The will to decarbonise heavy industry now needs strategic action

Decarbonising across hard-to-abate sectors such as heavy industries is a multi-level issue that is moving slowly despite initial policy advancements. That was among the observations delivered during a Spotlight Session on Tuesday, A focus on decarbonisation across industry which political, featuring Marco Duso, Partner, Sustainability Leader, Strategy and Transaction in EMEIA for EY.

He highlighted that 40% of global emissions come from heavy industry and described it as a “complex environment”. “Progress is going much faster than we expected, but probably much slower than we need to,” Duso told the Decarbonisation Theatre. “There are challenges because it’s a story of supply, but also of demand. It’s not just about creating cleaner energy it is also about transitioning both sectors and how they consume that energy.” Duso pointed out that five years ago there was barely any policy or corporate commitment in place.

“Now we completely changed the dynamic. We are actually in a competitive dynamic, which is very healthy, and exciting. We started to the emergence of different policy systems and competitive systems between different regions and countries in the world.”

Duso cited the EU’s Green Deal and the US Inflation Reduction Act (IRA) for their significant regulatory and incentive frameworks while also addressing the geopolitical and trade dynamics impacting global decarbonisation efforts. He went on to say there was no “silver bullet” for accelerating decarbonisation, but stressed the importance of innovation, particularly AI, which could be an “overlay” for climate-tech which was producing unicorn companies.

Duso said setting a net-zero target had been good for the industry sector, “but now it’s time to think more in terms of strategy, how we’re going to transform business, how we’re going to shift capital”. He added: “I’m not talking about doing the right thing, I’m talking about creating profit, just profit in the long-term.

“My call to action is really to look deeper and a longer-term horizon in terms of all the risks and opportunities that each of our sectors have. Rethink, adapt the business model, the operating model and all the other elements, in a way to drive green transformations in our companies.”