- Accelerating the application of innovative decarbonization technologies can help tackle the climate change crisis.
- Public-private collaboration can harness these innovations across the entire value chain to help reduce carbon emissions.
- But we need a set of frameworks and policies supported by governments, businesses and civil society to enable a sustainable recovery.
With the notion of “now or never” hanging over us, should we be fearful or optimistic? I remain optimistic. First, we already have the technology, and second, we all recognize that none of us can do it alone. If we accelerate the application of critical technology, we have a unique opportunity to help solve the world’s most pressing challenges together. Challenges like meeting the Paris Agreement target of limiting global warming to 1.5°C.
We want to create a more sustainable and equitable future for all through technology with purpose. We are already delivering the decarbonization technologies within critical industries to make a difference in the world – and we believe in the power of innovation and its impact when scaled. With the latest IPCC report indicating that it is “now or never” to limit global warming, the momentum that companies can provide is essential.
Beyond technology, companies like Siemens have the reach and reputation to act as a “convener” and facilitator of relevant industry players. Progress can be dramatically accelerated if we let go of silos and work together in powerful ecosystems. These “networks of networks” allow companies to join forces and co-create. As more partners join, ecosystems bring new products and services to market faster; they accelerate change, create new revenue streams and facilitate public-private collaboration. They are powerful tools for solving complex problems.
The full value of the “value chain”
By bringing actors together in ecosystems, the overall result is greater than the sum of the parts. Take the example of the manufacturing industry. Between 70 and 90% of a product’s carbon emissions occur throughout the value chain. For this reason, it is essential to achieve transparency and to track emissions along this chain in order to reduce the carbon footprint.
Estainium is an answer to this. Initiated by Siemens at the end of 2021, it is an open network that allows manufacturers, suppliers, customers and partners to exchange reliable data on the carbon footprint of products. This brings us closer to carbon neutrality and accelerates the climate transition.
One industry at the forefront of this transition is the automotive sector. Here too, the open exchange of data between companies is sought within a European ecosystem in which car manufacturers and suppliers, dealer associations and suppliers can all participate equally.
This partner network – of which Siemens is a founding member – is Catena-X. It is clear that an ecosystem that brings together all players, including large corporations and more established SMEs, is much more likely to improve efficiency and drive decarbonization.
A matter of trust
Such ecosystems thrive on a diversity of partners, but they need real commitment from everyone. And that can be earned by creating a foundation of trust and data security. The willingness of companies to share data must be protected against the unintentional (misuse) use of this data which would jeopardize their own competitiveness. This requires an ecosystem with full data sovereignty.
For Estainium, distributed ledger technology is used to ensure both a high level of data protection and reliability. And since no centralized storage takes place, each party retains full data sovereignty. For Catena-X, the companies involved have agreed on the International Data Spaces (IDS) standard for data sovereignty.
The power of private and public
For collaboration to be successful, it must be underpinned by frameworks provided by strong institutions like the EU. These include clear pathways for creating level playing fields and taxonomies for policy, regulation and disclosure in markets. The EU Taxonomy, a key part of the EU Green Deal legislative package, is a prime example.
Climate change is an urgent threat requiring decisive action. Communities around the world are already experiencing heightened climate impacts, from droughts to floods to rising seas. The World Economic Forum’s Global Risks Report continues to rank these environmental threats high on the list.
To limit the global temperature increase to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is essential that businesses, policymakers and civil society advance short-term and long-term global climate actions in line with the goals of the Paris Agreement on climate change.
The World Economic Forum Climate Initiative supports scaling and accelerating global climate action through public and private sector collaboration. The Initiative is working on several work streams to develop and implement inclusive and ambitious solutions.
This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions for the transition to a low-carbon, climate-resilient economy. CEOs use their position and influence with policymakers and corporate partners to accelerate the transition and realize the economic benefits of a more secure climate.
Contact us to get involved.
The decision to enable decarbonization through the electrification of the energy needs of our economy – whether in the industrial, infrastructure or mobility sectors – is a clear example where technology companies and regulatory institutions should working hand in hand to accelerate a sustainable recovery.
A successful outcome requires the involvement of multiple stakeholders
An example that many people can currently identify with is the adoption of electric heaters (also known as power-to-heat) and e-charging technology, coupled with the integration of renewable energy sources. . In terms of technological solutions, the heat pump and electric vehicle charging hardware exist, as do network software and control tools to balance production, consumption and demand.
So what do we need to take it to the next level? To name a few areas: policies to encourage the large-scale adoption of heat-generating systems and a regulatory framework, including regulations to support smart grid management and coordination with utility operators. network – for example via peripheral devices installed on all electric heaters and electronic chargers. A successful outcome would therefore depend on collaboration between multiple stakeholders: governments, businesses and the general public.
Governments and businesses also have a role to play in encouraging investment in the climate transition. Investments in renewable energy reached $322 billion in 2018 and continue to rise, according to IRENA. However, it remains well below the level required to meet global climate goals. In fact, the IPCC report found that financial flows are a factor of three to six times lower than the levels needed by 2030 to limit warming below 2°C; however, there is sufficient capital and liquidity globally to fill investment gaps. Once again, collaboration – between governments, companies, private investors and financial institutions – is needed to advance the deployment of this capital to the right projects in the right places.
Create value for all stakeholders
Business is a powerful force in driving sustainability – and vice versa. Companies that provide useful technology can help solve the world’s greatest challenges. It works in ecosystems – with customers, suppliers, institutions, investors and society at large – that will further accelerate progress. This underscores our belief at Siemens that what’s good for business and what’s good for people and our planet go hand in hand.