Closing in on net zero

The path to reach­ing net zero green­house gas emis­sions is at a crit­i­cal junc­ture, with change need­ed as rapid­ly as pos­si­ble. But there are glim­mers of hope, as progress yields cli­mate-friend­ly results – and com­mer­cial oppor­tu­ni­ties.

The US is tak­ing strides to address the threat and is invest­ing $369 bil­lion into clean tech­nol­o­gy via its Infla­tion Reduc­tion Act – but the UK and Europe need to swift­ly fol­low suit if we are to achieve glob­al net zero tar­gets.

That said, mea­sures have been put in place – the EU’s Green Deal Indus­tri­al Plan laid down the goal of mak­ing Europe the first cli­mate-neu­tral con­ti­nent by 2050. Addi­tion­al­ly, the Euro­pean Com­mis­sion’s Net-Zero Indus­try Act aims to pro­mote the use of clean tech­nolo­gies with­in the EU to equip it for the clean-ener­gy tran­si­tion. And, in 2019, the UK became the first G7 coun­try to sign a com­mit­ment to net zero by 2050 into law.

“For the ener­gy tran­si­tion to real­ly work, we need to put equal effort into invest­ing in infra­struc­ture and the grid, as well as the ramp up of renew­ables,” says Ariel Porat, senior vice pres­i­dent and head of Europe at Siemens Ener­gy.

“The two must go hand in hand. The US is demon­strat­ing, with its Infla­tion Reduc­tion Act, a very prag­mat­ic approach – sim­ple and speedy. We can and must learn from this approach.”

Cur­rent progress must be improved upon. The Inter­na­tion­al Ener­gy Agency states that we need nine times more invest­ment in clean ener­gy than in fos­sil fuels by 2030 to reach net zero by 2050. Cur­rent­ly, invest­ment in each is rough­ly equal. Accord­ing to the Inter­gov­ern­men­tal Pan­el on Cli­mate Change (IPCC), which met in March 2023 to address the dilem­ma, lim­it­ing warm­ing to around 1.5°C requires glob­al green­house gas emis­sions to peak before 2025 at the lat­est, and be reduced by 43% by 2030.

“The cli­mate time bomb is tick­ing,” warned UN sec­re­tary-gen­er­al António Guter­res. “But [the] IPCC report is a how-to guide to defuse the cli­mate time bomb. It is a sur­vival guide for human­i­ty. The 1.5C lim­it is achiev­able but it will take a quan­tum leap in cli­mate action.”

The report stressed that, in this decade, accel­er­at­ed action to adapt to cli­mate change is essen­tial to close the gap between exist­ing adap­ta­tion and what is need­ed. Keep­ing warm­ing to 1.5°C above pre-indus­tri­al lev­els requires deep, rapid and sus­tained green­house gas emis­sions reduc­tions in all sec­tors.

Chris­t­ian Bruch, Siemens Ener­gy pres­i­dent and CEO, echoes Guter­res. He said, “The IPCC report should encour­age us to final­ly act instead of dis­cussing the how in ide­o­log­i­cal debates. We must move ahead with decar­bon­i­sa­tion quick­ly and with an open approach to tech­nol­o­gy. Every­thing else is sec­ondary.”

Immediate action

The glob­al tem­per­a­ture will sta­bilise when car­bon diox­ide emis­sions reach net zero. For a rise capped at 1.5°C, this means we must achieve glob­al net zero car­bon diox­ide emis­sions in the ear­ly 2050s.

But are we on track? A recent sur­vey con­duct­ed by Siemens Ener­gy and Roland Berg­er asked around 2,000 ener­gy experts about the progress with­in their region. This data was used to cal­cu­late an Ener­gy Tran­si­tion Readi­ness Index (ETRI) for each region, offer­ing a per­cent­age readi­ness lev­el for their tran­si­tion to net zero. The find­ings are sober­ing. The leader, North Amer­i­ca, is at only 34%. Latin Amer­i­ca lags behind at 22%. Europe, maybe sur­pris­ing­ly giv­en the EU’s long-term cli­mate com­mit­ments, is still only 33%.

“A Euro­pean ener­gy readi­ness score of 33% high­lights the fact that we’ve got so much more still to do,” says Porat. “Europe presents a var­ied pic­ture in terms of progress on its key ener­gy pri­or­i­ties, with pol­i­cy and fund­ing top of most people’s lists.”

Success stories

How­ev­er, with­in each region are suc­cess sto­ries that offer a net zero path for oth­ers to fol­low. Cur­rent­ly lead­ing the way in Europe’s race to net zero is the Nordic region. Nor­way has pledged to be car­bon-neu­tral by 2030 and Swe­den wants to achieve 100% renew­able elec­tric­i­ty by 2040. Part­ner­ships are key to accel­er­at­ing and devel­op­ing solu­tions need­ed for the hard-to-elec­tri­fy sec­tors, for exam­ple inter­na­tion­al mar­itime trans­porta­tion cur­rent­ly accounts for 3% of glob­al car­bon emis­sions. And Dan­ish ener­gy com­pa­ny Ørst­ed — sup­port­ed by Siemens Ener­gy — is build­ing Flag­shipONE, Europe’s largest com­mer­cial pro­duc­tion facil­i­ty for car­bon neu­tral marine fuels in north­east­ern Swe­den. The e‑methanol from Flag­shipONE will be used in state-of-the-art dual-fuel ship engines.

The cost of renew­able ener­gy has tum­bled, too. In 2023, it is now more than six times more expen­sive to gen­er­ate elec­tric­i­ty from gas in the UK than from onshore wind, albeit renew­ables require addi­tion­al invest­ment in stor­age. Research by ener­gy think tank, Ember, shows that decar­bon­is­ing the pow­er sys­tem by 2030 would save the UK £93 bil­lion in gas costs. Net zero relies on mov­ing away from hydro­car­bons, which are exposed to volatile whole­sale pric­ing, towards a sys­tem based pri­mar­i­ly on domes­tic renew­ables.

Peo­ple right­ly talk about ramp­ing up renew­ables, but put less empha­sis on the grid – we need both

Ariel Porat, Siemens Ener­gy

That said, argues Porat, “There is no ‘sil­ver bul­let’ tech­nol­o­gy when it comes to reach­ing net zero. We will need a mix.” In par­tic­u­lar, he adds, “we need to make sure that we invest a lot into infra­struc­ture and the grid. Peo­ple right­ly talk a lot about ramp­ing up renew­ables, but put less empha­sis on the grid – we need both.

“An esti­mat­ed one-sixth of the elec­tric­i­ty gen­er­at­ed world­wide is based on tech­nolo­gies from Siemens Ener­gy. With our port­fo­lio of prod­ucts, solu­tions and ser­vices, Siemens Ener­gy cov­ers almost the entire ener­gy val­ue chain – from pow­er gen­er­a­tion and trans­mis­sion to stor­age.” 

Porat likens adding renew­able and alter­na­tive ener­gy sources to the grid with­out updat­ing it, to “adding arms and legs and organs to a human body with­out con­nect­ing them to the veins.”

The UK Government’s recent inde­pen­dent review of net zero, chaired by MP Chris Skid­more, reached the same con­clu­sion. It argued that the suc­cess of the Nation­al Grid in the 1960s, in bring­ing more capac­i­ty on stream, now needs to be repeat­ed with a sim­i­lar ‘nation­al net zero grid’. This would include the abil­i­ty for renew­able ener­gy projects to con­nect safe­ly to the grid giv­en their poten­tial for surges and peri­ods of pow­er inter­mit­ten­cy, and for bat­tery and oth­er stor­age options, such as hydro­gen. 

Energy grid fit for the future

The grid will also need to be larg­er to cope with increas­ing demand. Accord­ing to Nation­al Grid, to deliv­er the UK Government’s ambi­tion of up to 50GW of off­shore wind by 2030, indus­try must deliv­er more than six times the amount of elec­tric­i­ty trans­mis­sion infra­struc­ture in the next eight years than has been built in the past 30 years. 

The Skid­more Review states: “a busi­ness as usu­al approach will not be able to deliv­er the step change fore­seen to meet our net zero ambi­tions… over­all elec­tric­i­ty demand could increase from its cur­rent lev­el of 330 TWh per annum to between 450–500 TWh by 2035, and between 570–770 TWh by 2050.”

Here, there is excit­ing poten­tial for a ‘nation­al net zero grid’ to be aug­ment­ed by an inter­na­tion­al grid. Siemens Ener­gy is work­ing on the Neu­Con­nect direct pow­er link between Ger­many and Great Britain. This 725km land and sub­sea cable will enable up to 1.4GW of elec­tric­i­ty to move in either direc­tion, enough to pow­er up to 1.5 mil­lion homes. 

“It will help to bal­ance and shift sur­plus ener­gy from one coun­try to the oth­er,” explains Porat. “It goes in both direc­tions. If Ger­many has a lot of wind, for exam­ple, and it does­n’t need all that ener­gy, then it can shift it to the UK, and vice ver­sa.” 

This also begins to solve the inter­mit­ten­cy prob­lem of wind and solar ener­gy, if you can share ener­gy across larg­er dis­tances. “The Neu­Con­nect is just one of the ones that we’re build­ing,” adds Porat. “We also have the Celtic Inter­con­nec­tor between Ire­land and France. And there are con­nec­tions planned between Europe and North Africa, and between Europe and the Mid­dle East. So, if you don’t have wind or sun in one region, but the oth­er has, you can still use it.”

Affordability, reliability and sustainability

Recent dis­cus­sions around ener­gy have also focused on the “ener­gy trilem­ma” – the need to bal­ance afford­abil­i­ty, reli­a­bil­i­ty and sus­tain­abil­i­ty. The cur­rent ener­gy cri­sis and the war in Ukraine have sent prices soar­ing, with an increase in vul­ner­a­ble users unable to pay their ener­gy bills. But with renew­able ener­gy now the cheap­est form of ener­gy, an emis­sions-free future could be afford­able for all. 

A report from the We Mean Busi­ness Coali­tion, a group of influ­en­tial busi­ness­es sup­port­ing action on cli­mate change, con­clud­ed that net zero poli­cies would low­er house­hold ener­gy bills by 28% or €409 ($430) in 2030, and would be slashed by half by 2035. 

“The solu­tions to ener­gy secu­ri­ty are the same as the solu­tions to decar­bon­i­sa­tion”, says María Mendiluce, CEO of the We Mean Busi­ness Coali­tion. “Scal­ing up renew­ables and increas­ing ener­gy effi­cien­cy are win-wins for both ener­gy secu­ri­ty and emis­sions reduc­tions.” 

Indeed, net zero was described as “the eco­nom­ic oppor­tu­ni­ty of the 21st cen­tu­ry” by The Skid­more Review. It argued that new busi­ness oppor­tu­ni­ties ush­ered in by net zero have cre­at­ed “a glob­al rush of eco­nom­ic oppor­tu­ni­ty per­haps nev­er seen before. From the $370 bil­lion sup­port for clean ener­gy agreed by the Unit­ed States Sen­ate, to the Euro­pean Green Deal’s €600 bil­lion green invest­ment – the world is respond­ing to this oppor­tu­ni­ty.” 

For the UK, the review found that net zero could be worth more than £1 tril­lion in the peri­od 2021 to 2030, pro­vid­ing a net increase in high­ly-skilled jobs. The UK elec­tric vehi­cle bat­tery work­force alone is pre­dict­ed to add 78,000 new roles by 2040, accord­ing to the Fara­day Insti­tu­tion.

Transparency is key

Such invest­ment requires clear and con­sis­tent pol­i­cy, says Porat: “We need more clar­i­ty, trans­paren­cy, and secu­ri­ty for investors to plan ahead in mid to long-term. Once we have this clar­i­ty and mech­a­nism, we can reach our tar­gets much faster.” 

Many oth­er busi­ness­es are unit­ing behind this mes­sage. Porat high­lights recent part­ner­ships such as The Ener­gy Resilience Lead­er­ship Group launched at the Munich Secu­ri­ty Con­fer­ence by Break­through Ener­gy and Siemens Ener­gy, along­side EU Com­mis­sion Pres­i­dent Ursu­la von der Leyen, and the Alliance for Indus­try Decar­boniza­tion. These aim to accel­er­ate net zero ambi­tions and accel­er­ate elec­tri­fi­ca­tion. 

Such part­ner­ships and invest­ment sig­nals are impor­tant for busi­ness con­fi­dence. More than one-third of the world’s largest pub­licly trad­ed com­pa­nies now have net zero tar­gets, up from one-fifth in Decem­ber 2020, accord­ing to Oxford University’s Net Zero Glob­al Stock­take. McK­in­sey has esti­mat­ed that sup­ply­ing the goods and ser­vices to enable the glob­al net zero tran­si­tion could be worth over £1 tril­lion to UK busi­ness­es between 2021 and 2030.

Amid all this talk of tar­gets and invest­ment, how­ev­er, we need to remem­ber what’s at stake. “If we do not get on track for halv­ing emis­sions in the next sev­en years, glob­al secu­ri­ty will become impos­si­ble because of the impacts that the cli­mate cri­sis will have on our soci­eties,” warns María Mendiluce. 

“Fos­sil fuel use is respon­si­ble for 65% of glob­al emis­sions. There­fore busi­ness and gov­ern­ments have to go faster on tran­si­tion­ing away from fos­sil fuels to a clean ener­gy sys­tem.” Sig­nif­i­cant progress is being made, she says, and we have the solu­tions avail­able to decar­bonise our pow­er sys­tems. “But we’re not going fast enough.”

As the IPCC’s Jim Skea says, “Cli­mate change is the result of more than a cen­tu­ry of unsus­tain­able ener­gy and land use, lifestyles and pat­terns of con­sump­tion and pro­duc­tion.”

So, although progress is under­way, we must be pre­pared to make rad­i­cal changes, where nec­es­sary, to achieve net zero. Busi­ness as usu­al is not an option. 

 Find out more about Europe’s Ener­gy Readi­ness Index.

The path to reaching net zero greenhouse gas emissions is at a critical juncture, with change needed as rapidly as possible. But there are glimmers of hope, as progress yields climate-friendly results – and commercial opportunities.

The US is taking strides to address the threat and is investing $369 billion into clean technology via its Inflation Reduction Act – but the UK and Europe need to swiftly follow suit if we are to achieve global net zero targets.

That said, measures have been put in place – the EU's Green Deal Industrial Plan laid down the goal of making Europe the first climate-neutral continent by 2050. Additionally, the European Commission's Net-Zero Industry Act aims to promote the use of clean technologies within the EU to equip it for the clean-energy transition. And, in 2019, the UK became the first G7 country to sign a commitment to net zero by 2050 into law.