How business should combat climate change in the four phases of Decarbonization
With each passing year, the effects of climate change become harder to deny—or overcome.
Many business leaders have reached a consensus. 89% of global Deloitte executives surveyed believed that a global climate emergency was imminent in a 2021 Deloitte international survey. And while 88% believe organizations and governments can limit climate change’s worst effects by taking immediate action, the sheer magnitude of the problem may make it difficult for any organization to know where to start.
The majority of executives surveyed said that their companies are making immediate efforts to reduce net-zero emission. This includes using sustainable materials (67%), and energy-efficient processes (66%). Fewer are making the more complex, more difficult decarbonization changes such as committing their organizations to developing climate-friendly services and products (49%), requiring partners to meet sustainability standards (46%), or relocating and upgrading facilities for climate resistance (44%).
If you find the steps required to reach net-zero emission by 2050 daunting, think about the cost of doing business as usual. The U.S. has nothing to lose if they make no changes an estimated $14.5 trillionOver the next 50 years, climate-related damage will increase.
However, collective action towards a low-emission future could result in As high as $3 trillionOver that time, the U.S. was responsible for a significant amount of emissions. But a 50-year decarbonization plan that limits the planet’s warming to close to 1.5°C depends on organizations in all sectors collaborating to create emissions-free ecosystems and embracing climate standards that lead to significant change.
An ambitious four-phase scenarioWe created maps showing a path towards net-zero by 2050. This can be used by your organization to support meaningful and decisive transformation.
Phase I, Now through 2025 – Bold Climate Plays
The clock is already ticking. The United States must now set bold environmental regulations, invest in research, deploy and scale emerging technology, and accelerate infrastructure programs that support carbon neutrality.
The This coordinated undertaking will incur costsInaction will only cause the situation to worsen. The potential benefits are immense.
Decarbonizing by 2050 could require tripling U.S. investment in transmission infrastructure to an estimated $360 billion, according to Princeton University’s 2021 report Net-Zero America. It is possible to bring renewable energy to more people and lower their energy bills by upgrading and building more sustainable infrastructure. Employment in green construction and public services could also increase if more organizations innovate and invest in a low-emission future.
This effort together lays the foundation for faster change in the next phases.
Phase II, 2026–2040: Accelerate to Net-Zero
This is a time of profound change and requires the greatest shifts in policy, infrastructure, customer behavior, and policy. The private- and public-sector collaborations to accelerate innovation and create green-industry opportunities will begin to strengthen themselves. The wider adoption of clean energy will result in lower energy costs and a growing storage capacity that can make the grid more resilient.
Phase II calls for investment in the nation’s transition from fossil-fuel dependency. The cost of generating electricity from new technologies and infrastructure can reduce gross domestic product (GDP), on average, by 0.2% each year during this period.
This net-zero scenario predicts that the United States will add 320,000 jobs in clean-energy by 2040. With stronger domestic capabilities, the U.S. could add nearly $14 billion to its economy and 100,000 jobs each year through low-emissions advanced production.
Phase III, 2041–2050: The Turning Point
The United States has now overcome the most difficult economic challenges of the net zero effort and is on the right track to overcoming them. With decarbonization almost complete in the U.S., both the cost and the benefits of the transition will decrease.
The net economic gains will not be shared equally by all industries and regions. For the U.S., the moment when the benefits of decarbonization exceed its initial costs, marking the start of the transformation’s net economic gain—the “turning point”—would take place around 2048. The U.S. could then enter its first decade of net-zero economic growth in a stronger economic position than if it had used lower levels decarbonization.
Phase IV, 2051 and Beyond: Low Emissions Future
In achieving net-zero emissions and limiting global warming to near 1.5°C, a fully transformed U.S. economy would benefit from the growth of decarbonized industry—and avoid the most devastating potential of climate change. By the beginning of Phase IV, both the government and private sectors such as finance, science and technology, retail, recreation and tourism will likely experience economic and employment growth.
In this scenario, the Southwest would reap the greatest rewards of net-zero as a clean energy hub with industries that boost its economy by nearly 500 billion dollars per year. The U.S. could also support and lead global decarbonization efforts that increase productivity and reduce the risks and costs of climate change.
The desire to transform is increasing. Business leaders’ statements on decarbonization and climate change demonstrate that. Now, we need to turn that will into action.
Organizations have to play a leadership role in achieving the 30-year vision for more sustainable industry growth and employment growth. Organizations in all sectors should support the emission-reduction scenario in all four phases today and in the future by making climate action central to their growth strategies, building carbon-neutral networks and accelerating system-level change.
Read Deloitte’s report The turning point: New economic climate in the United States.