The sector’s transition from internal combustion to electric is well defined and underway, driven by consumer demand, government support and advances in technology. However, environmental risks around mineral supplies and the disposal of batteries remain to be addressed.
The sector’s desire to decarbonize is strong but local conditions, fragmentation and owner management can make transition initiatives and their financing requirements varied and complex. The need for coordination with the closely connected retail sector could add to these challenges.
The industry’s transition from hydrocarbons to renewables is relatively clear, but the scale of required investment, legacy assets and infrastructure renewal make this a very long process. The current energy crisis, boosting immediate demand for fossil fuels, threatens to delay the transition further.
In the short to medium term, greater adoption of sustainable fuel will allow an initial reduction in emissions. In the longer term, alternative propulsion will be needed. That will require huge, coordinated investment by manufacturers, operators, energy providers, airports and governments.
5. Advanced manufacturing
Pathways are well understood, but as well as changing its own production, the industry is highly dependent on decarbonization in the energy sector and its upstream supply chain.
6. Health, science and wellness
Decarbonization is recognized as a priority but is arguably a secondary environmental objective behind reducing the use of plastics – an area already receiving significant investment in R&D.
7. Consumer industries
In addition to decarbonization, the industry is focused on other ESG themes including the use of plastic packaging and social issues in its upstream supply chain. Decarbonizing logistics is a clear priority, but depends on the transition pathways of transportation sectors.
Shipping has a clear short-term pathway that includes optimizing routes and steaming, and retrofitting short-haul vessels with electric propulsion. In contrast, alternative solutions for larger vessels and long-haul routes are not yet clear.
9. Metal/concrete manufacturing
These are energy intensive sectors, and therefore particularly dependent on the shift to renewable power. The technologies these industries require to decarbonize their core processes at scale are still in the R&D phase.
Significant progress has been made in understanding how decarbonization can be integrated into future infrastructure via smart cities, digital transformation and circular economies. However, delivery will take decades and is heavily dependent on government policy and activity.