By Torsten Henzelmann and Martin Hoyer
North America has an enormous thirst for energy – matched by one of the highest levels of emissions per capita of anywhere in the world. In 20212 the United States and Canada alone were responsible for 15 percent of global emissions. But the region is making significant progress along the path to decarbonization. If it can now increase the speed of this progress, the region can potentially act as a role model for the rest of the world. These were the overall conclusions of the second North America Energy Talks, where Roland Berger was knowledge partner.
"To go fast, you go alone. To go far, you go together. To go really fast, you go together in alignment. It is all about collaboration."
The latest in the Energy Talks, a series of conferences focused on different geographical regions, brought together industry, political and society leaders from around the world to tackle the increasingly serious challenges in the field of energy. During the conference, participants were asked about the importance of a set of key "energy priorities" and what progress had been achieved towards the energy transition so far. Based on their responses, Energy Talks knowledge partner Roland Berger calculates that North America scores 34 percent in the Energy Transition Readiness Index (see below), one of the highest of any global region. Moreover, North America successfully cut its emissions by 18 percent between 2005 and 2021. Yet, per capita emissions in North America remain relatively high and must fall further still to be sustainable.
Participants in each session at the Energy Talks completed a short survey on the session's topic. The Energy Transition Readiness Index is calculated based on responses from up to 100 respondents in each session. Participants were asked for their expert opinion on the respective importance and progress achieved so far on each of 11 energy priorities, from "driving exit strategies for coal" to a "just energy transition". The final overall perceived readiness score as regards the energy transition towards net zero in North America is 34 percent.
During the Energy Talks, we asked participants how they thought their region was doing overall on decarbonization . Perceptions were not too far out of line with the reality: The experts estimated that the region had cut emissions by 22 percent since 2005, while the actual figure was 18 percent – in any case a remarkable achievement compared to other regions around the globe. Looking ahead to 2030, conference participants' expectations were ambitious: They estimated that emissions levels would be 46 percent below their 2005 level in 2030. Given that emissions fell by 18 percent in the decade and a half between 2005 and 2021, it is highly optimistic to believe that a reduction twice that size will be possible in the years remaining to 2030.
Overall, conference participants considered all 11 energy priority to have at least some impact on achieving climate goals. They placed particular emphasis on energy priorities affecting the electricity sector – exit strategies for coal, accelerating the use of renewables , and implementing energy storage solutions . In the past, the focus has been on decarbonizing specific sectors without examining the impact on other sectors. Now, an overarching framework is needed, such as that created by emission markets.
According to the participants, current progress on achieving the energy priorities is uneven. Progress is good in the area of power generation, but even here there is room for further improvement. A number of blind spots also came to light – areas that participants expect to have a high impact but which are currently showing slow progress, such as the establishment of emission markets, and also sector coupling (the electrification of end-user sectors).
According to the conference participants, what is now needed is much stronger local and global collaboration – a key enabler for driving exit strategies for coal, accelerating renewables systems and creating emission markets. They call for more private-public partnerships, and partnerships between suppliers and customers. A stable regulatory framework is also viewed as essential.
Participants added that innovations will be necessary in order to sustain emission reductions while continuing to grow economies. Funding, too, is important for all energy priorities, from investment programs under the Build Back Better Act to "resilience investments" to address severe weather and pollution.
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