News

New Study on How to Reduce One Third of Energy-Related CO2 Emissions by 2030

 

Utilities must define their strategy in order to support industrial clients with profitable and sustainable business models.

 

Tackling climate change is only possible with a strong change in energy consumption. Industrial processes cause 34 percent of all energy-related carbon emissions and many industries are already looking for a solution to minimize their CO₂ footprint. The study “Carbon Neutral – Opportunities For Utilities In A Decarbonized Environment” published by Oliver Wyam in cooperation with Professor Dr. Gunther Friedl, Maximilian Blaschke, and a team of students from the Chair of Controlling, TUM School of Management, analyzes the potential of transitioning into a zero carbon solution by identifying several climate neutral technologies. The ideal mix of technologies will enable utilities to offer solutions for zero carbon electricity, minimizing their carbon emission footprint, which consequently, will result in a cut of one third of all energy-related CO₂ emissions within the next 10 years.

 

The key players

Companies are becoming sensitive to reducing their energy consumption with ecological and economical objectives. The accelerating transformation to a carbon-neutral industry provides utilities with the opportunity to play a key role in lowering carbon emissions and profit from new business fields. In order to be successful in this challenging environment, on the one hand utilities have to reduce the carbon intensity of their existing offerings, and on the other hand, expand and reshape their business in the next decades. The right strategy will allow the utilities to meet customer needs while at the same time reveal significant economic potentials.

 

The mix of technologies needed

In order to achieve the reduction targets in industry, all gaseous and liquid energy sources, such as natural gas and oil, must and will be replaced by climate-friendly alternatives. While electrification will play a major role in passenger and light-duty vehicles, hydrogen or other green synthetic fuels will be needed in the mid- and long-term for heavy duty vehicles, such as in aviation, shipping and industry. The study identifies four technology clusters for utilities to address in order to efficiently support industrial players in reducing their carbon emissions.

  • Bridge Technology covers biomass for heat generation, a technology that is of high importance for most sectors in the short-term. However, in order to make it attractive in the long-term, utilities could implement a fuel switch for industrial players, as they are already using co-firing of biomass in their own combined heating plants.
  • Core Technology describes the power autonomy that has very high short- and long-term potential, due to a continuous shift towards decentralized zero-carbon electricity generation. Utilities can leverage their knowledge from conventional and renewable power generation and grid operation to set up low carbon and renewable energy projects and services.
  • Niche Technology includes electrification of heat, waste heat recovery, and system integration. They have a high priority in selected sectors where utilities must provide highly diversified solutions for industrial clients. Operating heating networks are likely to emerge as a profitable business model for utilities, where large scaling distributes recovered heat from industrial parks to households.
  • Next Generation Technologies target the most energy-intensive sectors and are likely to play a major role for carbon neutrality in several industries. Hydrogen and carbon capture and utilization/storage (CCU/S) have the highest emission reduction potential in the long run. Utilities can leverage competitive advantages and scaling effects by generating hydrogen with zero-carbon electricity and by providing hydrogen infrastructures. Given the predicted high importance of CCU/S in certain sectors, the early establishment of partnerships for storing and transporting CO₂ is a key factor for utilities.

 

These technology groups differ regarding the CO₂ reduction potential, the maturity of the underlying technologies and the required investment. The short-term importance of the technologies can be derived based on these factors. In the long-term perspective, the priority of those technologies was analyzed based on the CO₂ reduction potential and the expected deployment by 2040. Mapping the technologies along the two dimensions of short- and long-term priority reveals four distinctive playing fields. Those playing fields cluster similar technology approaches and offer opportunities for utilities. Depending on their skill set, strategic direction and capabilities, utilities can choose to cover one or more of these archetypes. The four archetypes provide guidance for developing a suitable approach to support the industry’s path to a carbon-neutral future. These playing fields result in various specific and overarching business models that give rise to new roles for utilities.

 

The impact

Worldwide, companies across industries are under pressure to actively reduce their carbon footprint. There are different regulatory attempts, such as the Paris Agreement to limit global warming to two degrees Celsius, or the European Union target to become an economy with net-zero greenhouse gas emissions by 2050. Aside from these political approaches, there is also pressure from society and other groups to become green such as the Fridays for Future movement. These developments result in a growing awareness in society for reducing the carbon footprint in the industry sector.

Utilities can build on strong capabilities and comprehensive experience in supporting industrial companies to reduce their carbon footprint. In order to support industrial clients with profitable business models, utilities must clearly define their strategy. The strategic direction should build on the utilities’ current product and services portfolio and aim at ensuring sustainable long-term profits in the energy market. This way, energy costs and CO₂ emissions can significantly be reduced while the company‘s operational business continues to run smoothly. A sustainable and at the same time profitable future for companies can finally be achieved.

 

For more information on the study, click here.

The post New Study on How to Reduce One Third of Energy-Related CO2 Emissions by 2030 appeared first on Technical University of Munich – School of Management.

Related News in this category

  Help & Contact
close slider
How can we help you
Corona virus updates
for our Students

Mail
to info.eec@wi.tum.de
Call
+49 89 289 28474

Meet the team
running the EEC
Get our address
for visitors or postal
We're here to help you