Private sector leaders are poised to become a driving force behind the green economy as investors, regulators and customers demand greater sustainability and geopolitical uncertainties rock energy markets. Getty Images
With the United Auto Workers union striking against the three major automakers, the Biden administration is emphasizing that demand for electric vehicles will continue to grow and that U.S. companies must continue to innovate to become more competitive with China.
“The real question is: How do we ensure that we get the industry up to speed to meet the necessary targets to reduce the emissions levels we want to achieve, and how do we ensure that we have the workforce and the market to accept this?” said Michael Regan, 16th administrator of the U.S. Environmental Protection Agency, during the Fortune Global Sustainability virtual forum on Thursday.
Electric vehicle (EV) production has become politicized as both President Biden and former President Donald J. Trump visited Michigan this week, each vying for the support of workers in the state. Trump, the front-runner in the 2024 Republican primary, has attacked electric vehicles as a threat to workers.
The Biden administration disagrees. In April, the EPA proposed new emissions cuts for new cars and trucks by 2032, which could lead to a dramatic increase in the number of electric vehicles sold within a decade. Already, electric vehicle sales in the US have increased from 0.2% of total car sales in 2011 to 4.6% in 2021.
Despite electric vehicle innovations pioneered by American automaker Tesla, China has led the world in electric vehicle production and has enjoyed strong domestic sales while boosting exports to foreign markets, particularly Europe.
Regan says it is the EPA’s responsibility to “design a regulation that provides that certainty so we can capture the market, advance low-carbon technologies, but most importantly meet emissions reduction goals so we can curb the climate crisis.” . That is the goal.”
Industry experts say the auto industry’s growing electric vehicle market is part of the tension between the UAW and General Motors, Ford and Stellantis. But Regan says demand for electric vehicles shows no signs of abating. “The UAW will be a part of the future,” Regan said. “We envision a very strong role for American workers.”
Consumers, investors and regulators are calling on the private sector to invest more in sustainability, especially as concerns about climate change and water and food shortages grow.
“For us, it’s a journey,” said Kim Marotta, global vice president of environmental sustainability at spirits giant Beam Suntory. “We set long-term goals, and the reason they are long-term is because it is a long-term initiative.”
Last year, Beam announced a $400 million expansion of the company’s Booker Noe distillery in Kentucky, an investment that will increase capacity by 50% while reducing greenhouse gas emissions by the same amount. But in 2022, Beam also saw an increase in absolute Scope 3 emissions due to slower decarbonization rates and company growth.
This reflects a global trend: Nations say they want to get serious about reducing carbon emissions, but global emissions continue to rise.
“It’s going to be a slow road for a while until we get some big projects that can move forward,” Marotta said.
Beam Suntory is committed to achieving net-zero carbon emissions across the company’s value chain by 2040.
Tech giant Oracle has committed to powering its global operations with 100% renewable energy by 2025. To achieve this goal, Jon Chorley, chief sustainability officer at Oracle, said: “First and foremost, you have to think about the efficiency of the data center.” Are the servers being used as efficiently as possible? Are you maximizing the use of electricity in terms of computing power?”
Ongoing steps at Oracle include maximizing the efficiency of the company’s data centers, as well as more effectively integrating hardware into cooling systems and switching from carbon-based electricity to renewable energy. In this way, Oracle is “shifting the energy that you have reduced to more and more renewable energy,” Chorley said.
Dow Chemical, which has committed to carbon neutrality by 2050, says it is talking to hundreds of suppliers to ensure carbon reductions are a shared vision for the future. And every year more suppliers disclose and commit to reducing their carbon footprint.
“Our direct engagement with them is to understand how much capital they are investing in decarbonization,” said Andre Argenton, chief sustainability officer and vice president of environment, health and safety at Dow Chemical. “This is how we make strategic decisions with our long-term suppliers.”
However, to continue making real progress, further technological innovations are needed to support carbon reduction. Vinod Khosla, founder and partner at venture capital firm Khosla Ventures, said 12 entrepreneurs will need to invent technological breakthroughs – on the scale of what Tesla founder Elon Musk achieved by shifting the market to electric vehicles – to solve the climate crisis .
“This is a science problem, a technology problem and an engineering problem, it is not a financial problem,” Khosla said. “So it takes a lot of patient capital in the long term. And that’s the hard part.”
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