Managing energy transition in an age of acute climate change

Companies around the world contribute to the sustainability challenges facing the planet.  The same companies are also materially impacted by these challenges. This presents both risks and opportunities for business as they seek to develop responses to how they impact and are impacted by climate change.

The 2018 Intergovernmental Panel on Climate Change (IPCC) special report indicating that the globe has warmed by 1.5 degrees centigrade confirms that global warming is worse than scientists previously anticipated. Significant action is needed immediately to strengthen the global response. Specifically, carbon dioxide should be removed from the atmosphere and other greenhouse gas emissions reduced.

At the same time, global demand for energy is predicted to continue to rise.

How business resolves this seemingly intractable dilemma, “will define not only how businesses themselves, but also how the planet that we all share, will survive into the future,” says Lerato Sithole, Managing Partner, ERM Africa. “In South Africa where we rely so heavily on carbon-based energy the stakes have never been higher in terms of how we understand and manage climate change and the energy transition,” she adds.

ERM is a leading global provider of environmental, health, safety, risk, and social and sustainability-related consulting services. With over 5 500 people in 40 countries operating out of over 160 offices, “for the last 50 years ERM has been working with clients across all industries, helping them understand and manage their environmental, health, safety, risk and social impacts,” says Sithole.

With regards to energy transition, ERM focuses on developing programmes that support businesses measure, understand and reduce their energy and carbon footprint while using energy more efficiently. Specifically, we assist clients to:

  • Set public emissions targets in line with the best available science. ERM is, itself, “a leader among our peers, setting our own Scope 1, 2 and 3 emissions targets approved by the global Science Based Target Initiative,” says Sithole.
  • Determine how to reduce the amount of energy required in future operations and how to source this energy from less carbon-intensive sources.
  • Capitalise on the business opportunities associated with the transition to alternatives.
  • Collaborate with other organisations to determine how their own waste might be another organisation’s feedstock.

By providing viable options that significantly reduce industrial greenhouse gas emissions, “we work to effectively transition clients to alternative emerging energy solutions,” says Sithole.

On measurement and target setting, ERM’s experience over the past decade in climate-related scenario analysis for business, led to ERM assisting the Task Force on Climate-related Financial Disclosure (TCFD) author the Technical Supplement on Scenario Analysis. ERM is using this ‘how to’ guide to assist companies across multiple industries and sectors undertake scenario analysis, evaluate commercial consequences and prepare strategic responses. This analysis is, “helping companies meet TCFD recommendations as they assess their climate-related business risks and opportunities and prepare to disclose information to the investment community while also assessing their potential exposure,” explains Thapelo Letete, Technical Director, Energy and Climate Change, ERM Africa.

ERM is also heavily involved in the evaluation of hydrogen as a sustainable fuel and energy vector for decarbonising heat, power and transportation. “Our expertise are being applied across a wide range of innovative projects in Japan, the United Kingdom and the United States involving the provision of strategic advice, financial modelling and layout development,” reports Letete. These projects also cover safety and risk evaluation, stakeholder engagement, environmental impact assessment, data management and health, safety, social and environmental consent delivery. ERM’s work spans production, storage, transport and end-use, “including hydrogen production facilities with carbon capture and storage, power to gas, electrolyser/fuel cell applications, gas networks evaluation, hydrogen trains, energy storage, pipelines and bulk scale hydrogen generation from renewables,” he explains.

ERM also undertakes cost-benefit and initial viability assessments, assisting companies make decisions about the most appropriate bio-based energy sources. ERM has, for example, been assisting companies produce and utilise biofuels and bioenergy, “particularly biodiesel produced from waste vegetable oil and electricity produced from waste bagasse in the sugar industry,” explains Letete.

As a result of working with clients on the critical role of forests in sequestering carbon dioxide from the atmosphere, ERM has also become involved with initiatives leading into the Conference of the Parties on biological diversity in 2020. ERM in France, for example, is a partner in the act4nature biodiversity initiative of Entreprises pour l’Environnement, the coordinator of the European network of the World Business Council for Sustainable Development. In response, “our operation in France has pledged to meet specific commitments supporting biodiversity in all the work that we perform for clients,” says Sithole.

There is a clear call to action to businesses around the world to transition to alternative low-carbon energy sources and, critically, remove carbon dioxide from our atmosphere while reducing other greenhouse gases.

“We are not powerless to act,” says Sithole.

The ability to measure our impact, use technologies to reduce the amount of energy we use, reduce greenhouse gas emissions and, “leverage the business opportunities presented by the transition to alternative energy sources is, today, well-developed, documented and implementable as part of standard business practice,” concludes Sithole.