Need for speed in the race to net-zero

Even as we wrestle with the ongoing fallout from the COVID-19 pandemic, climate change remains the biggest challenge that we face as a society.

In 2020, we saw its devastating impact in extreme weather events, with an increase in secondary perils such as severe storms and wildfires, contributing to $76 billion in global insured losses from natural catastrophes. Climate change is expected to exacerbate secondary peril events as humid air and rising temperatures create more extreme weather conditions. These conditions favour the onset and spread of such events.

As a physicist, I know that we cannot continue to change our atmosphere without creating significant risk. Nobody can accurately predict what’s going to happen, and as the impact is non-linear there are potentially catastrophic outcomes. That’s why we all have to contribute to meaningful interventions.

Governments around the world are developing national climate plans in order to dramatically reduce carbon emissions, but we are a long way off meeting the Paris Agreement. We in business must also step up, using our influence to help drive change. In 2021 this means contributing to the success of the Race to Zero initiative being championed by COP26 and working across industry sectors to scale emerging solutions. To date, it's been a jog, even a crawl, to net-zero and it quickly needs to turn into a sprint.

Many companies have set ambitious targets on carbon reduction combined with carbon offsetting. But this will not be enough on its own. The reality is that we will never hit net-zero without also being able to extract massive amounts of CO2 from the atmosphere. That is why we need to have strategies that both include existing solutions and emerging future solutions.

Businesses working together across industry at the highest level could have significant influence. Formed in 2015, the World Economic Forum’s Alliance of CEO Climate Leaders unites senior executives from around the globe and across multiple sectors.

As a group, we can help accelerate the transition to a low-carbon economy by gathering our collective resources to foster innovation and best practice. At Swiss Re, we are encouraging the energy transition by committing to further reduce our exposure to thermal coal and the oil and gas business. We also provide risk transfer solutions for, and invest in, the transition to a low-carbon economy

Signing up to net-zero emissions by 2050 is an important first step. But to make it possible to reach that goal, what’s needed is concerted and collaborative action across industries, in five key areas.

In order to use less energy, the world needs to deploy more efficient equipment, transport modes and production processes as well as use less primary material. Consumption and production patterns need to change so that we consume less and create products that last. We must move to a circular economy ensuring that every broken, discarded or depleted product can be recycled or reused.

Ten years ago, the ability of renewable energy to compete with fossil fuels was viewed with some scepticism. Since then, the use of renewables more than tripled in China and has doubled in the United States. The cost of renewables has been falling steadily, and in 2020 nearly 90% of the increase in total power capacity worldwide came from renewable sources. The more we scale up, the more we reduce our dependence on polluting fuels.

Industry consumes a huge amount of energy − more than 40% of it in fuel. It’s estimated that half of that could be replaced with electricity, using technology that is already available. Transport is another area with tremendous opportunity. Although it’s currently responsible for a quarter of greenhouse gas emissions, that figure could be significantly reduced with a move to electric vehicles and the electrification of trains.

Land use, including forestry and agriculture, accounts for around 20% of global emissions. We need to stop clearing forests to create agricultural land. By using techniques like agroforestry, we can encourage biodiversity while enabling forests to do their job: acting as a shelter for livestock, improving soil quality, managing microclimates and sequestering carbon.

We already have the natural resources to help absorb CO2 − whether through reforestation or the preservation of areas such as peat bogs which soak up and store carbon. Mangrove forests fulfil the same role with the additional benefit of reducing physical risks such as storm surge and flooding. We need to make use of these as much as possible, as the technology-based solutions evolve. Such solutions range from carbon capture and storage in industrial settings to direct air capture plants − 15 of which are now operating in Europe, the United States and Canada.

It is anticipated that by 2050, facilities like direct air capture plants will form the bedrock of a major industry the size of today’s oil and gas sector. Getting to that point requires an action plan backed by multiple stakeholders at a corporate and policy level.

Right now, our focus is on climate adaptation and supporting the transition to a low-carbon economy. We must set clear targets across value chains and industrial sectors and pull on all the decarbonization levers outlined above.

As leaders, we can work together to find solutions to decarbonization even the hardest to abate sectors. The bigger the membership of the World Economic Forum Alliance of CEO Climate Leaders, the greater the knowledge that we can pool and the more solutions we can generate. The stakes are too high for us not to give this all we’ve got.