By Ashish Bhadola
Decarbonization and carbon neutrality are no more just buzzwords, and there is unlikely to be a soul who is not concerned with the global warming situation today. On last check, when global average temperatures were two degrees warmer, sea levels were about six meters higher, increasing the risk of sinking for cities and even countries, displacing more than 300 million people worldwide. Right now, a fundamental tenet of controlling global warming is decarbonization. Numerous utilities, oil and gas companies, and manufacturing companies have committed hundreds of billions of dollars of investment towards decarbonization initiatives, opening exciting revenue growth opportunities for companies assisting them in these initiatives.
While the developed markets have leaped, the emerging markets will hold the key towards decarbonization because they need financing and technological intervention. Our analysis points at 8-10 markets. However, China, India, Indonesia, Malaysia, and Brazil, are among the top five markets which score high in our benchmarking from a decarbonization standpoint. On digging deeper, one finds that oil and gas power generation companies and some manufacturing-related industries such as cement manufacturing, steel, metals, and mining are all key markets that need to be decarbonized. Close to 50 to 60% of overall decarbonization in these markets emanates from these high-process complex industries.
In emerging markets such as India and China, we see a lot of focus being placed on renewable energy integration and decarbonizing the transport and industrial sector. The approach is different if we look at how different sectors are being decarbonized. Concerning the oil & gas sector in particular, material efficiency, technology performance, electrification, and hydrogen, are the top four or five categories that need to be tackled first. If we drill deep into specific value chain elements, such as exploration, drilling, production, separation, and transportation, all need different kinds of technology interventions. For example, technologies such as drones, AUVs, remote sensing, etc. are being used in exploration. Likewise, for drilling, there are technologies around manless rigs, hybrid rigs, automated flaring, LIDARs, etc.
New technologies throw massive opportunities for a variety of different players, which are enabling the decarbonization journey. The industrial automation market in the digital oil field space is expected to grow from $15 billion to $20 billion in the next five-odd years, with APAC being the most significant market. Another interesting technology for hard-to-abate sectors is Carbon Capture, Utilization and Storage (CCUS). The Global CCU market is expected to grow at a CAGR of 23% between 2022-30; ~56 new CCUS plants will add a new carbon capture capacity of ~225 MMT by 2030, with North America and Europe leading a significant portion of this growth trajectory. Much focus is also being laid on the transportation segment where EVs, hydrogen intervention, blockchain for supply chain management is also being discussed.
Power is another significant sector where many technology interventions are happening at a value chain level. We are talking about renewable energy-based power generation, which is quite significant in the Chinese and Indian markets. Geothermal is again in focus, with the market reaching close to billion dollars in 2026; solar and wind-related, decentralized energy generation (DEG) will penetrate deep in markets with limited or no energy access and manage demand-side fluctuations.
There is also a dire need to modernize aging transmission and distribution systems. International Energy Agency (IEA) predicts an investment of ~9 trillion in the electricity T&D sector between 2016-40. Upgrading present-day grids to smart grids, power electronics usage, and super-conductive equipment application will play an essential role in modernizing conventional grids. Some technologies are expected to play a critical role, such as, SCADA (supervisory control and data acquisition), flexible AC transmission systems and devices, smart transformers, smart grids, and microgrids. Likewise, from an end-user perspective, technology such as smart meters, smart systems to monitor energy consumption, heat pumps, etc., will have great potential from a decarbonization standpoint in the power industry.
Achieving Paris Agreement goals will need consolidated efforts from industry leaders, the scientific community, governments, and investors. The journey towards carbon neutrality starts with knowing your emissions, the ability to quantify them, and then finally applying cost-effective technologies to mitigate them. Promising technologies will need additional proof-of-concept to take them toward mass commercialization, something that we have witnessed in the case of solar, wind, or battery storage. All efforts will need to be supplemented by a conducive environment by the governments, for end-users find value in using them.
(The author is Energy and Environment Lead with MarketsandMarkets™. Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.)