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Hydrogen Vehicles Are on the Rise: Here’s What You Need to Know

Posted on March 15, 2024 by dishanth

Hydrogen Vehicles Are on the Rise: Here’s What You Need to Know

The automotive industry is rapidly transitioning to alternative energy sources for fuel vehicles, considering the greenhouse gasses (GHGs) emitted every mile driven. Battery-electric cars are on the rise, but are better alternatives on the horizon?

Hydrogen emerged as a viable replacement for fossil fuels and could be the next big thing in the automotive industry. The rise of hydrogen fuel cells is coming sooner than you may think, so here’s what you need to know about these vehicles.

Rapid Market Growth

The future of hydrogen power is bright, as investors think it has massive potential for the automotive industry. Experts say the global hydrogen fuel cell vehicle market will have a compound annual growth rate of 43% until 2032, culminating in a $57.9 billion value. Automakers understand the severity of today’s climate crisis and use any means necessary to advance their sustainability goals.

Harnessing Hydrogen

Hydrogen is unstable, as it reacts with other atoms to form compounds. So, how can you harness this chemical element to be safe for your vehicle? Scientists typically use these methods for hydrogen fuel production:

Thermal: The Department of Energy (DoE) says about 95% of today’s hydrogen comes from repurposed natural gas. Scientists combine steam and hydrocarbon fuels to produce hydrogen fuel, requiring high temperatures and attention to detail.
Solar: Using renewable energy to produce clean fuel is smart, so experts have used solar power for hydrogen production. For instance, they can harness hydrogen fuel using bacteria and its natural photosynthetic activity.
Biology: Bacteria are also helpful for hydrogen fuel production through biological reactions. You can use microbes to break down biomass and wastewater, and these tiny organisms aren’t energy-intensive, as they harness sunlight for power.

Refueling Stations

Hydrogen fuel is already available if you live on the West Coast, as most of the existing stations are in California — primarily in Los Angeles and the Bay Area. You can also enjoy this alternative energy source in the Pacific Ocean at the Hawaii Natural Energy Institute. As hydrogen fuel grows in demand, you’ll see more opportunities to fill up with it.

The DoE says the United States has 59 retail hydrogen-fueling stations, but more projects are on the way. Fleet companies may have private areas for fueling their vehicles, especially as long-haul trucks convert to hydrogen fuel.

Can Semi-Trucks Use Hydrogen Fuel?

Battery-electric motors are a concern for larger vehicles like light-duty and long-haul trucks. These machines must be powerful enough to propel heavy machines for long distances, but their weight drains energy quickly. Will hydrogen fuel be a solution? The logistics industry has focused on this alternative fuel source for greener highways.

For instance, in 2025, Kenworth will begin full-scale production of Class 8 T680 hydrogen fuel cell electric trucks in collaboration with Toyota. The heavy-duty truck manufacturer will deliver its first hydrogen-powered vehicles this year and then expand production.

While the fuel source changes, the typical qualities in hydrogen-powered trucks do not. This Kenworth Class 8 T680 truck has a max payload of 82,000 pounds, demonstrating its ability to carry a significant amount of goods.

The truck uses Toyota’s 310kW Dual Motor Assembly, as the Japanese automaker has prioritized hydrogen fuel research in the last decade. It recently released the second-generation Mirai, which mixes hydrogen and oxygen to produce electricity.

States like California have imposed strict requirements for long-haul trucks and other vehicles, so hydrogen-powered trucks could be the answer for sustainability and dependable transportation. Kenworth tested hydrogen fuel cell technology at the Port of Los Angeles in 2022 and used its success to build the Class 8 T680 semi-truck. Continued success will likely mean further North American expansion.

Powering Outside the Highways

Hydrogen has become a viable option for passenger cars and even long-haul trucks in its early stages. However, highway vehicles are not the only method of transportation using hydrogen power. Last year, North America debuted its first hydrogen train in Quebec, Canada. This machine uses about 50 kg of hydrogen daily and eliminates dependence upon fossil fuels for these trips.

Hydro-Quebec provides energy for the train, enabling it to travel about 90 km between Quebec City and Baie-Saint-Paul. Emissions are less of a worry for the train, as you only see water vapor emerging from its pipes.

What Are the Benefits of Hydrogen-Powered Vehicles?

Hydrogen-powered vehicles are likely the future, as automakers heavily invest in the technologies required for these machines. Driving a hydrogen-powered car delivers these four benefits.

1. Reducing Emissions

Auto manufacturers like Toyota are pushing hydrogen fuel technology because of its eco-friendliness. The only emissions are water vapor and heat, thus making them better for the environment. Turning hydrogen fuel cells mainstream would reduce the amount of GHGs emitted daily, which is crucial to combating climate change.

The transition to hydrogen fuel cells would significantly boost the logistics industry, considering how many long-haul trucks hit the road daily. Research shows medium and heavy-duty vehicles in the U.S. emit over 400 million metric tons of GHGs. Converting trucks worldwide would help the surrounding environment and improve health for each road traveled.

2. Easy Transition

While converting existing trucks to hydrogen fuel cells takes time, the transition might be easier than you think. Logistics companies can keep their current gas transport and storage mechanisms, repurposing them for hydrogen fuel.

Additionally, truck owners wouldn’t have to jump through hoops to let their vehicles take hydrogen power. Retrofitting combustion engines for hydrogen power is more straightforward than with electric motors, especially with heavy trucks.

3. Beating Battery-Powered Vehicles

Battery-electric trucks are best for short drives due to their limited range. However, logistics companies need their vehicles to travel hundreds of miles each trip to keep deliveries on time. Hydrogen-powered trucks allow fleet owners to combine sustainability and efficient travel due to their range.

For instance, the Kenworth T680 hydrogen fuel-powered truck ranges up to 450 miles, depending on the driving conditions. Regardless, it’s more than you’d get from an electric truck. In fact, the Kenworth machine boasts one of the highest ranges for any semi-truck using alternative energy sources.

4. Rapid Refueling

Another significant advantage of hydrogen trucks over battery-electric vehicles is the quick refueling. Fully electric trucks will need to wait for a few hours before they can head back on the road, causing trips to be longer than scheduled. However, hydrogen machines only require a few minutes to fill up, greatly boosting logistics companies. The Kenworth hydrogen fuel cell vehicle lets fleet owners increase uptime and reduce lead times.

Foreshadowing a Bright Future

The automotive industry is pushing for fossil fuel alternatives to help the planet’s transportation sector. While battery-electric technology has existed for over a decade, hydrogen fuel cells are another way for automakers to produce cleaner vehicles.

The future of hydrogen vehicles is bright as researchers continue to improve the technology and bring it into the mainstream.

Source Happy Eco News

How automotive batteries are being turned into solar power storage

Posted on December 13, 2022 by dishanth

As concern over climate change and the need for clean energy sees an increasing number of people switch to electric cars, these vehicles are fast gaining a larger market share.

But some experts are asking how green the batteries that run them really are?

They’re raising questions about the environmental impact of lithium mining, respect for human rights and alleged child labour in cobalt mines, the high energy costs of production, and a recyclability rate of barely 10%.

Rita Tedesco, ECOS Head of energy transition says that the recycling of materials of batteries “at this moment is neither interesting for recyclers nor for manufacturers because it’s much cheaper to extract virgin materials than to recycle them.”

But a Spanish company is trying to give used car batteries a ‘second life’.

As part of the EU project, Stardust, its reconditioning them to store solar energy, adding at least 10 years to their life.

Critics say European Union legislation on sustainable practices in battery recycling is largely outdate.

But discussions are currently underway on proposed legislation which could regulate the production chain from extraction to the recycling and reuse processes.

Watch the video in the player above.

Source euronews

British energy transition ‘an opportunity to train 200,000 workers this decade’

Posted on August 9, 2022August 8, 2022 by dishanth

PwC’s research paper on jobs in the energy transition concludes that, by 2030, 270,000 skilled workers from the fossil fuel sectors will likely be leaving as the net-zero transition continues. At the same time, 400,000 jobs will be needed in low-carbon energy sectors including nuclear, renewables and hydrogen. With one-fifth of the fossil fuel leavers set to retire, there could be an overall gap of 200,000 skilled workers for the clean energy sectors.

This raises questions about whether the Government, public and private sectors have ambitious and joined-up enough plans to reskill and upskill the existing workforce and to grow the pipeline of fresh talent.

Under Boris Johnson, the Government created a Green Jobs Taskforce featuring representatives from businesses, trade bodies, education and NGOs. The Taskforce’s has published one major briefing with another due this year. However, no fully updated careers and/or skills strategy has been created.

The Government’s overarching ambition is for the UK to host two million green-collar jobs in 2030, up from around 208,000 in 2020. Shortly after the publication of the Net-Zero Strategy last October, MPs on the Environmental Audit Committee (EAC) warned that it only detailed the creation of a further 440,000 green jobs by 2030. The High Court has since ruled that the Strategy is unlawful as it does not properly detail how the UK will achieve its legally binding climate targets.

PwC’s head of regions Carl Sizer said: “The big challenge will be finding additional workers outside the energy sector to build the clean energy labourforce needed for net zero. The opportunity is to create highly skilled jobs in locations that may currently lack these.”

To his latter point, the energy transition may well present opportunities for the Government to deliver on its levelling up rhetoric, as distribution networks will need upgrading across the country and as small-scale nuclear and renewables grow.

Sizer also noted the opportunity to get more women, and others from demographics currently under-represented in the UK’s energy sector, trained up. One 2021 report from PwC found that women hold just 21% of executive positions in the energy sector and that. When positions at all levels are covered, less than 19% are estimated to be held by women. The sector is also lagging on ethnic diversity, with 93% of staff being white compared with 79-82% of the general population.

PwC is proposing the development of new energy apprenticeship programmes and technical training schemes that can be taken mid-career, along with targeted communications. The report states that “a range of interventions” should be considered to encourage under-represented demographics to consider energy jobs.

Allaying job loss fears

The paper emphasises that, while job losses in the coal sector are forthcoming, with the UK’s remaining plants needing to come offline by autumn 2024, job gains in other sectors will more than offset the reduction of jobs in the fossil fuel space.

PwC states that up to 90% of roles in oil, gas and coal are transferable, meaning that job losses this decade are likely to be minimal – particularly if the private sector increases efforts in upskilling as the transition plan mandate is rolled out. Net job gains are driven by the nuclear and offshore wind sector, which the Conservative Government have increased targets for through the recent Energy Security Strategy. The Strategy also increased targets for hydrogen, presenting another major reskilling and upskilling opportunity.

“While the shift to green energy is as significant as the industrial revolution, job loss should be far less this time round,” said PwC’s Sizer. “Rather than face an abrupt cliff edge, workers will see their roles become greener over time, many should be able to stay in the same company, while others will reach retirement age.”

Many firms, the report notes, are already advertising for jobs in functions and sectors that can reduce emissions. It states that 24.6% of job adverts in the electricity and gas sector were in these roles in 2021, up from 21.1% in 2020.

Source Edie

Singapore green-lights nuclear power in low-carbon energy import proposals

Posted on July 20, 2022 by dishanth

Singapore’s Energy Market Authority (EMA) is allowing firms to propose importing nuclear energy as part of a scheme to acquire low-carbon electricity from overseas.

Only plans involving coal will be rejected outright in the latest call for applications that started on Friday (1 July). In an earlier round that ended in April, both coal and nuclear power were banned.

EMA said it is open to proposals from “diverse” low-carbon energy sources in the region, in response to a query from Eco-Business on why the change was made.

“EMA will also be considering a range of factors such as price-competitiveness, source diversity and safety when evaluating the proposals,” added Lee Seng Wai, director of the energy connections office at EMA.

Singapore wants to fulfil four gigawatts, or 30 per cent of its energy supply, by 2035 with imports of clean energy – defined as electricity produced with at most 150 kilograms of carbon dioxide emissions per megawatt-hour. Projects could start higher but must reach this level within five years of commercial operation.

Nuclear energy could fit the bill, with an “emissions factor” of 13 kilograms of CO₂ per megawatt-hour, on par with wind power and about a third of solar power, according to the United States energy department.

Emissions factors of various sources of energy, along with Singapore’s aggregate electricity generation, which is largely via natural gas. Data: US National Renewable Energy Laboratory, Singapore Energy Market Authority.

Singapore currently produces electricity almost entirely with natural gas. Each megawatt-hour generated creates about 400 kilograms of carbon emissions, according to EMA.

Proponents of nuclear power say the energy source can provide a consistent flow of low-carbon electricity – something wind and sunlight struggle to achieve. Critics fear the lasting impact of both disasters and nuclear waste, a permanent solution for which largely does not exist.

Neighbouring Malaysia and Indonesia could be possible candidates to supply Singapore with nuclear power based on their technological experience, said Dr Philip Andrews-Speed, a senior principal fellow at the National University of Singapore’s Energy Studies Institute.

“They have been working on nuclear power for decades. They could, in principle, tomorrow, make a decision (to build a reactor),” Dr Andrews-Speed said.

“But of course, as with everywhere in the world, this is a political issue. It is not purely energy policy,” he added.

The 2035 time frame EMA has set for Singapore’s energy imports may also be tight. Malaysia is thinking of building a new research reactor to replace its current 40-year-old model, according to a policy paper published this year, but no time frame has been set. It does not have a commercial plant.

The country did explore accelerating its nuclear power programme about 10 years ago, but progress has stalled under recent administrations.

Meanwhile, Indonesia wants to build its first commercial nuclear power plant by 2045.

Both Indonesia and Malaysia have said they will not export renewable energy, complicating Singapore’s plans to buy clean energy from its neighbours.

“Maybe Singapore is indicating it is accepting a wider choice of technologies,” Dr Andrews-Speed said, of Singapore’s decision to allow nuclear power in its latest call for import proposals.

He added that the cost of nuclear power over the next few years will depend on the type of technology used and the countries involved in building the reactors.

As it stands, nuclear power could cost over US$200 per megawatt-hour, much higher than solar and wind power, which caps off at around US$50 per megawatt-hour. Geothermal energy could reach close to US$100 per megawatt-hour, according to US-based asset manager Lazard.

Interest in nuclear energy worldwide has crept up recently, even outside its traditional supporters like France and China, amid high energy demand and fossil fuel prices. The United Kingdom wants to more than triple its capacity by 2050. Japan and the Philippines are planning to restart shelved plants.

Nuclear power is not in Southeast Asia’s regional green finance guidebook because of the high risks nuclear waste brings. The European Union considers nuclear energy projects green following a landmark vote this week, but its inclusion had attracted sizeable opposition from lawmakers and environmental groups.

Singapore does not have a nuclear power plant. In a scenario-planning paper released in March, EMA said the city-state could rely on domestic atomic energy to get its energy sector to net-zero emissions by 2050, if the world goes through a disorderly energy transition.

Longer runway

Singapore’s latest call for energy import proposals will be open for 18 months, till the end of 2023. The earlier round lasted only five months, and EMA said firms had asked for more time.

The agency said proposals from the earlier tranche will be automatically considered under the new round, which takes place under tweaked rules that allow consortiums to modify their plans after submitting initial papers.

EMA had earlier said it received 20 proposals in the earlier round, which detailed plans to import solar, wind, geothermal and hydropower from Indonesia, Malaysia, Thailand and Laos.

Source Eco Business

How big finance can scale up sustainability

Posted on June 1, 2022 by dishanth

Addressing the ever-worsening climate crisis will require the largest sustained movement of capital in history. At least $100 trillion must be invested over the next 20-30 years to shift to a low-carbon economy, and $3-4 trillion of additional annual investment is needed to achieve the Sustainable Development Goals by 2030 and stabilise the world’s oceans.

Mobilising these huge sums and investing them efficiently is well within the capacity of the global economy and existing financial markets, but it will require fundamental changes to how these markets work. In particular, traditional financial institutions will need help in sourcing the right projects, simplifying the design and negotiation of transactions, and raising the capital to fund them.

Many sustainability ideas are small-scale, which partly reflects the nature of innovation, whereby ideas are developed, tested, and, if successful, eventually copied. But the disconnect between those developing sustainability projects and the world of traditional finance means that scaling such initiatives is not straightforward.

At the risk of oversimplifying, sustainability advocates may be suspicious of “Big Finance” and its history of funding unsustainable industries. Investors, on the other hand, may be wary of idealistic approaches that ignore bottom-line realities, and might not be interested in small-scale transactions.

Given this disconnect, how do we scale up sustainable projects from small investments to the $100 million-plus range that begins to attract Big Finance and thus the trillions of dollars needed to make a global difference?

The disconnect between those developing sustainability projects and the world of traditional finance means that scaling such initiatives is not straightforward.

Three steps, in particular, are necessary. First, securitisation techniques should be employed to aggregate many smaller projects into one that has enough critical mass to be relevant. Securitisation got a bad name in 2007-08 for its role in fueling the subprime mortgage crisis that brought the developed world to the brink of financial ruin.

But when properly managed, joint financing of many projects reduces risk, because the likelihood that all will have similar financial and operational issues simultaneously is low. For the resulting whole to interest investors, however, the numerous smaller projects need to have common characteristics so that they can be aggregated. This cannot be done after the fact.

For example, we need to develop common terms and conditions for pools of similar assets, as is already happening in the US residential solar market. Then, we need to explain the fundamentals of securitisation to more potential grassroots innovators through regional conferences that bring together financiers and sustainable-project developers.

Second, we must reduce the complexity of key transaction terms and make it easier to design and negotiate the specifics of instruments used to invest in sustainable projects. In established financial markets, replicating significant parts of previous successful deals is much easier than starting from scratch for each transaction. This approach works because many of the terms and conditions for subsequent deals have already been accepted by key financial players.

Making successful innovations more visible to investors is therefore crucial. To that end, we should establish a high-profile, open-source clearinghouse of previous sustainable projects, including those that have been successfully funded and those that failed. This would be similar to many existing financial-sector databases but freely available, with reputable third-party oversight to ensure accuracy.

Third, the range of funding sources for sustainable projects needs to be expanded and made more transparent. Because sustainability investments may offer lower returns according to historic financial-market metrics, traditional asset-allocation practices, against the backdrop of “efficient markets,” would imply reduced attractiveness.

But historic benchmarks do not sufficiently factor in the exploding field of impact investing, which embraces different return and time thresholds and now accounts for about $2.5 trillion of assets. Securitising tranches of different kinds of impact investing could prove to be a game changer for sustainability financing.

It would thus make sense to create an open-source database of investor appetite – similar to the project database mentioned above – that is searchable by innovators and designers of new sustainable projects. This would make it easier to identify investors – equity, credit, or some hybrid – who might commit funding. The database could be housed in an organization such as the International Finance Corporation, the United Nations, or the Global Impact Investing Network.

There are encouraging precedents. The green bond market started just over a decade ago, and total issuance already could reach $1 trillion this year. And a critical mass of the financial world attended the UN Climate Change Conference (COP26) in Glasgow last November. Under the leadership of UN Special Envoy Mark Carney, the Glasgow Financial Alliance for Net Zero (GFANZ) has made $130 trillion in climate-finance commitments.

In 1983, Muhammad Yunus founded Grameen Bank in order to provide banking services, and especially loans, to individuals (primarily women) previously considered to be “un-bankable.” By the time Yunus won the Nobel Peace Prize in 2006, “micro-lending” had become a global phenomenon, with traditional financial institutions involved in securitizing these loans.

The financial revolution that Yunus started transformed retail lending, streamlined how such transactions are structured, and tapped a new source of scaled investment capital. To help address today’s existential sustainability challenges, capital markets and their major players need to be more innovative still and open the door to non-traditional, even disruptive, voices and ideas.

J. David Stewart, a former managing director at JPMorgan, is a sustainable-finance consultant. Henry P. Huntington is an Arctic researcher and conservationist.
© Project Syndicate 1995–2022

Source Eco-Business

The net zero workforce in manufacturing

Posted on May 23, 2022 by dishanth

A systematic shift is needed across all sectors of the UK economy to support the government’s net zero commitment by 2050. Industries that produce significant volumes of carbon emissions have much to do to play their part. These include the manufacturing and construction sectors that together account for 16 per cent of total UK emissions.

Stakeholder requirements, regulation and incentives are driving decarbonisation efforts. However, UK manufacturers have the opportunity to go beyond expectations on improving the environmental and social impact of their products and services. Ultimately, they need to create value and competitive advantage by putting sustainability at the centre of business strategy and pursuing meaningful decarbonisation objectives. Such an approach will help businesses reach two main objectives: meeting regulatory requirements on managing their own carbon footprint during operations and through their supply chains (scope 1 and 2 emissions) and reducing the impact of their products and offerings on the environment when in use (scope 3 emissions). Additionally, companies may also find that putting sustainability at the heart of their business strategy will open up opportunities for developing new products and entering new markets.

Minimising the environmental impact of offerings can be a complex strategic decision that will require closer collaboration with a company’s entire stakeholder community – including suppliers and customers – and forging new alliances with other companies, centres of innovation and educational institutions.

Energy transition and digital transformation are rapidly changing what work we do, how we do it and where we do it. However, growing competition for both sustainability and digital competencies [from other sectors], an ageing workforce, fewer new recruits and a lack of diversity all point to increasing skills challenges in the future.

After considering the net-zero related opportunities and challenges, this article explores how companies can improve their workforce approach and better align their skills agendas to maximise opportunities in energy transition.

UK net zero obligations, opportunities and challenges

Environmental, social and governance (ESG) scrutiny of businesses is increasing rapidly as investors and UK policy makers put more pressure on companies to disclose and reduce the environmental impact of their operations. For example, the scope of Streamlined Energy and Carbon Reporting (SECR) legislation was extended on 1 April 2019 to large UK incorporated companies (including private companies) that meet certain qualifying criteria.¹ The scheme requires businesses to report on their energy consumption, scope 1 and 2 greenhouse gas emissions and explain their actions to improve energy efficiency.²

Further, the government aims to expand the scope of the Task Force on Climate-related Financial Disclosures (TFCD) in the UK. In November 2020, the UK government announced mandatory climate risk reporting aligned with TCFD guidelines for premium listed companies, for accounting periods beginning on or after 1 January 2021. It also laid out a roadmap to bring all listed entities, large private companies and limited liability partnerships in the UK under the scope of TFCD by 2025, most by 2023. This means that every year an increasing number of UK manufacturers will have to report on their governance and strategies for managing climate-related risks and opportunities and assess the financial impact of such risks on their business based on a number of scenarios.

In addition to tightening the rules around climate-related financial disclosures, two recent policy papers set out measures to help the UK meet its net zero target and the role that the manufacturing sector is expected to play in the process.

The UK government’s Ten Point Plan for a Green Industrial Revolution outlines the technology areas that will benefit from greater government support as well as policy proposals and funding packages to scale them up. These technologies include advancing offshore wind, low carbon hydrogen production, zero emission vehicles and their associated infrastructure, greener buildings as well as carbon capture, usage and storage (CCUS). The Plan aims to mobilise £12 billion government investment and potentially three times as much private money, while also creating and supporting up to 250,000 green jobs.

The Industrial Decarbonisation Strategy sets ambitious carbon emission reduction targets for industry to support the UK’s net zero effort. The Strategy expects industrial emissions to be reduced by two-thirds by 2035 and by 90 per cent by 2050, with 3 megatonnes of CO2 (Mt Co2) captured through CCUS and around 20 terawatt-hour (TWh) of energy used in the form of low carbon fuels by 2030. This is a tall order for the sector that was responsible for 72 Mt Co2e emissions in 2018. However, the government is confident that “ the UK can have a thriving industrial sector aligned with the net zero target, without pushing emissions and business abroad”.

The new financial reporting requirements and the two policy papers create a level of urgency that requires manufacturers to take greater responsibility for the environmental impact of their activities. While the pressure falls more immediately on listed companies and large private businesses, the inference is clear for all UK companies, regardless of their size.

According to a 2020 survey by the Institution of Engineering and Technology (IET), 53 per cent of manufacturing and 61 per cent of construction businesses in the UK have sustainability agendas. The top three actions companies took to deliver these agendas related to using new, greener technologies, adapting existing technologies to be more green and encouraging telecommuting/remote working.

However, the real challenge and opportunity will be for both UK and global businesses to combine carbon focus with efforts to improve their productivity and international competitiveness. This cannot be done by treating sustainability as just one of many company initiatives. Sustainability has to be a strategic driver. This may drive a company to reconfigure its entire manufacturing lifecycle. This is a complex decision that could involve a company’s entire supply chain and require forging new partnerships. Areas that need to be considered include:

product design – reducing cost and waste during production, improving energy efficiency of the product and rapidly incorporating the use of new materials in the design process. It can also make a product part of the circular economy, by making it easier to repair, reuse or recycle.
raw material selection – using ethical, sustainable and alternative materials for production.
production – improving operational efficiency and reducing waste during production, implementing smart production technologies and using renewable energy sources.
shipping – reducing the carbon footprint of transporting raw materials, components and delivering final products. This involves setting carbon targets for transport providers and working closely with them.
aftermarket – shifting towards the circular economy model by providing spare parts, repair, recycle and disposal services, and optimising the efficiency of products in the field.

The benefits of sustainable manufacturing go beyond meeting regulatory compliance and energy cost reduction. They can include better risk management, improved overall operational efficiency, reduced waste, a positive impact on the company’s brand and reputation as well as relationships with local communities. While cost efficiency is a key performance indicator for nearly every business, companies realise that green credentials can help build trust with customers and open new markets. It also helps that customer perceptions of value are changing: 51 per cent of respondents of a recent survey think that the environmental credentials of a product or service are now just as important as the price they pay for it.

No manufacturer was left untouched by COVID-19. Business models, operations and attitudes to technology and the workforce all had to change as the pandemic rapidly unfolded. As leaders reflect on lessons from the pandemic, many realise that the speed of decision-making, agility to change operating models and a more resilient supply chain will be crucial for a long-term, green recovery.

As complex international supply chains were disrupted during national lockdowns, companies needed to consider multiple sourcing and, in some cases, relocating parts of the manufacturing lifecycle.

Digital adoption and the potential for increasing carbon costs may provide further incentives to establish regional, distributed manufacturing hubs across the UK. The term ‘green-shoring’ could be used to describe this potential trend.³ These hubs could be driven by businesses that engage in the circular economy and focus strongly on customers. For example, networks of small additive manufacturing facilities could serve specific customer needs faster and potentially cheaper if they are located close to their clients – thus reducing carbon emissions, time and cost spent on transport. Further opportunities may also arise in the future in combining low carbon energy sources and circular economy concepts in ‘reindustrialising’ certain parts of the country very much in line with the government’s levelling up agenda.

The pandemic gave leaders an opportunity to rethink strategies. As companies adapt and learn to live with the virus, we may see a growing number of manufacturers choosing to re-engineer their product portfolios towards the new energy technologies highlighted in the two policy papers. Undoubtedly, there will be opportunities to build infrastructure, manufacture equipment and components, and supply services for these green technologies. Initially, these will be focusing on the large industrial clusters to provide volume. While the pipeline of activities and a low carbon supply chain are slowly building, most of the projects that will make a material contribution to the net zero objective need to mature to provide opportunities on scale for UK businesses. However, companies need to get ready for when the floodgates open – as they may do when strategies and financial support mechanisms for various green technologies are established. Therefore, the question arises: what can manufacturers do now to create a competitive advantage for the green industrial revolution?

Manufacturing and construction workforce opportunities and challenges

The key opportunity for companies is to put sustainability at the heart of their business strategy and attract, develop and retain a motivated workforce to execute their plans.

However, building a workforce quickly that is capable of delivering a strategy with sustainability at its core will be a challenge. Only slightly more than half of manufacturing and construction businesses have sustainability agendas in the UK and less than one in ten have all the skills they need to deliver these programmes.

There are also some long-standing workforce issues the industry needs to address alongside sustainability. According to the Employer Skills Survey 2019, 36 per cent of vacancies in manufacturing and construction were hard to fill because applicants lacked the appropriate skills, qualifications or experience – compared to the national average of 24 per cent.⁴ In construction alone, an additional 350,000 full-time equivalent workers will be needed by 2028, mainly to upgrade existing buildings to reduce their energy consumption. With 11 per cent of the sector’s workforce coming from the EU, the UK’s departure has exacerbated skills shortages. The ageing workforce and lack of diversity are also issues. While women make up 48 per cent of the overall UK workforce, they only accounted for 28 per cent of manufacturing and 14 per cent of constructions occupations between January and March 2021.

Attracting future talent will also be difficult. While remote working provides more opportunities to recruit globally, Engineering UK estimates that there is an annual shortfall of between 37,000 and 59,000 engineering graduates and technicians to meet the yearly demand for 124,000 engineering roles across the UK economy. But it is not only about the numbers: the majority of graduates and apprentices finish their programmes with little training in the digital skills they will need for a future in manufacturing.

Indeed, the government set up the Green Jobs Taskforce following the publication of the Ten Point Plan for a Green Industrial Revolution policy paper to address the skills challenge. Its recently published report explains how the UK skills sector needs to adapt to support net zero.

Delivering the sustainability agenda will also require new skills that businesses have not traditionally targeted. These include the ability to quantify and analyse a company’s emissions data, set targets, articulate abatement pathways, forecast costs and timings as well as liaise closely with stakeholders around targets, actions and progress. Companies will also need new skills in emerging green technologies that will help them move from using hydrocarbons as a fuel source to hydrogen and batteries. Many of these skills are not industry-specific, so competition for them will certainly increase across the economy. To stay ahead of the competition, leading companies are appointing chief sustainability officers, starting to build sustainability teams and/or working with external advisers.

Digital technology will be key to optimise and make company operations, wider supply chains as well as products and offerings more sustainable. As smart factory principles and exponential technologies – such as robotics, cognitive automation, artificial intelligence, data analytics and the Internet of Things – advance, they will require digital skills and create roles and career pathways that do not exist today. Given that many manufacturing businesses are not yet investing at scale in net zero opportunities until more projects materialise, how do companies know what skills, knowledge and capabilities they need to recruit for in the future?

What should manufacturing companies do?

1. Put sustainability at the heart of business strategy

To meet decarbonisation targets for their operations, supply chain and product portfolio, manufacturing and construction companies should consider including sustainability in their business purpose, set clear decarbonisation targets and build their company strategy around it.

There is also a need for strong leadership that can articulate the benefits of sustainability to the business. This is crucial as decarbonisation targets and plans are likely to be set out by central sustainability officers but executing them and finding new opportunities will require the company’s entire workforce.

Each and every employee across the business will need to be empowered to play their part and bring fresh ideas to help the company exceed its targets. Having individual responsibility and ability to act will be important to reach net zero targets. Working for a business with strong sustainability credentials and a culture of innovation will give the workforce the opportunity to see the positive impact they are making.

2. Focus on digital and transferable skills and capabilities that allow learning rather than focusing on industry knowledge and experience

Leaders have the opportunity to reconsider the short- and long-term workforce needs of their organisation and find the right blend of specific skills and knowledge, soft skills and capabilities, and digital/human interface.

Electrical, mechanical and civil engineering skills will continue to play key roles in designing and making products and offerings for energy transition. However, materials, technologies and operational setups will change more rapidly and frequently in a sustainable, digital world. This means that in addition to core engineering skills, the workforce needs to demonstrate agility and the ability to learn quickly. The ability to work alongside and effectively incorporate artificial intelligence, machine learning, augmented reality tools and robotics into day-to-day activities will also become critical capabilities. Indeed, the Deloitte Human Capital Trends report highlights that using digital technology to increase the capability of teams to learn, create and perform in new ways leads to better outcomes. Organisations will also need effective cross-functional skills, including collaboration and social intelligence, as well as more technical skills such as cybersecurity, regulatory or commercial strategy.

These highly transferable skills will become more important than industry knowledge or experience. Continuing to strengthen these along with adopting a mindset focused on problem-solving and soft skills should make the company more adaptable and flexible to access further skills when necessary.

Companies need to build a net zero workforce that has both the skills and capabilities as shown in Figure 1.

Figure 1. Net zero workforce – skills and capabilities

3. Build the net zero workforce

Building the net zero workforce should start by redefining work in three different, yet intrinsically connected dimensions: the work itself, the workforce and the workplace. The table below provides questions manufacturing companies may want to explore.

Re-architect work

Robotics, cognitive technologies and Al help people focus on more strategic and value-adding activities.

Are you restructuring work to make your workforce’s activities more efficient? What should this job do, what should it stop doing and what can be automated?
In addition to automation, how are you using technology to enhance your workforce’s skills and capabilities?
How can you turn work from task completion to problem solving and managing relationships?
Which roles can be performed sustainably on a remote or hybrid basis?

Unleash the net zero workforce

Access to broader talent ecosystems help shift focus from structure to capabilities and potential.

How do you motivate and reward workforce to align with your decarbonisation goals?
Do your hiring strategies help you compete for non energy industry specific skills?
How can you build internal talent marketplaces that identify technical skills, capabilities and interests as well as proficiency levels?
How can you curate personalised experiences to maximise your workforce’s potential?

Adapt the workplace

When focusing on the workforce, organisations first need to understand what the desired work outcomes are. Next, they will need to follow a set of steps to anticipate both the technical skills and soft skills the workforce will need in the future. Once these are identified, companies will need to assess where potential gaps could arise and develop a strategy and roadmap to meet future workforce requirements. Key considerations are shown in the table below.

Anticipate skills and capabilities

Based on your mid-and long-term energy transition ambitions consider:

what skills and capabilities your organisation will need in the future and at what proficiency levels
whether leadership has the skills to manage new technology and energy transition
what proportion of skills should be core and what can/should you borrow from other sectors
what skills can you enhance by technology and what can you automate

Assess the current skills and capabilities gap

To identify skills gaps, create a live inventory of the skills and capabilities of your workforce and that of your wider ecosystem, covering:

your workforce, project partners, suppliers, contractors, managed services, crowd sourcing platforms and collaborative partners, including skills academies and universities
passions and special interests
requests for work scheduling patterns and other personal requirements or circumstances

Develop a skills and capabilities strategy and roadmap

Develop a dynamic talent strategy to enhance workforce capabilities and address skills gaps. Consider:

which skills you will acquire and which ones will you develop
how you will access your broader talent system to complement your existing skill set
to what extent you will enable remote working with appropriate policy and compliance infrastructure
creating a leadership development and succession plan aligned to energy transition objectives
how you will use technology to enhance your workforce’s capabilities

Execute strategic roadmap

Implement workforce-related initiatives, including:

dynamic learning and development programmes to support learning in the flow of work; leadership development programme and succession management; refreshed workforce mobility and talent acquisition approaches; a reward system aligned with energy transition/net zero objectives and based on value to the business; workforce composition and contingent workforce management; technology initiatives.

Organisations should also consider the following questions:

What additional support mechanisms are needed to keep the existing workforce focused on delivering the strategy?
How can staff be encouraged to explore new technologies and work with new talent towards sustainable goals?
How to create incentive mechanisms specific to certain Millennials and Gen Z who may view long-term incentives less attractive and change employment more frequently? This could include net zero-related incentives or exploring opportunities company-wide or in its extended networks.
How to develop a workforce that not only has the core technical and soft skills and capabilities for the near term, but can also access less specialised skills to scale up quickly if necessary?

4. Collaborate, collaborate, collaborate

In a world focused on reducing environmental impact of climate change and navigating rapid change, manufacturers can no longer act alone. There is an increasing need to collaborate with suppliers, energy providers, neighbours and, potentially, competitors and customers themselves to make the manufacturing lifecycle greener and help support customers decarbonise better. As the Green Jobs Taskforce recommendations suggest: business, the government and the education sector working closely together would ensure that the green jobs of the future provide high quality careers that are accessible for people from all backgrounds, in every region of the country.

In conclusion

Manufacturing and construction companies that realign their purpose and strategy around ESG goals early may not only able to meet regulatory and stakeholder requirements more easily but could also be better positioned to seize opportunities in energy transition. Re-energising their workforce approach and creating an environment for attracting and fostering the right balance of human and digital skills and capabilities will be the key to achieving sustainability goals.

Therefore, companies should:

Put sustainability at the heart of business strategy
Focus on digital and transferable skills and capabilities that allow learning rather than industry knowledge and experience
Build the net zero workforce
Collaborate, collaborate, collaborate

These actions should build a highly motivated workforce that is ready to deliver the net-zero goals in support of a cleaner, brighter and more sustainable future for the benefit of both business and the wider society.

Source Deloitte

Investing in the global transition to a more sustainable future

Posted on May 16, 2022May 16, 2022 by dishanth

Investors have had a lot to grapple with in the last few years.

The Covid-19 pandemic and a rapidly changing macroeconomic outlook have brought unprecedented risks and volatility to financial markets, while the urgency to fight climate change has become one of the biggest challenges facing governments and industries.

These developments highlight the importance of “sustainable wealth”, which HSBC Premier describes as growing assets not just for the short term, but for the years and generations to come. To achieve that, investment portfolios must be able to stand the test of time.

Many investors are now rethinking their approach to investing, and seeking new ways to future-proof their portfolios as they look to build long-lasting wealth. More than ever before, investors are exploring new sustainability-themed investments.

“Employing ESG (Environmental, Social and Governance) factors is a must,” says Mr James Cheo, Chief Investment Officer, South-east Asia at HSBC Global Private Banking and Wealth. ESG refers to a set of criteria that investors commonly use to evaluate the impact of a company’s activities before making an investment decision.

“This will not only reduce the risk when it comes to investing, but also improve the resilience of your portfolio over the long run. That’s because the quality companies that you choose to invest in tend to deliver stronger, more sustainable earnings.”

It also allows investors to support the global movement towards a more sustainable and equitable future. The trend of aligning one’s values with investment decisions is taking off, especially among younger investors.

A survey by HSBC Global Asset Management last year found that over 82 per cent of investors in mainland China, Hong Kong, Singapore and the United Kingdom rate sustainable, environmental and ethical issues as “quite” or “very important” to their investments. In Singapore, that figure stands at 80 per cent.

But the investors estimated that on average, they explicitly consider ESG factors for only around 28 per cent of their current investments, according to the survey. That reveals a gap between investors’ intentions and their actions.

To help investors bridge the gap, HSBC has made sustainable financing and investment a priority. The bank has more than 150 years of experience navigating a constantly changing world, and it sees the transition to a net zero economy as a major opportunity for investors.

Mr James Cheo, Chief Investment Officer, South-east Asia at HSBC Global Private Banking and Wealth. PHOTO: HSBC

“Sustainability is at the core of what we do. It’s extremely important and central to our discussion when it comes to investment decisions,” says Mr Cheo.

“It is a journey and there will be challenges along the way. Ultimately, our role is to help our clients through this transition. We believe that every portfolio should and can be sustainable, with ESG at its core,” he adds.

Opportunities in ESG investing

Investors surveyed by HSBC Global Asset Management cite a lack of suitable investment products, and not wanting to limit their choices, as major barriers to sustainable investing.

But Mr Cheo says sustainable investment opportunities have increased tremendously in the last few years as more investors – especially those in Asia – become interested in the space, and the market for ESG products mature.

“Investors should start to take that first step to be invested,” Mr Cheo says. He suggests incrementally increasing one’s ESG investments “because that’s going to be a very important pillar to investing, especially in the years ahead”.

Integrating ESG considerations into your investment decisions will help create a more resilient portfolio that will stand the test of time. PHOTO: HSBC

He shares three broad themes that would offer investment opportunities in the years to come:

Energy transition: An increasing number of governments and industries have made net zero carbon emissions pledges, and the transition to a low-carbon future is set to involve major reconfigurations in the way industries and society function.

Winners from this megatrend are companies that successfully adapt to the transition. Producers of low-carbon or renewable energy, as well as those developing new technology that help the world in the transition, will also benefit.

In Asia, China’s ambition to reach net zero emissions by 2060 will herald a green revolution with significant investments aimed at increasing the use of clean energy, promoting electric vehicles and greening supply chains.

Protecting biodiversity: A research by the World Economic Forum found that more than half of the world’s GDP is moderately or highly dependent on nature. So, damage to nature and biodiversity threatens global economic activity.

The winners in this area are companies in the circular economy, which promotes recycling and reusing products for as long as possible to reduce waste.

Social factors: The social pillar of ESG investing is receiving more attention as research shows that socially responsible companies perform better in the long term². This is because companies with a more diverse workforce as well as those that respect human rights and focus on developing talent tend to have stronger leadership, happier employees, and more resilient operations.

Navigating economic uncertainties

Financial markets are likely to remain volatile in the coming months, given higher inflation, slowing economic growth and the likelihood of further interest rate hikes by the US Federal Reserve and other central banks.

“Such an environment requires investors to be more proactive in strengthening the resilience of their portfolios,” says Mr Cheo.

Steps that investors can take include reducing cash holdings to avoid having portfolio value eroded by inflation, and diversifying investments with a mix of stocks, bonds and alternative assets to hedge against rising inflation.

In terms of investment options, HSBC picks the US market for its economic growth prospects and those in South-east Asia, given the region’s reopening from pandemic-related closures. The bank also suggests adding income through dividend stocks and high-yielding bonds.

“Remember that time in the market is more important than timing the market, so they have to stay invested through the cycle,” says Mr Cheo.

ESG investing could help investment portfolios navigate current uncertainties and prepare for the major transition towards a greener and more equitable future.

“You have to look for quality companies that can thrive with higher prices, that can navigate a volatile environment. That’s why we think that ESG leaders are going to be one of the winners that will come out from this uncertain macro-environment,” says Mr Cheo.

But above all, investors should always pick investments that suit their risk appetite and profiles.

Approaches to sustainability-themed investments

Mr James Cheo shares that there are multiple ways to invest sustainably. Here are three of the most common approaches:

Firstly, investors can consider negative screening. This method involves excluding companies that are not aligned with investors’ values or investment objectives. For example, some investors exclude tobacco companies from their portfolios due to the harmful effects of smoking on health.

Secondly, investors can look across sectors and asset classes for companies that have high ESG scores³. ESG is a set of criteria that evaluates how a company operates in relation to environmental (such as how it uses energy or manages wastes), social (such as the treatment of workers) and governance (such as its choice of board members) factors. Companies with high ESG scores are seen as better-managed, and thus more likely to do well in the long term.

Thirdly, investors who want to achieve certain environmental or social objectives alongside financial returns can do that through a practice known as impact investing. For example, investing in research and development aimed at finding cures to diseases, or new technology to improve access to banks.

Making a difference together

HSBC is a firm believer in doing business responsibly and sustainably. It is also committed to encouraging customers to invest and live in a sustainable manner. For that, the bank has forged a global partnership with non-profit charity One Tree Planted to plant trees on behalf of clients in selected parts of Malaysia, Indonesia and India.

From now till June 30, customers who sign up for a new HSBC Premier banking account with the bank will have 10 trees planted on their behalf. For existing customers and staff of HSBC, up to 10 trees will be planted on their behalf for every ESG Unit Trust fund investment they make.

Visit www.hsbc.com.sg/esg to explore HSBC’s suite of ESG funds, which cover themes such as climate change, sustainable energy and healthcare.

Disclaimer:
Customers are advised to make independent judgment with respect to any matter contained herein. This material is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. You may wish to seek advice from a financial consultant before making any investment decisions. If you choose not to do so, you should consider whether the investment is suitable for you.

Footnotes:
^{1, 2} HSBC Global Private Banking – January 2022 – Q1 2022 Trend Brochure
³ ESG scores are calculated by rating agencies such as MSCI, Sustainalytics (owned by Morningstar), ISS, RepRisk, Refinitiv, Bloomberg, S&P Global, and FTSE. Refer to https://sustainfi.com/impact/esg-score/

Source The Straits Times

Energy firms want APAC governments to step up in the energy transition

Posted on December 9, 2021December 9, 2021 by dishanth

Energy firms are pressing on governments in Asia-Pacific to facilitate the development of renewable power and technologies on the back of the COP26 global climate summit where countries pledged to slash greenhouse gas emissions.

In a series of forums organised by media firm Thomson Reuters last week, industry leaders said that political will is key to ensuring a smooth switch to green fuels.

Nitin Apte, chief executive of Singapore-based solar and wind power firm Vena Energy, said governments need to provide transparent and predictable pathways for companies to align with their sustainability targets in the next few decades.

“Projects that we develop take several years,” said Nitin. “They’re around for 20, 30 years in the communities that they are going to be built in.”

Nitin added that he wants to see countries collaborate and help firms on cross-border energy projects, pointing to examples like Singapore’s slated import of up to 100 megawatts of hydroelectric power from Laos. The venture involves Keppel Electric, a Singapore-based power retailer, and the Laotian state electricity company.

Other speakers said demand for hydrogen power from “centres of consumption” like Japan, China and Taiwan, could be fulfilled by Australian exports. Australia is set to become one of the world’s largest producers of green hydrogen.

Each country has a different history, a different energy mix. Does that mean each country will just look at its roadmap in isolation? I guess not, maybe that’s precisely where collaboration comes into play.

Valery Tubbax, chief financial officer, InterContinental Energy

“Each country has a different history, a different energy mix. Does that mean each country will just look at its roadmap in isolation? I guess not, maybe that’s precisely where collaboration comes into play,” said Valery Tubbax, chief financial officer of Hong Kong-based hydrogen power firm InterContinental Energy.

Chairperson of Taiwan’s Offshore Wind Industry Association Marina Hsu agreed, saying that associations can invest and advocate for development, but it’s the job of country leaders to “liaise and really think strategically” across the region.

Singapore Minister of State for Trade and Industry Low Yen Ling, speaking at the forum, said countries in Asia-Pacific need to play to their strengths, and “given different countries’ circumstances, the energy transition strategy for countries in APAC will really differ from one another”.

Low said Singapore is focusing on developing emerging technologies, and it recently awarded US$40 million to 12 projects on low-carbon hydrogen, as well as carbon capture, utilisation and storage.

“I hope we will only see an acceleration of the pace of deployment of carbon-neutral technologies,” said Thomas Baudlot, CEO of the Southeast Asia arm of French utility firm ENGIE.

But how much cash other governments in Asia-Pacific can pour into decarbonisation remains in question. In Southeast Asia, the Covid-19 pandemic caused delays in renewable energy projects and put a strain on the public purse to fund capital projects. Many member states’ climate pledges are also contingent on foreign funding.

Countries in ASEAN may need to place a greater emphasis on balancing social economics with sustainability.

Mohamad Irwan Aman, head of sustainability, Sarawak Energy

“Countries in ASEAN may need to place a greater emphasis on balancing social economics with sustainability,” said Mohamad Irwan Aman, head of sustainability at Malaysian utility firm Sarawak Energy.

Others point to the government’s role in managing private players to prevent a chaotic scramble for power generation and distribution markets. Australia’s electricity market hit a crisis point in 2017, when high wind and solar investments caused the closure of fossil fuel plants, while the grid was not prepared for intermittent power supply. After a series of black-outs and close shaves, the government worked on coordinating supply between power plants and invested in batteries – steps that led to a smoother roll-out of renewables in the years since.

“The foundation for net-zero in the energy infrastructure space, where everyone can be a winner, starts with a thought through and orchestrated plan,” said Morris Zhou, co-founder and executive chairman at Australian solar power firm Maoneng. “I believe that this responsibility sits with the policymakers around the world.”

Citing the need to adapt to climate change, Irwan said companies shouldn’t wait for policy changes before building a business case around addressing climate change. “This is not about environmental issues, it’s about the company’s survival in the long term,” he added.

Balancing green power and efficiency

Despite the rapid escalation in renewables, discussions also focused on increasing energy efficiency for existing power infrastructure, particularly in India, which will remain reliant on coal-fired power for some time. Currently the world’s third-biggest emitter of greenhouse gases after China and the United States, India has pledged to reach net zero carbon emissions by 2070. While there will be an overall reduction of coal’s contribution to electricity in the coming years with the ramping-up of renewables, India’s coal consumption is expected to grow in absolute terms.

India’s electricity consumption per person increased by over 30 per cent since 2012, although it’s just 40 per cent of the world average in absolute terms. But as the middle class in the world’s second largest country expands, its energy demand in the next 20 years is expected to outstrip all other countries.

This means not just adding incremental power capacity with renewables, according to Raman Kalra, chief digital officer of Indian solar and wind energy firm ReNew Power, but making the efficiency of existing power assets “much, much higher”.

Kalra said that involves using digital technologies to make the electricity grid work optimally, and to create better public transport networks to take cars off the road. India’s car ownership is expected to increase five-fold by 2040, which will drive demand for oil.

Wasting power is not just India’s problem. A United Nations report found energy efficiency to be the most useful tool in curbing energy demand in Asia Pacific, followed by developing renewable energy. Mismanaged road traffic is the main culprit for energy inefficiencies, alongside manufacturing and a lack of building regulations for houses which end up wasting energy in heating and cooling.

The International Energy Agency also factors in a “major worldwide push to increase energy efficiency” in its projected net-zero scenario, where the 2030 world economy is 40 per cent larger but uses 7 per cent less energy.

No carbon is produced from energy that’s not used. It’s not been sexy to have that discussion, but it’s a missing piece.

Jeff Connolly, Chairman and CEO, Siemens Australia and New Zealand

“No carbon is produced from energy that’s not used. It’s not been sexy to have that discussion, but it’s a missing piece,” said Jeff Connolly, chairman and CEO of Siemens Australia and New Zealand. The firm provides energy management and tracking services.

While smart meters for energy optimisation, along with renewables like solar and wind, are ready for mass deployment, speakers conceded that other popular technologies like green hydrogen and carbon capture are nascent and expensive. But they’re bullish about the prospects.

“Technology has always surprised us on the upside,” said Vipul Tuli, South Asia CEO of Singapore energy firm Sembcorp.

Source Eco Business

The global energy landscape is going through major shifts

Posted on April 12, 2021 by dishanth

We publish this long-term energy outlook at the start of 2021, after a year that has brought extraordinary challenges. The COVID-19 pandemic and subsequent economic crisis caused unprecedented disruption in the energy landscape—and the path to recovery remains uncertain.

At the same time, the world’s energy systems are going through rapid transitions that are triggered by simultaneous shifts in technological development, regulations, consumer preferences, and investor sentiments. Our Reference Case sheds light on these developments and provides a synthesis on how energy demand will evolve.

In the short term, a return to pre-COVID-19 levels is projected in one to four years

The impacts of COVID-19 have permanently shifted energy-demand curves. Although demand rebounds to 2019 levels in one to four years, it does not return to the previous growth path. Electricity and gas rebound more quickly than oil demand, and coal does not return to pre-COVID-19 demand levels.

Recent work by McKinsey on the effects of the COVID-19 crisis on economic growth introduces a set of scenarios, reflecting varying levels of effectiveness of the public-health response and speed and strength of policy interventions.

From these scenarios, two were selected as most likely outcomes by a group of more than 2,000 executive respondents globally: “Virus Contained; growth returns” and “Muted Recovery.” At the time of this report’s publication
(January 2021), the latest actual numbers show a trajectory that comes closest to “Virus Contained; growth returns.” Consequently, this scenario underlies the projections in our report.

Given the unparalleled size of many economic-recovery packages, the focus of the stimulus measures plays a key role in shaping energy systems in the decades to come.

In the longer term, fundamental shifts already emerging pre-COVID-19 are going to be the key drivers of the energy transition

As economies and energy markets recover from the short-term impact of COVID-19, fundamental shifts in the energy system continue, and the coming decades will likely see a rapid acceleration of the energy transition.

Power wins and hydrogen changes the landscape . . .

Power consumption doubles by 2050 as energy demand electrifies, wealth increases, and green hydrogen picks up momentum.

. . . and low-cost renewables dominate power markets

Renewables become cheaper than existing fossil plants within the next decade. This triggers a sharp uptake in the installed capacity of solar photovoltaics and onshore and offshore wind (5 TW of new solar and wind capacity installed by 2035—which is equivalent to fivefold growth).

Peaks in fossil-fuel demand keep coming closer

Projected peaks in demand for hydrocarbons have come forward. Oil demand peaks in 2029 and gas in 2037, whereas coal shows a steady decline.

Yet in the Reference Case fossil fuels continue to play a major role in the energy system by 2050, driven by growth in areas such as chemicals and aviation.

In the Accelerated Transition scenario, demand for fossil fuels continues to decline, particularly oil and coal. Peak oil demand could move forward by five years to the early 2020s, at a level less than 1 MMB/D above 2019 levels.

After a long period of growth, global liquids demand peaks in the late 2020s, followed by a 10% decline in demand by 2050. This is mainly driven by slowing car-park growth, enhanced engine efficiency in road transport, and increased electrification.

Global coal demand peaked in 2014 and continues to decline by almost 40% from 2019 to 2050. Under increasing regulatory and financial pressure, coal’s role in the power sector diminishes, contributing to the overall decline in demand.

Gas continues to increase its share of global energy demand in the next ten to 15 years—the only fossil fuel to do so—and then peaks in the late 2030s. Even in the Reference Case, gas demand in 2050 is 5% higher than today.

Source McKinsey