Net Zero

Net Zero

Despite net-zero targets being set for 85% of the world's population, energy-related emissions increased in 2021. A 1.5°C pathway is still far off. For energy-intensive companies to embrace the quick change that Earth desperately needs, we must develop more appealing incentives.

The depressing truth is that we are far from a 1.5°C trajectory eight years from 2030, when emissions must be cut in half. Today, more than 136 nations—representing 116 regions and 85% of the world's population—have declared net-zero targets. On the corporate side, over a thousand businesses have committed to the Paris Agreement, totaling over $23 trillion in market capitalization. 1 Despite these initiatives and the strong economic argument in favor of moving toward a net-zero economy, emissions are still rising. Global energy-related CO2 emissions increased by almost 2 billion tones in 2021, reaching their highest level ever, according to the International Energy Agency (IEA).

The disparity between net-zero goals and actualization is growing. 30% of the world's emissions of greenhouse gases come from industry.

A review of the necessary steps to keep global warming to 1.5 degrees Celsius reveals the following depressing data:

· We must add 630 GW of solar energy and 390 GW of wind energy annually by 2030.

· By 2030, annual investments in sustainable energy must reach $4 trillion (compared to $750 billion in 2021).

· Each year, subsidies for fossil fuels, which account for 80% of global energy, total $6 trillion.

· 99% of businesses worldwide need a climate action strategy, yet only 2/3 of them have net-zero ambitions.

· Electric vehicles must increase from 5% of worldwide auto sales to over 60% by 2030.

· By 2030, emerging technologies will require $90 billion in R&D spending (current spending is $25 billion).

· To reach their 2030 goals, emerging markets require $1 trillion in additional investments.

· From 9% of current global economic activity, global circularity needs to double every ten years.

Lack of regulations to reward early adopters during the transition is making the problem worse. Governments should establish incentives, reduce investment risk, recognize and reward climate action, and enact sanctions against those who do not adhere to net-zero commitments. While demand-side signaling measures could encourage the use of low-carbon technologies, carbon pricing and other methods might stop carbon leakage.