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The lessons of 2020

Jan Porvaznik, Director, Energy Storage, RWE

We can agree that 2020 was a monumental year in very much any regard. On one side we found ourselves in a “bear hug” of the coronavirus pandemic, economic collapse, surrounded by tensions around inequality, race, and political partisanship. On the other side, we experienced historic heat records – Phoenix set a triple-digit heat record, temperatures in Siberia hit 100 degrees, and we witnessed one of the most active wildfires and hurricane seasons in recent history.

Still, I will remember 2020 as the year in which the world finally decided to genuinely reverse the decades of damage we’ve done to our climate.

At the beginning of the year, the EU’s leadership introduced a new Green Deal promising to cut 55% of the EU’s emissions by 2030. Along with the later announced 500 billion EUR stimulus, these are thought to be the focal points of the EU’s economic recovery strategy. Other countries, including the largest global polluter, China, and the fifth-largest emitter of CO2, Japan, also announced plans for “greening“their economies.

In late winter, the global outbreak of Covid-19 plunged the global economy into a deep contraction. The bearish moods were quickly followed by a fast recovery and a bullish market fueled by the growing interest in high-flying technology and green energy stocks. For example, solar-panel and equipment makers and other clean-energy companies gained on the possibility of more green infrastructure spending. Renewable energy developers and utilities with ambitious clean energy plans pushed out oil and gas companies from many investment portfolios. Above all, NextEra, the largest global player in renewables, sidelined incumbent energy giants such as Exxon and Chevron to become the world’s most valuable energy company.

"One silver lining of Covid-19 is that more people now realize the relationship between global health and the environment"

What appears to be the strongest year for clean energy and the fight against climate change was rounded off by the election of Joe Biden that quoted the fight against climate change as one of the key pillars of his presidency. Mr. Biden’s campaign also proposed a $2 trillion plan to achieve a carbon-free power sector by 2035. The narrow margin that Democrats won in the US Senate sparks hopes for new legislation to combat climate change, such as measures to promote the use of electric vehicles and clean energy.

Thanks to the events of 2020, we no longer have to think of widespread clean energy or massive emission reductions as a moonshot effort. One silver lining of Covid-19 is that more people now realize the relationship between global health and the environment. The health crisis, among other things, helped illustrate better than any event ever before that, despite how bad Covid-19 has been, advanced consequences of climate change over time can be far more damaging to society and the economy. After all, just like the global health crises, climate change emerged due to the failed attempts to govern the system using conventional economic principles.

The quest for a common goal: digitalization and sustainability 

Looking ahead into 2021, everything seems to point to strong momentum for sustainability. I believe we’ll see a continued and growing interest of investors in technology companies, primarily software and sustainability tech. The growth will be fueled by leading institutions around the world, both public and private, wanting to deliver on their dual goals of digitalization and decarbonization. Despite the fact that there had been historically considered separate processes or goals, we can expect their deeper integration and alignment as the leading global institutions zero in on fulfilling their environmental and sustainability goals (ESGs). The main reason to believe that these two goals will be increasingly intertwined stems from their ultimate purpose – reaching efficiency. While digitalization aims to increase the efficiency of output, sustainability solves for efficiency in use, and re-use of inputs. They naturally converge into digitally-enabled sustainability.

While we’re still at the onset of the era of digitally-enabled sustainability, we’re already seeing more and more technology and industrial companies systematically applying digitalization and sustainability measures to their own operations. Naturally, these companies can offer what worked for them internally to the wider marketplace. For example, companies such as GE or Siemens can use software that they tested internally along with their hardware that the market is already familiar with. Supported by cloud-computing powerhouses such as Microsoft, Amazon, or Google they can deliver a fully digital decarbonization experience while providing long-term revenue opportunities for these tech companies.

Sustainability as a purpose of doing business

When implementing digitalization we must make sure to prioritize sustainability as the intent and not simply as an incident of the process. Digitalization comes with a surge of demand for new technology and equipment such as sensors, data storage, computing power, and software. All of this requires even more energy and resources to manufacture, operate, and maintain. Just think about data storage with its underlying material complexity and high power demand. The increased product output must be thoroughly matched with the lowering of the environmental footprint in order for this scheme to work properly - providing benefits to the economy and the environment. Therefore, it is important to invest time and resources in the design and integration of digital tools so that the sustainability tech along with digitalization are harnessed as tools for continued sustainable development and not a liability to the ecosystem.

The corporate strategy-shapers, policymakers, and investors have the power to influence this movement. It will require, among other things, the creation of better market development mechanisms and result tracking. The above mentioned signals provide a prime opportunity for the industry players to demonstrate beneficial ways to pair digitalization and sustainability in new products, projects, and business models, ultimately creating foundations for a more restorative, circular economy.

Sustainability post-Covid-19

The Covid-19 crisis showed us the weakness of the industrialized world that relies on rare and not-easy-to-recycle resources, a world where ubiquitous advertising tries to incentivize the sale of products and services whose need is often questionable. It showed us the limits of the old-fashioned consumerism that started in the 20th century.

I hope that the world after Covid-19 will be a world more attentive to ecological balances, more demanding in terms of quality and user experience, a world of abundance where everyone can find something to suit their needs, ideally nearby. I hope that everyone can find art of living that suits them, perhaps surrounded by AI companions who will for once be helpful in listening to our needs, solving our problems. Simply put, I hope for a world built on technologies that are a combination of quantum and biological universes.

More than ever before, we have to stand BIG and look FAR to turn this crisis into opportunities for a sustainable future.

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