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Research Report

Powered for change

Working as one to achieve growth and decarbonization for all

5-MINUTE READ

In brief

  • While the world is working to hit net-zero goals, the scale of progress and investment falls short. A new era of collaboration and action is needed.

  • Our research has identified three ecosystem collaboration-imperatives that unlock new economic models for the decarbonization of heavy industries.

  • If businesses act on these imperatives now, in only three years they could set the foundations for new economic pathways on the road to net zero.

It's time to accelerate industrial decarbonization

We’re at the halfway point between signing the Paris Agreement and its first major deadlines in 2030. While much has been achieved since 2015, heavy industry has made little progress.

Why is it so important to accelerate industrial decarbonization of heavy industry? The world relies on five energy intensive industries: steel, metals and mining, cement, chemicals and freight and logistics. Their products and services feed into the supply chains of virtually all others. But so do their emissions. Heavy industry’s Scope 1 and 2 emissions become their customers’ Scope 3 emissions. If heavy industry fails to decarbonize, all others fail.

If we understand the problem, we can develop a solution. At the heart of this problem lies a vicious cycle of inaction. If we can collectively flip this to a virtuous cycle of action, in just three years, we could set the foundations for a new economic pathway and an orderly transition to net zero.

Vicious cycle of inaction. Heavy industry’s lack of progress has created a chokepoint in global decarbonization. Source: Accenture analysis, 2023.
Vicious cycle of inaction. Heavy industry’s lack of progress has created a chokepoint in global decarbonization. Source: Accenture analysis, 2023.

Orchestrating a collective endeavor

Investment and innovation have the potential to reduce decarbonization costs, but these investments simply aren’t happening at the scale or pace net zero requires. The reason: the value chain is not collectively working together. The siloed approach we are currently seeing means leaders are focusing on their own organizations, rather than actively working across the wider value chain.

This has created an investment standoff, where all parties are waiting for others to move first. Delivering on net-zero goals must be a collective endeavor. It starts when there is cooperation between heavy industry and oil, gas and power and their customers down the supply chain.

5%

of oil, gas, and power providers say they expect to shift from decarbonizing their own business to support the decarbonization of heavy industry before 2043.

63%

of heavy industry executives do not see priority decarbonization measures to be economically attractive before 2030.

95%

of heavy industry executives believe it will take more than 20 years to deliver net-zero products at close to price parity with high-carbon alternatives.

80%

of heavy industry executives believe a price premium of +20% is necessary for low-carbon products and services to compete with high-carbon alternatives in the next 5 to 10 years.

Three imperatives for decarbonization and growth

There is a clear path to industrial decarbonization. By working together, industries can create the confidence that’s needed to unlock investment and innovation and bring down costs.

To do this they must focus on resolving a small number of the most difficult barriers to decarbonization.

Tackling these barriers in the next three years will set heavy industry on the right path to decarbonization and accelerate the world’s progress toward its net-zero targets.

Three interdependent imperatives can help all industry flip from a vicious cycle to a virtuous one.

  1. Target green premiums to finance the initial phase of industrial decarbonization.                                                
  2. Accelerate scaling low-carbon power and hydrogen to guarantee affordable, secure supply.                                                                                                                                               
  3. Drive down the capital and operating expenses of low-carbon infrastructure.
Virtuous cycle of collective action. Industries can collectively make meaningful progress in just three years with a focus on the right actions. Source: Accenture analysis, 2023.
Virtuous cycle of collective action. Industries can collectively make meaningful progress in just three years with a focus on the right actions. Source: Accenture analysis, 2023.

The scope of our research

This research has recommendations for multiple segments that are part of the industrial value chain:

  • Oil, gas and power providers.
  • Steel, metals and mining, cement, chemicals and freight and logistics; we refer to them as heavy industry.
  • Pulp and paper, aerospace and defense, automotive, industrial equipment, life sciences and consumer goods; we refer to them as light industry.

To better understand the opportunities and the actions that will create impact, we conducted significant research:

  • A global survey with 1,000 executives across key industries in April and May 2023. The aim was to understand the near-term challenges and priorities of industrial decarbonization, expectations for Scopes 1 to 3 emissions, key revenue and cost levers for improving the financial business case for selected decarbonization solutions, regional priorities and partnership plans.

  • Qualitative interviews with 18 executives and middle management from selected industries

  • Techno-economic modelling leveraging Accenture’s proprietary S-curve methodology to quantify cost drivers, so that industry can achieve the greatest savings with Energy Transition Technologies including wind, solar, battery storage, green hydrogen, green steel, green ammonia and green construction.

Based on these imperatives, Powered for change lays out a bold, three-year action plan for accelerated industrial decarbonization. It demonstrates how, in a new era of collaboration, we can spark confidence across the value chain. Those who are successful will create a sustained source of competitive advantage for decades to come.

WRITTEN BY

Stephanie Jamison

Global Resources Industry Practices Chair & Sustainability Services Lead

Rob Hopkin

Managing Director – Global Resources Group, Energy Transition & Sustainability Services

Catherine O’Brien

Director – Global Resources Group, Energy Transition & Sustainability Services