Looking ahead to a future post the COVID-19 pandemic, TEAM Energy’s, Head of Customer Success, Tom Anderton, considers how organisations will need to navigate and adapt to a new normal to meet climate targets.
We are without a doubt experiencing a period of unprecedented disruption. There’s not one person, organisation or sector that hasn’t been affected; and it is only right that the focus now should be on crisis management and immediate relief.
What has become more apparent in these last few months is the importance of population health. We know that a healthy planet means healthy people, which supports a healthy economy; so we must keep up the fight to protect it.
The pandemic presents us with the opportunity to think about the world of tomorrow. Calls for a renewed focus on tackling climate change have been increasing in recent weeks. As we look forward to the future, the challenge of net zero will still be there, but our means for financing and delivering the tools to fight it will be fundamentally changed.
There is no right or wrong answer for achieving net zero. The challenges are different for every sector.
Full decarbonisation by 2050 even for heavy polluting industries such as manufacturing and transport, while ambitious, is possible.
Since legislating for net zero, the Government has pledged more than £2 billion in funding to support decarbonisation across UK sectors. Much of this will go towards the development of electric vehicle and carbon capture technologies, investment in hydrogen and green finance strategy.
While most organisations are prioritising the pandemic, it can be difficult to think about then refocusing sustainability and net zero plans. It is true though that many energy leaders might find that they have, or are on track to achieve their energy and sustainability targets this year without needing to do much. This has come as the consequences of the pandemic have forced many organisations to reduce their workforce or close their doors, leading to a natural reduction in energy consumption. But the gains from this are short term.
There is also a pay-off between the benefit of this reduction against the likely hit to revenue. The pandemic will no doubt affect the available capital for decarbonisation initiatives, and budgets and spend will be scrutinised more than ever; where this is the case will these projects get the attention they deserve?
There will, we hope, eventually come a time when we’re able to return to ‘normal’ and when that day arrives climate targets and net zero 2050 will still be there. But instead of picking up where we left off, organisations will have to adapt their strategies to meet their goals with strained budgets and fewer resources.
So now is a great time to take advantage of our reduced operations, to take stock of where we are, what we have achieved and prepare for life after the pandemic to meet our energy and sustainability goals.
Lessons from the past have taught us that recessions can provide the opportunity to accelerate change. Now is not the time to take our foot off the pedal, but rather we should be looking for new ways of driving clean growth.
The cost of sustainability
In the conversations I have, there are two common hurdles that typically prevent energy leaders from investing in and fulfilling their sustainability ambitions: time and money.
Yes, the cost of solar and wind power has come down, and renewables are now cheaper than fossil fuels. But decarbonising is expensive, and the reality for many organisations that don’t have capital reserves, is to get project funding, they need to be able to prove a return on the investment upfront. This can be a challenge when many energy efficiency measures have longer-term return rates.
The second biggest challenge is not having the resources. This is more prevalent now as many organisations are operating with a reduced workforce. While we are waiting for the economy to recover, staffing levels may be impacted for some time, forcing energy and sustainability leaders to meet targets on their own.
With the Environmental Audit Committee warning of ‘constrained’ Government finances post the pandemic, there’s talk and potential for a number of financial recourse options to help bridge the funding gap.
This could mean an increase in carbon taxes to create revenue for green funding or ending fossil fuel subsidies; both measures that would hit high emissions industries particularly hard.
There is also the option to leverage private finance investments (PFI). It is estimated that the UK’s transition to net zero will require PFI to the tune of £393 billion by 2031. There are challenges to this though, stakeholders will no doubt want guarantees against their investments, and expect energy efficiency projects to happen at scale to make them bankable.
With these eventualities in mind, organisations looking to the post pandemic recovery will need to consider how they are going to navigate and adapt to meet their energy and climate plans.
Recovery and beyond
As we look forward to recovery, we have the opportunity to use the insights gained during this time to shape our new normal to prioritise energy and sustainability, and support clean and resilient growth.
The world has changed significantly since the start of the crisis. Businesses have had to adapt quickly to new ways of working, with many now running much of their operations remotely. As a consequence, their utilities consumption has fallen and their operational emissions are significantly reduced. The cumulative effect of this has also for many organisations, delivered considerable financial savings.
Where this has been successful, do we need to go back to operating in the same ways as before? As organisations will be looking for low cost and resource options to support their transition to net zero, this could be the no investment solution they are looking for.
This isn’t to say this solution is right for every sector, some industries rely on people and travel. There is still the opportunity though to consider new ways of working that can support efficient operations. Behaviour change programmes are particularly effective at helping embed a culture of sustainability, training and guiding staff, customers and stakeholders to adopt habits that can have a significant impact on overall emissions.
Our new normal
In a post pandemic world, the challenges to achieving climate change targets will still be the same, but the landscape against which we need to meet them will have considerably changed.
If organisations are open to accepting and adapting to a new normal, the answers to net zero transition are more achievable than they have ever been before.