Decarbonisation Technology - August 2024 Issue

Considerations Every pathway is unique, and when selecting the decarbonisation elements to help build a company’s marginal abatement cost curve, the pathway needs to be adaptable to a variety of considerations that can shift the order of execution. Examples include, but are not limited to, policy delays, technology readiness, and expertise availability, which can impact final investment decisions. Can the plan adapt if there is a policy change? Can the pathway adapt if there is a delay in a project? What will the impact be? Some of the considerations may include but are not limited to: Policy and regulation framework It is important to understand the policy landscape before embarking on any decarbonisation strategy. Policy can help provide incentives and drive carbon reduction through capital investment. Pathways need to be adaptable to change and delays of regulations. Does the plan have a variety of reduction steps/levers that could be substituted if regulatory changes affect the relative economics? Technology growth and maturation Sustainability strategies have initiated very ambitious opportunities to innovate and explore new technologies at a faster pace than ever before. Globally, we see a vast array of new technologies for hydrogen production, carbon capture utilisation and storage, renewables, nuclear energy, and many others. As with any new technology, risk is inevitable. Some technologies will fail before they rise, others will be dismissed, and others will surpass expectations. In addition, being the first to adapt to a new technology may lead to a competitive advantage but might also take a company down a non-viable path in the longer term. Waiting for technology maturity may limit performance risk at the expense of not meeting timeline commitments on decarbonisation. Incorporating all these aspects is important to the feasibility of a plan. Technology readiness level On par with technological growth is also the readiness level of new technologies. How is the plan impacted if there are delays to a technology

it depends on or, even worse, that technology fails to deliver expected results? Understanding the implications and risk exposure is essential. Infrastructure and raw materials • Consideration of established and new infrastructure needs is an additional element to incorporate when evaluating the robustness of a plan. If relying on carbon capture storage, it is good to know when and if your jurisdiction is working on a CO₂ infrastructure to provide an outlet market for recovered CO₂. Understanding the impacts of any possible delays is equally important. • If planning on electrifying systems behind the meter, is there available power supply from the grid? Will this power be green or low carbon intensity power? Does the city/country have plans to expand and support grid power generation, distribution, and transportation? What are the implications for the plan if the power grid does not implement its expansion steps? • In a world where there are expanding needs for batteries, catalysts, and steel, is there a sufficient supply of critical minerals to support all projects? What if every facility in the world plans to build an electrolyser in the same year? It quickly becomes infeasible from a materials, labour, and expertise perspective. The above is an extreme and unlikely example, but establishing these boundaries helps better understand capability and its impact if there are delays. Expertise As new technologies arise, expertise in these technologies globally becomes increasingly essential. Expertise comes with experience; with this new era comes room to expand knowledge and expertise. Understanding how it impacts on plans and schedules, as well as the possibility of the right expertise not being available is essential. Is there a plan to attract new talent while competing with ‘new and exciting’ industries? How do you convince new graduates that your company is on the cutting edge of technology despite the appearance of being in an industry that is in decline? Risk assessment: technical and financial We have discussed how technical risk can have an impact on a decarbonisation plan, but