The UAE’s Net Zero Advantage

By Miguel López, thyssenkrupp CEO

Late November is rapidly approaching, bringing COP28 into view. The world’s attention is turning to Dubai, and how the conference will shape the future development of global industries in pursuit of a sustainable environmental future for all.

Each year, the world’s most important climate conference produces measures that satisfy some while disappointing others – an inevitable outcome when compromises are being hammered out between hundreds of nations within a massively condensed timeframe. However, one message that consistently cuts through the post-conference analysis of every COP is this: we must move faster. We must decarbonize our global economy faster to keep the Paris Agreement 1.5C target alive and stave off the worst effects of climate change.

This is why thyssenkrupp will be joining COP28; we’re bringing a diverse team including top executives and experts to Dubai to be part of the conversation, to share our expertise and contribution, and encourage deeper collaboration throughout our industry and beyond.

Ambitious adoption of key technologies will drive the green transformation

After power generation, the industrial sector is the biggest global emitter of greenhouse gases, representing 30% of annual emissions and 40% of global energy consumption. We’re highly aware of the carbon-intensive nature of our own operations, as thyssenkrupp Steel emits approximately 2.5% of total greenhouse gas emissions in Germany. Conversely, this means that almost nobody can make a greater contribution to decarbonisation in Germany than we can. Or to put it bluntly: we at thyssenkrupp are one of the most effective climate activists with our decarbonisation commitment.

Don’t misunderstand me: It is not easy to do. Change begins at home, which is why our green transformation efforts to achieve complete carbon neutrality by 2050 are in full swing.

On October 1^st 2023, thyssenkrupp brought together its key decarbonization technologies under a single segment. Alongside my CEO role, I am also leading the new segment. With this I would like to emphasize that thyssenkrupp is fully committed to the green transformation. By building a green industrial powerhouse of interconnecting technologies, we turn from being part of the climate change problem to becoming an integral part of the solution.

The aim is to reduce CO2 emissions as far as possible. So here too, anyone who can achieve this is one of the biggest climate protection pioneers. We can. And therefore, that's what we want to be. That is our opportunity and our mission.

These are crucial developments because they can unlock the future of ecologically sustainable industries anywhere in the world. Put simply, if we can create the means for greener industry, and then transport them at scale, we can make global industry truly sustainable.

Risk vs Reward – Tech adoptions need shared knowledge and responsibility

Upscaling greener technology is inevitable, but it carries justifiable concerns and adoption risks. Industrial operations are based on economies of scale and feature processes that may have remained broadly similar for years if not decades. Completely overhauling the infrastructure and daily operations of such outfits is a daunting prospect, which is exactly why we must share our experiences and disseminate best practices to help every industrial sector scale up its tech adoption with greater speed and surety.

COP28 is the ideal forum to do this, as it fosters collaboration on an international scale. Building alliances is the surest way to build the necessary confidence to act faster and bolder when it comes to decarbonization. At thyssenkrupp, we are ready to further engage here and work together in global initiatives.

Green ambitions + green funding = green hydrogen

To talk specifics, green hydrogen is a perfect example of how decarbonization and the overall green transformation of industry can be turbocharged with the right combination of ambition and resource commitment.

Regarding our own efforts, steel making is an extremely emissions-heavy business; the thyssenkrupp Steel plant in Duisburg produces 30,000 tons of pig iron per day, producing more than 55,000 tons of CO2 in the process. However, hydrogen is the key to eliminating these emissions, as its use means that only water vapor is emitted instead of carbon dioxide.

To achieve a hydrogen ramp-up on a truly industrial scale, we’re forging ahead with the "tkH2Steel" decarbonization project – a technologically new plant combination where hydrogen allows for the creation of 2.5 million metric tons of directly reduced iron per year. This is a crucial step towards producing three million tons of CO2-reduced steel per year from 2030.

Not only will this project save a ton of emissions (6 million tons by 2030, to be exact) it will serve as a springboard for Germany’s green hydrogen production, with this facility alone aiming for a target annual capacity of 143,000 metric tons. This is what iterative change looks like – not only are we decarbonizing our operations, we’re creating the technological advancements and the literal fuel for green transformation across the industry.

thyssenkrupp is investing almost three billion euros in the first direct reduction plant as part of "tkH2Steel" at the Duisburg site. We are receiving funding totaling around two billion euros from the federal and state governments for this project. Again, this underlines the accelerative force of private-public collaboration. Without it, the project would likely have a much later implementation timeframe – and time is a resource we have very little to spare.

Can COP28 serve as a turning point in the climate struggle?

As the opening ceremony for COP28 draws near, all attendees should use these remaining days to consider what they will bring to the table. While use cases, tech adoption experiences (good and bad), suggestions and hard data are all invaluable, perhaps the most important element to bring is a collaborative mentality.

Every agreement, target and measure produced at previous COPs was the work of painstaking cooperation and the vision to deliver a net-zero world economy. At COP28, everyone has their part to play, and, increasingly, that part must be aligned with the efforts of others to leverage its full potential.

Lynn Xia,
Senior Director - Overseas Strategical Key Account Department,
Sungrow

Recent extreme weather events show all too vividly the far-reaching environmental impacts of changes in the Earth's climate caused by increased human emissions of heat-trapping greenhouse gases. In the race to avoid climate catastrophe, the focus on reducing carbon dioxide emissions has led to a massive surge in the adoption of renewable energy.

As a China-based provider of cutting edge solutions for a sustainable future, Sungrow is very aware of the major role this country is playing in the global energy transition. Last year, China invested $546 billion in solar and wind energy, electric vehicles and batteries. In the first six months of 2023, China increased silicon wafer production by 63%, solar cell production by 62%, polysilicon production by 65% and photovoltaic (PV) module production by 60%. It exported over $29 billion worth of PV products.

A recent report from independent research group Global Energy Monitor (GEM) estimated that China could more than double its solar and wind capacity by the end of 2025. If all projects are successfully built and commissioned, China will surpass its 2030 target of 1,200GW of solar and wind power five years ahead of schedule. China accounted for 55% of the global spend on solar and wind in 2022 and there are more solar panels installed in large-scale projects in this country than the rest of the world combined.

As the world’s most bankable inverter brand with over 340GW installed worldwide and owner of the world’s largest inverter factory, Sungrow has seen this growth at first hand. With a 26-year track record in the PV space, our products are installed in over 150 countries worldwide. Sungrow’s climate action philosophy is to provide “Clean power for all” with high quality PV and storage solutions based on our deep understanding and project experience in different scenarios.

In the words of Senior Vice President James Wu: ”Low carbon is an important concept in limiting global warming to 1.5 degrees Celsius, and Sungrow has been engaged in making a positive environmental influence for 26 years with reliable solar energy and energy storage products and technical support on a regional and global scale.”

While acknowledging that the road to zero carbon will be full of difficulties, Wu has been encouraged by the appointment of H.E. Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and chairman of clean energy pioneer Masdar, as COP28 President Designate to lead negotiations to limit the global average temperature rise at the conference. His understanding of traditional and renewable energy is expected to deliver positive outcomes for the energy transition and to reduce global carbon emissions.

The UAE and China share common goals in contributing to the energy transition and carbon neutrality. The UAE has demonstrated real leadership in the advancement of renewable energy and has a remarkable track record in tackling climate change. Its commitment to renewable energy was given form by the creation of Masdar 17 years ago. Masdar is now one of the largest renewable companies in the world with a clean energy portfolio of 30GW. The UAE has set a target of installed clean energy capacity of 19.8 GW (including solar) by 2030, contributing 30% of the country’s total energy mix as part of the UAE Net Zero by 2050 Strategic Initiative.

As founding CEO of Masdar, Dr Sultan Al Jaber, was an early pioneer and champion of renewable energy. His knowledge, experience and panoramic perspective of renewable and traditional energy are likely to prove invaluable at COP28.

Sungrow is honored to be part of a number of landmark clean energy projects in the UAE that demonstrate the role solar energy can play in the energy transition. We are a major supplier of inverters to the 2GW Al Dhafra solar plant, the largest single-site solar PV power plant in the world. The plant will use approximately 4 million solar panels to generate enough electricity for around 160,000 homes across the UAE and mitigate 2.4 million tonnes of carbon dioxide annually. The world knows the importance of energy and the replacement of traditional energy sources has led to many major improvements in the renewable energy industry. Sungrow looks forward to working with partners and investors, especially upstream and downstream organisations in the supply chain, to support the global energy transition. The COP28 meeting is expected to comprehensively discuss key issues and challenges, such as efforts to improve energy efficiency, accelerate the deployment of renewable energy, scale up low-emission hydrogen, reduce emissions from road transport and heavy industry, and develop a practical and inclusive action plan with agreed priorities and positions.

Many of us are calling for emission reductions and a rapid path to net zero by mid-century. The question of how to reduce emissions globally is complex. Bridging differences and reducing confrontation is even more complex.

Stronger action than ever before must be taken to protect the environment with a zero carbon future. But assigning blame or fighting each other is pointless. As the old Chinese proverb says, "No egg remains unbroken when the nest is overturned". Planet Earth is like a bird's nest that needs to be protected and we are as fragile as the eggs inside. Practical and inclusive solutions are required to keep the planet safe because humanity cannot survive in extreme weather conditions.

Small and medium-sized enterprises are green powerhouses –investing in them is investing in everyone’s future.

Globally, small to medium sized enterprises (SMEs) make up 90% of businesses and account for around 50% of employment.

This means that while Amazon, Coca cola, Apple and other brand behemoths make bold net-zero projections, it’s important to support the millions of firms with 250 or fewer employees that are also driving the sustainability agenda – arguably even further and faster. This is especially true for SMEs in the renewable energy sector who will play a leading role in bringing down global emissions.

Challenges of transitioning

SMEs across all sectors understand the importance of acting on sustainability. In one survey, an overwhelming 89% of SMEs in the UK recognized sustainability as a business issue. It's this acute awareness which has prompted fellow SMEs to build and offer renewable energy solutions.

But working with fewer employees and resources, SMEs must balance the need to innovate with the need to grow. Particularly in the developing world, SMEs are confronted with daily challenges; wrangling bureaucracy, limited access to stable finance and skills shortages. Smaller firms are also more vulnerable to climate change impact. Lacking the financial buffers of global brands, they must thrive to survive.

The result is too many SMEs with minimal margin for innovation and little protection against disaster - including those whose very business model is built upon enabling climate change action.

What SMEs want

A recent Twitter poll by ADSW asked SMEs in the renewable energy sector what support they needed to succeed economically and environmentally:

37% required funding.

32.8% asked for incentives.

30.3% highlighted incubator programs.

Across all sectors, SME respondents echo the same findings. In a survey from the SME Climate Hub, 40% of small business owners globally reported delaying climate action because of time limitations, two-thirds admitted feeling unequipped to tackle the climate crisis – and 70% needed faster access to external funds to reduce their emissions.

The case for investing in SMEs

The World Bank predicts 600 million jobs are already needed in 2023 to absorb the growing global workforce. This should put SMEs, as a major employer, at the top of the priority list for governments around the world - and argue the International Trade Center’s case for $1 trillion global investment in annual SME investment.

It would be money well spent.

Smaller enterprises can react with greater agility than the world’s giants. A surprising study by ScienceDirect found that climate change has had a significant positive impact on innovation among SMEs, leading to an average increase of 6.6% in R&D development investment.

Indeed, many SMEs thrive on the challenge – such as Charm Industrial, a US-based SME which converts plant waste into bio-oil and then stores it underground, locking carbon away for 1 million years. The company made headlines in 2022 for signing a $53 million deal to remove over 100,000 tons of carbon dioxide from the atmosphere.

But for those with minimal support or funding, a surge in innovation is hard to achieve.

SMEs in pursuit of SDGs

Despite the unlevel playing field, SMEs all around the world are leading the way.

In India, solar-powered clean irrigation has positively impacted more than 38,000 small farms. Award-winning SME Claro has installed 60MW of power and 16,850 solar pumps. Its work has so far benefited 7,650 women farmers and avoided an estimated 30,000 metric tons of CO2 emissions.

The award-winning SME Genevos is advancing the mission for zero emissions at sea. Based in France, the firm is a front-runner in championing green hydrogen and on a mission to drive the marine sector towards a net zero future.

In South Africa, G7 Renewable Energies has been in the business of grid-connected wind farms and solar parks since 2008. With 37 interns over the past decade, the company is investing in the future by enrolling undergraduates, graduates and post-graduates in its youth development program. Thinking younger still, its Head of Environment has helped create When I Grow Up, a children’s book of inspiring stories from people working in green energy.

And SMEs don’t need to be in the renewables sector to have big impact. In Tanzania, honey producer SuBeHuDe has partnered with the Global Evergreen Alliance on a project of landscape restoration, supporting livelihoods in the area. The nonprofit focuses on training in sustainable beekeeping practices alongside promoting access to inclusive education, healthcare and clean water. The name is a shortening of Sustainable Beekeeping and Human Development and SuBeHuDe has built a social, economic and environmental framework which has positively impacted thousands. 

Small businesses, big impact

SMEs may not be big, but they are powerful. Collectively they can accelerate the green transition and benefit everyone on the planet, but only if they can access funding and have a supportive environment, with policy frameworks and incentives to boost their green development.

Small businesses may be our biggest hope.