Decarbonation and Public Funding for Energy in the world

Many countries are pursuing emission reduction policies as climate change has become one of the world’s principal challenges. Nations worldwide are facing macroeconomic and financial challenges that need to be tackled if governments want to achieve the ambitious targets for net zero by 2050. Decarbonising the global economy has become one of the main objectives governments around the world are striving to achieve.

What this calls for is a national awareness of the need to respect the environment and ensure that energy consumption is sustainable, and ideally decarbonised.

The scarcity and price volatility of fossil fuels are actually affecting the competitiveness of European industries and their ability to establish long-term strategies for growth. At the same time in this climate emergency, public authorities are recommending that industries focus on decarbonation by switching to low-carbon energy sources.

Companies play an important part in the achievement of the targeted objectives.

Decarbonation of industry

Decarbonation includes all measures taken to reduce the carbon footprint, i.e. the emissions of greenhouse gases, mainly carbon dioxide (CO2) and methane (CH4), and thus the impact on the climate.

More specifically, decarbonising your business means:

Managing your energy mix 
Managing your material mix
Managing your energy performance

Main objectives

As a central theme of the COP26 discussions and driven by international cooperation, many countries around the world have pledged to reduce their carbon footprint.

The European Union (EU) is aiming for carbon neutrality by 2050. This means that the public authorities wish to strike a balance between carbon emissions linked to human activities and the absorption of carbon from the atmosphere enabled by carbon sinks such as forests.

Inevitably, the industrial world is urged to take action.

The key role played by public funding

Meeting the ambitious targets for decarbonising the global economy by 2050 necessitates the development and implementation of a wide range of energy-efficient technologies.

To achieve this, most governments across the globe support the private sector and research and development (R&D) in the field of energy efficiency, with government policies aimed at boosting energy-efficient technologies. In the process, many countries rely heavily on spending measures such as increased public investment and subsidies for renewable energies.

Investments in the energy sector, and especially renewable energy, are vital to honour the Paris Climate Agreement adopted in 2015. For example, the International Energy Agency (IEA) estimates that cumulative investments of more than USD 6 trillion will be needed by 2040 if the agreement to keep the global average rise of surface temperatures below 2°C is to be met.

The positive impact of R&D spending in the energy sector has been demonstrated as it helps to reduce greenhouse gas emissions over the long term.

European public funding for decarbonation

A vast legislative panel regulates decarbonation across the EU, made up of European directives and programmes such as the:

Green Deal: a package of measures put in place by the EU to achieve net zero by 2050.
Fit for 55 package: a set of interconnected proposals aimed at achieving a fair, competitive and green transition by 2030.
EU Emissions Trading System (EU ETS): a cap and trade system setting a limit aligned with the EU’s climate targets for the total amount of greenhouse gases emittable by the installations and aircraft operators involved.
Corporate Sustainability Reporting Directive (CSRD): this aims to harmonise the corporate sustainability reporting while improving the availability and quality of published data.
Taxonomy: a classification system defining alignment criteria for economic activities with the net zero by 2050 objectives.

To incentivise the uptake of decarbonation measures, various European countries offer a wide range of funding opportunities encouraging industry players to accelerate their decarbonation.

Energy transition budget

According to the IEA, global annual investments in clean energy will need to more than triple by 2030, reaching approximately USD 4 trillion, if the net zero by 2050 objectives are to be achieved.

What does a concrete decarbonation project look like for a company?

The sustainability of a business becomes a central issue in a context where decarbonation is essential.

A vital requirement in this respect is to control the energy mix by reducing the reliance on fossil fuels. Just as crucial is getting the material mix under control by adopting waste management and recycling practices. And there is a parallel need to control the energy performance by reducing consumption and emissions. 

Finally, eco-design and circular economies are essential approaches to promoting a more sustainable use of resources and minimising the environmental impact.

By integrating these various measures, companies can contribute to the sustainability of their business while acting in an environmentally responsible manner.

Examples

Companies have a wide range of concrete projects they can implement to promote sustainability and reduce their environmental impact. Some of these projects include:

Heating, Insulation, and Relamping: Companies can improve their energy efficiency by upgrading heating systems, enhancing insulation, and replacing traditional lighting with energy-efficient alternatives.
Renewable Energies: Implementing renewable energy sources such as photovoltaic panels, geothermal systems and biomass can help companies reduce their reliance on fossil fuels and decrease greenhouse gas emissions.
Waste Heat Recovery: Capturing and utilising the waste heat generated by industrial processes can help companies optimise their energy use and reduce energy waste.
Industrial Processes: The electrification, modernisation and rationalisation of industrial processes can help to improve the energy efficiency and reduce environmental impacts.
Energy Monitoring: Implementing the Energy Management System (EMS – ISO50001) and monitoring systems can help companies track and optimise their energy consumption, leading to cost savings and greater sustainability.
Eco-Design and Waste Management: Companies can adopt eco-design principles to develop products that are more environment-friendly throughout their lifecycle. Introducing recycled raw materials (RWM) in processes and working in closed cycles can additionally minimise waste generation, reduce scrap, and promote recycling and reuse.
Transport: Companies can explore sustainable transportation options such as electric vehicles, alternative fuels and efficient logistics to reduce carbon emissions associated with their operations.

By implementing these projects, companies can make significant progress in achieving their sustainability goals, reducing their carbon footprint, and contributing to a greener and more sustainable future.

A complex process

The implementation of strategic and complex projects calls for a thoughtful and well-planned approach. Especially as these projects can involve various areas such as building, production, and work routines. They often require significant investments in both the operational expenditure (OPEX) and capital expenditure (CAPEX). Projects on this scale also involve technical aspects, particularly concerning energy standards and requirements. It is essential to comply with current regulations and seek energy-efficient solutions.

Financing these projects can be complex, with a need to mobilise multiple funding sources such as European, national and regional subsidies, repayable advances, tax credits, and Energy Savings Certificates (EEC).

Implementing these projects moreover entails a complex value chain, with many players involved. It is meanwhile essential to keep a close eye on regulatory and strategic developments, establish an accurate inventory, formulate recommendations, make informed decisions, implement the necessary actions, manage the financial aspects, and continuously monitor the results achieved.

The success of these projects depends on a rigorous management and effective coordination of all the stakeholders involved. Reliance on solid expertise and close cooperation with the various stakeholders are essential to ensure the success and sustainability of these complex strategic projects.