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Wednesday, December 1, 2021

John Kerry: Companies that quickly embrace green technology will be cleaned up

The author is the U.S. President’s special envoy on climate issues

When we end COP26 and assess our progress in avoiding climate chaos, governments around the world have pledged to continue to significantly increase their ambitions.

But in order to achieve our goals, bold private-sector leadership is also crucial, especially to achieve the decarbonization of industries where the transition to net zero emissions has just begun. Solar and wind energy alone cannot change the global economy. The so-called “difficult to reduce” sectors, including heavy industry and long-distance transportation, also need rapid progress. These account for one-third of global carbon emissions and may generate most of them by 2050.

The Pioneer Alliance can use their supply chain to expand innovation breakthroughs, thereby reducing the cost of clean technology in industries where there are currently no commercial alternatives to replace fossil fuels.

The good news is that now is the best time to step up. In the United States, the newly enacted Infrastructure Act made a historic investment in the commercialization of clean technologies needed to reach net zero by 2050.

Leading companies are recognizing the dual opportunities of taking climate action and seizing competitive advantage. Just like the well-known cavalry, the forerunner is coming.In Glasgow, we unveiled Forerunner Alliancen. The partnership between the US State Department and the World Economic Forum provides leading global companies with a platform for fast-tracking clean energy innovation.

34 companies with a market value of nearly US$6 trillion have made ambitious commitments in the steel, aviation, freight, and shipping sectors. These are precise and verifiable procurement commitments designed to help innovators bring emerging clean technologies to market by 2030. Although the commitments made by these companies account for only a small portion of their total purchasing power, they are huge compared to the current scale of clean technology in these industries.

For example, the companies that made the steel pledge of the Pioneer Alliance promised that by 2030, 10% of their total steel purchases will have almost no carbon emissions during production. It happened three months ago. But now major automakers and renewable energy companies-using steel for wind and solar farms-have sent a strong signal to investors and innovators to build more that can be sold to ready buyers Clean steel plant.

In the aviation sector, the company promises to purchase advanced technologies that can reduce life-cycle emissions by 85% or more compared to traditional jet fuels without any compensation. This is unprecedented. Major airlines and companies that purchase flights, such as the world’s largest technology and financial companies, have pledged to replace 5% of their jet fuel needs. They signal a strong demand for innovation, such as clean synthetic fuels, next-generation biofuels, and zero-emissions advancement-all of which are critical to the net-zero transition.

Initially, these products may be expensive, but by fulfilling their procurement commitments within this decade, pioneers can bring emerging technologies to a commercial tipping point and ultimately eliminate any premium costs compared to pollution options.

Some companies may see the appeal of being a fast follower and postpone decisive climate action until the net-zero transition goes smoothly. They take risks to put their competitors in an insurmountable leading position in establishing innovative and clean supply chains. Companies that work hard and continue to invest in a business model that assumes a net-zero transition will never risk being swept away by the trend.

Although many key technologies have not yet been commercialized, strong demand signals will drive investment in innovation. The area of ​​private investment in next-generation technologies has been renaissance, from producing clean hydrogen-based fuels to capturing carbon dioxide from the atmosphere. Private investment in early-stage clean technology has broken historical records, accumulating $37 billion in the first three quarters of 2021.

The transition to net zero presents the biggest economic opportunity since the industrial revolution: by 2030, annual investment in clean energy technologies will reach US$4 trillion. Companies should seize this opportunity by promoting this transformation, rather than being hit by its impact.

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