Our attention is caught, like the sails in ship, when the wind blows.
Wind is one of the natural powers global governments are seeking to harness to reach their respective net-zero targets.
Greenhouse gases (GHGs) comprise of carbon dioxide (CO2), methane and nitrous oxide, and water vapour. CO2 is released when oil, gas and coal are burned in homes, factories and to power transport. Methane is produced through farming and landfill. A further contributing factor is global deforestation because there are less plants to absorb there are less trees and plants to absorb CO2.
Greenhouse gases in the earth’s atmosphere trap heat and contribute to global warming, and net-zero means not adding to this. The way to achieve net-zero is by reducing GHG and balancing out any that remains by removing an equivalent amount.
Under the 2015 Paris Agreement, 197 countries agreed to try to keep future global temperature rises under 1.5C to avoid the worst impacts of climate change.
The UK’s target is to reduce its greenhouse gas emissions 100% from 1990 levels by 2050. In a July 2021 report on fiscal risks, the Office for Budget Responsibility estimated a net cost of the UK reaching net-zero by 2050 to be £1.4trn, or just over £10bn per year. This is made up of around £1.4trn in costs, offset by around £1.1trn in savings.
With the United States’ targeting to halve US greenhouse-gas (GHG) emissions by 2030 and reach net-zero emissions by 2050. To reach its targets, according to one source, the US will spend circa. $27trn through 2050 ($900 billion per year, on average), according to estimates under the 1.5°C decarbonization scenario.
Australia currently has a target to reduce its domestic emissions by 43 percent on 2005 levels by 2030 and net-zero by 2050. The Australian government will invest AUD 20 billion in low emissions technologies over the next decade (under the Technology Investment Roadmap), hoping to unlock AUD 80 billion of private and public investment on green technologies.
Taking the UK, US, AUD forecast spend of circa. $29trn to reduce GHGs and net-zero a tremendous amount of complex and high value projects shall be undertaken within the next couple of decades. As part of their investment governments are insisting on local content requirements (LCRs).
LCRs are rules requiring firms to use a minimum level of domestically manufactured goods or domestically supplied services. Globally, and domestically, do adequate supply chain exist to undertake works on this scale? If there was an infinite supply developers, contractors, sub-contractors, consultants, and suppliers then the answer would be yes. However, reality paints a different picture.
On a global scale there are limited suppliers, take wind turbines for example where there are four or five suppliers who meet international standards, and vessel suppliers where only limited vessels exist and/or in manufacture to meet the size of turbines and respective foundations. On a domestic level, the supply chain is limited in terms of capacity and the necessary know-how on contracts and the administration thereof. This can create potentially issues on understanding obligations under the contract, such as carbon monitoring, cost and time reporting, applications for payment, and other matters. In essence the goal for net zero is a global project on a massive scale with a real time for completion. The damages for non-completion are real too and affect all of us.
There are head winds and tail winds in all aspects of life. Whilst LCRs are a tail wind for the local community because there an increased opportunity for work in what otherwise may be closed market. LCRs from cost, capability, and capacity perspective could be headwind that drive up cost and reduce market’s freedom of choice, thus increasing costs and risks in the supply chain.
With this global pursuit, it would be beneficial for the supply chain to have a strong tail wind to help meet the demands. Soben is strategically placed with global offices to meet the needs of the global, and local, market needs. We have the experts who understand and can advise carbon accounting, energy efficiency, project reporting, and contract administration.
Let Soben help you tap into this natural power and be the wind in your sails to help deliver a cleaner future.
Director – Specialist Services, EMEA