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Carbon Neutral could be new normal

As we discussed in the other article, we think that 2020 was the year to raise our awareness on climate change. There are several reasons why we do think so. First, two Asian largest economies, China and Japan, announced that each country would aim to achieve carbon neutrality by 2060 and 2050, respectively. Actually, China is the country emits carbon dioxide most so that the incident was more than an announcement. In other words, we feel that carbon neutrality is not our ideal but our mandate. Second, not only regions (e.g. California) but also many developed countries (e.g. Japan) set new limitations on sales of new combustion engine vehicles, and new policies had a huge effect on business landscape. Third, many automotive companies such as Bentley shared new strategy including their electrification planning. The companies not only react to national policies but also try to shape our society better and more sustainable with their intentions. Thus, we guess that they consider carbon neutrality one of important factors to improve the globe.

Renewable energy is essential to realize carbon neutrality

Based on the report of Agora Energiewende, EU’s renewable energy overtook fossil fuel energy for the first time in 2020. As we know, renewable energy emits less carbon dioxide than fossil fuel energy does so that a fundamental question is how to increase the ratio of renewable energy. The cost of renewable energy generation is still a big issue, and the cost of fossil fuels is cheaper and attractive for many countries such as Poland and Hungary. However, as we discussed above, the fact that carbon neutrality is not our ideal but our mandate would have an impact on even these countries.

According to the report, the ratio of renewable energy in EU is 38% in 2020, on the other hand, that of fossil fuel is 37%. We can say this is the remarkable moment, but the continent aims to reach 55% greenhouse gas reduction by 2030 and climate neutrality by 2050. Therefore, there is still gap between the targets and the reality.

To reach 2030’s goal that is reduction of greenhouse gas emissions by 55%, EU countries have to increase wind and solar energy generation three times as much as they do now. It seems the target is unrealistic, but countries are forced to make it happen. Therefore, in business perspectives, we can find opportunities to enter new markets, to invest in new products and services and to find new partners.

In summary, European Union is not the right track to achieve carbon neutrality by 2050, but it is not unrealistic but ambitious target. Thus, we can expect that countries will take more initiatives and companies find more opportunities.