We are currently in the Big Pledge Era. A time when world governments and corporations are boldly committing to major reductions in their carbon footprint and overall environmental impact. In our recently launched State of the US Energy Industry Report, a survey of US industry leaders conducted in partnership with The Harris Poll and Axios Studio, 75% of respondents said that “the public messaging about what companies in industries are doing to address environmental sustainability is different than the conversations held behind closed doors.”
Despite the differences in what's being publicly stated versus privately discussed, the overall results from the report are extremely encouraging. Sixty-eight percent of energy leaders believe the industry can reach net zero emissions by 2050, and the data also pinpointed the most critical component to get us there: technology.
This report gives us an unfiltered look at what industry insiders are thinking and feeling about their industry’s transformation. Below are some of the most compelling stats and what they mean for the sustainability journey in oil and gas, power and utilities, and manufacturing.
Oil and gas: Innovative use of technology and software solutions will drive the industry’s transition
All respondents agreed the top three most important next steps for driving the industry’s environmental sustainability in the US are technology (68%), public sentiment (48%), and politics (46%). This is particularly true for oil and gas companies, as they face growing political pressure, stricter regulations, and a worsening public opinion. But along with that also comes a greater incentive to take action. There is real work going into transforming from solely oil and gas providers into broader energy providers.
When asked what has the most potential for advancing the industry’s environmental sustainability efforts, 47% said “thinking big and outside of the box.” While bold, big thinking can (and does) include drastically changing the makeup of company portfolios, there are equally radical investments that can be made into the core business to increase efficiencies and sustainability simultaneously. According to the survey, the most immediate strategies this industry can employ to address environmental sustainability issues are renewables (62%), technology (61%), and talent (49%).
The survey makes the connection between the growing pressure on oil and gas companies to reduce emissions and the need for technology to enact change. Technology enables streamlined operations and increased efficiencies. As we improve operations, we increase profits, thus allowing for greater investment into the sustainable energy sources needed to drive the broader industry transition. In the long run, only those who can make the sustainable shift will continue to drive growth.
Power and utilities: An indirect approach is equally as valuable
Sustainability initiatives in power and utilities require a complex portfolio approach, which may be why fewer energy industry respondents (58%) believe we can reach net-zero goals compared to the percentage of overall respondents (68%). This should not imply that power and utilities companies are ignoring sustainability. In fact, for many in power and utilities, the transition to a more sustainable energy mix is already underway, with renewable sources replacing traditional fossil generation.
Beyond adding renewables to the grid, the biggest opportunity for making a meaningful impact on sustainability is through increased operational efficiency of existing facilities and infrastructure. This report identified that the most important reason for prioritizing environmental sustainability is to improve operational efficiency.
This finding aligns with other research that shows that much of the positive sustainability impact to date has resulted indirectly from digital transformations aimed at operational goals. According to our report, manual data collection is the top challenge when it comes to using data to address environmental sustainability (35%), as is data quality (32%). By solving these underlying challenges, you can maintain or reduce operational expenses and increase reliability, while also positively impacting the sustainability of your organization.
So, while the inflection point for direct sustainable change depends on the mainstream arrival of scaled and cost-effective power storage via industrial batteries, these findings indicate that there is much we can do in the meantime to indirectly address sustainability within the power and utilities market.
Manufacturing: The first step towards a more sustainable future is understanding our present
As with the other verticals, prioritizing operational efficiency resonates well with manufacturing leaders. Sustainability in manufacturing means waste reduction, quality improvements, reducing and optimizing consumption, and visibility into reporting.
This is in line with the report findings, which show the top three areas where technology will play a role in sustainability initiatives are in reducing energy use in operations (49%), reducing waste from operations (45%), and reducing emissions from operations (45%). The report also shows that the biggest benefit to using data to address environmental sustainability in operations is making information actionable (35%), enabling decision making at the factory floor (25%), and breaking data out of legacy systems (18%). All of these areas focus on identifying the inefficiencies in current operations, which drive positive impact on operational excellence and would positively impact the bottom line.
What we are seeing here is that sustainability is a data problem. This is particularly true for manufacturers, who tend to rely on heuristics and experience. These manufacturers likely know their total consumption but have limited insight into what drives their consumption and how to optimize efficiency. By connecting data from assets and processes, it’s possible to track the climate footprint of every step of the manufacturing process and even produce sustainability reports automatically.
Implementing a central, contextualized data management system is a crucial first step across all industries
It is clear that environmental sustainability and operational improvements go hand-in-hand, and data is the connecting thread. To rise to the challenge of the Big Pledge Era and truly achieve net-zero goals, we must be transparent with our data, which requires the right technology to uncover it, understand it, and act on it.
As all heavy asset industries become more effective in using innovative technological solutions, to both improve operational efficiencies while reducing environmental impact, we will see increased profitability. We can then shift resources to larger investments in environmental sustainability — energy diversification, electrification, natural resource sustainability, etc. — to drive the energy transition forward.
We’ll be discussing all of this and more with The Harris Poll and Aker BioMarine in our July 8 webinar. Register here.