Partnerships to shape the net zero transition
Cooperation is gaining momentum to bring industrial emissions to net-zero, not only in order to fund technological advancements, but also to diffuse these technologies and exchange knowledge between the private and public sectors. Countries and companies are increasingly working together to set up policy frameworks and incentives. Collaboration is a basic element to achieve the unprecedented goal of becoming a carbon neutral society by 2050. In my opinion the only way forward is to collaborate, bring together value chains and unlock their potentials by becoming sustainable economies.
Private Public Partnerships (PPP)
Although PPP’s have so far been used more in traditional fields such as the construction of infrastructure projects, this form of financing can certainly strengthen the transition from a linear to a circular economy. Before the financial and economic crisis, the PPP’s market was experiencing a sharp increase in volume, but since 2008 the number of new PPP’s projects has decreased considerably. In the 2014-2020 multi-annual financial framework the Commission has given increased consideration to the more intensive leverage of public funds with private funds.
PPP’s had fallen out of favour in Europe. It is therefore worth reviewing PPP mechanisms to better understand their advantages and disadvantages. Specific standards aiming for improved transparency regarding partnership structuring, as well as stronger measurement criteria, should be developed to improve knowledge sharing and good practice. PPP’s are more practical for countries that have robust demand, and are complemented by strong institutions and governance, protection of investments, and dispute resolution mechanisms.
It seems that the design of public-private partnerships (PPP’s) and the ability to leverage public-private investments will make or break green industrial policy efforts. To begin with, the High-Level Panel of the European Decarbonisation Pathways Initiative calls for public-private partnerships in its first and forth priorities for industries; it promotes the use of PPP’s to focus R&D efforts and to enable risk sharing for investments for demonstration of innovative technologies. Done well, PPP’s can incentivize private investment to accelerate sustainable green infrastructure, lead to efficiency gains, provide attractive returns, and enable.
In previous blogs we have touched upon private-public partnerships that are very successful in strengthening the collaboration of all actors and engaging with more stakeholders along the value chains, such as, the Circular Bio-based Europe (CBE).
Partnerships within the supply chain and cross-sectorial
Companies are partnering up in making greener products from green energy. More often, in our social media feeds, we are coming across announcements about strategic partnerships to further advance companies shared net zero ambitions. Through the collaboration, companies will work together on opportunities to reduce carbon emissions in their sector and contribute to the development of a sustainable industry. Most companies carbon footprint lies in their value chain (from raw materials and the emissions from transporting ingredients to factories and then getting finished products to customers). Deciding what type of ingredients, materials, and manufacturing processes a product contains and goes through is an opportunity to collaborate with suppliers and customers to reduce carbon footprint.
International cooperation
Recent years have also seen the development of a much-needed international collaboration to catalyse industry transition. Countries and companies are increasingly working together to set up policy frameworks and incentives. An example of this is the Leadership Group for Industry Transition (LeadIT), a collaborative initiative which gathers countries and companies that aim to achieve net-zero carbon emissions by 2050.
Does the net zero transition mean the end of isolated companies pursuing benefits and the fiercely competition between companies from the same sector as we traditionally have known it? These new partnerships are opening up a new era of collaboration schemes, where more established are venturing with start-ups to grow and reinvent themselves, or traditionally competitors are now teaming up to advance technologies that will benefit the entire value chain. Competition simply is evolving, as businesses must make bolder moves.
“Growth-conscious executives should see these sustainability-driven shifts in value as a call to play offense. Pivoting their strategy to embrace this moment, first movers are gaining the upper hand by using low-cost green financing to build out carbon-free production capacity and fill big, recurring orders for scarce commodities such as green steel or recycled plastics. Risk won’t disappear, of course, but leaders in the net-zero transition will be those companies that recognize new possibilities for value creation and make credible efforts to pursue them.”
