Cutting carbon emissions in half in a decade
By Jakob Askou Bøss, Senior Vice President, Corporate Strategy and Stakeholder Relations at Ørsted
The world needs to cut projected carbon emissions in half by 2030 to limit global warming to 1.5°C. The most important task ahead is to replace fossil fuels with green energy.
Fossil fuels cause 75% of global carbon emissions, predominantly in the global energy system. This means 10 years of tough choices for governments, people and companies. But it is doable. A decade ago, we decided to change our company from black to green energy. Earlier this year, Ørsted was named the most sustainable energy company in the world and today, Ørsted is an example of how green business is also good business.
Back in 2006, Ørsted, formerly DONG Energy, was one of the most fossil-intensive utilities in Europe. We operated combined heat and power stations in Denmark, drilled for oil and gas in the North Sea, and sold and distributed power and gas to end customers in Denmark. Our power and heat production were based on coal, oil and natural gas, with less than 15% of renewable energy in our portfolio.
In 2008 we decided to change that. We rescoped our company completely to go all in on green. We did so because of the early but growing societal focus on climate change, which we believed would fundamentally challenge and over time erode our fossil-based business model. At the same time, we could see that continuing our business would harm the planet.
Our rationale for changing to green energy was clear: we could invest in offshore wind farms, which would have a bright future and support the way society was moving, or we could invest in coal-fired power plants, which would be burning coal for 40 to 50 years, experience increasing societal resistance and fundamentally harm the planet.
So, instead of fighting change, we decided to change ourselves. We came to that conclusion by shifting our point of view from inside out to looking at how our business could change to play a positive role in the world. That’s when we decided to go green.
Today, we are a leading global renewable energy company driven by a vision of a world that runs entirely on green energy. We are the global market leader in offshore wind and have installed around one third of the world’s offshore wind capacity. Offshore wind farms built by Ørsted bring clean power to more than 12 million people and avoid 6.3 million metric tons of carbon emissions a year. Since 2006, we have reduced the carbon intensity of our energy generation by 83% and we will reach 98% by 2025, making our power and heat production essentially carbon-free.
GREEN BUSINESS IS GOOD BUSINESS
Committing to green was a risky decision ten years ago when renewable energy generation was much more expensive than conventional power plants. However, we have helped to change that and demonstrated that the business case for transitioning to renewables is strong. Since 2012, we have helped reduce the levelised cost of electricity from offshore wind by more than 60%. It is now cheaper to build and operate offshore wind farms in Europe than new-built power plants running on coal, gas or nuclear.
Likewise, U.S. states are now rapidly increasing their demand for renewable energy. They do not only do so as part of a climate action agenda – they look to renewables because it has become the cheaper energy alternative.
And costs are likely to decline even further as the global build-out rate of offshore wind accelerates. Towards 2025, Ørsted plans to invest more than USD 30 billion in deploying renewable energy at scale.
The upcoming ‘Climate Decade’ will be challenging with tough decisions to be made. But our world desperately needs action. Good news is that it is indeed possible to change from fossil to green energy and cut carbon emissions by 50% or more in ten years. It will, most likely, even be the best business decision too, because it will bring about the innovation and corporate renewal needed for companies that will have to transform their business models to stay competitive in a post-fossil world.
It’s great to see companies proactively working to reduce their carbon emissions by pledging to go 100% renewable, through initiatives such as The Climate Group’s RE100 program.
At Ørsted, we are excited to join Climate Week NYC 2019. This year, to help speed up green action globally, we will invite everyone to take an outside-in look at our common home, planet Earth. We look forward to sharing what we have learned from transforming from black to green energy in the last 10 years – and to sharing our optimism that it is indeed possible to make even the biggest changes in a decade.