ENGIE's Vice President Shankar Krishnamoorthy shares three factors that need to be considered in order to accelerate the zero-carbon transition.
Authored by Shankar Krishnamoorthy, Executive Vice President of ENGIE.
COP21 and the Paris Agreement have triggered both public and private sector awareness. At the end of July 2019, 596 global companies (representing $11.4 trillion of market capitalization) pledged to reduce their emissions in line with the Paris Agreement, through an initiative known as Science Based Targets (SBTs). In addition to this, more than 500 investors with $35 trillion of assets were calling on governments to take more action to combat climate change, ahead of the recent UN Climate Change Summit in New York and there is also increasing support for green bonds, whose total volume reached a $200 billion milestone in October, ENGIE SA being the biggest issuer.
The fight against climate change has paved the way for corporate investments as well as the launch of global platforms that are gathering multiple stakeholders committed to transforming their organizations through concrete solutions, innovative technologies and resilient partnerships. I will be participating in December in the 10th World Climate Summit, which is for the 2nd year hosting the Investment COP dedicated to a solution focused platform for government and project development stakeholders to accelerate the mobilizing of climate investments and solutions.
Companies must be bold and take more steps to reengineering their business models to align it more with their customer’s climate change ambitions. I am convinced that what is good for society is good for business: at ENGIE, we proved this is the case. We radically changed our strategy and turned our business model upside down. We have gone from being fundamentally an energy producer to operating now where our core business involves helping our customers consume less energy. Innovation was at the absolute core of such change and our success to date, in shifting and reengineering our business model to be more prepared for the future.
To accelerate the zero-carbon transition, we should not believe in a single universal solution to address all needs. On the contrary, we need a mix of solutions combining financial, technological and behavioral factors, brought together at appropriate scale.
First, local and inclusive commitment of territories is key to transposing NDCs into future-proofed solutions.
We have now entered the next phase of the energy transition, which has long been advocated and supported by governments and climate change activists. But the demand for action from civil society, voters, consumers, employees and investors around the globe is directly transforming the sector. As these changes are taking place in an increasingly decentralized world, various local stakeholders are now more and more actively involved in the zero-carbon transition.
Secondly, I believe in a balanced energy & technology mix.
The twofold challenge of intermittency and cost of renewable energy appeals to a diversified energy mix, with an important role of also gas which is able to lastingly replace the production of coal. The support for green gases – biomethane and green hydrogen – is also essential and we must ensure that these technologies grow as big as wind and solar, especially since they will be instrumental in managing the intermittency of solar and wind.
But, electricity alone, even mostly renewable, is no panacea: heating, industry and mobility also needs to be equally addressed. These sectors still need support to set-up sustainable and profitable businesses that will also accelerate their transition.
Thirdly - Energy efficiency is key in the zero-carbon transition
In the energy sector, we talk a lot about developing renewable energy. But we also have to focus our efforts on helping our clients to consume less energy and on increasing energy efficiency for the part they still need to consume.
To achieve this, we need to first – focus on building homes, factories, cities… easy to use and comfortable to live in, that need less energy. Then secondly – focus on energy efficiency. With state-of-the-art, digitalized and updated systems, it is possible to reduce energy needs significantly.
We can and should start now: business models that are sustainable are and will be preferred. They attract more talent and clients, will be more resilient to climate change and future regulations, and will create more value for clients, shareholders and society as a whole both now and for the long term future.
At this year's World Climate Summit - The Investment COP in Madrid, Spain, ENGIE's Executive Vice President Shankar Krishnamoorthy will be speaking during the Opening Session: Overcoming Barriers - The Solutions to Achieving The Paris Agreement.