‘Net zero and beyond’ is more than a tag line. It captures the way we think about the technology, commercial and policy challenges and opportunities of the global transformation that is underway. This philosophy underpins our mission and approach.

Targets for net zero emissions by mid-century are not the destination, but a milestone along the way.

The science that underpins these targets assumes we will move well beyond net zero emissions, to a net negative emissions economy. The IPCC road map for 1.5˚C of warming by 2100 assumes it is too late to avoid temporarily breaching this limit. The net zero goal requires both decarbonisation and the removal historical emissions to return atmospheric carbon to safe levels.

At the current rate of change, decarbonisation will not occur in time to prevent breeching safe global temperature limits. So, new carbon removal industries and markets are needed to reverse warming and mitigate the impacts locked it. This is creating new opportunities for technologists, investors and economies that can service this demand.

The five pillars of the net zero transition cut across every sector of the economy.

The last decade has seen the costs of renewable energy drop by (over 90%), making zero emissions solutions cheaper than carbon intensive incumbents and kick starting an unstoppable transition to zero emission electrical grids. These rapid cost reductions with scale show industry and policy makers the pathways through the decarbonisation of other sectors can rapidly unseat incumbent and carbon intensive technologies

This energy transition has also unlocked a pathway for the low-cost decarbonisation of all other sectors. With grid firming storage and interruptible demand, zero emission electricity grids under pin technologies to electrify and decarbonise, buildings, transport, industry and agriculture, and keep carbon removal solutions net negative emissions.

The net zero transition has already started. The decarbonisation of the global economy is no longer an abstract goal, but an unstoppable transformation that has already started. 

The transformation that is occurring will affect the supply chains of every sector on the scale of the industrial revolution. Until recently, companies could be comparative climate leaders with a focus on value signalling to customers while minimising compliance costs. This is has changed. The incrementalism “no-regrets” climate era is over. The transformative net zero era has begun.

For economies and firms, this transformation represents an opportunity for extraordinary growth by creating new sources of value. It also represents an existential threat of stranded assets and communities from any failures to adapt.

The world is moving, and a company that contents itself with present accomplishments soon falls behind.

George Eastman - Founder of Kodak

‘Transition risks’ of being left behind for companies with high direct and indirect emissions are being priced in today. They materialise in the form of higher cost of capital, restricted debt access, and export costs.

  • Over 43% of capital managers have now committed to decarbonisation of the assets they hold at a rate and timelines consistent with IPCC trajectories, responding to increasing divestment and shareholder pressure.
  • Insurers are increasing premiums or refusing to underwrite new projects with high transition risk.
  • Financial regulators are looking to ensure banks have sufficient capital adequacy to cover transition risk of their lending portfolio.
  • Countries are using carbon border adjustment mechanisms to level the playing field for lower carbon domestic industry against high-carbon import.
  • Securities regulators are penalising companies that pass off symbolic “carbon neutral” offsetting as material decarbonisation that will mitigate transition risk.

Investing in transformation.

Leading companies are transforming their supply chains to eliminating their upstream and direct emissions in response to these forces and consumer demand. Transformative zero and negative emissions substitutes are being deployed across sectors including food, steel, aluminium, energy, transport and food to service this demand. For both firms and economies, investments in incremental reductions or poorly sourced offsets increase costs, without reducing transition risk. Strategically targeted investments are required to capture these new opportunities and avoid stranded assets and communities.

The role of policy is to drive cost of solutions down so markets can deploy them at scale and in time frames that matter.

Climate policy is no longer about incremental “no regrets” symbolic actions or punitive “polluter pays” compliance frameworks. The scale and pace of change requires re-imaging and energising the supply chains of every sector of the economy. Economies that succeed will thrive by capturing new markets and sources of productivity growth. Those that don’t will be left behind.

This calls for new ways of thinking about climate policy that learn from the lessons and failure of both earlier climate policy, and other industrial transformations.

The imperative for policy makers is to help new solutions ascend the learning curve through to reduce costs, allowing private investment and consumption to takeover, through micro economic reforms that:

  • Aligning incentives though catalytic investments and building markets.
  • Removing barriers through regulatory reform and industry capacity building.
  • Build social license through regulatory guardrails that support community and environmental benefits.

One size-fits all solutions won’t cut it.

Different regions have different strengths, weaknesses, threats and opportunities. In every sector, the portfolio of solutions are at varying stages of technology and commercial readiness – with different challenges and potential pathways to scale and cost reduction.

Effective policy takes a nuanced and portfolio approach to understand the local and sector specific leverage points that will deliver the greatest economic, social and climate benefits.