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EUDR ‘could cost EU consumers up to $1.5 billion’, say analysts

 960 640 Stuart O'Brien
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A new study has explored the impact of EU Sustainability Regulations and the implications of the new EU Deforestation Regulation (EUDR) for global commodity supply chains and consumer markets.

The EU Deforestation Regulation (EUDR), which comes into force at the end of the year, is the latest round of EU sustainability regulation which attempts to influence global regulatory policy and value-chain practices as part of the bloc’s effort to achieve key aims of The European Green Deal such as no net emissions of greenhouse gases by 2050.

The EUDR is arguably one of the most far reaching and impactful pieces of EU sustainability regulation, targeting commodities linked to deforestation, which includes cattle, cocoa, coffee, oil palm, rubber, soya, and wood as well as some of their derived products, such as paper/paperboard, leather, shampoo, chocolate, tyres, and furniture.

Under the EUDR companies that trade in these commodities and their derived products in the EU market or who export them from the EU will need to follow mandatory due diligence reporting of the goods and supply chains they wish to trade in and demonstrate that their products are not linked to deforestation, or to forest degradation through, for example, the expansion of agricultural land. The regulation will require companies and industries in countries that supply the EU to transition to a sustainable, deforestation-free supply chain and legal agricultural value chain if they wish to trade in the EU.

Agribusiness Consultants at GlobalData a leading data and analytics company estimate that EUDR compliance premiums for companies operating in the supply chain for just two of the targeted commodities, oil palm products and their derivatives (such as crude palm oil (CPO) and palm kernel oil (KPO)), and rubber could be in excess of $1.5 billion alone. Whilst companies operating in these supply chains will be able to absorb some of the costs themselves a good proportion of these compliance premiums are likely to be passed onto EU consumers in the form of food and drinks and product price increases.

GlobalData Food & Beverages Consultants’ new study: ‘EU Sustainability Regulations: How the EUDR and other Sustainability Regulations will impact consumer markets’, explores some of the EUs key sustainability regulations focusing on the aims of the EUDR and the compliance challenges ahead for farmers, companies, and manufacturers trading in the commodities targeted by the regulation.

The study also looks at what the EUDR could mean for the global supply chain of the target commodities, the potential impact on consumer markets and pricing within the EU and how the EUDR could affect the bloc’s future competitiveness with China.

With the EUDR coming into full force on 30th December 2024 for large companies (2025 for SME’s), the new study is also a timely reminder for large companies operating in the Food & Beverages, Foodservice, Retail and Packaging sectors to finalise their EUDR compliance strategy over the next six months to avoid being late in aligning their operations with the new EUDR rules.

It could be argued that the EU aims to use the ‘Brussels effect’ to direct global policy on sustainability. This is the idea that the global landscape responds to the EU ‘externalizing’ its laws because the bloc is such a significant global consumer market. According to **Eurostat, the EU has a population of over 448.7 million people, one of the biggest consumer markets in the world.

The European Investment Bank predicts that the EUs various climate actions could result in a potential hit to EU-wide GDP of -0.4% by 2030, taking into account all of the EUs sustainability initiatives, but says the costs of not acting would be greater.

Fred Diamond Senior Food & Beverages Consultant and Analyst at GlobalData, said: “The aims of the EUDR are understandable and cutting greenhouse gas emissions and protecting biodiversity is essential. However, there could be some disruption ahead. The extra demands of the EUDR could lead some commodity suppliers in what the EU terms ‘third countries’ to move away from the EU and increase trade with countries that impose fewer regulatory requirements such as China. Some food categories, such as plant-based meat, may have to reformulate and switch to other protein sources, such as pea protein if the result of the EUDR is an increase in the price of soya for food production.

“The gap between big and small companies could get wider as larger companies are more able to shoulder the additional regulatory burden. The exact impact on consumers will depend on a variety of factors, including how companies choose to respond to the regulation, the extent to which the regulation is enforced, and how much assistance EU member states are willing to give to supplier countries to help them align with the new rules. However, with recent news reports confirming that the world’s top climate scientists expect global heating to go well beyond the current 1.5C target, sustainability regulation associated with cutting greenhouse gas emissions, such as the EUDR which targets deforestation, remains an urgent priority for the planet.”

Research indicates students are putting environment ahead of education resources

 960 640 Stuart O'Brien
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Over three quarters (80%) of students have avoided printing a resource they know could have helped their learning due to environmental concerns.

That’s according to research from Epson, which surveyed 200 UK students aged 16 and up has revealed that, despite a staggering 90% of UK students agreeing that printed learning materials (e.g. print outs or revision sheets) help them to understand and retain information better than digital materials alone, many are reluctant to print.

Sustainability concerns are at the core of students’ reluctance to prioritise their learning, with nearly all of those surveyed (98%) agreeing that they worry printing too much could be seen as wasteful and damaging to the earth.

As a result, 8 in ten (83%) students feel conflicted about printing the materials they need because they want to be as eco-friendly as possible.

In a bid to understand how leaders could respond, the research also showed that 80% of students agree their learning would be improved if their place of education had more sustainable print solutions, such as Heat-Free inkjets that use less energy and create less waste than laser printers[i].

Speaking about the research, Nick Taylor, Head of Sales for Office Printing at Epson UK, commented: “Students across every country surveyed as part of this study not only worry about the impact printing can have on the environment but have acted on that concern to the potential detriment of their education.

“This could not only limit the attainment of students themselves, but places pressure on the education sector, which is measured on its ability to improve results and prepare young people for what lies ahead. Educational institutions must act. It’s unfair to force learners to choose between their future and that of the planet. Heat-free inkjet printers can provide the printed materials students are crying out for while reducing energy use and waste[ii].”

As Epson Heat-Free inkjet printers use no heat in the printing process, it means they consume less energy than laser printers. Most also have fewer moving and consumable parts[iii] meaning a longer and life span for the product, making it the more sustainable choice.

Advances on ESG could be undermined by compliance failures within the supply chain

 960 640 Stuart O'Brien
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As businesses continue to develop the application of robust ESG standards into everyday operations, efforts could be undermined by compliance failures within their supply chain.

That’s according to new research published today by independent UK law firm Burges Salmon. In order to gauge how UK companies are reporting on the full ESG value chain of their operations, Burges Salmon surveyed over 360 business leaders across the Energy and Utilities, Technology, Built Environment, Transport and Healthcare sectors, to shed light on how prepared businesses are to meet their supply chain-related ESG disclosure obligations, set to be further tightened by a raft of new legislation, including the EU Corporate Sustainability Reporting Directive.

The report – Supply chain ESG disclosure – is your business ready? –  reveals that 32% of all businesses surveyed are completely unprepared to meet their ESG supply chain disclosure obligations and among those, only 29%, fewer than 3 in 10, believe their organisation fully understands the legislative and regulatory landscape governing ESG corporate disclosure.

Michael Barlow, partner and Head of ESG at Burges Salmon, says: “UK companies must first prove their commitment to ESG by complying with a range of mandatory disclosure obligations. Ensuring business partners meet ESG standards requires investment, resources and constant monitoring, and it is clear from our research that most companies still have some way to go.”

Notably, the report shows that it is large companies that are not as prepared as they should be, with only 45% of respondents confirming that they have a dedicated team that deals with ESG related matters. Similarly, only 43% of respondents in these companies say their organisation fully understands the legislative and regulatory ESG risks their supply chain may give rise to.

By contrast, evidence from the research shines a light on small and medium sized businesses as those able to provide greater levels of influence in successfully meeting their ESG compliance obligations, with 75% of respondents from this group claiming their organisation fully understands the legislative landscape.

“A small organisation might have more limited disclosure obligations and can be quite on top of it. For large organisations, obligations are more complicated, particularly if they operate across different jurisdictions. What’s more, if ESG teams are too remote from day-to-day operations, there is a danger that ESG remains on the periphery of business priorities” adds Barlow.

With research insights from across five sectors, the findings seem to position the Energy and Utilities sector firmly as the leader of the pack, with 68% of those surveyed saying their company’s ESG commitments and those of its supply chain are well aligned, and two thirds of respondents also claiming to have someone at senior level monitoring ESG policies, procedures, and compliance with regards to the supply chain.

James Phillips, partner and Head of Energy at Burges Salmon, comments: “In terms of the larger established energy and utilities companies, I think there is a high level of sophistication, expertise and understanding of what it is they need to be doing, and how to approach implementation.”

That is not to say the sector isn’t facing challenges and the data points to a number of areas where sharper focus is needed – in fact, 46% of respondents in the sector say their company has developed a code of conduct in respect of ESG matters that is adhered to by the supply chain, and only 47% say their organisation has detailed procedures in place to assess the ESG compliance of prospective supply chain companies.

Conversely, the Healthcare sector is the one at most risk of non-compliance and the least prepared of all sectors surveyed. Indeed, almost a third of respondents, 31%, say their organisation doesn’t fully understand the legislative and regulatory ESG risks their supply chain may give rise to, and over a quarter, 27%, say robust verification of the ESG data provided by the supply chain isn’t always taking place.

Meanwhile, research data from other sectors surveyed show that some are in a good position to meet corporate disclosure obligations in relation to their supply chain, but more work needs to be done. In fact, only 22% and 14% of respondents from the Technology and Built Environment sectors respectively say their supplier contracts have been adapted to enable them to gather the required ESG information, and nearly 25% of those surveyed in the Transport sector say their organisation doesn’t fully understand the legislative and regulatory ESG risk its supply chain may give rise to.

Highlighting Scotland as the UK nation that is most prepared, the report goes on to explain that it is factors such as the size of the Energy sector, particularly renewables, low carbon industries and the traditional oil and gas sector, that is accelerating its transition, which are all driving this upward trend.

Malcolm Donald, a partner in Burges Salmon’s Edinburgh office says: “Through the conversations I’ve had with clients based in Scotland, I’ve noticed that much of the ESG focus has always been on the environment, but there’s certainly much more focus on social and governance now and I think that has been driven by internal stakeholders. The other thing that clients are recognising, is that it is no longer just about what they do, but it’s about making sure that their supply chain is doing the same thing in a demonstrable way.”

Cutting-edge innovations ‘driving investment boom’ in green hydrogen

 960 640 Stuart O'Brien
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The clean energy landscape is gaining significant momentum in 2024, fuelled by substantial support from major economies and venture capitalists propelling the advancement of green hydrogen technology.

Recent months have witnessed a pronounced uptick in interest and investment in this domain. At the forefront of this innovative wave is green hydrogen, a pioneering technology for producing net-zero, clean fuel.

This rising trend is also fueled by several high impact innovations in green hydrogen technology, as highlighted by Technology Foresights, a proprietary framework developed by GlobalData.

Globally, the surge in interest surrounding green hydrogen is unmistakable, underscored by significant developments in various regions. In India, projects valued at $2 billion have received clearance, with plans to invest up to $12 billion in the coming years dedicated to green hydrogen production. Mirroring this commitment, Italy has earmarked a substantial $1.1 billion fund specifically for the establishment of electrolyzer factories crucial to green hydrogen processes.

Notably, Morocco is aligning with this global trend, designating 1 million hectares of land for green hydrogen production. This momentum is further accentuated by substantial venture capital investments, as evidenced by leading investors such as TPG Capital and Temasek injecting multimillion-dollar funds into green hydrogen startups in recent months. These developments underscore a growing global interest in green hydrogen, propelled by both governmental initiatives and private sector investments.

Sourabh Nyalkalkar, Practice Head of Innovation Products at GlobalData, comments: “The evolution of hydrogen production technologies reflects a significant shift from carbon-positive to net-zero carbon solutions. The industry has transitioned from conventional syngas or methane reforming methods, associated with carbon emissions, to advanced technologies leveraging renewable sources like solar and hydro for hydrogen production. Notably, the innovation radar for green hydrogen highlights emerging technologies such as photocatalyst electrodes and electrochemical water splitting, anticipated to be impactful innovations in the long run. This progression underscores a concerted effort towards sustainable and environmentally friendly hydrogen production methods.”

Key players in green hydrogen production technology, such as Toshiba, Panasonic, and Topsoe, are at the forefront of innovation in photocatalyst electrodes. These industry leaders are expanding their focus beyond traditional materials like titanium and zinc, aiming to develop highly efficient electrodes capable of facilitating electrochemical reactions for hydrogen production. Importantly, these major players are securing contracts from public entities to establish hydrogen production facilities. For instance, Panasonic received orders from Greater Manchester, while Topsoe successfully secured projects from the Australian government, supplying technology crucial for green hydrogen production.

Nyalkalkar concludes: “The green hydrogen startup landscape is currently ablaze with innovation, attracting substantial investments from prominent stakeholders worldwide. In the first quarter of 2024 alone, leaders in the photocatalyst electrode startup landscape monitored on Technology Foresights, including Sunfire, Ohmium, and Verdagy, have collectively raised nearly $500 million from top-tier venture investors. This surge in investment and innovation activities suggests a promising future for the industry, prompting stakeholders in the energy sector to stay vigilant.

“To capitalize on this growing momentum, strategic pivots and exploration of new growth opportunities through collaborations and acquisitions are essential for securing a foothold in this rapidly evolving and promising space.”

Oil and gas outlook set to be dominated by geopolitics and supply chain dynamics this year

 960 640 Stuart O'Brien
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The oil and gas industry has witnessed a considerable upheaval in its supply chains amid the protracted Russia-Ukraine conflict and renewed tensions in the Middle East. Both of these conflicts could potentially disrupt global oil and gas supplies in 2024, and hence, the themes of geopolitics and supply chains are the hot topics for this year.

It is therefore important for the oil and gas industry to assess the impact of these themes while charting out their growth plans, says GlobalData.

GlobalData’s thematic report, “Top 20 Oil & Gas Themes 2024,” reveals the leading themes that could have a significant impact on oil and gas operations in 2024. Energy security concerns are expected to be the major driver for the oil and gas trade in 2024. Furthermore, the pace of the global transition towards clean energy is likely to be slow in 2024, as several countries are confronted with issues of energy security and inflation.

Ravindra Puranik, Oil and Gas Analyst at GlobalData, said: “The fallout of the Russia-Ukraine conflict has resulted in the restructuring of global energy supply chains in the last two years. Moreover, global energy markets must also have to contend with rising tensions in the Middle East. Thus, geopolitics and supply chain dynamics will impact the decision making of oil and gas companies in 2024.”

The report also puts emphasis on the ESG theme and the themes contributing to the global energy transition. Within ESG, the environment and social aspects of oil and gas operations are the focal point of discussion as they are important for long-term sustainability. Newer industry themes that support the energy transition towards zero-emission technologies, such as renewables, low-carbon hydrogen, carbon capture and storage (CCS), and electric vehicles (EV), are evaluated for their potential impact on the oil and gas business in 2024.

Puranik continued: “Profitability is expected to be critical for driving the financing of decarbonization initiatives in 2024. Moreover, the Ukraine conflict has also exposed the vulnerabilities in clean energy generation and, in a way, pushed back the prospect of peak oil for the time being. This is also likely to benefit natural gas and LNG in supporting global decarbonization goals in the medium term.”

The report evaluates traditional oil and gas themes, namely liquefied natural gas (LNG), shale, and integrated refineries, that are enabling companies to remain competitive in the energy market. Shale oil and gas production could reach record levels in 2024.

The report also reveals how disruptive technologies, such as artificial intelligence (AI), blockchain, cloud computing, cybersecurity, the Internet of Things (IoT), robotics, and the metaverse, are impacting the oil and gas industry. Several prominent integrated oil companies (IOCs) have actively sought to digitalize their operations by employing digital technologies. These technologies are bringing in newer work dynamics to improve efficiency, reliability, and operational security.

Puranik concluded: “Oil and gas companies are expected to continue to expand the deployment of digital technologies across their operations in 2024. As the industry prepares to become agile and pursue a long-term energy transition, digital technologies will play a pivotal role in achieving these objectives.”

World Economic Forum urges businesses to help ‘close the climate action gap’

 960 640 Stuart O'Brien
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The Alliance for CEO Climate Leaders, a CEO-led community facilitated by the World Economic Forum, has released a new report calling on businesses and governments to shift from incremental to systemic actions to meet climate goals.

The report, Bold Measures to Close the Climate Action Gap: A Call for Systemic Change by Governments and Corporations, was published in partnership with the Boston Consulting Group (BCG) and complements the State of Climate Action report launched prior to the COP28 climate change conference.

According to the analysis, while individual climate action has increased, collectively the sum is not sufficient to reach the level of systemic change needed. There is a 600-plus gigaton gap in national emissions reduction ambition and policy that needs to be closed to limit global warming to 1.5°C. As such, stronger government action is needed.

Meanwhile, looking at CDP data for the 1,000 largest companies globally, likely well over 10% of global emissions are in the supply chains of those companies– showing the dramatic systems impact that the world’s largest companies could have.

“The first UN global stocktake and the first part of this report have highlighted a large climate action gap that we are not on track to close,” said Pim Valdre, Head of Climate Ambition Initiatives at the World Economic Forum. “We need to urgently shift into delivery mode, focusing on immediate actions with outsized impacts. Enabling these actions calls for public-private action to drive the right policies, technologies and financial solutions needed to achieve a system-wide transformation.”

While COP28 showed new impactful steps, such as the global agreements to triple renewable energy and double energy efficiency by 2030, more is needed to deliver on commitments, the report concludes.

The Alliance of CEO Climate Leaders, which consists of more than 120 top companies from diverse industry sectors and regions, representing more than $4 trillion in total revenues and 12 million employees, called for decision-makers at the international climate change conference to shift from incremental actions to those that can transform systems and reach exponential impact.

“While COP28 resulted in very good progress and many companies have already started climate initiatives, the sum of the parts is still insufficient. Companies remain constrained by obstacles such as high costs and interest rates, low customer willingness to pay, or a lack supporting permitting and regulations,” said Rich Lesser, Global Chair of Boston Consulting Group and Chief Advisor to the World Economic Forum’s Alliance of CEO Climate Leaders. “This report brings answers to these obstacles, with examples of practical actions that can transform systems from the inside. If all government and corporate leaders start acting on them now and together, we will go a long way towards the scale of impact that we need.”

Private-sector action

The reports asserts that companies can and should drive systemic impact beyond their internal initiatives, highlighting five actions with the potential for dramatic impact:

Government action

Governments have a large responsibility to deploy mitigation solutions in a just and socially acceptable way. The report highlights five priorities to help close the 600-plus gigaton emissions gap:

  • Move up net-zero targets to 2050 or earlier, increase near-term targets, and raise financial and technical support from higher-income to lower-income nations.
  • Recognize and put a material price on carbon.
  • Double financing and incentives and make public procurement green.
  • Remove obstacles such as permitting lead times, supply chain bottlenecks, skill gaps and social distrust.
  • If progress remains too slow, consider more drastic measures, such as hard technology bans, or massive adaptation and removal investments.

How to deliver these and other critical actions for the net-zero transition will be discussed by business leaders at a meeting of the Alliance of CEO Climate Leaders during the World Economic Forum Annual Meeting 2024.

Digitalisation to be ‘main driver’ of Operational Technology

 960 640 Stuart O'Brien
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Almost half (45%) of industrial companies believe digitalisation will be the primary reason that new operational technology (OT) job roles will be created in the next three years.

The research, commissioned by Schneider Electric and carried out by Omdia, polled 407 industrial companies ranging from small and medium enterprises to large companies across western Europe (UK, Germany, France, Italy, Spain, Denmark and Sweden), the US, China, India, and Southeast Asia (Vietnam, Thailand and the Philippines). The study highlighted the scale of the global industrial skills crisis, with talent acquisition a key challenge for more than half of those surveyed (52%).

However, it also identified the cure for this problem. Alongside job creation, over two-thirds (70%) of those surveyed agree that digitalization will help to tackle talent shortages, highlighting the potential of digital tools to deliver more than just productivity and efficiency.

While the skills crisis rages, the industrial workplace is undergoing rapid change. Sustainability goals and advanced technologies, such as Artificial Intelligence (AI) and digital twins, are becoming further integrated into the workforce. The research found that 45% and 47% respectively believe that the increasing requirements of industrial companies to meet environmental and social sustainability goals will require a significant extension of existing job roles in the plant.

“Digitalization doesn’t just benefit productivity and overall efficiency. It’s vital for solving some of the people-centric challenges facing industrial businesses,” said Ali Haj Fraj, Senior Vice President, Digital Factory, Industrial Automation at Schneider Electric. “There’s a real opportunity for industrial enterprises to optimize and enhance OT roles. By reducing the time spent on administrative tasks and enabling people to better fulfil their potential, we can solve many of the key challenges facing these businesses and help build a more sustainable future.”

The survey found that over half of respondents (52%) consider talent acquisition and retention to be a challenge, but one that can be overcome, showing that a level of optimism is shared among industrial businesses around overcoming workforce challenges.

Three in five (60%) believe OT roles will change in the next three years, either moderately (41%) or significantly (19%). Furthermore, a large majority (73%) agree that digitalization will substantially change the nature of work in the next three years. Three in ten (31%) consider quality-control roles to be most significantly augmented or enhanced by digitalization.

The survey also found that in the next three years industrial companies expect new skills will be required in areas like robotics programming and integration (49% of the respondents say they have no or insufficient skills in this area) and data processing, visualization, and analytics (on average more than 30% have no or insufficient skills in these areas). While respondents say they are prioritizing investment in data processing, visualization, and analytics, robotics programming and integration is indicated as only a medium priority for almost half of those surveyed. A key recommendation from the research is thus for industrial companies to work with partners across the industrial ecosystem who can help meet technology skills deficits with solutions, training, and other capabilities to prepare their workforce for the future.

“The changing nature of the industrial workforce is, and will increasingly, necessitate investment in digitalization to empower staff and improve productivity and efficiency,” said Alex West, Senior Principal Analyst, Industrial IoT and Sustainability at Omdia. “If they don’t, the broader and more serious longer-term impact will be on innovation and an inability to mitigate talent shortages.”

The full report, entitled The Future of Work in Industry, can be accessed here.

Photo by NASA on Unsplash

Synthetic biology has ‘vast potential’ across industries

 960 640 Stuart O'Brien
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The emerging field of synthetic biology will unlock several new realms of innovation, ranging from environmentally friendly luxury materials to novel cancer therapeutics and even using DNA as a new form of data storage. Not only that, synthetic biology potentially provides advanced solutions to global challenges such as food insecurity, climate change, and plastic pollution.

That’s according to GlobalData research, which explains that synthetic biology, commonly abbreviated to synbio, involves changing the genetic material of existing biological systems by copying, cutting, or moving segments of DNA to give them new functions and characteristics.

GlobalData’s latest report, “Synthetic Biology,” highlights numerous industries, including agriculture, consumer, energy, food, healthcare, industrial materials, mining, packaging, and technology, that will be impacted.

Isabel Al-Dhahir, Senior Analyst in the Thematic Intelligence team at GlobalData, said: “The possibilities of synthetic biology are boundless. Pushed forward by the growing demand for sustainable materials, environmental remediation, and innovative therapies, synthetic biology could transform numerous industries. Growing enthusiasm saw venture capital investment into synthetic biology surpass $1 billion in 2023, a more than tenfold increase since 2016.”

Al-Dhahir continued: “Synthetic alternatives to meat, precious metals, natural fibers, fuel, and medicines, among others, continue to be developed. The environmental benefits of such innovations are often the focus, but these developments will also facilitate the next stage of supply chain management.”

Advancements in synthetic biology could enable lean supply chain management, decrease reliance on imports, and further support reshoring efforts. Accelerated by the COVID-19 pandemic and sustained by the US-China trade wars, supply chain shifts are already visible as countries and corporations try to protect themselves against further disruption.

Al-Dhahir concluded: “Synthetic biology is a very young and promising field with enormous potential. However, the market has struggled to find a firm footing. Mixed public perception towards genetically modified consumer products and unclear regulations poses a significant barrier. Additionally, the field is largely dominated by startups that do not have sufficient capital to scale their production. In healthcare and technology, however, there is increased mobilization in this market by the likes of Janssen, Novartis, and Microsoft.”

Photo by Warren Umoh on Unsplash

Carbon emissions reduction ‘requires rigorous compliance’ to net zero strategies

 960 640 Stuart O'Brien
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The carbon-intensive oil and gas industry is undergoing massive disruption with more countries and companies trying to implement net zero emissions by 2050 – but tackling emissions and supporting low-carbon industries will require a combination of well-designed regulation and increased investment in decarbonisation.

That’s according to GlobalData, which cites that greenhouse gas (GHG) emissions generated by oil and gas operations—also known as Scope 1 & 2 emissions—were reportedly accounted for 15% of the total energy-related emissions worldwide in 2022.

A further 40% of the energy-related emissions came from the use of oil and gas for power generation, heating, vehicle fuel, and industrial processes, also known as Scope 3 emissions. Against this backdrop, developed countries are aiming for net zero by 2050 while developing countries like China and India are aiming for 2060 and 2070, respectively.

GlobalData’s thematic report, “Net Zero Strategies in Oil & Gas,” provides an overview of the efforts to mitigate emissions from the oil and gas industry. It benchmarks leading companies, such as  BP, Equinor, ExxonMobil, TotalEnergies, and Shell, based on their emissions and net zero commitments.

Ravindra Puranik, Oil and Gas Analyst at GlobalData, comments: “Oil and gas companies are currently working to reduce scope 1 and 2 emissions, generated by their operations. Several leading companies have set themselves the target to reach operational net zero emissions by 2050. To achieve this, companies are focusing on adopting new technologies, such as low-carbon hydrogen, carbon capture and storage; and making other operational changes like building renewable energy and biofuels capacities.”

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The 2021 United Nations Climate Change Conference (COP26) conference had called upon the participating countries to develop long-term net zero strategies. The COP27 summit of 2022 encouraged countries to consider nature-based solutions. The upcoming COP28 summits hopes to make grounds to fast-track energy transition and significantly reduce emissions before 2030.

Barbara Monterrubio, Energy Transition Managing Analyst at GlobalData, said: “To support global commitments towards climate change, countries and regulatory bodies have started introducing emissions trading systems or enhancing existing ones. This is pushing companies to strengthen internal targets and diversify their portfolios into clean and sustainable products and technologies. Even when the mitigation strategies approached by each company are different, they all converge on reducing emissions intensity and cutting operational emissions, reduce and stop flaring and include renewable technologies.”

Most net zero targets set by oil and gas companies cover Scope 1 and 2 emissions. To reduce Scope 3 emissions, oil and gas companies are switching their products to lower-carbon sources of energy including hydrogen, LNG, biofuels, and renewables.

Monterrubio concluded: “Even when a fast progress is being made in tackling upstream and downstream emissions, switching to low carbon products is a long-term process, with many oil and gas majors in the early stages of their energy transition strategy. A combination of well-designed regulations as well as huge investments are needed to tackle emissions and support low-carbon industry.”

Photo by Sugarman Joe on Unsplash

Energy crisis putting business Net Zero goals at risk

 960 640 Stuart O'Brien
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82% of UK business leaders say the energy crisis will impact their organisation’s ability to meet emissions reduction plans – Of that figure, around half of organisations say they are delaying planned investment in sustainability and net zero plans (49%). Just over one third of the same organisations (34%) say they now have more immediate business challenges to meet. More than a quarter of these organisations claim that taking practical action to meet targets is difficult (27%).

That’s according to research published by Schneider Electric, which says that given the direct link between lower energy use and decreased emissions, organisations that maintain efforts to meet their emissions targets will also reduce energy use as a result. This in turn will lower their overall energy costs, and provide a useful boost to the bottom line in a challenging economic climate.

Crucially, the survey of more than 1,200 large organisations reveals that business leaders still recognise the importance of working to emissions reduction targets, as 39% believe that climate change and net zero ambitions will become more of a priority over the next three years. Only a small minority (12%) believe that national net zero commitments will be diluted in that time.

“Business leaders tell us that the energy crisis should be seen alongside the many other challenges they have faced over the last twelve months, including economic pressures, cyber security and skills shortages. Yet our research suggests that some of the UK and Ireland’s largest organisations are ‘kicking the carbon emissions can down the road’, as a result of the energy crisis”, said Kelly Becker, Zone President, Schneider Electric UK and Ireland.

“As fears grow about progress against global commitments made under the Paris Agreement, and the UK’s Climate Change Committee warns of a lack of progress on emissions cuts, the UK and Ireland need businesses and organisations in the public sector to play their part and stick to their net zero and emissions reduction targets”, said Kelly Becker.

The survey also reveals that only around one in five (21%) of those surveyed believe that energy prices will fall over the next three years, while over two thirds (69%) think their organisation will still be addressing the energy crisis in 12 months’ time.

Becker also urged business leaders to re-engage with their emissions reduction ambitions: “It’s not all doom and gloom: as our research shows, business leaders still believe in their climate change ambitions – they simply need to push the subject back up the corporate agenda.

“The technology required to help businesses decarbonise is already available – and the return on investment for these solutions has never been more attractive, with payback periods measured in months rather than years. Organisations still have time to meet their net zero commitments by understanding and addressing energy use, investing in renewable energy and energy saving technology, and embedding sustainability and carbon reduction targets in their business plans,” she added.

“What’s more, those that invest in green skills and green jobs will reap the rewards of a diverse workforce for decades to come. At Schneider, we’ve seen this for ourselves through our apprenticeship and graduate programmes.”