter, vice chair, Deloitte LLP and U.S. energy, resources & industrials leader.
Prioritizing infrastructure decarbonization. Due to longevity and the high time value of carbon, there is a need for immediate decarbonization of existing infrastructure. Acting now to capture emissions holds greater significance than postponing the process for tomorrow. According to Deloitte analysis, applying the standard time value principle shows that, capturing 1 million metric tons per annum of carbon in 2050 is equivalent to capturing only 0.35 mmtpa today, underscoring its substantial time value.
Expanding and modernizing the power grid for a clean energy transition. As the demand for renewable energy grows, the report indicates that grid infrastructure should evolve to handle increased capacity while maintaining customer affordability. Constructing a new grid typically requires five to 15 years, while the implementation of renewables spans only about one to five years. Further, Deloitte reported that more than 70% of the U.S. electricity grid is over 25 years old, highlighting the need for comprehensive upgrades and modernization efforts, while maintaining consumer affordability.
Boosting industrial manufacturing capacity for the energy transition. Manufacturers are helping drive energy efficiency and process efficiency through smart factory solutions, and play a key role in building capacity to produce the components needed for a transition to lower emissions economies. Deloitte noted in its report that over the past five years, clean energy manufacturing investment has grown fourfold to reach US$80 billion in 2022. Additionally, global solar photovoltaic manufacturing capacity is set to hit nearly 1,000 GW by 2024, surpassing the 2030 target of 650 GW for a net-zero trajectory.
Promoting metals and mining sustainability in critical supply chains. The energy transition is expected to reduce fossil-fuel reliance while increasing reliance on metals and minerals, and altering supply chains, cost structures, and business models. Deloitte reported a switch to wind and solar energy is expected to lead to a nearly 10x increase in metals, minerals and materials demand, compared to conventional energy sources. Similarly, electric vehicles, on average, require 2.5x more copper than a typical internal combustion engine car.
Advancing land, water and waste stewardship. Slowing the pace of climate change necessitates careful stewardship of remaining resources. Key among these are land, which serves as vital carbon sinks; water, essential for industrial processes, energy generation and human life; and waste, which can be transformed into valuable industrial feedstock. Achieving new levels of stewardship, noted report authors, will likely require additional collaboration and innovation across industries and communities.
To help the progression of the energy transition, the Deloitte report outlines three considerations that can catalyze action across the five strategic vertical markets:
Tri-phasing scaling. Emphasizes the incremental and sequential progress of decarbonization, starting from the asset level (a machine, process or facility), then scaling to a system level (set of machines and processes or multiple facilities), and eventually integrating various systems or sectors into a unified low-carbon ecosystem (across processes, technologies, sectors, vendors, and supply chain).
Facilitating acceleration. Leverage tools such as technology, talent, finance, and innovative business models to help expedite the transition’s pace by offering vital support and momentum.
Serving as transition architects. Drive action among policymakers, companies and consumers who may play important roles in shaping the transition’s trajectory, ultimately determining its outcomes.
“These five verticals, working in tandem with the cross-cutting enablers, can set in motion the wheel of energy transition,” concluded the report’s authors.
The “Energy Transition: The Road to Scale” report can be downloaded from Deloitte’s website, www2.deloitte.com.
