Decarbonization is the critical component within the Energy Transition. We have to reduce our emissions down as fast as possible. The way we set about this will determine how we will manage the planet in the future.

Facing a climate that will become hotter, repressive and unpredictable is what we are all facing in the coming years. We have set ambitious targets to achieve the Paris Agreement as a legally binding international treaty on climate change. It was adopted by 196 Parties (countries) at COP 21 in Paris on 12 December 2015 and entered into force on 4 November 2016.

Its goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.

To achieve this long-term temperature goal, countries aim to reach global peaking of greenhouse gas emissions as soon as possible to achieve a climate-neutral world by mid-century.

Reshaping the energy systems is a massive challenge

It is the massive challenge of reshaping the foundations of the energy industry in the coming years that will determine whether we achieve this. It is not looking promising as we are not taking the collective action that is so needed. That needs urgently changing.

I have written previously about decarbonization a few times. I laid out my Themes for decarbonizing, my agenda setting post as well as discussing a dizzy array of energy solutions to decarbonization and offering where the crucial role innovation must-have in the Energy System

The two sides of the decarbonization equation

This post expands out the decarbonization problem that each organization is presently facing, shown in the visual here (and above)

There are two sides to the energy equation on decarbonizing. The energy supply side and the energy demand-side prioritize and manage the decarbonization needed within any project evaluation, implementation, performance return, and financing issues.

We need to weigh up the needs, and the management must work through the issues to determine a decarbonization strategy. Setting not just the vision and commitment but establishing clear targets, unwavering support and clear budgets as the requisites of undergoing a journey of change.

Any decarbonization journey is full of uncertainty, and weighing up those needs in ambition and realisation is a balance but a necessity.

The overarching questions to think through are these

Is deep decarbonization possible? The level of investments will be substantial and require enormous changes to the energy system we have in place today.

Will the achievements provide more radical change, such as:

• Clean energy economic growth
• How we make, store, and use energy
• The potential of new services and design
• Unlocking a new age of electrification generation
• Cheaper energy alternatives

In many ways, the management needs to instil an innovative mantra with the following principles at its core.

“Our need is to keep pushing for discoveries, for experimentation, for demonstrating. We must nurture innovation, and we must continuously look for ways to facilitate its pathway and deliver on the changes that will bring us through this decarbonization journey together, as it is vitally important we contribute to making this happen.”

When we take the time to look around, we see a new energy system emerging to build our changes around.

These are some of the principal value drivers

• Energy will be far more distributed
• It will have more dynamic and flexible energy flows
• It will be low carbon in all solutions adopted
• The component of service orientation will rise
• Customer-centric thinking will dominate
• Value is further downstream to seek out and exploit
• It offers new business model options
• The emphasis is on the value within  how it is digitalized and data-driven
• Collaborations will be greater and more open in exchanges

Evaluation, where the opportunities for change derive from, is in energy-saving and emission reductions. Core issues to resolve need to cover the scope 1,2, and 3 emissions.

The demand side

• Replacing and renovating outdated equipment from basic upgrades to radical redesigns
• Managing in smarter ways to monitor, simulate and manage operations
• Electrifying and smart charging all of the sources of transport
• Extensively reviewing production and rethinking overall process flows

The supply-side

• The potential to generate “green” energy on-site through solar, wind and bioenergy.
• Shifting wherever possible to low-carbon heat in the efficiency and electrification.
• Actively engage in becoming a prosumer of energy to add fresh revenue and cost-saving opportunities.
• Making sure all electricity is sourced from sustainable renewable sources guarantees the origin of the energy consumed.
• The effective deployment of energy storage to optimize assets and power flows on all energy-consuming sites (factories, warehouses and offices)
• Finding holistic solutions that partner and optimize mutual energy needs and combine energy requirements in imaginative power supply contracts.

To undertake a decarbonization journey needs financing.

There is a growing level of alternative financial models to the traditional CAPEX investment. It is the ability to manage and utilize capital in the best ways, and the models are certainly out there. I recently was listening to and found it very useful and wrote about the options provided by Siemens here “Financing Decarbonization in Energy and Infrastructure“, which certainly opens up the thinking to evaluate the alternatives.

Decarbonization is critical to achieving, as are all reductions of harmful greenhouse gases. Across all energy users, we have to be far more conscious of the need to change, switch to sustainable renewables, and work through the understanding of the energy equation in demand and supply does begin to give a greater understanding of the challenges and opportunities.

Having a clear decarbonization strategy is a must to have.