To avert runaway climate change, we must eliminate global carbon emissions by 2050. While much of the focus has been on the main culprits — power plants, buildings, and cars — more than one-third of emissions come from heavy transport such as trucks and planes and the heat-intensive manufacture of materials such as steel and cement. We can’t reach our goal without addressing these sectors, too. But how? They’re widely considered hard to abate — stubbornly resistant to decarbonization, which many believe would be slow, costly, and unprofitable.
But abatement is not only feasible — it will be amply rewarded, if done strategically. In this decade, a rich stew of new technologies, materials, design methods, financial techniques, and business models, along with smart policies and aggressive investments, could revitalize, relocate, or displace some of the world’s most powerful industries. By the 2030s, trucking, aviation, and shipping could be decoupling from climate. Steel, aluminum, cement, and plastics could take new forms, be used more sparingly, and be made in new ways, in unexpected places, under novel business models.
In this article and a companion technical paper, I examine business strategies that can help make all this possible and generate trillions of dollars in the process. While the strategies are distinct, they share a common thread: Increasingly competitive and abundant renewable electricity is undercutting and displacing fossil fuels. Outpaced and out-competed, coal and gas plants are being starved of revenue while their fixed costs per kilowatt-hour rise. Electrified heavy transport and industrial manufacturing heat powered by renewables will likewise undercut, devalue, and strand their fossil-fueled rivals, siphoning off the old technologies’ revenues to fund their own expansion. The growing arguments for making and using renewable electricity will reinforce one another, accelerating the demise of fossil fuels and propelling one of the greatest disruptions in business history.
Let’s now explore the five business innovation strategies that will speed this transformation. Each is described as it applies to key sectors where it can bring early wins. But many of these will apply across sectors and can be even more powerful in synergistic combinations.