Why cooperation is key to decarbonizing value chains, according to a clean energy expert
“We know we cannot do it ourselves,” Annika Ramsköld, Head of Sustainability at Swedish energy company Vattenfall, told the World Economic Forum in an interview conducted late in 2022.
In the midst of what the International Energy Agency (IEA) terms the “first truly global energy crisis”, there are green shoots of hope.
In December, the IEA said the crisis was accelerating renewable power installations – so much so that total capacity growth worldwide is “set to almost double in the next five years”.
But this kind of capacity growth takes cooperation, which was the theme of the World Economic Forum Annual Meeting 2023.
In spite of soaring costs and ongoing supply chain issues, companies like Vattenfall, one of the founding members of the Forum’s First Movers Coalition, are spearheading the transition to clean energy – and decarbonizing the entire value chain of renewable infrastructure.
“We have, for a very long time, had an extremely clear strategy to enable fossil-free living within a generation and that encompasses the full value chain. And in that endeavour, we have formed a number of partnerships, because we know we cannot do it ourselves.”
Here, in an edited interview, Ramsköld explains just why cooperation is key and some of the challenges they face.
How does your partnership model work?
The partnerships we have are very deliberately chosen. Because we know when we build a wind farm, we need a lot of steel in the towers, we need a lot of concrete in the foundations, we need to transport these components and so forth. So we look at all those areas where we have a footprint in the supply chain.
We’ve also very deliberately looked at where you have the emissions in the world. From a Swedish and Northern European perspective, a third of the emissions come from transport, a third of the emissions from industries. We know that if we can help to replace fossil fuels with fossil-free electricity, that’s when you can make a huge contribution. So we have looked at each key sector in the industry: iron and steel, refineries, chemical industries, and so forth, and deliberately pinpointed and made collaborations with those industries.
It’s very much leveraging our knowledge from previous partnerships and the contacts we have to a lot of other industries and providers. We have a number of very exciting industry collaborations to produce fossil-free steel, fossil-free aviation fuel, fossil-free biodiesel. It’s about electrifying heavy transport.
What are the challenges involved in electrifying all these hard-to-abate sectors?
It means we need to build so much more renewable energy. We have the technology and the capacity to do so, but it means that we need to have the permitting processes in place. And we definitely also need acceptance by the general public and communities, because we need access to land and sea beds in order to build renewables. A big problem earlier was Nimbys (Not In My Backyard). But now it’s become what we call Bananas, so ‘Build Absolutely Nothing Anywhere Near Anyone’.
That’s one part that is a problem in itself. But on the other hand, I think the more we can work together between politicians, communities, different partners, and see that it will bring new job opportunities. You need to form partnerships to make it happen. When you want to move into transformative technology, completely new, unknown territories, you do need to partner up and you also need the public support – both the general public and politicians. You need to share the investments.
In this current energy crisis, are you seeing countries turning more to renewables to reduce reliance on Russian gas?
Some actors in some countries see that we need to move much quicker into the renewable sector to be independent. And if we had sped up the process earlier, we would not be in the critical situation that we are today. On the other hand, some tend to move back to ‘what we know’. So we see both movements, some that go back to the fossil-based system, and others are speeding up [the transition to clean energy]. So there is a mix. In Europe, we have the Fit for 55 package. There is definitely a clear push from the political side to stick to our commitments.
Vattenfall is one of the founding members of the Forum’s First Movers Coalition. What progress has there been since the coalition was announced?
We’ve started to see different companies announcing activities. It’s about highlighting, inspiring others to see things are moving. Since it was launched, we are now really gathering demand volumes. It has become clear already that there is a higher demand than there is supply. But that’s also the entire purpose of the First Movers Coalition to show those that can bring the supply to the market, that there is a huge demand, so they would dare to move into investing into these technologies. We’re now forming a financial pillar to be able to secure investment money.
For huge infrastructure projects, what is the situation with using recycled materials, or having end-of-life built into manufacturing?
We need transformative technologies. We know that 50% of the [emissions] reductions we need to make by 2050 rely on solutions that we don’t have yet on a commercial basis. In the best of worlds, it’s on a pilot scale, maybe only on a piece of paper. So you need those transformative technologies to enter the market. While at the same time, of course, we need to do all the small things that we can do. So we have different purposes for the different collaborations we are in. Definitely we need to recycle. And we already ask suppliers of steel, concrete, etc, that a certain amount should be recycled. The overall aim is to have a lower carbon footprint. But what you can do here and now is start recycling and reusing.
What is so exciting now is that we see what’s causing climate change is really carbon dioxide and greenhouse gases. And we all see that as the evil part. However, carbon dioxide together with hydrogen are going to be some of the key components to produce materials that today are completely dependent on fossil fuels. But if you capture carbon dioxide, and produce hydrogen with fossil-free electricity, and start building hydrocarbons, then we don’t need to extract the oil and gas from the ground. So in that sense, you are also recycling.
What have you learned as you’ve been involved in these projects?
I think one key learning is if you have a clear joint target and agenda for what you want to accomplish, you definitely speed things up, and you can have a true impact not only on your own operations, but you can really help society and your customers and suppliers to decarbonize. It’s often about the supplier, if we look at wind turbines, we need fossil-free steel, we need fossil free cement, etc. But those are further down in the supply chain and they are usually also our customers. So in a way, you really get an ecosystem. And that means that we have both to decarbonize our customers, at the same time as we decarbonize our supply chains. It’s a very good way to ensure that we work in the full value chain.
If we take the HYBRIT fossil-free steel project as an example, we also got public support from the energy authority and we managed to squeeze the timeline. We started with a feasibility study, we saw that everything worked and we could shorten our time plan quite drastically. So the key learning is, if you have all the stars aligned, you know jointly where you want to go, you also get the public support that is needed, then things can go very quickly. But it really demands that you work together. And if one piece, such as the permitting piece, the political support or the public support, is not there, then things will take time. I cannot emphasize enough: partnerships are absolutely the way forward and it means joint public and private partnerships are key to make it happen.
It’s also really important to have projects that are easy to understand for other actors. And it really serves as a huge source of inspiration for others and it’s very clear that when you go out and talk about these things, it is a bit of a wake-up call for others that say, okay, yes, you say it’s actually possible. And now it’s time for us to also act.
How hopeful are you that we can tackle climate change?
A lot of things are happening in Europe, and other areas. If you compare it to three years back, there’s greater awareness that we need partnerships, we need to start acting here and now. And the clearest thing I see is that it’s very much about companies now going from word to action. We see a lot of different tests and pilots and demo plans of new technologies. And there’s starting to be an abundance of those. So absolutely, things are happening. And that, in itself, at least gives me a lot of hope. Now we need to ensure that we really showcase these things, because they are a source of inspiration, showing that it’s possible, and the strength in really joining forces in different types of partnerships.
What more do you think needs to happen?
There are funds available, but now we need to secure that those funds land where they can make a difference. So that we find those type of implementation activities happening. And, and we see a lot of pilots and demos etc, ongoing in Europe and ending in Asia and the US as well. But I think what we need to secure is that it does not only become something that happens in the privileged part of the world, we need to secure that it also come to benefit for the developing world, wherever that is sort of possible that that’s where we need to direct quite a bit of the financing, as well.
It’s also important for everyone to understand every kilowatt hour counts. To do this big transformation, it’s also very important to save energy and do things in a resource-efficient way. So you need at the same time to safeguard that energy is used for the right purposes and not wasted. We’ve got used to being able to have an abundance of energy, but we need to ensure we use it in a smart way.
Source: World Economic Forum