Fuel for the future generation and for sustainable environment
Second-generation Bioethanol (2G), also referred to as next-generation biofuels, are fuels that are manufactured from various types of non-food biomass. It is produced from lignocellulosic biomass, such as agricultural residues comprising stocks and stems from cereal crops like rice, maize, etc. and uses industrial by-products such as crude glycerol as feedstock. Lignocellulose is considered a renewable and inexpensive carbon source, and its availability depends on crops grown in specific regions. Various types of plant biomass, like dedicated energy crops, have also been used in the production of such biofuels. Maximum potential sources of lignocellulosic biomass include agricultural waste (wheat straw, corn cob, rice husk, cereal straw, and bagasse), industrial waste (brewer’s spent grains and grains from distilleries), municipal solid wastes (food waste, craft paper, and paper sludge containing cellulose). Forest-based woody wastes are the other potential sources of lignocellulosic biomass.
The most striking difference between first-generation and second-generation biofuels is that the former is produced directly from edible portion of crops like rice and other cereals, maize, sugar beet and cane whereas the latter is produced from industrial and household wastes and residuals.
Why is 2nd Generation bioethanol (2G) a better choice?
Bioethanol is considered to be a very effective alternative compared to fossil fuels since it is a renewable energy source which has a significant role in reducing greenhouse gas emissions. But the use of first-generation bioethanol can lead to competition between land use for agricultural purposes and energy production needs and the significant prioritization of fuel versus food. Hence, the 2G bioethanol will be an attractive option as it eliminates this issue and also allows the use of waste as biomass.
Second-generation biofuels are mainly used to overcome the constraints of original biofuels.
The primary benefit of 2nd generation bioethanol is that it offers greater benefits in terms of environmental performance, improved energy efficiency, enhanced the ability to use lower cost and more widely available feedstock and also the ability to easily get integrated into existing fuel supply and distribution systems.
It is a more environmentally friendly renewable fuel which can be directly used by the transportation sector as liquid fuel or by blending with petrol in specific proportions.
Moreover, compared to first-generation biofuels, second-generation (2G) biofuels generate a higher energy yield per acre.
Further, our country has been encouraging the manufacturing of 2G bioethanol to achieve its E20 target, i.e. the 20% ethanol blending in petrol by 2025. It helps the country with agricultural waste incineration and also to meet the goal of converting waste into energy.
Converting agricultural waste into biofuels will reduce toxic air pollution to a great extent, especially in the northern states of the country, where open field burning of agricultural residues, especially during October/ November every year is a common practice.
It should also be noted that the use of biofuels to replace fossil fuels will lead to a significant reduction in GHG emissions. Studies show that 2G bioethanol has a higher GHG reduction potential than its first-generation counterpart.
2G biofuels are highly inexpensive compared to other existing fossil fuels.
To meet our growing energy demand, bioenergy will be one among many diverse resources available at the time. From burning wood to create heat to using biodiesel and ethanol for vehicles and using methane gas and wood to generate electricity can be included as examples of bioenergy. Further, it can also include the more recent forms of bioenergy use materials named ‘biomass’ such as sugarcane, grasses, straw, soybeans and corn.
In short, bioenergy is an energy source which is derived from biological sources i.e. living things and their metabolic products. It can be in the form of heat, light, electricity or fuel aiding transportation.
What are sources of bioenergy present out there?
The biological source used to create bioenergy is called biomass. At present, there are many different types which are constantly in development. And broad categories of such sources include;
Wood including wood chips, sawdust and other forestry by-products
Animal fat waste cooking oil
Algae purpose-grown plants (energy crops)
Effluents from livestock
Human waste organic fraction of municipal waste
Thus bioenergy is diverse since the productions can be tailor-made according to different regions of the country.
Biofuels include fuels mainly used for transportation like ethanol and biodiesel, which are produced by converting biomass into liquid fuels. Biofuels can be used even in airlines and most vehicles on the road today. Such renewable transportation fuels, which are functionally equivalent to petroleum, will lower the carbon intensity of vehicles and airlines.
These technologies convert renewable biomass fuels into heat and electricity. By the process of burning, bacterial decay, or the conversion of gas or liquid fuel. Bio-power can offset the need for burned carbon fuels, especially in power plants, lowering the carbon intensity of electricity generation. Bio-power can increase the flexibility of electricity generation and improve the reliability of electric grids.
Apart from electricity and fuels, biomass can also be converted into chemicals. It involves the production of plastics, lubricants, industrial chemicals, and other products typically made from petroleum or natural gas. The existing petroleum refinery models integrated with bio-refineries can produce bioproducts alongside biofuels. And such a co-production strategy leads to a more efficient, cost-effective, and integrated approach to the country’s biomass resources. Further, the revenue generated from such bio-products will offer added value. It also helps improve the economies of bio-refinery operations and creates a more cost-competitive biofuel.
Applications and efficiency of biomass
The application of bioenergy or biomass can be segmented into two;
Direct Biomass Application: Direct application of biomass includes direct combustion or co-firing with fossil fuels.
Indirect Biomass Application: There is a number of non-combustion methods available for converting biomass into energy forms. In such a process, raw biomass is converted into a variety of gaseous, liquid or solid fuels, which are directly used for energy generation. The carbohydrates in biomass, comprised of oxygen-carbon and hydrogen, can be breakdown into a variety of chemicals. And some of these can be used as fuels;
When plant matter is heated instead of burning, it results in various gases, liquids, and solids. And these products can be further processed and refined into many useful fuels, like methane and alcohol. Biomass gasifiers can capture methane released from plants and burn it in a gas turbine to produce electricity. Another approach to do this can be to take these fuels and run them through fuel cells, thereby converting hydrogen-rich fuels into electricity and water with few or no emissions.
Bacteria, yeasts and enzymes will also turn into carbohydrates. Further, fermentation converts biomass liquids into alcohol, a combustible fuel. An almost similar process is used for converting corn into grain alcohol or ethanol, which is further mixed with the gasoline to make gasohol. Similarly, methane and carbon dioxide are also produced when the bacteria break down the biomass, which can be captured in sewage treatment plants and landfills and burnt for heat and power.
Soybean and canola oil, two types of biomass oils, can be used to convert into liquid fuel that is similar to diesel fuel and also into gasoline additives. Biodiesel can also be produced from algae as a source of oils. Biodiesel is produced by combining alcohol with vegetable oil, animal fat or recycled cooking grease, that can be used as an additive for minimising vehicular emissions or as an alternative fuel for diesel engines.
Advantages of a robust bioenergy industry
Studies show that abundant and renewable bioenergy can lead to a more secure, sustainable and economically sound time ahead. And this becomes possible by;
Supplying domestic and clean energy sources
Reducing the country’s dependence on foreign oil
Generating more employment opportunities within the country
Revitalising rural economies.
Grandview research on ethanol sources for production
Global warming occurs when carbon dioxide (CO2) and other air pollutants gather in the atmosphere trapping sunlight and solar radiation that has bounced off the earth’s surface. Usually, this radiation would escape into space. However, these pollutants linger in the atmosphere for centuries—trapping heat that causes the planet to heat up. Pollutants called greenhouse gases are responsible for trapping the heat from the atmosphere. Thus, the impact that contributes to these gases is the ” Greenhouse Effect”. Carbon dioxide, methane, nitrous oxide, and synthetic fluorinated gases are primary pollutants in the process.
Global annual temperatures have risen by more than 1 degree Celsius (approximately 2 degrees Fahrenheit). It rose by 0.07 degrees Celsius (0.13 degrees Fahrenheit) every 10 ten years between 1880 and 1980. However, the rate of increase has more than doubled since 1981. Over the last 40 years, the global annual temperature has risen by 0.18 degrees Celsius (0.32 degrees Fahrenheit) per decade. India is the third-largest emitter of carbon dioxide after China and the US, and this is because of its rapidly growing population and an economy heavily dependent on coal and other fossil fuels. The nation’s Prime Minister committed that it would reduce the emission intensity of its economy to 45% from 33–35% in the previous years by 2030.
As a tropical developing economy, India faces more significant challenges. Mainly in coping with adverse climate changes in recent years than other countries. The Central Government launched the National Clean Air Programme as a long-term, time-bound and nationwide strategy. This is to tackle the air pollution problem with a target of 20-30% reduction.
The country is planning to achieve net-zero emissions by 2070
As part of this, India’s journey to Net Zero emissions and new climate change targets appear to be ambitious. And towards achieving this, Prime Minister Narendra Modi announced a five-fold strategy named ‘Panchamitra’. This is done at the 26th Conference of Parties (CoP26), which states that;
The country’s non-fossil energy will be increased to 500 gigawatts by 2030: Central Electricity Authority (CEA) has projected the country’s energy mix for 2030. And as per this projection, the country’s installed capacity of non-fossil energy for electricity generation in 2019 was 134GW. 522GW will increase by 2030, which requires a solar and wind energy capacity of 280 GW and 140 GW, respectively, with a total installed capacity of 817 GW with a power generation of 2518 billion units by 2030.
50% of the country’s energy requirement will be met from renewable energy by 2030. As per the estimates with CEA, 9.2% of the county’s electricity requirement are being met from renewables by 2019. In 2021, this has increased to 12%, with an increase in renewable energy capacity by 102 GW. That means that India needs to increase this exponentially to meet 50% electricity generation by 2030. The country’s power requirement is expected to touch 2518 billion by 2030. And to meet this requirement, the capacity has to increase to 700GW from the present 450 GW. And considering hydroelectricity as part of this will require raising the new renewable power to 630GW, which is obviously achievable.
The total projected carbon emission by the country will reduce to one billion tonnes by 2030. The current CO2 emission by the government estimates at 2.88 GT. And as per the projections by the Centre for Science and Environment (CSE), the country’s CO2 emission on account of business activities will be 4.48 Gt by 2030. But the government is planning to cut its carbon emission by 10 billion tons, making its emissions in 2030 at 3.48 GT. This shows the country’s ambitious target to cut its emissions by 22% in the coming years.
The country will reduce the carbon intensity of its economy by less than 45% by 2030. Thus helping the country to achieve;
The target of Net-Zero by 2070: As per the estimates of CSE, between 2005-2016, the country has achieved a 25% reduction in its emission intensity and is on its way to earning more than 40% by 2030. India will improve measures to reduce emissions from various sectors like transportation and other energy-intensive industries like cement, iron, steel, non-metallic and chemicals. All these efforts by the country will help it become a Net Zero by 2070.
COP26: India’s efforts to combat climate change
In November 2021, the COP26 global summit, held in Glasgow, had a significant role in bringing climate change under control. Around 200 countries have been asked to plan efficient ways to cut emissions.
As per the UN Environment Program’s Emission Gap Report estimates, India is only the major economy on track to achieving its target set out in the Paris Climate Agreement. The country plans to reduce its GDP’s emission intensity, i.e. a significant reduction in the volume of carbon emissions emitted for every unit of its GDP by nearly around 35% by 2030. Further, as per the reports by the Environment Ministry, India has achieved its ambitious target of reducing the emission intensity of its GDP by over 21% in 2020. The country is almost nearing its goal of reaching about 40% share of non-fossil fuel-based electricity generation capacity.
Further, the Ministry of Environment, Forests, and Climate Change state that the country is favourable toward the International Panel on Climate Change (IPCC) report. The government has taken several initiatives over the past few years, including setting up the International Solar Alliances and Coalition for Disaster.
Significant impacts of global warming
Climate change can bring multiple changes in different regions, expected to worsen with further warming. These changes include; Change in wetness and dryness, Changes to winds, snow and ice, coastal areas and oceans. For instance,
The water cycle is intensified because of severe climate change, resulting in intense rainfall, flooding, and more intense drought in many regions.
Climate change will affect rainfall and alter monsoon precipitation in different regions.
The continued sea-level rise will result in frequent and severe coastal flooding, especially in low-lying areas.
Global warming will also lead to the loss of seasonal snow cover, and melting of glaciers and ice sheets.
Changes to the oceans on account of warmings, such as frequent marine heatwaves, ocean acidification and reduced oxygen levels, will affect the ocean ecosystems and the people who rely on them.
For cities, warming will increase heat, flooding because of heavy and frequent precipitations, and sea-level rise in coastal areas.
At present human-caused greenhouse gas emissions are much higher than ever. And if the warming trends continue at the current rate, it will take the estimated global heating up to 2.7 degrees Fahrenheit. As a result of which, the earth’s climate system, in many ways, like;
More frequent and intense weather events include heat waves, hurricanes, droughts and floods.
Rising sea level because of melting glaciers and sea ice and increased ocean temperature.
Changes the ecosystems and natural habitat.
And these changes not only create a risk to the plants and wildlife and have a direct impact on the overall population.
According to IPCC, countries should focus on decreasing their greenhouse gas pollution by 45% by 2030 to achieve net-zero emissions by 2050. Reducing greenhouse gas will require significant efforts at the international, national and country levels. And as a foremost step towards this,
Countries should reduce fossil fuel production, consumption, and pollution using cleaner and renewable energy sources.
Significant efforts must be made to protect forests, reduce deforestation to all possible extent, and reduce food waste and emissions.
Every individual must be committed to taking carbon-cutting actions in their daily life.
Some possible solutions to combat global warming
Save energy at home:Where possible, use compact fluorescent lights (CFL) bulbs than regular light bulbs. CFLs use two-thirds less energy and last longer than standard bulbs.
Use less heat and air conditioning:Installing weather strippings or caulking around windows and doors will lower the energy to heat and cool the homes by 25%. Keeping the thermostat just 2 degrees lower in winters and higer in summers will help save about 2000 pounds of carbon dioxide every year.
Plant a tree:Planting suitable trees around residential areas and parkways helps to reduce energy usage during hot summers.
Buy fuel-efficient cars or hybrid vehicles:Buying a fuel-efficient car will save money and pollute less than engine run vehicles. Further, buying a hybrid vehicle will significantly reduce greenhouse gas emissions.
Switch to Biofuel:Adopt new methods to use biofuel, alternative to the current petroleum derivatives. This for a long term creates the major impact and save our planet from future disasters.
Walk, bike or take public transport:Rather than using private vehicles to cover shorter distances, using public transportation will significantly reduce the amount o air pollution. Committing to using public transit will lower the emissions to a great extent.
Inflate your tires:Keeping your vehicle’s tires adequate inflated will save 250 lbs of CO2.
Reduce, reuse and recycle:All possible attempts should be made to reduce waste by choosing reusable products instead of disposables. Further buying products with little packaging will help to minimise waste. Also, recycling half of the household waste saves considerable carbon emissions annually.
Climate change is one of the defining issues of our generation. The cause of these changes,global warming, is significantly impacting the entire planet. The world is undeniably warming, which is causing a series of unexpected disasters. Scientists are working tirelessly to forecast the circumstances given the number of assumptions. The reality, however, may differ and will not always be precise. We may be too late to respond if the planet reaches damage in irreversible conditions. Assume that neither the government nor the people of each country take drastic action. In that case, the IPCC predicts that we will reach 1.5°C above pre-industrial levels within the next few decades. The IPCC is a United Nations Intergovernmental panel on climate change that provides assessments of human-caused climate change. The image given below shows the temperature level within the year 2040.
Scientists attribute rising temperatures to the human induced ‘greenhouse effect.’ Carbon dioxide accounts for most of it. As Display 2 shows, current concentrations of CO2 in the atmosphere are already significantly higher than for the past hundreds of thousands of years. The speed and level of the increase suggest most of it is by human activity.
Decarbonisation- What, how and why is it important?
Decarbonisation is simply reducing the carbon dioxide (CO2) emission into the atmosphere by effectively switching towards the usage of low carbon energy sources, thereby creating an economic system that substantially reduces and compensates carbon dioxide emissions. The concept increases the dominance of low-carbon power generation by correspondingly minimising fossil fuels, creating a high demand for renewable energy sources like biomass, wind power, and solar power.
In the business context, decarbonisation refers to all measures adopted by an entity. It can be either private or public, to bring down its carbon footprints. This involves greenhouse gas emissions, carbon dioxide, and methane, to reduce its impact on the climate as a whole. Khaitan BioEnergy, as a company, has shown key initiatives towards decarbonisation by developing bio-fuels for the global economy. Therefore what matters for investors, is the resulting changes in government policy and consumer behaviour. Similarly the impact on companies and their valuations (the ‘transition risk’) too.
Why is it important?
Decarbonization is essential for a variety of reasons, and these can be summarized in critical points:
Addressing Climate Change:
Decarbonization is crucial in mitigating the effects of climate change by lowering GHG emissions, primarily carbon dioxide (CO2), which are the leading cause of global warming.
Limiting Global Warming:
It aims to limit global temperature rise, as outlined in international agreements like the Paris Agreement, to prevent catastrophic consequences, such as more intense heatwaves, sea-level rise, and extreme weather events.
Decarbonization helps protect ecosystems by reducing pollution, habitat destruction, and the disruption of natural processes caused by the extraction, transportation, and burning of fossil fuels.
Improving Air Quality:
Transitioning away from fossil fuels improves air quality, reducing the health risks associated with air pollution and respiratory diseases.
Energy Security: By diversifying various energy sources and reducing dependence on fossil fuel imports, decarbonization enhances energy security and reduces vulnerability to supply disruptions.
Economic Opportunities: It fosters economic growth and job creation in renewable energy sectors and promotes innovation and competitiveness in clean technologies.
Environmental Sustainability: Decarbonization promotes sustainable practices and reduces the harmful environmental impacts of fossil fuel extraction, transportation, and consumption.
It can address environmental justice concerns by ensuring that the benefits of decarbonization. Also they are accessible to and benefit all communities, especially marginalized and vulnerable populations.
Investing in decarbonization drives technological innovation in clean energy, energy efficiency, and sustainable practices, leading to advancements across various sectors.
Long-Term Resource Conservation:
Decarbonization reduces reliance on finite fossil fuel resources, promoting long-term sustainability and reducing the risk of resource depletion.
A decarbonized economy is more resilient to the impacts of climate change. Thus helping communities better withstand and recover from extreme events.
Global Cooperation: Decarbonization fosters international collaboration to combat climate change, strengthening diplomatic ties and global efforts to achieve climate goals.
Health Benefits: Cleaner energy sources and reduced pollution from decarbonization lead to better public health outcomes and lower healthcare costs.
Thus decarbonization is essential for addressing the climate crisis, protecting the environment, improving public health, enhancing economic opportunities, and ensuring long-term sustainability and resilience in the face of a changing climate.
Why governments, businesses and society are in urgent need of decarbonisation?
In Paris Agreement of 2015, governments and business leaders across different countries have committed to work towards achieving a low carbon economy. Thus making the concept a global imperative priority of governments and companies as it has significant role in limiting global warming. 197 countries worldwide have shown their consensus to gradually reduce the use of fossil fuels and CO2 emissions. This is to achieve carbon neutrality by 2050 and bring down global warming below 2°C by 2100. And to keep global warming within the acceptable level, the only way left is through deep decarbonisation.
Companies operating in specific industries like transport, energy, etc have declared their vision to become carbon neutral by 2050. So to realize this ambitious mission, key progress must be in sectors that share similar nature. This can be like longer asset lifespan, the complexity of electrification and high energy density. And as per the statistics, such sectors account for 32 per cent of the total carbon emissions.
To meet the global temperature standards by the Paris Agreement and the UK government, “there should be reduction in carbon emission from transportation and power generation”.
WHY DOES IT MATTER IF THE WORLD ‘ONLY’ BECOMES 1.5°C WARMER?
Warming will not be evenly spread. The climate will become more unstable and weather patterns disrupted,. Similarly with heatwaves in some places and hurricanes and floods in others. The list of resulting direct physical climate change risks is long. It includes damage to assets, rising sea levels, water stress, crop failures and lower yields, lower fish catches, high mortality and low labour productivity in hotter countries, etc.
But longer-term concern is that at some point in the warming process, various natural feedback mechanisms will kick in, and warming will self-perpetuate and become unstoppable. These include the albedo effect release of methane by melting permafrost . Also the Amazon rainforest dieback is happening. These outcomes are impossible to model exactly, which is why there are a wide range of climate scenarios.
Nonetheless, irreversible damage and our actions in coming decades will dictate our planet’s course for centuries to come.
TARGETING ‘NET ZERO’ BY 2050 IS NOW A GLOBAL IMPERATIVE
The consensus now is that we have to fully decarbonise—reach ‘net zero’—by around 2050. Display 3 models the drastic decline in CO2 emissions. It require an immediate effect in order to reach net zero by both 2055 and 2040.
To achieve zero net emission, there should be a radical switch toward cleaner energy sources. and shifting from fossil fuels to other clean green sources of energy. Complete decarbonisation is the only solution for achieving climate stability, as per the reports by the World Economic Forum.
The global middle-class population is expected to reach 3 billion over the next two decades. Thus compelling the industries to produce more commodities at relatively low prices. But constraints on vital resources will hurdle the industries to meeting the growing demand. Industries being nearly half of the global GDP and employment should note that they contribute to 28% of the world’s greenhouse gas emissions. With due concerns over environmental degradation by political parties and international agencies, the decarbonisation of industries has become more prominent. And industrial decarbonisation is not an easy process. It concerns the four major sectors that contribute 45% of carbon emissions into the atmosphere. These sectors include; cement, ammonia, steel and ethylene. And this requires rebuilding the production process from scratch or redesigning the existing sites. Decarbonising these four significant industries requires a careful mix of technologies and strategies. Statistics in recent reports estimate the total cost of industrial decarbonisation to be around $21 trillion.
Following are the most effective ways to decarbonise the four most environmentally significant industrial sectors;
Khaitan BioEnergy, as a company, has shown key initiatives towards decarbonisation by developing bio-fuels for the global economy. The company encompasses the idea of focusing on producing high-efficiency products for the green and circular economy. The company developed and owns multiple patents for technologies that significantly reduce greenhouse gases. By holding an ethanol production patent, the company converted presently wasted albeit economically viable cellulose to sugars to 2G bioethanol . This technology is by undergoing various levels of development and testing. Thus making it highly efficient and unique by fully utilising components of lignocellulosic materials. Rice and paddy straw are the main agricultural waste. With this technology, the long-pending problem of open field burning will significantly solved. E ventually leading to a significant reduction in the environmental hazards arising from such activity.
Khaitan Bio energy uses rice straw to produce Bio-ethanol. The estimated carbon credits from 2G ethanol produced from Rice Straw:
From the life cycle of ethanol production, the reduction in greenhouse gases is estimated at 1 MT of CO2 is reduced for every MT of ethanol. 1 MT of ethanol equals 1268 litres or 1.268 Kiloliters. On 100 Kiloliters/day of production, the weight of ethanol produced is 78.9 MTs. Carbon credits per Kiloliter of ethanol accruable are 0.789 Credits/Kl
The company is commits to the principles of environmental sustainability and green (ESG) & tapping natural resources responsibly. Using the latest technologies contributes to safeguarding the energy supply. With fuels cutting CO2 emissions by up to 88% compared to fossil fuels, Khaitan BioEnergy shows the way forward in climate protection and achieving carbon neutrality in the coming decades.
Regulatory framework governing Decarbonisation
The Paris Agreement of 2015 appears to be a vigilant move towards achieving carbon neutrality. The agreement gets approval from 195 countries across the world. The countries have jointly shown their consensus towards minimizing the increase in global temperature by 2°C and trying hard to reduce it to 1.5°C in the coming decades.
Europe has been very positive and supportive of achieving a low carbon economy through various policies and regulations in recent years. One such initiative was by The European Green Deal 0f 2019. The initiative targets reaching carbon neutrality by 2050 and also aims to improve competitiveness by reducing the gap between economic growth and the use of resources.
The above initiative was rectified in the European Climate Law of June 2021. Targeting to achieve carbon neutrality by 2050 and modified the emissions reduction objective for 2030. And this upward improvement shows reforming the existing energy and climate regulations through a comprehensive legislative package.
Recently, the European Union has approved the Next Generation EU funds of 750 million euros targeting the speedy recovery following the Covid-19 crisis. As per the Recovery and Resilience Plans by the Member States, a part of this fund is used for to achieve the climate objectives.
How to achieve decarbonization
The following are the main steps in the process of decarbonization;
Have a clear understanding of the current potential and baseline. As a first step towards achieving decarbonization, getting a straight forward deal of the current decarbonization journey. It helps to set the target and enable us to make quick decisions about where to start. And to begin with, industries can go for creating baseline emissions by sources.
Further, to create a well decarbonization process, industries and governments can use software to scrutinise the data. Thereby helping the stakeholders and use the data in the right way. Keeping stakeholders is essential to ensure that the decarbonization.
Build and announce the targets: After identifying the goals, the next step is to promote this goal in public, helping businesses to realise those goals faster.
Decarbonization Strategies and Programs: Different industries need to adopt different decarbonization strategies based on their varying nature. Because of advancements in technology, most enterprises require individual efforts to achieve a carbon-neutral economy, such as infrastructural upgrades, digital solutions, and data management.
Monitor and adjust: Towards achieving decarbonization, industriesmight face challenges such as additional human capital, reallocation of finances and more.
Therefore to keep updated with the latest trends, industries must constantly monitor. Also analyse the changes happening in the internal and external business environment from time to time.
The possible impact of the net-zero transition
Various research analysts suggest that as per the Network for Greening the Financial System (NGFS) Net Zero 2050 Scenario, there will be a considerable shift in demand for various goods and services due to changes in policies, technologies, and consumer and investor preferences. By 2050, the oil and gas production will experience a sudden decline in its production volume up to 55- 70%. Further, coal production for energy use may extinct by 2050.
Decarbonisation also significantly impacts the demand for products and services that use fossil fuels. The need for internal-combustion engines may decline considerably because of rising awareness about battery-electric and fuel cell electric cars. And demand for EV’s is expected to reach 100% by 2050.
Regarding other sectors, productions will concentrate more on lower-emission alternatives than products with emission-intensive operations. In the agriculture and food sector, the necessary changes for achieving net-zero transitions can be a shift from protein demand from emission-intensive beef and lamb to a lower emission food option like poultry.
The other sectors like power are expecting exponential demand on account of targets for aligning with net-zero emissions. The power sector is expecting a twofold increase in its market by 2050. Also, the production of biofuels and hydrogen will increase tenfold in the coming years. Other industries that indulge in managing carbon with carbon capture and storage expect to project a high growth rate in the coming years.
Under the NGFS Net Zero 2050 scenario, a capital allocation of nearly $275 trillion is on physical assets as cumulative spending. Achieving a net-zero transition would require eliminating some existing physical assets and replacing them with new ones – investments in installing physical assets with low carbon emissions in a period running from 2021 to 2025. The scenario also ensures the decarbonisation of existing assets. And on average, the annual spending for attaining net-zero emissions amounts to $3 trillion to $4 trillion, which will be equivalent to about 7.5% of GDP from 2021 to 2050. About $1 trillion of the present spending on high emission assets will have to be reallocated to low emission assets. Specific sectors like buildings, power and transportation would account for 75% of the total spending on physical assets.
This capital expenditure for achieving net-zero transitions will result in operating savings in the long run through reduced fuel consumption, improved energy and material efficiency and lower maintenance costs.
The net-zero transition will also impact consumer spending as they may experience increased prices and include the need to replace goods that burn fossil fuels like transportation, vehicles and home heating systems that depend on fossil fuels and a potential change from beef and lamb consumption. Consumers will experience severe hikes concerning mobility and building transitions, and the cost of production in fuels will be transferred to consumers in various duties and taxes.
NGFS Scenario also foresees a demand for 162 million new job opportunities and a decrease in demand for direct and indirect jobs relating to the operations and maintenance sector by 2050. As per the scenario, the need for direct operations and maintenance jobs relating to the fossil fuel extraction and production sector and the fossil fuel-based power sector would be lesser. Whereas the agricultural and food sector jobs will prosper as demand for animal protein is affected under the net-zero mission. On average, 34 million positions associate with livestock and feed-relate jobs will be close by 2050. Similarly, low emission sectors will experience more job gains by 2050.
The rise in cumulative spending on physical assets will create substantial growth opportunities for companies and countries. Companies that minimise the emissions of their processes and products can get numerous benefits. Decarbonising their products and methods can also help them run their businesses cost-effectively. For example, improving the energy efficiency of heating systems in a steel plant can lower both its emission and operating costs. Car makers will prefer to manufacture EVs over Internal Combustion Engines. Industries will shift towards solar, and wind energy to generate renewable electricity and energy companies will start generating biofuels and hydrogen.
Sectors that are exposed to net-zero transition
Fossil fuels: Combining fossil fuels contributes to 83% of global CO2 emissions. And the sector is highly expose to achieving carbon neutrality through energy efficiency, electrification and managing methane emissions. The industry will also face a steady decline in the demand for fossil fuels and growing demand for other energy sources like electricity, biofuels and hydrogen.
New energy sectors-Hydrogen and biofuels: Growing awareness about decarbonisation will soon create more demand for low emission energy technologies. Investments in expanding the capacity and infrastructure of other low carbon fuels would require additional capital spending amounting to $230 billion per year between 2021 and 2050. Net Zero 2050 scenario estimates that hydrogen and biofuels sectors will create two million direct job opportunities by 2050.
Power: To decarbonise the economy, the power sectors of different countries would require a phase of fossil fuels based operations and add low emission capacity power to meet the growing demand for economic development and electrification of other sectors. The sector must require capital spending amounting to $1 trillion, $820 billion, and $120 billion for power generation, power grids, and energy storage. As the industry prospers, the allied sectors like equipment providers, electricity storage hardware and related services will also develop. The industry expects to generate six million direct job opportunities.
Mobility: The transportation segment accounts for 75% of the total mobility emissions. And decarbonisation would require the sector to adopt electric vehicles or vehicles powered by hydrogen fuel cells rather than internal combustion engine vehicles. The Net Zero 2050 scenario estimates annual spending of $35 trillion on the same for building charging and fueling infrastructure by 2050. Nearly nine million job opportunities expect to generate in the EV manufacturing sector by 2050.
Industry: Two leading sectors are given more attention. That is steel and cement, as they contribute 14% of the global carbon emission and 47% of total industrial carbon emission. These two sectors decarbonise by installing CCS equipment or shifting to fuels like hydrogen resulting in zero or low emissions.
Agriculture and food: Agriculture sectors are driven towards carbon neutrality by ensuring that they follow GHG-efficient farming practices. They encourage to increase the production of energy crops to produce biofuels. Annual spending amounting to $60 billion would be required to enable more emission-efficient farming by 2050.
Khaitan BioEnergy, as a company, has shown key initiatives towards decarbonisation by developing bio-fuels for the global economy. The company encompasses the idea of focusing on producing high-efficiency products for the green and circular economy. The company develops and owns multiple patents for technologies that significantly reduce greenhouse gases resulting from transportation fuels to decarbonise the mobility sector. By holding an ethanol production patent, the company converted economically viable cellulose to sugars to 2nd generation bioethanol technology. This technology is developed by undergoing various levels of development and testing, making it highly efficient and unique by fully utilising all the components of lignocellulosic materials in the production of high-value products. Rice straw is a massively produced agricultural waste. With the emergence of this technology, the long-pending problem of open field burning will be significantly solved, leading to a significant reduction in the environmental hazards arising from such activity.
The pre-commercial pilot plant established by the company highly focuses on establishing an end to end process for self-sustained integrated biorefinery, which facilitates zero discharge. And this patented technology by the company is recognised as a significant breakthrough for biotech innovation by the Biotechnology Industry Research Assistance Council, BIRAC.
The company is committed to the principles of environmental sustainability and green (ESG) & tapping natural resources responsibly. Using the latest technologies contributes to safeguarding the energy supply. With fuels cutting CO2 emissions by up to 88% compared to fossil fuels, Khaitan BioEnergy shows the way forward in climate protection and achieving carbon neutrality in the coming decades.