Decarbonization has made its way into the corporate C-suite, but economic realities are conspiring to seat it further from the head table.
Pollution and climate change action plans have become top of mind for companies across a wide range of industries. Leadership is contributing to that trend, but market demand for cleaner operations and workforce awareness of employer climate commitments are combining to be a bigger driving force. Little wonder then that efficiency is now an energy industry priority. The challenge, however, is justifying investment in efficiency in a down-bound economy where energy demand and prices are lower. That equation adds up to poorer odds for improving energy efficiency. As the International Energy Agency [IEA] points out in its Energy Efficiency 2020 report, improvements in global energy efficiency have been declining for the past five years. The COVID-19 pandemic will further stall energy efficiency gains. Cheaper energy prices resulting from reduced demand resulting from ailing economies resulting from company closures and widespread layoffs resulting from a global pandemic erode the business case for investing in the infrastructure improvements needed to increase efficiency. They also erode the world’s ability to cut greenhouse gas (GHG) emissions because energy efficiency can deliver what the IEA estimates is 40% of the GHG reductions needed over the next 20 years to meet lower emissions targets. The good news is that more than half of the major energy utility companies in North America included in a recent Black & Veatch survey have decarbonization goals over and above those required by government regulation. The global energy engineering company notes that a major driver of those decarbonization goals is that sustainability has become a priority for large corporate customers and stakeholders. The question here, however, is, which market priority will prevail: bottom--line economics or sustainability imperatives?
