30 November 2023 marks the first day of the United Nations Climate Change Conference (COP28) in the United Arab Emirates. The policymakers attending must be honest about our lack of progress. It’s encouraging that more than 70 countries have set net-zero targets, representing 75 percent of global greenhouse gas (GHG) emissions.1 Yet none of these countries are on track to meet those goals.
After a brief reprieve during the COVID-19 pandemic, emissions continue to rise, and with each passing year, the work to slow climate change becomes harder. In fact, the U.N. projects that GHG emissions will rise 10 percent by 2030.2
Time is running out, and we need innovation across all industry sectors. We need that innovation in not only products and services, but also policy, to support and pave the way for the rapid adoption and deployment of decarbonized technologies.
Critical Actions to Decarbonize: The Playbook
Last December, UVA’s Darden School of Business, Miller Center for Public Affairs and Environmental Institute convened 25 leaders from the private and public sectors in the UVA Rotunda to discuss ways in which global decarbonization could be accelerated toward a net-zero goal by 2050. Government and private sector representatives from the energy, transportation, agriculture, industrial and building sectors worked collectively to identify the top five actions to move the needle on climate change, summarized in The Decarbonization Playbook.
The five actions were featured in the Darden Ideas to Action piece “5 Difficult but Feasible Steps to Reverse the Climate Crisis.”
- Modernizing the electrical grid
- Reforming electricity permitting
- Reforming agriculture
- Promoting a circular economy
- Establishing a price on carbon
UVA alumni who attended the Summit offered their thoughts on priorities, based on the state of their industries.
Adopt Carbon Pricing to Incentivize ‘Hard to Decarbonize’ Industrial Sectors
Carbon pricing, either in the form of a carbon tax or a cap-and-trade system, has long been considered the single most effective tool to incentivize decarbonization. Policymakers around the world are recognizing the effectiveness of carbon pricing for moving the needle on climate change. According to the World Bank, more than 70 carbon pricing initiatives are in play. In the U.S., there are a handful of initiatives on the East and West coasts, but pushing through any form of national carbon regulation has been politically challenging.
Arsalan Ahmed (MBA ’13), who works on mergers and acquisitions for Ecovyst, a chemical services firm, thinks that setting a price on carbon is the most significant of the five priorities. This is especially true in the industrials sector, in which processes to make steel, cement and chemicals are challenged by the significant amounts of energy and carbon-rich raw materials needed to manufacture products. Carbon capture and storage (CCS) will be critical to decarbonizing these industries, and a price on carbon is necessary to motivate businesses to adopt CCS.
“As a company, we want to unload heavy carbon footprint businesses — either fix them or get rid of them — and it’s a sentiment shared across the entire chemical industry.” He said the U.S., the world’s largest economy and a frontrunner in energy transition work, is lagging behind Europe in establishing a price on carbon and feels that doing so is critical to drive demand for carbon-capture technology.
Treat GHG Emissions as a Business Risk in Property Development
What if GHG emissions were treated as a business risk? One of the five actions identified during the Summit was based on the idea that GHGs should be handled as company liabilities. Including emissions on the balance sheet would lead to them being more accurately tracked and hopefully reduced throughout the supply chain.
Lizzy Belair (MBA ’23), who works for federal property developer FD Stonewater, agrees with Ahmed that establishing a price on carbon is a top priority. She believes it is necessary to catalyze change in real estate development. “If the carbon footprint of a building were part of the cost of development, it would become financially advantageous to build a net-zero carbon building,” she noted.
Developers tend to build on low-cost land, typically green field parcels off highways. However, if the developer were tagged with the full carbon costs of the project — including emissions from any new traffic generated from the finished product — the economics would change. Infill and urban redevelopment projects would become more economically attractive, Belair says.
With carbon as a line item, companies could track the emissions tied to extraction, manufacturing, transport, construction and disposal of building materials. This is known in the industry as “embodied carbon,” and it makes up an astounding 11 percent of building global GHG emissions.3
Focus on Labor Practices to Reform Agriculture
Industrialized farming practices have reduced topsoil by 40 percent. Agriculture companies and farmers face the reality of needing to increase food production while shifting mindset to regenerative farming practices that retain and build up soils, not deplete them. For this reason, reforming agricultural policy was one of the Summit’s five recommendations.
When we talk about farming, the reality is that 90 percent of farmers are small operations. Lisa Manley (UVA ’87 and ’93), vice president of sustainability for Mars Inc., acknowledges that agricultural reform looms large. She leads the food and pet care conglomerate’s global human rights practice which focuses on issues such as poverty, child labor and gender discrimination. “If you look at the climate contribution of agriculture, it consumes 70 percent of the world’s water and produces 30 percent of global greenhouse emissions,” Manley noted. For small-hold farmers to be able to focus on climate-smart agricultural practices such as rotational grazing and cover crops, they need living incomes — the net income required for a household in a particular part of the world to afford a decent standard of living for all members.
Manley believes that change occurs at the intersection of issues — for example, where labor practices meet water stewardship efforts. This is why she found the Summit powerful: a day of professionals from disparate fields engaged in cross-disciplinary conversation. “We were able to get into the meat of many topics, see new angles and think about what needs to be done to drive action and have impact,” Manley said.
The Time for Policy Innovation Is Now
Mitigating climate change will require coordinated, multistakeholder action across critical industry sectors. The U.N. conference provides an opportunity for country leaders to strategize coordinated action on a global scale. At COP28, instead of lofty goals and targets, they need to focus on the details. They need to adopt a sector-based approach that recognizes some sectors will be harder to decarbonize than others.
For some sectors, we have seen substantial progress on decarbonized solutions, and what is needed is clever policies to nudge adoption globally. For others, we need policy innovations to put incentives in place to motivate changes in behavior, including adopting carbon capture and storage. For still others, we should focus on “moon shots” in which there is investment in basic and applied science to innovate solutions that are market viable.
Ultimately, we need commitments from countries to invest in policies to push for innovations and technologies that can accelerate decarbonization across industry sectors.
Espousing lofty goals and targets may feel good, but time is of the essence. We need a detailed action plan and policy innovations on how to decarbonize all sectors.
This article was developed with the support of Darden's Batten Institute. Lenox and Duff co-authored the book The Decarbonization Imperative: Transforming the Global Economy by 2050.