This blog was written by Aker Horizons’ Chief Executive Officer Kristian M. Røkke for the World Economic Forum. It was published on July 28 2022.
To achieve net zero targets, the speed and scale of industrial decarbonization need to accelerate. Innovative technologies such as carbon capture, utilization, and storage (CCUS) can cut emissions in hard-to-abate sectors. Multi-stakeholder collaboration across value chains is needed more than ever.
Conflict and climate change have focused the world’s attention on energy supplies and prices more intensely than at any other point in the last half-century. But this is a time to act, not to react. At this pivotal moment, it is critical that we remain laser-focused on our medium and long-term goals: ensuring energy security while reaching net zero carbon emissions.
We have a clear goal in the 2050 net zero target and we’re developing new means of measuring progress through initiatives such as the World Economic Forum’s Net Zero Industry Tracker. Surging investments in renewable energy have mainstreamed clean technologies – such as solar and wind – that revolutionized energy production, making it ubiquitous and at the same time intermittent.
Further innovation is happening every day: carbon capture, utilization, and storage (CCUS) is now a proven approach to meaningfully cut emissions. And, through a worldwide emphasis on decarbonization, there is the possibility of utilizing clean hydrogen in hard-to-abate sectors, such as steel and shipping.
What we are yet to see is a global response bringing together these diverse technologies across entire value chains and at the scale required, despite abundant evidence that the world is seriously lagging behind the kind of progress vital for delivering a net zero future within the required timeframe.
Our goal must be energy transition at the scale of the industrial revolution, whilst moving at the speed of digital disruption.
At Aker Horizons we know that there is no silver bullet to reach net zero. It will require pulling every emissions reduction lever we have at our disposal, from hydrogen, to CCUS, renewables, electrification, and energy efficiency improvements, especially to decarbonize hard-to-abate industries.
For example, CCUS is key for abatement in cement production, but can also be important in the low-carbon production of steel. Decarbonizing the steel industry will also require renewable power, hydrogen, and hydrogen derivatives such as ammonia. These technological solutions, fortunately, can be operationalized across entire energy systems, effectively decarbonizing other industries’ processes and value chains.
We have developed a portfolio of technologies, projects and companies that can spur progress across entire value chains, not only wind and solar power, but also superconducting systems that connect renewable power to mature grids, as well as green hydrogen production and our proprietary, proven carbon capture technology. By 2025, we aim to have built 10 gigawatts of renewable power capacity, invested 100 billion Norwegian kroner ($10 billion) in green industries and enabled the removal or avoidance of 25 Mt CO2e annually.
What we see is that renewable energy resources are often located too far from major industries to help them switch to green production. Additionally, electricity lacks long-distance mobility.
To address these challenges, we are taking a holistic approach to developing value chains based on local, low-cost renewable energy that is integrated with midstream products such as hydrogen, and downstream end-use products such as ammonia, green iron and fertilizers. These can then be exported globally to the largest off-take markets. We call them “hydrogen hybrid hubs” and we currently have two under development, in Northern Norway and in Chile.
These sites offer excellent examples of public-private collaboration, with benefits that accrue to everyone involved. The Narvik region in northern Norway offers cost-efficient renewable power along with excellent transportation networks and local stakeholders in the public and private sectors who are committed to fostering a green energy transition. We have invested in prime industrial sites in the region and we are forging partnerships to spur large-scale green hydrogen production to be used in local industrial applications, creating green jobs and driving exports.
We believe there is a significant potential for this hybrid project strategy, which can contribute to both industry decarbonization and addressing energy security issues in key regions around the world. But we can’t do it alone. The world will need countless more projects like these to achieve net zero progress at scale.
Bringing these technologies to scale demands vision and commitment from all of us, whether in the public sector or the private sector. It requires raising multi-stakeholder collaboration to a whole new level. To increase scale and efficiency, and to lower costs, the whole gamut of stakeholders needs to come together to accelerate innovation. That is why we are partnering with companies across value chains and geographies, including Microsoft, Mitsui, BP, Shell and Statkraft, and why we have joined initiatives such as the Green Hydrogen Organisation (GH2) to accelerate the production and utilization of green hydrogen across a range of sectors globally. The common denominator is a shared commitment to reduce emissions and accelerate the energy transition.
Uncertainty stymies innovation. Governments have a vital role to play in putting in place the policy frameworks that will inspire confidence in these nascent sectors and give better future revenue visibility for business. They must also share the responsibility of building key infrastructure, to help defray some of the risks that today hamper real economic opportunities. Business and governments need to work together to foster markets that can price green hydrogen, green ammonia, e-methanol and other emerging products competitively. Today these products are frequently priced through opaque and time-consuming bilateral deals.
There is rightly a focus on the need for more investments in clean technologies and associated infrastructure that will eventually propel the world toward net zero. In response, the Aker group has established Aker Asset Management (AAM) to bring financial capital closer to industrial expertise. AAM aims to establish funds totaling €100 billion to invest in profitable climate solutions delivering green energy, green industry, and green cities.
The urgency of today’s crises and the challenge of achieving net zero in less than three decades demand that we act across multiple sectors and industries in parallel. We have the technologies to revolutionize the energy sector and decarbonize entire industries, and these are rapidly becoming cost competitive. What we lack is time. Let’s grasp this moment to deliver the next true revolution.