By Glenn Heppell, Resources Lead ANZ, Accenture

At the end of 2023, the year already declared to be the hottest on record, the world’s annual meeting on climate change, COP28, took place in Dubai. The clear takeaway from the conference was a growing sense of urgency to accelerate global efforts to reach net zero. It’s a sobering fact that at the halfway point to the UN’s Sustainable Development Goals, the world is on track to achieve just 15 per cent of our targets.

If we are to reach our stated goal of limiting global warming to 1.5°C, experts believe global greenhouse gas (GHG) emissions must peak by 2025, decline 43 per cent by 2030, and reach net zero by 2050. While progress on decarbonisation has certainly been made since the Paris Agreement, on our current trajectory, we won’t meet these metrics. How we get back on track has been the key theme discussed at COP28.

Business has a critical role to play

According to a new Accenture report, Destination Net Zero, 37 per cent of the G2000 companies are now committed to net zero – up 3 percentage points since 20221. However, our research also shows that only 18 per cent of these companies are cutting operational emissions fast enough, and over half have not yet started cutting emissions at all.

The report also included data from 28 of Australia’s largest companies by revenue. At first glance, the results are encouraging: 96 per cent of the Australian companies surveyed have set net zero targets, compared to 55 per cent of counterparts in other regions.

75 per cent have also published net zero targets across all scopes (1, 2 and 3) compared with 57 per cent in the EU and 26 per cent in the US. While the sample size is small, these signals of intent are important as we know that companies that set targets typically reduce emissions faster than companies who do not, however, tangible action is still lagging.

An area of concern highlighted in the research findings is that Australian companies, in particular, have an over-reliance on carbon offsetting, with 64 per cent relying on carbon offsets to meet their emission goals, compared to 27 per cent globally. Only 11 per cent were seeking to adapt their business models and reinvent their core offerings for a low carbon emissions future. So, what needs to be done? How can action be accelerated to produce real and tangible results?

Decarbonisation levers work, but adoption needs to rise

Increasing the adoption of decarbonisation levers by individual businesses is imperative for accelerating the pace of emissions reduction. While deploying any single additional lever may not be effective on its own, our research indicates companies that adopt ten or more levers see significant reductions in emissions.

In contrast, those adopting fewer than ten levers often find themselves overseeing a continued rise in emissions. Businesses should be aiming to “stack” levers, or simultaneously combine multiple decarbonisation measures.

These levers include renewable energy adoption, process optimisation, sustainable sourcing as well as more complex actions such as upgrading to “green” technology and reinventing business models. The synergies created enhance the overall impact of each lever, creating a more resilient and adaptive framework for sustainable business practices.

Energy-intensive industries need to be supported in their transition

“Heavy” industry sectors, including steel, metals and mining, cement, chemicals, and freight and logistics collectively contribute to almost half (40 per cent) of total global CO2 emissions1. In addition, their Scope 1 and 2 emissions become their customers’ Scope 3 emissions. Reinventing these industries to become more sustainable is really make or break for climate mitigation.

However, placing the burden of the energy transition solely on companies operating within this sector without help or intervention, is unrealistic and unproductive. Decarbonisation ultimately comes down to cost – green alternatives to high carbon products and services are currently more expensive and the technologies that support them are new and not available at scale. To meet net zero, we have to accelerate the speed at which we bring down these costs.

Encouraging investment in advanced technologies such as green hydrogen production, renewable electricity powered processes, and AI-powered sustainable mining practices can significantly reduce the carbon footprint of these sectors and lower-emissions down the supply chain.

This extends beyond the production level to investing in low-emission freight and logistic solutions. The creation of new industrial clusters throughout Australia, similar to the Kwinana cluster in Western Australia, also holds much promise to reinvent heavy industry in a sustainable way.

Investment in clean energy needs to happen in tandem with decarbonisation

Australia cannot succeed in our decarbonisation efforts until a clean energy industry is in place – for the sake of both domestic energy security, as well as creating a clean energy export market that can replace the economic contribution of our historic fossil fuel exports.

Accenture research has found that clean energy exports could be worth $314 p.a in revenue to the nation by 2040. Assuming policy support, by 20401 this could set Australia as a global leader in clean exports; adding more value and more jobs to the Australian economy. But the window to capture this opportunity is closing fast as other countries invest heavily in their own sovereign capabilities. Australia needs its own globally ambitious, proportionate and targeted clean energy policy that will encourage and leverage private investment.

What next?

While investment and innovation will reduce decarbonisation costs and build a renewables industry, these investments simply aren’t happening at the scale or pace net zero requires because the value chain – from energy providers to heavy industry to light industry – is not collectively working together.

We’re currently seeing a siloed approach with leaders focusing on their own organisations, and investors focusing on niche opportunities, rather than a collective effort across the wider value chain. This has created an investment standoff or stalemate, where all parties are waiting for others to move first.

A greater focus on collaboration between the private and public sectors moving forward, along with a reinvention of both business and industry operating models and processes, will be needed to propel Australia’s energy transition and secure our future prosperity as a nation.

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