Heavy industry has stalled on moves to cut supply chain carbon emissions, says Accenture, with a lack of collaboration and investment to blame.
In a report called Powered for Change Accenture points out that the world relies on five energy-intensive industries: steel, metals and mining, cement, chemicals and freight and logistics. Their products and services, say the report’s authors, “feed into the supply chains of virtually all others – and so do their emissions”.
Accenture points out that, while the world is working to hit net-zero goals, "the scale of progress and investment falls short" and that "a new era of collaboration and action is needed".
“We’re at the halfway point between signing the Paris Agreement and its first major deadlines in 2030,” the report states, adding that “while much has been achieved since 2015 heavy industry has made little progress”.
It says heavy industry’s Scope 1 and 2 emissions "become everyone else's Scope 3 emissions".
Scope 1 and 2 emissions are those for which an organisation is directly and indirectly responsible. Scope 3 emissions are those that occur up and down a company’s supply chain, and can account for up to 80% of total emissions.
“If heavy industry fails to decarbonise then all others fail,” the report says.
It adds that the heart of this problem is “a vicious cycle of inaction”, and continues: “Heavy industry’s lack of progress has created a choke point in global decarbonisation. Investment and innovation have the potential to reduce decarbonisation costs, but these investments simply aren’t happening at the scale or pace net zero requires.”
Accenture: Value chain not working together on emissions
Accenture says the reason for this is that “the value chain is not collectively working together”, and blames leaders “focusing on their own organisations rather than actively working across the wider value chain”.
This, it says, has created an “investment standoff”, with all parties “waiting for others to move first”.
“Delivering on net-zero goals must be a collective endeavour,” stresses the report. “It starts when there is cooperation between heavy industry and oil, gas and power and their customers down the supply chain."
Headline findings from the report include
- Just 5% of oil, gas, and power providers say they expect to shift from decarbonising their own business to support the decarbonisation of heavy industry before 2043.
- Almost two-thirds (63%) of heavy industry executives do not see priority decarbonisation measures to be economically attractive before 2030.
- Virtually all (95%) of heavy industry executives believe it will take more than 20 years to deliver net-zero products at close to price parity with high-carbon alternatives.
- The vast majority (80%) of heavy industry executives believe a price premium of 20% is necessary for low-carbon products and services to compete with high-carbon alternatives over the coming five to 10 years.
But Accenture insists that there “is a clear path to industrial decarbonisation”, adding that by working together industries can “create the confidence needed to unlock investment and innovation and bring down costs”.
Among its recommendations are for heavy industry to:
- Target green premiums to finance the initial phase of industrial decarbonisation.
- Accelerate scaling low-carbon power and hydrogen to guarantee affordable, secure supply.
- Drive down the capital and operating expenses of low-carbon infrastructure.
- Establish a virtuous cycle of collective action.
Accenture says: “Industries can collectively make meaningful progress in just three years with a focus on the right actions.
“To do this they must focus on resolving a small number of the most difficult barriers to decarbonisation.
“Tackling these barriers in the next three years will set heavy industry on the right path to decarbonisation and accelerate the world’s progress toward its net-zero targets.