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December 2, 2022

The Business Case for Net-Zero in the United States

Nicholas Institute for Environmental Policy Solutions
The Business Case for Net-Zero in the United States

Recent US legislation has made historic commitments toward moving the country to net-zero greenhouse gas emissions by 2050, including hundreds of billions of dollars in investments and incentives. While these public commitments are substantial, their success ultimately depends on their ability to galvanize private sector innovation and action.

During the 2022 UN Climate Change Conference (COP27) in Egypt, the Duke University-based Energy Pathways USA project brought together corporate leaders to discuss how the private sector is doing its part to decarbonize the US economy. 

Here are highlights from the conversation, which was moderated by Jackson Ewing, senior fellow at Duke University’s Nicholas Institute for Energy, Environment & Sustainability and a faculty member at the Nicholas School of the Environment. 

ON ADVANCING NET-ZERO PROGRESS THROUGH FINANCING

Bank of America has made a commitment to reaching net-zero in its financing activities, operations, and supply chain before 2050. 

“We’re working across our businesses to weave emissions and those targets into how we work with our clients on a day-to-day basis and make decisions around the lending and investment toward those targets,” explained Alexandra Liftman, global environment executive at Bank of America. “It is very complex. It’s always complex when you try to measure and set targets in an area where there’s no set methodology.

“But we’re making a lot of progress; we’re committed to the journey. We’ve got a lot of peers that are committed to the journey alongside us. And most importantly, we have a lot of clients that are committed to the journey alongside us because we wouldn’t be able to meet our goals if we didn’t have clients that were moving towards net-zero themselves.”

Pathways to Net-Zero for the US Energy Transition

Energy Pathways USA brings together partners across multiple industries to accelerate progress toward net-zero carbon emissions by 2050 in the United States. Convened by the Nicholas Institute for Energy, Environment & Sustainability at Duke, the project is an autonomous regional initiative of the global Energy Transitions Commission.

A new report released in advance of COP27 sets the stage for the project. “Pathways to Net-Zero for the US Energy Transition” examines the current trendlines, challenges, and opportunities for meeting the US net-zero objective—and outlines the work ahead for Energy Pathways USA.

The Energy Pathways USA project is aligned with the Duke Climate Commitment, particularly Duke’s efforts to engage with public and private sector decision makers to advance a more just and sustainable future.

ON HELPING STAKEHOLDERS UNDERSTAND THE FULL BENEFITS PICTURE

ADM—the multinational agricultural origination and processing company—is partnering with PepsiCo to support regenerative agriculture practices on up to 2 million acres of farmland by 2030. Such practices can help address climate change by capturing carbon in the soil. 

But when it comes to advancing net-zero efforts, companies must highlight the benefits that will matter most to stakeholders, pointed out Alison Taylor, chief sustainability officer at ADM: “If you cover crop, for instance, your farm is likely to be more resilient to drought to floods to some of the extreme weather conditions that we’re certainly all experiencing with climate change. Fewer inputs—fertilizers, pesticides—that saves money as well. So there’s a real business case to share with these business people.”

ON THE ECONOMIC BENEFITS OF A CLEAN ENERGY TRANSITION

Duke Energy, one of the country’s largest energy holding corporations, has announced plans for billions of dollars in capital investments over the next decade to modernize the electrical grid and bring cleaner energy online. 

“Historically, at least in the US, the discussion has been, ‘Yes, we would like to get to a cleaner energy system, but what is the cost?’” noted Katherine Neebe, chief sustainability officer at Duke Energy. 

“We wanted to challenge that assumption. When we took a step back and looked at the benefits that our clean energy transition will bring in terms of additional jobs, etc., we found that there is roughly a $250 billion economic output—positive impact—as a result of the transition.”

ON THE ROLE OF PARTNERSHIPS IN ACCELERATING PROGRESS

Volvo LIGHTS (Low Impact Green Heavy Transport Solutions) is a public-private partnership of 14 organizations to deploy commercial battery-electric freight trucks in southern California.

Accelerating progress on this complex goal requires a holistic approach, said Niklas Gustafsson, head of public policy and regulatory affairs at the Volvo Group. 

“You need to get all the partners together, but then you also need to come up with this plan for each individual site and for each customer driving a truck. Nothing is moving by itself. You also need to find the right competence outside of this club of 14 companies and institutions—and that is for the electric vehicle equipment, charging, energy, financing, engineering, assistance with grants.”

ON INNOVATION AND TECHNOLOGY

Increased use of renewable energy sources gets most of the attention in efforts to decarbonize the power sector, but digitization of the grid is the “unsung hero,” reported Roger Martella, chief sustainability officer of GE: “If you want to build energy resiliency, the most immediate thing you can do is digitize the grid and bring in those digital solutions.”

“The real focus today is active management—the notion that with the variability of renewables and weather events and cybersecurity, you need to have digital substations and digital tools that can manage the flow of electrons in real time, predict where something is going to go wrong, reroute energy, predict weather events, and bring up and down generating resources.”

Investing in research and development for innovative technologies is also critical, Martella said. “We have to develop the breakthrough technologies for tomorrow—technologies that we’re working on today, but that we might not see until late this decade or even the following decade. We have to be like a time machine inventing them now.”

ON THE IMPACT OF THE INFLATION REDUCTION ACT

The Inflation Reduction Act (IRA) could play a critical role in spurring corporations’ net-zero efforts in the US, panelists agreed.

Liftman of Bank of America observed, “If you add up the climate provisions in the IRA and the infrastructure bill that came before it, it’s a half a trillion dollars’ worth of capital. We need more capital than that, we’ll need continued capital, but it’s really landmark.”

Neebe of Duke Energy noted that provisions in the IRA give companies such as hers space to innovate. “As a regulated utility, we’re mandated by law to build least-cost, so that trumps everything. What the IRA does is, it flips the script a little bit. It enables us to think about renewables, investments in the grid, etc. towards that net-zero future that we need. And it defrays the costs that customers will be paying, which is so important because if we lose sight of affordability, if we lose sight of reliability, we will halt forward momentum significantly.”

The IRA could boost the efforts of all companies committed to advancing net-zero progress, regardless of their sector, said Taylor of ADM. “We don’t consider ourselves an energy company, but we’re rapidly becoming one because we have to figure out a way to decarbonize all of our supply chains, which means from the farm to the processing and through our transportation networks, as well. So we’re really looking forward to taking advantage of a lot of the activity in the ecosystem around the IRA.”