Roadmap to neutrality - what foundational questions need answering to determine one’s ideal decarbonisation strategy

Abstract

Considering increasingly ambitious pledges by countries and various forms of pressure from current international constellations, society, investors, and clients further up the supply chain, the question for companies is not so much whether to take decarbonisation action, but what action and by when. However, determining an ideal mix of measures to apply ‘decarbonisation efficiency’ requires more than knowledge of technically feasible measures and how to combine them to achieve the most economic outcome: In this paper, working in a ‘backcasting’ manner, the author describes seven aspects which heavily influence the composition of an ‘ideal mix’ that executive leadership needs to take a (strategic) position on. Contrary to previous studies, these aspects consider underlying motivations and span across (socio-)economic, technical, regulatory, strategic, corporate culture, and environmental factors and further underline the necessity of clarity of definitions. How these decisions influence the determination of the decarbonisation-efficient ideal mix of measures is further explored by providing concrete examples. Insights into the choices taken by German manufacturers regarding several of these aspects stem from about 850 responses to the ‘Energy Efficiency Index of German Industry’. Knowledge of the status quo, and clarity in definitions, objectives, time frames, and scope are key.