SUSTAINABILITY – THE ROLE OF INNOVATION IN THE RACE TO ZERO

We Face an Existential Crisis

We must transition to a more sustainable way of life. The exhaustion of our planet’s resources and the climate emergency are an existential crisis. We cannot continue pumping carbon and other pollutants into our atmosphere and we cannot continue to increase our use of the planet’s resources in lockstep with our increasing population, which has more than trebled in David Attenborough’s lifetime.

We are already seeing the effects:

• Rising temperatures, heatwaves and droughts.
• Rising sea levels, ocean warming and acidification.
• Impact on ecosystems, food and farming.
• Impact on the availability of fresh water.

These are very difficult problems to solve, not least because they cannot be solved within national boundaries and our international institutions are relatively weak. However, the good news is we are starting to make real progress and there is a renewed sense of urgency.

Sustainability is firmly at the front of government policy around the globe and firmly on the board agenda of every major corporation. This combination of government regulation and business leadership is driving innovation that will, as Bill Gates argues in his new book, be pivotal in avoiding a climate disaster.

The Race to Zero

A core element of these initiatives is the Race to Zero. This is a global initiative to commit businesses, cities and regions to achieving net zero carbon emissions:

• We need to stop driving carbon into the atmosphere completely by 2050 and be half-way there by 2030.

• Right now, we’re dumping 51 billion tons of carbon equivalent pollution into the atmosphere every year and we need to reduce these emissions by at least 10% a year.

• 75% of these emissions come from the 20 largest emitting countries and from four sectors of their economies – the electricity grid, transportation, building and industry.

What is needed is nothing less than the reinvention of our industrialised economy. In order to reach net-zero by 2050, we must decarbonise the electricity grid worldwide and electrify everything that currently relies on carbon fuel. We must find ways to eliminate the carbon emissions generated by:

Innovation will play an absolutely critical role in achieving this transition. For example, in order to decarbonise the electricity grid, we need a breakthrough in battery technology to provide much higher energy storage density, at much lower cost, and with less reliance on scarce resources such as cobalt.

Transition to a Circular Economy

The Race to Zero is one half of the puzzle, the other is the transition to a circular economy. We can’t keep developing and growing our economies, and increasing production, while all the time using more and more resources.

We have to decouple growth from consumption and start to close the loop. This means designing for reuse from inception:

• Every time we make something from scratch, using raw-materials and energy, we increase our carbon emissions and deplete the Earth’s resources. Every time we reuse something, we conserve those resources and avoid those emissions.

• A well-publicised example is the production of aluminium, which is incredibly energy intensive (about 17,000 kWh per tonne). Yet aluminium is also very suitable for reuse and recycling, which is much less energy intensive.

Re-Greening Our Planet

Billions of dollars will be spent in the coming years building carbon capture facilities to suck carbon from the atmosphere. However, we already have the most efficient method of carbon capture readily to hand. An acre of trees can capture around 10 tons of carbon dioxide per year and some, like the Empress Tree, can capture more than 100 tons.

Deforestation causes about 10 percent of global emissions. When trees are cut down they no longer capture carbon dioxide from the atmosphere and, through rotting or burning, often release what they have captured back into the air. Deforestation is robbing us of one of the most effective tools we have to mitigate the effect of our carbon emissions.

More broadly, biodiversity in general is affected by climate change, with negative consequences for human well-being. And biodiversity makes an important contribution to both climate change mitigation and adaptation. Conserving biodiversity is critical to addressing climate change.

A recent World Economic Forum report concluded that “First, businesses should do what they can to save the planet: reduce carbon emissions and nature loss, eliminate waste and switch to renewable energy sources. Nature positive transitions across infrastructure, energy, food, land and ocean use could lead to $10.1 trillion in annual business opportunities and 395 million jobs by 2030.”

Leadership, Investment and Innovation

International and national policy makers have a vital role to play in driving this transition, as do the leaders of our largest companies. And there are many great examples of innovation and progress:

• China’s regional and city leaders have invested massively in the infrastructure for electric vehicles and, as a consequence, the country has almost half a million electric buses (compared to less than 100,000 in the US).

• Norway is redeploying offshore oil expertise to build offshore wind farms, which require the same underwater construction know-how. Norway also leads the way in adoption of electric vehicles, with 40% of new car sales being electric.

• Apple’s environmental policies are led by a former head of the EPA, Lisa Jackson. They are already carbon-neutral as a company and plan to extend that to encompass their supply chain and their customers by 2030 – this is leadership.

• 75% of BMW’s electricity consumption is from renewable sources and they are committed to 100% by 2050. They will offer electric versions of all their models by 2025 and are aiming for 15-25% of sales to be electric by that date.

• VW will launch 70 new electric models by 2028 and are committed to making the entire company carbon neutral by 2050.

• In Holland, the horticultural and agricultural industries recycle carbon dioxide from power stations and feed it into their immense greenhouses to promote plant growth.

• In the UK, water companies are committed to providing net zero water supply to all their customers, domestic and industrial, by 2030.

• The UK government has set a deadline of 2030 for phasing out the sale of internal combustion engine cars and most other European countries have passed similar laws.

Implications for Business Leaders

The need to provide leadership in the transition to a sustainable economy is now front and centre for every company. There are four factors which are focusing minds in boardrooms around the globe on this issue:

1. The Size of the Opportunity

We are transitioning to a sustainable economy, a revolution on the same scale as the industrial revolution itself, and one that provides the same scale of opportunities. For example:

• The electric vehicle battery market is a $35 billion industry, forecast to grow to $133 billion by 2027.

• First movers, like Tesla, can capture dominant market share very quickly (and become more valuable than all the other car makers combined!).

• Moving to a circular economy reduces costs and improves supply chain resilience. In many ways, it’s now cheaper to save the planet than it is to continue ruining it.

2. Regulation and Compliance

If the economic upside of transitioning to sustainability is not sufficient motivation, then regulation will provide the necessary incentive. For example:

• European governments setting deadlines for the phasing out of internal combustion engine vehicles.

• Regulators setting mandatory targets for generation and use of renewable energy and for achieving net-zero carbon emissions.

• Governments establishing carbon taxes and legally binding carbon budgets.

3. Investor sentiment

Investors are increasingly looking at environmental, social and governance (ESG) factors as a fundamental indicator of company risk and performance:

• In the past six years, global assets managed according to sustainable-investment strategies more than doubled to $30.7 trillion, equivalent to one-third of all managed assets (source: McKinsey).

• ESG controversies wiped $500bn off the value of Fortune 500 companies in the last five years (source: Bank of America).

4. Customer and Employee Pressure

Customers and employees are increasingly factoring a company’s environmental commitments and track record into their decision making:

• 70% of customers, across industries, will pay 5% premium to “go green” (source: McKinsey).

How Are Companies Responding?

Sustainability expert and board advisor Dr Mark Wade categorises companies as moving through five stages of maturity in their response to this challenge.

It is the Innovators and Leaders, companies like Tesla, that are actively investing and collaborating in the development and application of new technologies we need to drive the transition to a sustainable economy.

Where is your company on this maturity curve and where would you like to be?

As Bill Gates says so clearly, in his book, How to Avoid a Climate Change Disaster, “We need to deploy the tools we already have, like solar and wind, faster and smarter, and we need to create and roll out breakthrough technologies that can take us the rest of the way” to zero carbon emissions.

He gives many examples of the areas where we need innovation, including finding ways to:

• Make and store carbon-free electricity, such as off-shore wind power, geothermal, battery technology, pumped hydro energy storage, and cheap hydrogen.

• Capture carbon and remove it from the atmosphere, such as direct air capture technologies.

• Eliminate the enormous quantities of CO2 generated by use of cement in construction, such as making cement from seawater and CO2 captured from powerplants.

• Reduce the CO2 and methane released by farming and agriculture, such as reducing demand for meat, developing cultivated meat, and synthetic fertilizers.

• Eliminate emissions from transport, such as use of carbon-free alternative fuels and the adoption of electric vehicle technology (requiring innovation in battery technology).

• Become energy efficient in heating and cooling, such as increased use of heat-pumps, electrification of heating systems, improved insulation, and green-building technologies.

Data driven sustainability

Governments and corporations are investing heavily in transforming the use of data to inform and manage their sustainability strategies. For example, a key element of the UK government’s £12bn plan for the Green Industrial Revolution is the use of operational data held by electricity companies.

The Energy Data Taskforce (commissioned by the Government, Ofgem and Innovate UK) highlights that moving towards a modern, digitised energy system is being hindered by poor quality, inaccurate or missing data, while valuable data is often restricted or hard to find. To address these issues, the government is funding energy data innovation competitions and launching an energy industry data strategy, as set out in the Department for Business, Energy & Industrial Strategy (BEIS) Whitepaper – Powering our net zero future

As Jonathan Cook of Zuhlke Engineering observes: the government is urging electricity companies to open up their operational data as part of the decarbonisation drive. The innovation competitions they are funding provide companies, like Zuhlke and others, an opportunity to participate and use their skills to accelerate achievement of national goals.

Smart Energy and Intelligent Automation

The transition to a more sustainable system of energy production, distribution and consumption will draw heavily on innovative use of AI and Intelligent Automation. This is illustrated by two case studies which show how companies are using these technologies to reduce energy consumption and wastage.

The first is the use of Intelligent Automation by Hovis, the bakers, to reduce food waste and energy consumption in their baking production:

• UK Food waste is worth approximately £20bn annually and bread waste accounts for a fair proportion of this. Hovis worked with Intelligent Automation specialists AltViz to address a bottleneck in their order management system which was a key contributor to finished product waste.

• Each morning Hovis predicts which products to bake and starts production prior to receiving final customer orders. These orders pass through a series of back office systems before making their way to the bakeries. This delay, which can be 90 minutes, contributes to potential overproduction if the final order volume is less than predicted.

• AltViz applied Intelligent Automation to aggregate these customer orders with other data and send the bakers final order quantities immediately, cutting out the delay, and generating a 50% reduction in express order food waste and a 35% saving in associated costs and energy usage.

The second is the use of machine learning to enable a large property developer and operator to better understand and predict the energy consumption of their buildings:

• They worked with Filament, an innovative AI consultancy specialising in machine learning and natural language processing, with the objective of reducing energy consumption in apartment buildings.

• Filament ingested and cleaned energy consumption data, merged it with external data on weather and holidays, and applied supervised machine learning algorithms to arrive at a solution able to predict future energy consumption with over 97% accuracy.

Next Steps

So, how should companies engage with this challenge and play their part in driving the innovation necessary for us all to achieve our goal of getting to net-zero emissions by 2050 and being half-way there by 2030?

The first step is to understand your own company’s carbon footprint and commit to your own, company specific, goal for carbon-neutrality. This has to be more than an arbitrary target. It has to be baked into your strategy and operational plans. This is why several leading companies are now appointing Chief Sustainability Officers to provide board level accountability for their sustainability goals.

The second step, having set your goals, is to work out how you will achieve them. Not just the immediate, low-hanging fruit, but also longer term, systemic changes to your business, including your customers, suppliers, products and distribution.

By way of guidance, in his book, Bill Gates sets out six “to-dos” for large companies:

1. Set up an internal carbon tax.
2. Prioritise innovation in low-carbon solutions.
3. Be an early adopter.
4. Engage in the policy making process.
5. Connect with government-funded research.
6. Help early-stage innovators get across the valley of death.

Above all, get started. The transition we need to make here cannot be achieved entirely through incremental change. We need breakthrough innovation in so many areas. We need to transform almost every element of our economy over the next few decades. So, no matter where your business is focused, there are changes you can and must make.

Conclusion

The burning platform is the one we live on (planet earth). We face a stark choice. Invest in the transition to a sustainable economy or bear witness to the slow train wreck of our civilisation.

Business leaders around the world are taking up this challenge. We have been slow to respond but we are picking up the pace. The Race to Zero is underway.

The leaders in this race will be those who invest in the necessary innovation. It surely is a case of “Innovate or Die”.

Acknowledgements

Contributors to this article include:

• Dr Mark Wade, who offers a unique range of experience in bringing sustainable development to the mainstream of major corporations and has a passion for developing responsible leadership. His ground-breaking work encompasses both ‘hard-wiring’ (reporting, governance, systems and processes) and ‘soft-wiring’ (the hearts and minds of leaders) to generate the ‘will, thrill and skill of sustainable development’.

• Jonathan Cook, who leads Zuhlke Engineering’s business development in energy sector data transformation. Zuhlke’s mantra in this area is “delivery is strategy” and they are at the forefront of several innovative projects that will play a big part in modernising energy distribution in the UK.

• Richie Barter, CEO of AltViz and a leading authority on intelligent automation of complex processes. AltViz’s Intelligent Automation Platform can improve business performance and help to drive sustainable outcomes by enabling companies to access, analyse and act on data, using machine learning and other powerful AI techniques.

• Doug Ayres, Co-Founder of Filament, the AI consultancy specialising in the application of machine learning and natural language processing. These technologies will be key to building the smart energy systems and processes needed to get us to net-zero.

Key sources for data and examples used in this article are:

• 2021 UN Climate Change Conference (COP26).

• How to Avoid a Climate Disaster, by Bill Gates.