By Arunkumar M Sampath
The ever-worsening effects of climate change and the adverse global economic impact of the COVID-19 pandemic followed by the recent geopolitical situation and the spiraling effect of rising energy bills call for an urgent need for a new environmentally sustainable and inclusive approach to growth with innovation playing a pivotal role in reducing greenhouse gas (GHG) emissions and achieving net zero targets as committed during climate accords and COP meetings. Investments are required not only in “clean tech” but also in inclusive and sustainable growth and natural and social capital to improve productivity, raise living standards, and achieve net zero targets by the middle of the century. With continued challenges on financial commitments by different countries on cleantech investments in the backdrop of the worsening effects of climate change, innovation is expected to play a critical role in decarbonization across different sectors. With the active collaboration of both public and private sectors, a gamut of technological approaches may have to be adopted ranging from low or non-carbon technologies to mitigate sources of GHG emissions to carbon capture and storage (CCUS) innovations to address the consequences of global warming.
Figure 1 (Ref ) graphically depicts how the assumption of a 2% annual reduction of GHG emissions may still result in only about 50% reduction in GHG emissions by 2050 due to energy efficiency only (EE only) or behavioral change only while the green bar shows 76% reduction in GHG emissions by 2050 with both EE + behavioral changes. The temporal mapping of total gigatons of carbon in Figure 2 (Ref ) emphasizes the relative size of the blue box compared to the green box or the magenta area. The blue box represents the sheer magnitude of emissions reductions that behavioral change in theory can accomplish, which is much higher than the low-carbon infrastructure represented by the green box or much superior to the pledges by independent countries under the Paris accord (magenta area). Additional observations from Figure 2 indicate 1) a significantly worsening climate impact situation with a 4 Degree Celsius to 6 Degree Celsius rise in temperature and 2) the need for collaborative efforts by both behavioral changes and low-carbon innovation (blue + green boxes) to achieve 2 Degree Celsius rise in temperature by 2050.
For effective climate policies, implementation, and continuous monitoring and control, it is imperative to have access to high-quality data for identifying specific action items to be implemented in specific sectors and geographies and studying the impact on GHG emissions (Ref ). Across the world, different countries have agreed that this data be accessible, relevant, authentic, and usable across different sectors for policy and decision-makers and extended stakeholders. The open data framework and transparency also enhance societal participation, acceptance, awareness, reporting, and open innovation across different industries and sectors.
II. Cross-Industry and Cross-Sector Innovation
Over the past few years, a relatively new concept of “Open Innovation” spanning cross-industry and cross-sector is taking shape to address climate change which combines the knowledge, ideas, and innovation external and internal to an organization (Ref ). Open innovation alliances can broadly be classified as horizontal collaboration with cooperation among competitors with different capabilities, or vertical collaboration with suppliers and customers. Open innovation can be termed an inside-out process or outside-in process depending on the direction of the knowledge flow. The sale or licensing of technology to others is the primary mode of engagement in the former while stakeholder integration and external sourcing of technology drive the latter form of open innovation. An open innovation that combines both is referred to as a coupled process, which may take the shape of a strategic alliance or a joint venture.
In Ref  a detailed report is presented on how the Energy Transitions Commission (ETC), a coalition of global leaders from across the energy landscape, plans to deliver a prosperous net-zero-emissions economy by the middle of the century. The ETC comprises members from energy producers, energy-intensive industries, equipment providers, finance players, and environmental NGOs. The ETC has chalked out a “Mission Possible” to build a global economy that serves the dual purpose of enabling developing countries to attain developed world standards of living and ensuring that the target of 1.5°C rise in temperature is achieved to realize net zero greenhouse gas (GHG) emissions by 2050 (Ref ). As shown in Figure 3 (Ref , Project Mission Possible comprises steps involving
1. High-quality energy efficient buildings
2. Flexible zero-carbon mobility
3. Zero emissions circular goods
4. Abundant clean energy
5. Sustainable natural ecosystems
The ETC report (Ref ) also highlights multiple priorities to help the global economy recover from the COVID-19 pandemic impact while continuing to be focused on achieving net-zero emissions targets. The priorities include a) significantly high investment in renewable power systems, b) low-carbon technology investment in green buildings and infrastructure, c) green technologies and alternate fuels & powertrains in the mobility industry, and d) energy transition from the traditional fossil fuels industry to name a few.
To realize a net zero economy by 2050, it is imperative to look at “open innovation” across multiple industries and sectors with the triangulation of a) cross-industry innovation, b) innovation in energy-intensive industries, and c) innovation in low-carbon infrastructure, as shown in Figure 4 (Ref ),
II A) Cross-Industry Innovation
Of late, companies in a specific industry have started moving away from the traditional “closed” innovation approach that focused heavily on internal research & development (R&D), gaining a competitive edge, and reinvesting further in internal R&D to stay ahead of the competition (Ref ). Large corporations are left with no choice but to adapt themselves to “open” innovation due to multiple factors including a) increased complexity and cost of R&D, b) pressure for reduced R&D cycles and time to market of new products, c) hiring and retaining skilled knowledge workers, d) rigid corporate culture in large corporations with majority of new budgets allotted to upgrading the existing R&D and little left for radical research, and e) niche start-ups propped up by venture capital (VC) firms that lure innovators from large firms with excellent benefits and pay packages. For organizations operating in specific industries such as pharmaceuticals and healthcare, the long and costly innovation cycles, and the incremental progress that the existing innovation environment brings, may not be adequate for radical breakthroughs. Adding to this, in specific sectors such as the oil & gas industry, the pressure to quickly adapt to low-carbon infrastructure, decarbonization, and switch to fossil-free feedstocks, forces the industry to urgently seek solutions outside their traditional industry boundaries or team up with industries across multiple sectors such as renewables, mobility, and Information Technology (IT). The formation of such cross-industry innovation alliances on emerging technologies such as green hydrogen, quantum computing, autonomous and connected vehicles, hydrogen fuel cells, advanced batteries, electric vehicle (EV) charging infrastructure, etc. is still a fairly new concept with companies often in an “exploratory innovation alliance” on a trial-and-error basis, which may eventually evolve into a more systematic approach to cross-industry innovation with far-reaching economic and social impact.
II B) Innovation in Energy-Intensive Industries
Energy-intensive industries (EII) like cement, steel, paper, and chemicals, though play a vital role in infrastructure, nation-building, and supporting the global economy, also carry the dubious distinction of being one of the largest polluters and contributors to GHG emissions (Ref ). The consistently high levels of pollution from EII are due to multiple factors including high levels of energy and resource inputs, practically unchanged production processes over many decades, and little or no R&D investment compared to other industries, resulting in low rates of innovation. To their credit, EIIs in the recent past have implemented incremental process innovations but these industries require a significant overhaul of R&D with the development of entirely new core production processes, and investment in low-carbon innovation to comply with the 2 °C rise in temperature target agreed upon in the Paris accord. The low-carbon infrastructure investment includes replacing the current fossil fuels with renewable energy (solar power, electricity, green hydrogen, etc.), carbon-capture-storage (CCS), and/or carbon-capture-utilization (CCU) technologies. placing the EII in a precarious situation from a technical and innovation perspective. The EIIs have only seen sporadic instances of radical process innovations as they are expensive and risk-prone with long lead times on return on investment (ROI). As the EIIs operate in a market with high capital investments, large variations in input material costs, low-profit margins, and long payback times, with the additional constraint of input materials being procured in a highly price-sensitive commodity market, no marketing advantage is seen to use low-carbon materials at a higher price requiring substantial investments in new production processes required for low-carbon
II C) Low-carbon Innovation
The urgent need for low-carbon innovation and associated investment to meet the net zero targets by 2050 cannot be over-emphasized. In the past, organizations and governments have been attempting “only incremental” low-carbon innovations to address negative environmental impacts more out of legal compliance with market regulations (Ref ). In recent times, a more “proactive approach” to low-carbon innovation covering both environmental and social impacts is being pursued to realize a more holistic view of sustainability. Recent studies have pointed out two broad classifications of low-carbon innovations:
1. Clean technologies to reduce GHG emissions and simultaneous withdrawal from carbon-intensive technologies to “phase out the use of fossil fuels” and
2. Technologies for carbon capture and utilization (CCU) and carbon capture and storage (CCS) to prevent carbon emissions from escaping into the atmosphere, while still “allowing for the use of fossil fuels”
As already pointed out in Figure 2 (Ref ), behavioral changes (social and business innovation) contribute significantly to reducing GHG emissions emphasizing the fact that motivation, impact, and direction of innovation are equally important to buttress low-carbon innovation.
III. Collaborative Efforts toward Net Zero
On November 8, 2022, on the sideline of COP27 in Sharm El Sheikh in Egypt, a press release mentioned that a coalition of six global companies (Bechtel, General Electric, General Motors, Honeywell, Invenergy, and Johnson Controls) announced the launch of the Corporate Coalition for Innovation & Technology toward Net Zero (CCITNZ). It is an alliance spanning multiple sectors intending to accelerate innovation and develop breakthrough technologies and support different countries meet carbonization and climate change goals (Ref ). CCITNZ has been formed with multiple objectives including
a) Partnership – promote partnerships across public, private, and social sectors in different countries
b) Innovation & Technology – prioritize cost-effective and inclusive solutions to arrest the raise in GHG emissions and promote low-carbon technologies with buy-in from local communities
c) Energy Security – assure energy security for current and future needs but with collaboration with governments and stakeholders to promote decarbonization and emission reduction efforts
d) Policy – support formulation and enactment of policies promoting sustainability and innovative technologies along with the development
e) Resources – contribute ideas and inputs as part of expert panels along with government officials and other stakeholders to foster innovation and work towards Net Zero goals.
According to Ref , the Energy Transitions Commission (ETC) anticipates that to achieve the energy transition by 2050, additional investments of up to $2 trillion will be needed every year till the middle of the century. A similar study by the International Renewable Energy Agency (IRENA) estimated that cumulative investment in renewable energy must reach $27 trillion in the next three decades till 2050 to meet the Paris Agreement goals. A recent analysis by BloombergNEF points out that the energy transition investment hit $500 billion for the first time in 2020 (Ref ).
Experts opine that cross-sector collaboration, buttressing the investments in climate change, is quintessential for our efforts on energy transition towards Net Zero to succeed (Ref ). They go one step further to point out that “working together is no longer optional but imperative”.
As captured in Figure 4 (Ref ), global efforts toward Net Zero need to focus on the triangulation of technologies with an increased focus on decarbonization across all sectors of the economy including agriculture, mining, oil & gas, mobility, construction, and healthcare, to name a few. As good news, the cost of renewables has been coming down significantly with the costs of solar, wind, and batteries decreasing by 85%, 49%, and 85%, respectively, over the past decade, with the additional advantage of advanced materials, Artificial Intelligence (AI), Blockchain, and Advanced Computing enjoying significant breakthroughs to support the energy transition (Ref ).
IV. Open Data Framework to Address Climate Change
For effective, meaningful, and time-bound actions by different countries to address global climate change, high-quality and open data are crucial to identify and answer multiple questions such as
a) what are the most effective policy interventions necessary to bring down GHG emissions,
b) which specific sectors need financing and the required amount,
c) which countries are willing to invest in specific technologies and in which sectors
d) what amount of financing will the developed countries provide low-income global regions and in what timeframe
e) how will these align or adversely impact the commitments at multiple COP meetings
The International Open Data Charter defines open data as digital data that is published with the technical and legal characteristics to be “freely used, reused, and redistributed by anyone, anytime, anywhere” (Ref ). The Open Data Inventory (ODIN) framework formed by Open Data Watch (Ref ) provides climate impact data from 187 countries across the world and addresses two important parameters – do we have enough data points? and do we have access to open data? The ODIN framework taps into the data published by the National Statistics Office (NSO) of a country and provides an assessment of the completeness and openness of the data in line with international standards.
As established by the United Nations Framework Convention on Climate Change (UNFCCC), the relevant data types include statistical data, spatial resolution data, and temporal resolution data (Ref ). Typical data includes
1. Emissions-related data
a. GHG emissions disaggregated by sector published annually – monitoring, reporting, and verification of emissions and mitigation actions
b. Projected future emissions and emissions avoided under the current policy framework published once in two years – detailing the mitigation actions
c. Historical GHG data updated every few years – understanding the emissions trajectories and evaluating the impact of past actions and policies
2. Agricultural data
a. Enables formulation and implementation of appropriate policies, incentives, and subsidies to assess vulnerabilities to climate change and to support local adaptation, water use, crop selection, and food security strategies more effectively.
3. Land use and Land use change and forestry (LULUCF) data
a. LULUCF data support climate change mitigation activities and strengthen accountability, help formulate country-wide land use decision-making, and allow
more informed forest management by communities, public and private sectors.
4. Electricity data
a. Open access to electricity sector data that plays a vital role in development but also contributes to 41% of global CO2 emissions is critical to managing freshwater withdrawals, private sector investments, and adaptation planning.
5. Stationary energy data
a. Stationary energy data (excluding electricity data) provides information on the percentage usage of alternate energy and its contributions to GHG emissions.
6. Transport data
a. Open transport data that includes road, rail, aviation, and inland water transport helps identify areas of improvement in transportation infrastructure and investments in low-carbon transportation in a sector that is one of the largest contributors to GHG emissions.
7. Waste data
a. Waste generation and management data allow better tracking of emissions and the specific areas/need for investments in “waste-to-wealth” generation efforts.
8. Natural hazards and impacts data
a. Open access to the latest data on natural hazards and their impact on local communities is relevant and critical for disaster risk management and adaptation planning in both the public and private sectors.
9. Socioeconomic data
a. Helps better understand the demographics of climate change impact with a renewed focus on strengthening specific geographies and communities.
10. Climate Finance data
a. Transparency in climate finance data minimizes corruption, improves accountability, informs communities on how the funds are being spent, and encourages investors to bring in future fund flows. However, currently, no internationally accepted standards are agreed upon to disseminate climate finance data.
Much of this information is publicly available on the UNFCCC website (Ref ) through the various reporting mechanisms used by countries, including National Communications, National Inventory Reports (developed countries), Biennial Reports (BRs, developed countries), Biennial Update Reports (BURs, developing countries), and Nationally Determined Contributions (NDCs).
Data related to climate change across the globe face a multifaceted challenge across three dimensions: availability, reliability, and comparability (Ref ). The challenge with data availability is multi-fold across asset classes, sectors, geographies, and different timeframes. Regarding data reliability, it is observed that the available data sources and metrics are scattered and inconsistent besides their auditability and transparency. In reference to data comparability, multiple frameworks for climate-related disclosures and their inherent differences in focus and design and focus besides
lack of consistency, pose a challenge for comparison of the information reported across different frameworks.
It has been well-documented in multiple articles across the literature that behavioral changes play an extremely important role in achieving the Net Zero emissions target. The assumption of a 2% annual reduction of GHG emissions shows a maximum reduction in GHG emissions (76%) by 2050 with both energy efficiency and behavioral changes. The temporal mapping of total gigatons of carbon for the next three decades again indicates that emission reductions with behavioral changes are much higher than the low-carbon infrastructure and much superior to the pledges by independent countries.
A relatively new concept of Open Innovation spanning cross-industry and cross-sector is taking shape to address climate change which combines the knowledge, ideas, and innovation external and internal to an organization to address GHG emissions reductions. In a recent announcement on the sideline of COP27 in Sharm El Sheikh in Egypt in November 2022, a coalition of six global companies from different industries and different sectors announced their collaborative partnership toward Net Zero.
In establishing low-carbon infrastructure, two schools of thought have emerged: one focusing on only clean tech (avoiding fossil fuels altogether) and the other using CCU & CCS technologies using fossil fuels, in addition to clean tech.
It is well recognized by inter-governmental agencies and world emission monitoring authorities that the availability of high-quality and open data is crucial for effective, meaningful, and time-bound actions to address global climate change. Data must meet the critical three-dimensional criteria of
availability, reliability, and comparability.
It is the general expectation that the developed world should reach net-zero GHG emissions by 2050 and the developing world by 2060 at the latest. To reach this target, multiple initiatives need to be taken up simultaneously including a) unleashing massive investment in renewable power systems, b) boosting the construction sector via green buildings & infrastructure, c) supporting electrification or alternative fuel usage in the mobility sector (on-road vehicles, off-road vehicles, air transport, water transport), d) strict enforcement of climate commitments by governments and industries in addition to the required development and growth, e) providing financial support to encourage low-carbon innovation, f) accelerating energy transition from the fossil fuels industry and supporting CCU/CCS technologies, and g) strict monitoring and control of annual GHG reduction commitments at COP meetings so the target of net zero by the middle of the century is not compromised.
[This article was authored by Arunkumar M Sampath, a Principal Consultant in Tata Consultancy Services (TCS) in Chennai. His interests include Hybrid and Electric Vehicles, Connected and Autonomous Vehicles, 5G/6G, Cybersecurity, Functional Safety, Advanced Air Mobility (AAM), AI, ML, Data Analytics, and Data Monetization Strategies]
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