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COP26: The Future of Sustainability and Renewable Fuels

Published:

January 4, 2022

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Since the close of COP26, the first carbon-neutral Conference of the Parties (COP) event in history, the sustainability space has been buzzing. From food production and distribution, modes of transportation, fuel production, and recycling efforts, the industry is experiencing unprecedented momentum that will carry into the future. Translated into commitments, pledges, phase-outs, and direct action from coalitions vowing to reshape the way net-zero targets are defined, stakeholders are working toward a common decarbonization goal – balancing the push-pull between business, policy, and consumers. Keep reading to learn how COP26 commitments will impact fuel production and use.

Phasing out Fossil Fuels

COP26 was significant in many regards, especially in that it was the first COP where fossil fuel reduction was on the agenda – both the phase-down of unabated coal production and the phase-out of inefficient fossil fuel subsidies. While industrial use of coal as an energy source in the United States has continued to decline down to 4% in 2020, coal still accounts for 10% of the United States’ total energy consumption. Similarly, subsidies for fossil fuels have been declining across major economies, yet there was still over $350 billion available in 2020, with $20 billion coming from the United States. However, in January 2021, President Biden signed an order to stop fossil fuel subsidies – eliminating government support by 2022 and shifting priority to supporting sustainable energy solutions.

There is still work to be done to reduce fossil fuel use, but we’re encouraged to see momentum around solutions like renewable natural gas (RNG) experience an uptick in demand. RNG is currently being used in thermal applications as a replacement for coal and fossil natural gas – providing a quick, easy way to reduce Scope 1 emissions without facility upgrades or disruption to operations.

Immediate Impact of Methane Reductions

Another big achievement at COP26 was that over 100 countries signed the Global Emissions Pledge to cut methane emissions by 30% before 2030. The committed countries currently emit nearly half of all methane, so this pledge is poised to make a significant and immediate impact. This is encouraging because methane emissions have been increasing year-to-year and need to drop by nearly half to meet the Paris Agreement’s goal for 2030.

Since methane doesn’t stay in the atmosphere as long as carbon dioxide does, reducing its levels supports decarbonization efforts faster and more significantly than other efforts. During COP26, President Biden unveiled the U.S. Methane Emissions Reduction Action Plan which doubles down on emissions reduction efforts in the United States – all while reducing consumer costs, creating jobs, and fostering innovation.

RNG developers, such as U.S. Gain, are poised to help make these methane reduction regulations a reality – by capturing methane and transforming it to RNG as well as distributing it to transportation and energy markets to replace fossil use. As more government incentive programs roll out around methane emissions, energy developers are ready to meet the increased demand.

Sustainable Transportation as a Priority

“Mobility” accounts for 20% of global greenhouse-gas emissions and will play a critical role in meeting net-zero targets – paired with the unique potential for net-cost savings. COP26 has led to many coordinated efforts working to advance the adoption of sustainable fuels. Specifically, one of the goals that COP26 set forth prior to the summit was reaching a consensus on the transition to zero-emission vehicles – ensuring the pace was consistent with the goals outlined in the Paris Agreement.

Fifteen countries entered a Global Memorandum of Understanding (MOU) for Zero-Emission Medium and Heavy-Duty Vehicles – aiming for 30% of new vehicle sales to be zero-emission by 2030 and 100% by 2040. The participating countries believe coordinated efforts are needed to reduce transportation emissions, fossil fuel use, and energy costs: all while mitigating climate change and improving air quality. Additionally, over 30 countries signed a declaration to accelerate the transition to 100% zero-emissions cars and vans. Currently, Europe is leading the way with its regulatory-driven market and positive consumer demand trends – and, is on pace to be a market share leader in electrification. By 2030, electric vehicles are projected to account for 75% of new car sales in Europe.

While the U.S. did not sign on to these agreements at a federal level, municipalities (i.e. LA, NYC, Atlanta), automotive companies (Ford, Daimler, GM), and states like Oregon and California are creating agreements of their own. They’ve realized the positive impact adopting alternative fuel vehicles can have – signaling a need for increased manufacturing capabilities and developments to build out an infrastructure network for battery-electric and hydrogen fuel cell vehicles. Along with other organizations, U.S. Gain has recognized the value of partnerships – working with market leaders to drive the energy transition forward. By bringing fuel supply, infrastructure, and credit generation services to market in a scalable, flexible manner, fleets can benefit from tailored solutions.

The Road to Net-Zero

 The stakes around net-zero goals are getting higher as global investment firms at COP26, 450 to be exact, announced via the Glasgow Financial Alliance for Net Zero that $130 trillion in assets have net-zero goals. Accounting for 40% of total, global assets, this serves as the largest-ever commitment made at a COP session. With the requirements to meet these goals becoming more explicit and the new Net Zero Standard for business, companies will be required to use science-based target initiatives (SBTi’s) to outline how they will reach net zero by 2050.

SBTi’s Net-Zero Standard provides year-by-year guidelines for companies on how to become net-zero by 2050 –  first by directly reducing emissions and then by investing in carbon offset projects to compensate for their remaining carbon impact. Stakeholders are realizing that collaboration and commitments are important to develop more confidence in global regulations – resulting in more funding for alternative fuel infrastructure and fuel supply. By matching consumer demand with the ability and willingness to produce fueling alternatives, the market can move one step closer to net-zero.

Investors will continue to scrutinize companies’ net-zero commitments and direct their money to those that have the most convincing planning and execution strategies. The basis of competition as we know it is shifting – and the ability to identify emission challenges and measure progress throughout the value-chain is becoming ever more important.

The future of sustainability management lies in digital technology that enables closer monitoring of supply chain happenings. This is showcased by transportation technology providers, such as Breakthrough, that are bringing transportation emissions reduction products to market – enabling manufacturers, retailers, and distributors to accurately track, report, and reduce their Scope 3 emissions.

What’s Next?

Industries within the food supply chain are expected to overtake farming and land use as the largest contributor to greenhouse gases. As net-zero check-in dates like 2030 get closer, consumers and investors will start to base purchase and investment decisions on which companies have sound plans for achieving their sustainability goals – and, the measurement tools to hold them accountable. By adopting digital emissions monitoring technology and transitioning to alternative fuel and thermal energy, organizations can begin to align their value chains with net-zero practices, today.

Companies who have solid, proactive plans will have first rights to available capital and financial incentivization. For help getting started and going further with your net-zero goals, reach out – we’ll help you navigate the alternative fuel and renewable energy landscape.

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