One-third (34%) of the world’s largest companies have set public net-zero goals. To stand a chance at tackling the climate crisis, companies now must move from ambition to action and cut their operational emissions across offices, industrial or manufacturing sites and fleets. Adopting an integrated approach to decarbonization – i.e., combining solutions across buildings, fleets and energy – can put businesses on the fast track to low carbon.
The low-carbon opportunity
Global annual investment in all energy transition technologies reached a record high of USD 1.3 trillion in 2022. Still, this figure must quadruple by 2050 to remain under the 1.5°C global warming threshold.
Inflation, rising energy costs and supply bottlenecks risk slowing the implementation of net-zero transition plans. Yet, in light of recent policy and market trends, there has never been a better time to switch to low-carbon.
Governments are ushering companies toward tangible decarbonization as demonstrated by the European Commission’s EUR €250 billion Green Deal Industrial Plan, the USD $370 billion pledged for clean energy by the US Inflation Reduction Act (IRA), or Germany’s EUR €50 billion program for industrial decarbonization.
Global investment in clean energy technologies (i.e., renewable power, energy efficiency tech, grid technology, EVs, etc.) is now significantly larger – and growing significantly faster – than investment in fossil fuels.
The price of clean energy technologies is at an all-time low: solar photovoltaics is the cheapest source of energy today, and since 2009 the price of electricity from utility-scale solar photovoltaics has declined by 89%. Similarly, the price of onshore wind electricity declined by 70% during the last 10 years.
Trailblazing companies demonstrate that an integrated approach to operational decarbonization, combining clean energy technologies across buildings, energy and mobility, can unlock numerous opportunities to net zero.
Making decarbonization investments more attractive
Buildings, energy and transport are the pillars of our infrastructure. Combining zero-emission solutions across these three pillars allows us to decarbonize physical assets faster and more efficiently.
For example, on-site clean power generation with zero-emission vehicle charging, Heating, Ventilation and Air Conditioning (HVAC) improvements, along with building and energy management systems, have proven to create energy and cost efficiencies in sites like an office building in Finland, a logistics center in Norway, a French university campus, and even an entire city district in Belgium.
As business leaders develop and implement roadmaps to decarbonize operations, they face tradeoffs between costs and emissions reductions, what is technically feasible, and the return on investment. By adopting an integrated approach, companies can align the decarbonization business case with medium and long-term sustainability plans and investment cycles:
- Between 20% and 60% of CO2 emissions reduction can be achieved in offices, retail buildings, campuses and other building types through integrated retrofits. For example, at its Lausanne headquarters, the International Olympic Committee achieved a 35% reduction in energy consumption by combining solar PVs and heat pumps.
- An estimated 25-30% reduction in capital and operational expenditure can be reached at site-level for businesses that invest in integrated decarbonization solutions. Energy consumption costs can be reduced up to 30%, and the sale of surplus power to the grid or paid EV charging provides potential revenue generation opportunities that help absorb the cost of implementation. In addition to the capital efficiency gains, bundling solutions contribute to de-risking the investment in decarbonization.
- The energy efficiency achieved can increase property value, as buildings that are highly rated with regard to energy sell at a 10-25% premium.
Integrated approaches allow companies to chart a new course that is faster, more efficient and more cost-effective than traditional, siloed approaches to decarbonization. Integration can become a red thread connecting building managers with energy procurement and fleet managers, as well as sustainability and financial executives – making decarbonization a company-wide strategy.
It’s time to talk to CFOs and policymakers.
Integrated approaches call for progressive corporate sustainability governance that consider synergies across operational function and enables partnerships between businesses, subsidiaries and technology providers. They also provide opportunities to experiment with innovative financing mechanisms, such as incorporating new operational cost savings and revenue streams into loan and procurement agreements (see for example ESCO models).
Governments also have a role to play in accelerating the adoption of integrated approaches. The rise of on-site energy generation and smart grid technologies have surpassed the functionalities of the centralized energy supply model. Traditionally siloed pillars of operations must be connected and dynamically connected in order to shift to everything-as-a-grid. This will require support for cross-industry data sharing and interoperability of digital solutions to enable information exchange between building management systems, mobility infrastructure and reactive energy grids. An update of permitting processes and regulations will enable to develop and incorporate new technologies faster. Governments’ incentive packages to support the decarbonization of industry must consider integrated approaches and distributed energy resources (DER).
Join us to accelerate your company’s decarbonization journey
Switch, a new project by the World Business Council for Sustainable Development (WBCSD), helps companies harness the potential of integrated approaches and adopt and scale solutions that abate operational emissions through:
- Knowledge and advocacy – highlighting the value of integrated approaches through thought leadership and best practices sharing.
- Integrated approach pilots – launching real-life applications of integrated approaches with member companies and building roadmaps for operational decarbonization.
- Tools and guidance development – supporting the development of an open-access tool to help companies estimate the benefits from integrated approaches and produce focused guidance on financing, governance and policy outlooks.
For more information, contact: Esther Perrin (firstname.lastname@example.org)