In a recent report on a path to achieving net-zero emissions at net-zero cost, McKinsey looks not just at sector level sustainability initiatives, but also at the systemic impact of decarbonization on technology, the role of the power sector, land use, and socio-economic implications.
On February 10, 2021, GII hosted a peer-to-peer roundtable discussion with public-sector transportation operators, investors, and industry leaders from the United Kingdom to discuss the opportunities, challenges, and success factors of the sector’s transition to net-zero. The themes discussed included:
- Sustain the increased focus on net-zero. Neither Brexit nor COVID has slowed down the focus on net-zero. The relevance of sustainability, decarbonization and ESG has significantly increased during the past 12 months—and is expected to increase further—not in the public debate, policy guidelines, investor requirements, and corporate ambitions and strategies.
- Strengthen system-level coordination for a successful net-zero transition. The technologies required for a transition to net-zero (e.g. electric vehicles, renewable energy, biofuels, CCS) are largely proven and governments, industry associations, and companies are aligning around emission reduction targets. Implementation of technologies in some areas, however, depends on coordination within and between sectors (e.g. road and rail, charging infrastructure, sustainable aviation fuels).
- Develop investable business cases to mobilize capital and action. While the technology is mostly available, the economics for its use cases are not yet as clearly developed. Either technology costs are still too high, or demand is still too low to make a reasonable business case. Developing corporate or sector-level carbon abatement cost curves will contribute to increased transparency, as being explored by some companies. Governments can also help overcome some of these uncertainties by establishing the right incentive systems.
- Set the right incentives. Governments continue to play a fundamental role in making the transition happen, not only in terms of policies and guidelines, but also by setting the right regulations and incentives for users/consumers and industry players. A comprehensive regulation and incentive framework can spur demand for new technology products and bring down the levelized costs of energy.
- Embed sustainability in the organization to facilitate the transition and attract the required talent. Defining the sustainability ambition, strategy, and implementation plan are relevant steps, but executing on the transition with the support of the entire organization is the only way to ensure that targets are met. Companies have a choice in how to embed sustainability in their organization—ranging from risk management to core strategy to fuel growth. Clear communication of this decision, inside and outside the organization, can help attract the required talent.
