Decarbonisation Technology - May 2024 Issue

Decoding the complexities of decarbonisation Decarbonisation is a complex process influenced by various interrelated factors that underscore the multifaceted approach needed to achieve net zero goals Bamrung Sungnoen, Wiwut Tanthapanichakoon and Khavinet Lourvanij SCG Chemicals Pongsatorn Anukulnaree Thai Polyester Company Apinan Soottitantawat Chulalongkorn University

D ecarbonisation, the process of reducing the amount of carbon dioxide and other greenhouse gases emitted into the atmosphere from all sectors of society, particularly the energy-intensive sectors, is a crucial step towards mitigating climate change. However, it is a complex issue comprising economic, political, technological, social, and infrastructural challenges. Understanding these complexities enables us to forge a realistic roadmap toward our aspirations, providing a foundation for strategic planning and decision- making to navigate these roadblocks. The goal is to turn our aspirations into reality.  Economic factors Economies heavily dependent on fossil fuels must diversify to renewable energy sources like wind and solar. Although renewables are becoming more cost-effective, they often require significant upfront investments. Examples of decarbonisation requiring a massive shift in capital allocation towards low-emissions technologies (Krishnan, et al., 2022) and infrastructure are as follows: • About $275 trillion in cumulative spending on physical assets is needed between 2021 and 2050 to achieve net zero emissions, including renewable energy, electric vehicles, energy efficiency improvements, and carbon capture, utilisation and storage (CCUS) technologies. More specifically, the estimated costs of decarbonising four key industrial sectors (cement, steel, ammonia, and olefins) are about $21 trillion (Krishnan, et al., 2022). • Similarly, the US Department of Energy

estimates that decarbonising eight US industrial sectors (chemicals, refining, iron and steel, food and beverage processing, pulp and paper, cement, aluminum, and glass) could require up to $1.1 trillion in capital expenditures (Walton, 2023). • Carbon pricing, such as greenhouse gas (GHG) taxes, may have near-term macroeconomic impacts, leading to higher costs of fossil fuels and adverse supply shocks like ‘oil shocks’. Annually this can lower global growth by 0.15-0.25% and increase inflation by 0.1-0.4% (IMF, 2022). Undoubtedly, economic factors are central to global decarbonisation efforts, influencing investment decisions, industry dynamics, and macroeconomic outcomes. Governments, businesses, and international organisations must work together to navigate these economic challenges and ensure the widespread sharing of decarbonisation benefits while effectively managing cost burdens. v Political factors Policies and regulations play an indispensable role in promoting or hindering decarbonisation. Political leaders play a key role in championing and adopting climate policies that smoothly drive the transition to a low-carbon economy. Political systems often focus on short-term gains instead of long-term policies due to electoral cycles. Political stability and a focus on long-term planning are necessary to sustain decarbonisation efforts. Climate change policies, particularly those that affect consumers, such as carbon pricing,