Lighting a Path Forward in Energy Independence Day 2024

Industry : Research    

What Energy Independence Day Means for Industries

The World Energy Independence Day is commemorated on July 10^th to highlight the significance of energy diversification, renewable energy sources and technological advancements in environmentally friendly solutions. A transition towards the circular economy will provide a pathway for a more resilient energy ecosystem.

Besides, there are a few dynamics that have made energy independence second to none for advanced and emerging economies:

• Energy security

• Economic stability

• Technological innovation

• Combating Climate Change

Promotion of sustainable practices with investments in EV batteries, ocean freight and plant-based packaging solutions could gain an uptick. While clean energy may grapple with headwinds, including high costs, increased borrowing costs and supply chain disruptions, investments in the environmentally friendly portfolio will continue to soar. For instance, in May 2024, Hapag-Lloyd joined forces with IKEA to minimize emissions from its container shipments originating from Asia. IKEA expects CO2 emission reduction of approximately 100,000 tons from March 2024 to February 2025.

Adoption of sustainable energy sources and raising awareness about the significance of energy independence will illuminate the potential of ocean freight, EV and packaging industries.

Realm of the EV Batteries

A tectonic shift in mobility advocates for EV batteries and charging stations. The need to reduce the impact of climate change through the electrification of transportation and the broader transition to cleaner energy sources has become prevalent. According to an IEA 2023 estimate, the global demand for EV batteries increased by 65% in 2022.

Industry experts in 2023 claimed that within the next seven years, many companies are contemplating reducing the carbon footprint of battery manufacturing by almost 90%. However, this significantly requires massive changes in the supply chain. The usage of low-carbon power and circular materials are the most efficient decarbonization levers.

Moreover, major OEMs, almost 13 out of 15 companies, announced between 2022 and 2023 that they planned to ban ICE vehicles sooner to achieve new emission reduction targets. EU’s regulatory “Fit for 55” program in addition to net-zero emission targets/guidelines also further boosts the demand for the category.

Momentum Shift towards EV Charging Connectors

IEA expects around 17 million electric car sales by the end of 2024, suggesting the charging point infrastructure needs to be developed in line with EV sales. The increasing demand for charging stations reflects a shift towards cleaner and sustainable transportation solutions. Besides, the need for quick charging connectors has increased significantly across the globe due to the rising popularity of EVs.

Bullish government policies have been shot in the arm to drive the world towards a pollution-free environment. The European government is aggressively pushing for the development of public EV charging stations to comply with the Alternative Fuels Infrastructure Regulation (AFIR). The presence of public charging points is becoming more important to facilitate the adoption of EVs on a larger scale.

The U.S.’s “NEVI Formula Program” and EU’s “Regulation for the Deployment of Alternative Fuels Infrastructure” provide favorable policies and additional investment for expanding charging station infrastructure.

Sustainability Hold Prominence in Ocean Freight and Air Freight

The maritime freight sector is taking major steps in exploring several sustainable options for the industry. Ocean freight was responsible for transporting nearly 80% of the global trade volume as of May 2024. In 2023, Forbes estimates noted that a 10% reduction in cruising speed can drop fuel usage by almost 30%. Smart indicators are helping companies to weigh the containers properly to avoid cargo spoilage and damage. Alternative fuels, such as biofuels and hydrogen, are increasingly being adopted by shipping companies to minimize environmental impact.

More than sixty companies operating in the air freight-airlines domain aim to use 10% sustainable aviation fuels by 2030. Freight providers are increasing their investments in sourcing sustainable fuels. For instance, in February 2023, United Airlines announced the launch of a USD 100 million investment fund, named “United Airlines Ventures Sustainable Flight Fund,” for startups developing and researching SAFs.

Flexible Packaging Gains from Plant-based Solutions

Increasing preference for sustainable plant-based packaging solutions to reduce carbon footprint and fuel consumption and the rise of digital printing has become a game-changer in pursuit of energy independence. According to Flexpack-Europe's report in 2022, using flexible packaging solutions for food packaging could reduce the overall carbon footprint of packaging by 40% in the continent of Europe. This is equivalent to less than 1% of all GHG emissions in the EU.

In August 2023, Amcor plc announced the launch of its high-barrier paper packaging in the North American region. As part of its “Amfiber” portfolio, the new recyclable product is known as AmFiber Performance Paper. The product adheres to the Repulpability Standards - curbside recycling, thereby enabling firms to offer consumers more environmentally friendly packaging.

ESG Trends Redefine Facilities Management Services

Increased regulation and an emphasis on ESG have spurred the penetration of building energy management and control solutions. To meet non-negotiable ESG targets and decarbonization agenda and to combat rising energy costs, energy management solutions have become a value proposition in 2024. The increasing number of impact funds and the emergence of new ESG-focused lending practices demonstrate the extent to which ESG now influences M&A procedures and investment parameters in the facilities management sector.

Unfolding Opportunities from Renewables in Natural Gas

With the increasing focus on renewable energy, renewable natural gas (RNG) has gained immense traction. RNGs are expected to be a critical component in meeting clean heat standards as they continue to emerge at the state level. A significant number of companies or producers have recently reduced their oil and gas investments as a result of the clean energy transformation as they move away from fossil fuels steadily.

LDPE Focuses on Recycling

The emergence of bio-based polymers/polyethylene and green LDPE. Consumers and brand owners are becoming more interested in sustainable materials, which is driving up the demand for recycled plastics and polymers. Companies such as LyondellBasell, ExxonMobil and Dow Chemical are using an integrated value chain approach for innovative products and technologies that address the circular economy and renewable issues. These large corporations/manufacturers are trying to decrease scope 1 and scope 2 greenhouse gas emissions while manufacturing LDPE and its copolymers as part of their carbon reduction initiatives.

• In May 2023, Dow Chemical entered into a long-term partnership with New Energy Blue in the North American region. The main aim is to use renewable agriculture waste, such as corn stalks and leaves, to produce bio-based ethylene.

• In June 2023, LyondellBasell partnered with Chevron Philips Chemical and Technip Energies to use Technip's latest e-furnace technology in their olefins and ethylene production process. The novel e-furnace technology is expected to decrease GHG emissions by almost 90%. This will enable manufacturers to utilize renewable electricity in their most energy-intensive portions of the plant.

Suppliers are increasingly focusing on sustainability and recycling initiatives to meet environmental, social and governance (ESG) standards and various other parameters. A few instances of recent supplier developments are:

• In October 2023, LyondellBasell purchased a 50% ownership of Rodepa Vastgoed B.V. The acquiree specializes in recycling plastic waste.

The Road Map

The Global Energy Independence Day holds immense significance as it highlights the potential of energy conservation and renewable energy technologies and addresses energy challenges to pave the way for a cleaner, greener and sustainable world. As the world celebrates this day, emphasizing investments in clean technologies could be a watershed moment for the planet.

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