Thoughts: Businesses increasingly targeting net-zero by 2030

By Alan King, Syntegra MD

There is no doubt in my mind that organisations face some tough decisions around energy goals in the drive to net zero.
So it was with some delight that I read the recent report from business consultants PwC indicating that the proportion of businesses committed to achieving net-zero by 2030 has nearly doubled since its survey last year, rising from 28% to 47%.
As a headline figure, that’s go to be good news – really encouraging that companies and public sector bodies are taking their role in this critical campaign seriously.
But turn the page and the challenges quickly emerge, clouding the euphoria of this doubling momentum.
The same report reveals higher energy use – and with it, an inevitable rise in costs and an identifiable gap in funding for energy projects.
Someone is going to have to foot the (significantly bigger) bill.
And my fear, not unnaturally, is that in the face of rising costs, the foot comes off the proverbial gas of the net zero journey and valuable time is wasted with business bosses mired in balance sheets not powering ahead with any sense of urgency with initiatives to combat climate change.
The PwC study surveyed 750 businesses and 50 public sector organisations and found that 89% of businesses reported higher energy consumption over the last year, with a fifth of respondents experiencing an increase of more than 10%. The trend, they predicted, is set to continue, with 83% of businesses predicting further growth in energy consumption by 2025.
The survey cites technology as the main driver of this increase, with 34% of companies stating energy-intensive technologies such as artificial intelligence (AI), automation and electrification are the primary reasons for higher energy demand.
Business growth and expansion are also identified, with 33% of respondents identifying these as key factors.
Businesses are therefore expecting higher energy bills, which the consumer is likely to foot. 92% expect energy price volatility to drive up the cost of their products and services over the next year.
And with the first rise set to hit just next month, one can only imagine the reticence on behalf of senior leaders to commit to further innovation without knowing how the landscape could change so quickly.
While businesses are focusing on energy efficiency, capital costs remain the biggest barrier. The majority of funding for energy initiatives comes from internal sources like operating cash flows and existing credit facilities, said the survey.
Businesses said they predict similar funding sources, but many acknowledge a significant funding gap for energy projects with around 69% of businesses saying private investment will be essential to meet their energy goals, though only 31% plan to rely on it.
PwC UK’s industry leader for energy, utilities and resources Vicky Parker said: “The UK is facing the start of a new transition in the energy market, and we are at an inflection point, where tough decisions will need to be made.”
I can see – and understand that.
But I hope to see some true bold leadership emerge from these troubled waters.
According to the study, cutting carbon emissions is the top energy management objective for 26% of businesses, outweighing other business objectives such as reducing energy consumption or lowering unit costs.
It’s encouraging to hear that businesses are generally making progress with low-cost efficiency measures as around 55% have switched to LED lighting, 42% have secured renewable energy supply agreements and 40% have implemented on-site solar solutions.
However, there’s less progress on capital-intensive projects which obviously needs addressing as a matter of urgency. Only 33% of businesses have fully redesigned their offerings to be more energy-efficient, while a similar proportion have retrofitted buildings or implemented heat pumps and electric vehicles (EVs), said the report.
Public sector organisations face their own challenges. While 36% of public sector organisations rank reducing energy consumption as their top priority, they face challenges such as high capital costs and a lack of energy expertise.
From the public sector responses, 36% highlighted the absence of in-house energy expertise, a problem only 19% of private sector respondents mentioned.
I’d like to think good practice could be shared around this – and naturally some incentives from Government in terms of funding and guidance.
There are growing pockets of innovative good practice and it is incumbent on everyone involved to share and seek it out to keep the wheels moving on this long journey.
PwC UK’s energy, utilities and resources deals leader Matt Alabaster added: “Private capital is a strategic pool of investment that can move the needle on the UK’s industrial strategy and clean power objectives. However, it has choices about where to deploy.
“Through our research, investors told us that investing into demand-side energy solutions is currently difficult for a number of reasons.”
I appreciate this can all sometimes fall into the ‘too difficult’ tray but it is also too important to ignore.
Business bosses have their businesses to look after. It is our business to make your business more efficient and make the ‘too difficult’ appear ‘too obvious to ignore’.
Let’s talk.