Currently, 91% of global GDP and 783 of the 2,000 largest publicly traded companies have committed to a net zero target. Delivering these targets requires long term shifts away from GHG-intensive energy sources towards cleaner energies including solar, wind, and hydrogen. Technology can (and must) expedite this transition, but transforming the entire energy sector – which is responsible for roughly three quarters of global GHG emissions – will take time.
Yet time is precisely what we do not have. The science is clear that global GHG emissions must halve by 2030, which involves peaking emissions in 2025. This requires decisive action and large-scale deployment of ‘next-generation’ technology including sophisticated (and alternative) battery storage, mass electrification, green hydrogen, and carbon capture and storage. This innovation is underway, but a lot of the technology needed to deliver net zero either does not currently exist or has not reached commercial maturity. So, what can businesses do in the meantime to reduce emissions from energy consumption and loss?
Energy efficiency: immediate measures
Lesser known – but no less important – than this new technology is the role that improved energy efficiency can (and indeed, must) play in delivering net zero. And, unlike next-generation tech, it can do so now. According to the IEA Efficient World Scenario, currently existing cost-effective technologies could double global energy efficiency by 2040. This is key: meeting Paris Agreement targets requires improving global energy intensity by 30-50% per square metre; and energy efficiency represents more than 40% of the emissions abatement needed by 2040.
In 2020, wasted energy by City of London offices alone was equivalent to the energy needed to power more than 65,000 homes, or the carbon emissions of 46,000 cars. This costs UK businesses £35 million per year. Optimising energy use could therefore not only reduce an organisations’ scope 2 GHG emissions but could also limit the (significant) cost of wasted energy. Amidst a crippling energy and cost of living crisis, this is no bad thing.
How does technology improve energy efficiency?
Alongside traditional measures like improving insulation in buildings, digitalisation can increase energy efficiency through technologies that gather and analyse data and automate elements of supply and consumption.
As discussed in Clyde & Co’s podcast, ‘Technology and efficiency in a revolutionised energy sector’, data gathering technologies like sensors and smart meters collect information about energy use and send it to be processed by algorithms, artificial intelligence, digital simulations or other data analysis technologies. The processed data is then sent to devices that can automate, regulate, and optimise energy supply based on factors including actual patterns of demand and consumption. This creates a more efficient balance between energy supply and demand, and removes margin for human error (for example, forgetting to turn off lights or central heating). In this way, technology can limit energy loss and, by working with renewable energy sources and battery storage technology, can facilitate distributed renewable energy and increased grid flexibility. As technology becomes more sophisticated – for example energy management systems integrating external data sources like weather conditions – the potential benefits increase. By using more granular data to refine energy management and improve operational performance, digital efficiency measures save energy – which also saves money.
However, as with everything, digitalisation is not without limitations or legal risks. In the podcast, Clyde & Co partners discuss the risks associated with mass data harvesting, analysis, storage and sharing, which includes breaching restrictions on the use of data and potential cyber-attacks.
But, carefully managed, these risks do not outweigh the benefits of using technology to improve energy efficiency in offices and homes – both from a cost and climate perspective. As a crippling cost of living crisis, exacerbated by war in Ukraine, sends energy costs through the roof, energy efficiency has the potential to not only help organisations deliver net zero pledges, but also to reduce the costs of wasted energy. When presented with a rare moment where commercial and environmental interests are aligned, it would be wise to seize it.
[Digitalisation is reshaping industries around the world. In Clyde & Co’s Digital Transformation podcast, Clyde & Co specialists explore the risks and opportunities presented by the digitisation of their various industries. Subscribe here.]