Be Inspired: Change is Doable
Many leaders are not yet convinced by the scale of change needed, plus the urgency. At Thinking the Unthinkable we know they are often inspired by those who take risks and succeed.
Anna Borg is President and CEO of Vattenfall, the energy giant which is “determined to enable fossil-free living within one generation”.
Here she explains why taking risk is so important to achieve the urgent transition needed. She spoke in the WEF Davos Agenda session Accelerating and Scaling Up Climate Innovation on 19 January 2022. The transcript is lightly edited.
Vattenfall is a founding member of the First Movers Coalition created at COP26 in Glasgow to accelerate demand for zero-carbon technology.
I think it’s important to remember that although the challenges are huge, so are the opportunities. I think this [because] as business leaders we are used to managing and taking risk.
I think we need to make that work for us in order to solve this challenge from a climate perspective, by finding and building these really profitable business models. It is possible and it is happening.
Every time I talk to my colleagues in the First Movers Coalition we - in addition to discussing how to solve this from a global perspective - also end up talking about the business opportunities we see in our respective businesses and how we can drive this forward together.
So for me, this is very much an existential question from a climate and global perspective.
But it’s also a business topic. It’s doable. We can manage this if we utilise the resources we have and the innovations we have, and the development that we are making to the purpose of solving this.
So I’m actually quite optimistic.
The Drama for Change
It’s in our own hands because it comes down to realising that reality is changing. And you only have to look around you to see that the market prerequisites are changing dramatically.
So for us to commit to being Net Zero in 2040, and also to follow the one and a half degree trajectory from the Paris Agreement, it is very much our competitiveness. It’s not our sustainability strategy. It’s clearly our business strategy to do that.
I think there is a tendency to underestimate the risk of not changing when the world around you is changing.
So for me, the connection to the businesses is very clear. What we need to do is, of course, look at our own business and phase out our fossil fuels. We are well on the way. But we need to make sure we get all the way.
Don’t Be Complacent
We are investing heavily into fossil electricity production. Mainly offshore wind will be one of the main players. We could of course have stopped there and said: ‘Okay. We’re an energy company. We produce electricity. There’s going to be a lot of demand for it. Let’s focus on fossil free electricity. But we decided to go beyond and really make sure to also collaborate with our suppliers and our customers in order to innovate the entire business value chain.
Removing CO2 Is Possible
I would like to give a couple of examples of that. The first one is the hybrid initiative SSAB-LKAB-Vattenfall. So steelmaking, mining, energy went together in order to think about how can we make steel without fossil fuels.
We found a process where green hydrogen is used, and the footprint - the CO2 footprint - is basically erased. And it’s not only a good idea or an R&D project: it’s actually steel. It’s made produced and sold to the Volvo group. You can see a piece of it here [see picture].
It would definitely have been possible for SSAB to sell a lot more of it if it had been there. So the next step is to make sure we can scale up and go to full commercialization.
The second example is a cooperation we have together with Shell, Scandinavian Airlines and LanzaTech. It is for sustainable aviation fuel using captured carbon from a bio fired heat plant in combination with green hydrogen – again - in order to produce electric fuels.
A third example is a partnership with the chemical industry BASF. We joined to build the world’s largest offshore wind farm, and they will use part of that output in their business.
And then of course, we’re also very happy to be one of the founding members of the First Movers Coalition. It very much links in to the total value chains. That fosters demand and cooperation around responding to that demand.
Change Won’t Just Happen – the ‘What’ and ‘How’
There are things needed in order to get things rolling. It’s not going to happen automatically. I usually think of what is needed in something I call two plus two.
The first two are about the ‘What’. The second two are more about the ‘How’, because it needs to happen in reality as well.
The System Gets In The Way
The ‘What’ is to make sure that the frameworks are not hindering us on this journey. What I mean by that is that a lot of the current legislation and regulatory framework is set up in order to manage an existing system, which is done in balance and very optimised on the margin.
That’s not what we’re talking about now. We’re talking about major transformation in energy, industry transportation at the same time: the regulatory framework needed to facilitate this and make sure we don’t exclude any fossil free technologies beforehand. Like small modular nuclear reactors, for example, which can play an important role here.
Secondly, the price of CO2 is fundamental. It is not only shifting the relative competitiveness, but it’s also sparking innovation of low emitting technologies. The traded market for CO2 that is in place in Europe is one example of how that can be set up.
Be Circular in Your Thinking
The second two prerequisites that would be needed in order to get the ‘How’ rolling has to do with supply chains. Because all of this transformation will require a lot of input. It will require raw materials. If you’re going to produce fossil free steel, you need green hydrogen. If you’re going to get green hydrogen, you need green energy. And if you’re going to need green energy, you need steel in order to build it, and that steel needs to be fossil free.
So there is a circular way for thinking about the supply chains that needs to be in place.
Open Eyes and Minds Everywhere
Also the supply chain when it comes to people and competencies, because a lot of people with new competencies will be needed in order to make this happen.
And lastly, but maybe most importantly, we will need acceptance from people, communities and societies where these transformations will happen. Because otherwise, we still have technical capability, the knowledge and to some extent also the capital funding of this.
Although the transformation is massive in numbers it equals up to somewhere around two percent of global GDP. That is doable. We need to have acceptance for the changes needed. And then I think it’s up to us to make it happen.
This is not a future that will suddenly pop up. We need to have the possibility to create it.