The Road to Net Zero - Part 1
- from ambition to delivery
Many organisations across the public, commercial and industrial sectors have established ambitious targets for reducing carbon emissions. They are now facing the much more difficult question which is how are those ambitions translated into delivery, as the implications on cost and affordability are made more apparent. In particular how do those ambitions sit with all the other priorities orgainsations have to deal with.
For most organisations, the energy transition will not be delivered
by a single major project. It will involve a sequence of decisions over many
years: reducing demand, replacing existing plant, electrifying heat and
transport, developing renewable generation, increasing electrical capacity,
introducing energy storage and adapting infrastructure as technologies, markets
and regulation evolve.
The challenge is therefore not simply to identify low-carbon
technologies. It is to determine what should be done, in what order, and when. and how are these ambitions translated into practical and deliverable investment decisions?
Let us start with the trajectory to net zero.
Every organisation already has an energy trajectory, even if
it has never been formally defined.
Buildings will be refurbished. Boilers and electrical equipment will reach the end of their lives. Vehicle fleets will be replaced. New buildings and processes may increase demand. Electricity networks may require reinforcement. Energy prices, regulation and technology will continue to change.
The starting point is therefore to understand the existing
system and establish the likely business-as-usual trajectory, taking account of internal and external factors influencing the "do nothing" carbon trajectory. Internal factors like plant replacement , that will replace older plant with more modern, more efficient plant. and external factors which will include the rate at which grid electricity is being decarbonised for everyone.
Against this baseline we can then identify additional
interventions required to achieve the organisation's objectives and determine
when they should occur.
This changes the delivery question from:
How do we achieve net zero today?
to:
What sequence of technically and commercially viable
investments takes us towards our long-term objective?
That distinction is important. Premature investment can
destroy value just as easily as delayed investment. This sense that net zero is not necessarily an immediate destination but a journey, the objective then is how do we make good decisions now while preserving the ability to take advantage of
future technologies and changing market conditions.
Avoid investment in what are likely to become stranded assets!
One of the biggest risks in the energy transition is
investing in infrastructure on a replacement basis (new gas boilers for example ) that subsequently may have to be replaced before the end
of their economic life due to costs of fossil fuel or carbon taxes.
A heating system installed today may operate for twenty years. Electrical infrastructure may remain in service considerably longer. Decisions being taken now therefore influence the energy system well into the 2030s, 40s and beyond.
The key takeaway here is that not every project needs to achieve net zero immediately, but significant investment should be consistent with the longer-term pathway.
This means considering lifecycle cost rather than simply initial capital cost and understanding how today's investment fits with future electrification, renewable generation and infrastructure requirements.
In Part 2, we look at why developing that trajectory
requires us to consider heat, power, transport, generation and storage as parts
of a single energy system.