Considering increasingly ambitious pledges by countries, pressure from society, investors, and clients further up the supply chain, the question for companies is not so much whether to take decarbonisation action, but what action and by when. However, determining an ideal mix of measures to apply ‘decarbonisation efficiency’ requires more than knowledge of technically feasible measures and how to combine them to achieve the most economic outcome: In this paper, the author describes seven aspects which heavily influence the composition of an ‘ideal mix’ that executive leadership needs to take a (strategic) position on. These aspects consider underlying motivations and span across (socio-)economic, technical, regulatory, strategic, corporate culture and environmental factors and further underline the necessity of clarity of definitions. How these decisions influence the determination of the decarbonisation-efficient ideal mix of measures, both in principle but also in terms of specific impact is further explored by providing examples. What choices are taken by German manufacturers in several of the aspects is disclosed by insights from about 850 responses to the ‘Energy Efficiency Index of German Industry’. Knowledge of the status quo, and clarity in definitions, objectives, time frames and scope are key.

Already more than 140 countries consider or have pledged to reach net-zero emission targets by 2050 or earlier and the share of global emissions falling into an emission pricing scheme has steeply increased over the past three years. Even where there are no direct implications for industry (yet), there is a series of subtle pressure points driving an increasing number of companies across the globe to work towards climate neutrality and pledging ambitious emission reduction goals. This article sheds light on the pressure points, the subtle triggers, the underlying considerations as well as the hoped-for benefits for industrial companies from achieving net-zero emissions. The observations and ideas presented in this paper are derived from quantitative data obtained via the Energy Efficiency Index of German Industry (EEI) and qualitative data. Not only societal, work force, supply chain and investor expectations play a large role, but also many strategic considerations which have the potential to make the company more resilient and profitable, particularly in time of crisis. Those companies that do not move towards decarbonisation, on the other hand, may face a costly late-mover disadvantage. This piece uncovers subtle interconnections, helping stakeholders from industry and beyond to grasp opportunities and challenges ahead.

The quickest and easiest way to avoid greenhouse gas (GHG) emissions is to purchase renewable electricity and offset the remaining emissions. However, the industrial sector’s electricity needs already exceed renewable electricity generation. Moreover, electricity accounts for only one third of the industry’s energy needs. Simultaneously, the advance of sectoral coupling and the decarbonisation of industrial processes, as well as the desire to rapidly decrease dependence on fossil fuels, are creating significant additional demand for renewable energy. Neither existing nor planned generation and transmission infrastructure will suffice to meet the expected short-term demand. Based on survey data from the German Industry Energy Efficiency Index, this article therefore examines the share of GHG savings that companies intend to achieve on- and off-site. Understanding how much additional generation and transmission capacity is needed by the industry to decarbonise and by when is crucial to identify and address the extent of excess demand. On average, companies plan to avoid 22 % of their 2019 emissions by 2025 and 27 % by 2030, primarily through on-site measures. In combination with the extrapolation of the entire industry’s needs for off-site capacity, the data calls for a rapid expansion of planning authority and green generation capacities.

From the perspective of manufacturing companies, the political, media and economic discourse on decarbonisation of the recent years manifests itself as an increasing social expectation of action. In Germany in particular, this discourse is also being driven forward by powerful companies, respectively sectors, most notably the automotive industry. Against this background, it was examined how German manufacturing companies react to rising societal pressure and emerging policies. It is examined which measures the companies have taken or plan to take to reduce their footprint, which aspirations are associated with this and by which structural characteristics (company size, energy intensity, sector) these are influenced. A mix methods approach was applied, utilising data gathered from approx. 900 companies in context of the Energy Efficiency Index of German Industry (EEI), along with media research focusing on decarbonisation plans and initiatives announced. We demonstrate that one-size-serves-all approaches are not suitable to decarbonise industry as the situation and ambitions differ considerably depending on size, energy intensity and sector. Even though the level of ambition and urgency is high, particularly micro and energy intensive companies are challenged. The research uncovers a series of questions that call for attention to materialise the ambitions and address the challenges outlined.