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.
