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Is carbon management crucial for a clean supply chain win?
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As the urgency to combat global warming intensifies, enterprises are increasingly adopting rapid decarbonisation practices to align their business strategies with sustainable development goals (SDGs).

With a focus on addressing the dual crises of climate change and the ongoing destruction of natural ecosystems, businesses are at the forefront of sustainability efforts and are highly interested in investing in carbon management technologies to systematically reduce their CO2 emissions, says GlobalData.

Kiran Raj, Practice Head of Disruptive Tech at GlobalData, said: “From green financing and green buildings to green IT, investments in clean technology are on the rise, defying the considerable geopolitical and macroeconomic headwinds that affected most capital markets. The fast-paced adoption of carbon management technologies will continue in 2023 and beyond as governments, corporations, and investors increasingly collaborate to make the low-carbon future a reality.”

Shagun Sachdeva, Project Manager of Disruptive Tech at GlobalData, added: “Across the broad spectrum of carbon management solutions from new materials, clear sustainability disclosure standards, improved carbon capture techniques to more adaptive supply chains, companies are constantly innovating to stay ahead of the curve. The key for the companies will be to evaluate their strategies in light of growth and return projection and strike a balance between capability and profitability.

GlobalData’s Innovation Radar report, “Green business: How carbon management technologies help reduce CO2 emissions,” highlights how the real-world innovations in carbon management across industries can allow companies to either draw analogies with existing products, services, and processes or transfer strategic approaches for a revolutionary transformation.

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Sachdeva added: “While there has been a slow yet steady rise in carbon management concepts such as carbon assessment, reduction, recycling, trading, and green fuels in the last few years, new innovations in use cases such as carbon capture & sequestration and green IT will take carbon management ecosystem to the next level.”

Carbon capture & sequestration

Carbon capture & sequestration will play a promising role in the energy transition, especially in heavy industries like power, steel, cement and oil and gas. It refers to the suit of technologies used for capturing CO2 produced during industrial processes. In June 2022, Italy-based startup Energy Dome developed a CO2 battery for long-duration energy storage. Energy Dome claims that the battery uses CO2 to store renewable energy on the grid and can be deployed anywhere. In March 2022, Danish green-tech startup Algiecel developed a photobioreactor based on a mobile container using algae to absorb CO2 emissions from industrial processes.

Green IT

Green IT or green computing covers information and communications technology (ICT) and computing technologies with lower carbon footprints. This starts with manufacturers manufacturing sustainable products to IT departments switching to more environmentally friendly options like virtualization, power management and proper recycling habits. In February 2023, a Taiwan-based manufacturer and distributor of computer hardware, Gigabyte, introduced next-generation servers with an aim to reduce carbon emissions with its green computing solutions. In January 2023, California-based Data Center-as-a-Service provider ECL launched a modular, environmentally friendly, off-grid data center that uses green hydrogen as its main power source.

Sachdeva concluded: “Despite a strong push towards carbon management solutions, the industrial application of carbon management technologies is still in its infancy and will take significant time to scale up. No major industries currently operate in an entirely circular way. Infrastructure implementation, cost control and standard as well as lack of efficient reporting frameworks being the key challenges at present, it will be interesting to watch how companies will strategically place their bets and meet their M&A targets that not only capture the climate-focused tailwinds but also keep them insulated from the macroeconomic headwinds.”

Consortiums key to organisations hitting net-zero goals
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Due to a dearth of low-cost innovative solutions and scalability issues, companies are failing to achieve their ambitious net-zero goals.

However, consortiums, with a collective goal of reducing carbon emissions, can address these challenges and attract investment from big companies to accelerate and support the implementation of decarbonization strategies, says GlobalData, a leading data and analytics company.

Vaibhav Gundre, Senior Consultant of Disruptive Tech at GlobalData, comments: “There is a growing consensus that to achieve the 2050 net-zero goal requires collaboration among the governments, policymakers, companies, and other stakeholders. Consortiums can play this pivotal role in reducing carbon emissions via key pathways such as renewables, energy efficiency, carbon removal technologies, and the hydrogen economy to provide the necessary investment to accelerate such efforts. Moreover, a cross-sector collaboration can bring innovative solutions involving the application of technologies.”

Stripe, in collaboration with McKinsey, Alphabet, Shopify, and Meta launched a consortium named “Frontier” in April 2022 to commit to carbon removal technology improvements and cost reduction by guaranteeing future demand. This collaboration among corporate giants is an advance market commitment (AMC) to buy an initial $925 million of permanent carbon removal between 2022 and 2030. It aims to convince researchers, entrepreneurs, and investors that there is a growing demand for such technologies by providing a profit incentive to encourage innovations in carbon removal.

Guidehouse launched a new consortium “Building the Clean Hydrogen Economy” in February 2022 to create and launch innovative pilot projects that use clean hydrogen to decarbonize heavy transport, increase renewables integration, and decrease emissions in the US energy sector. The consortium’s working groups are currently working on three pilots in the Southwest US, New York, and the US Gulf Coast. The pilots aim to drive an adequate and cost-competitive supply of hydrogen by 2025-2030.

The UN Global Impact announced the launch of the CFO Coalition for the SDGs, a platform where global chief financial officers (CFOs) and other corporate officers can collaborate with peers, investors, financial institutions, and UN agencies to develop principles, frameworks, and recommendations, in March 2022 to integrate the sustainable development goals (SDGs) in corporate finance. The coalition aims to leverage the commitments from CFOs to create a $10 trillion market for SDG-directed finance by 2030.

Launched by Repsol in January 2022, The Spanish Hydrogen Network (Shyne) consortium aims to invest $4.4 billion in green hydrogen technologies and install 500MW of capacity by 2025 and 2GW by 2030, which is half of the Spanish government’s 4GW target. The consortium will also build renewable-energy projects to power the electrolyzers, promote the use of hydrogen in transportation via synthetic fuels, and at least 12 new hydrogen filling stations by 2025.

Gundre concludes: “Despite a flurry of net-zero announcements, there is no significant progress made due to a myriad of challenges. Consortiums can help companies with little to no expertise in net-zero technologies by leveraging the know-how of other players and helping unlock the full potential of clean technology innovators. In a nutshell, embracing new technologies and being open to new partnerships will be key in achieving the collective goal of net-zero.”

Cybersecurity vulnerabilities ‘will impact energy price rises’
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With rising global energy prices already causing concern to struggling households, GlobalData warns that there is another risk factor that could push prices even higher: cybersecurity.

The leading data and analytics company notes that many energy companies ushered in technology upgrades to their systems and processes, spurred by the COVID-19 pandemic. However, these were not necessarily adequately protected from cyberattack. Further, rising geopolitical tensions globally have increased the risk of cyberattack exponentially, and the costs of such attacks are often passed on to the consumer.

GlobalData’s latest report, ‘Cybersecurity in Power 2022’, highlights the case study of the Colonial Pipeline attack back in May, which caused a short-term rise of up to $3.05 a gallon in affected areas. The report advises energy companies to invest across the entire cybersecurity value chain with the exception of chip security, and predicts that revenues of global cybersecurity in the energy sector will reach $10 billion by 2025.

Daniel Clarke, Analyst on the Thematic Research Team at GlobalData, said: “Every minute that energy companies delay in addressing their cybersecurity vulnerabilities is another minute in which a cyberattack could occur. This is especially considering heightened geopolitical tensions around the Russian invasion of Ukraine have increased the threat of attacks on the sector. As we saw from the Colonial Pipeline attack back in May, the fallout costs of cyberattacks are often shifted onto the consumer in the form of higher prices, and the last thing we need right now is further rises to energy prices.”

GlobalData’s report notes that the adoption of technologies such as augmented reality (AR), artificial intelligence (AI) and drones will only increase as time goes by. Already, many tasks that would have been performed by a staff member on site, such as asset management and repair, are now being digitalized via the means of AR—whereby workers speak to experts using an AR headset. However, there can also be vulnerabilities closer to home, with many people unaware that smart meters aren’t secure.

Clarke continued: “The perfect storm has been brewing in the energy sector. An existing wave of digitalization, further accelerated by COVID-19, has meant that energy companies are more connected than ever before, increasing the opportunities for potential cybercriminals. If companies are digitalizing their operations without commensurately investing in cybersecurity, they are increasing their risk of a cyberattack. Companies need to manufacture connected devices such as smart meters better so that they are more secure before they are used by consumers or through the smart grid.”

Increased digitalization, combined with a new era of geopolitical competition, has meant that cyberattacks are increasing in both volume and severity.

“The Russia-Ukraine war has shown the importance of energy, in terms of both steady supply and price, for the full functioning of every other sector. The energy sector underpins everything. The energy sector is consistently one of the most attacked sectors. As a result, energy companies around the world vulnerable to cyberattacks.”