How should the energy company allocate capital between proven thermal assets and emerging renewable technologies'...
This article emerged from discussions in the Corporate Growth and International Management Working Group of the Schmalenbach-Gesellschaft, a German association that brings together corporate practitioners and business scholars. Authors Martin Glaum and Ralph Schweens head the working group; Alexander Gerybadze and Thomas Muller-Kirschbaum are members. Whether driven by regulation or by conscience, many large companies have made commitments to reduce their greenhouse gas emissions as part of worldwide efforts to limit global warming. Doing so is particularly challenging for industrial companies that have energy-intensive production processes or sell products that consume a great deal of energy during their use. European Union programs and directives have put the identification, monitoring, and mitigation of carbon emissions unequivocally on the corporate agenda. As compliance with those regulations compels EU-based organizations to tackle the transition away from fossil fuels with greater urgency than many of their peers in North America, advances in practice are emerging....
What's often missing from the conversation about getting to net-zero emissions is a recognition of the difficulty in transforming the complex physical assets underlying our current energy system ' a system that has been optimized over centuries to deliver high performance, that is deeply embedded in the global economy, and that serves billions of people. McKinsey Global Institute Research has identified 25 significant technology and infrastructure challenges that need to be overcome. These relate not only to the development and deployment of low-emissions technologies, but also to the supply chains and underlying infrastructure that need to be transformed....
We are providing an unedited version of this manuscript to give early access to its findings. Before final publication, the manuscript will undergo further editing. Please note there may be errors present which affect the content, and all legal disclaimers apply. Achieving net zero global emissions of carbon dioxide (CO2), with declining emissions of other greenhouse gases, is widely expected to halt global warming. CO2 emissions will continue to drive warming until fully balanced by active anthropogenic CO2 removals. For practical reasons, however, many greenhouse gas accounting systems allow some a''passivea'' CO2 uptake, such as enhanced vegetation growth due to CO2 fertilisation, to be included as removals in the definition of net anthropogenic emissions. By including passive CO2 uptake, nominal net zero emissions would not halt global warming, undermining the Paris Agreement. Here we discuss measures addressing this problem, to ensure residual fossil fuel use does not cause further global warming: land management categories should be disaggregated in emissions reporting and targets to better separate the role of passive CO2 uptake; where possible, claimed removals should be additional to passive uptake; and targets should acknowledge the need for Geological Net Zero, meaning one tonne of CO2 permanently restored to the solid Earth for every tonne still generated from fossil sources. We also argue that scientific understanding of net zero provides a basis for allocating responsibility for the protection of passive carbon sinks during and after the transition to Geological Net Zero....
