Business leaders overwhelmingly back electrification
A new report has found that there is global consensus around electrification of business operations, with 90% of companies now saying that they support the shift.
A new poll of business leaders across 18 countries, entitled ‘Powering Up: Business Perspectives on Electrification’, reveals that nine in ten businesses now expect to be largely electrified by 2035, with 73% expecting to reach this goal as early as 2030[i]. The researchers say this highlights growing business demand for clean electrification as a strategy for energy security, competitiveness and tackling climate change.
The research, which was commissioned by E3G, We Mean Business Coalition, and the Global Renewables Alliance, was conducted in April amid geopolitical tensions in the Middle East, including the closure of the Strait of Hormuz. The study found overwhelming support for a rapid transition to electrified economies powered predominantly by renewables, with 78% of respondents saying that they believe their country would be better protected from shortages and price shocks if it used more electric systems.
With the current Middle East crisis marking the second major energy shock in just four years, businesses are focused on reducing exposure to volatile fossil fuel supplies, the researchers say. As a result, 91% of respondents expect electrification to improve their energy security. Similarly, almost eight in ten business leaders say geopolitical instability has made electrification more urgent. Further, 61% expect geopolitical instability to increase their own energy costs, with 88% saying that switching to a renewables-based electricity system would help stabilise energy prices during times of instability.
The research also highlights a strong perceived link between electrification and competitiveness. The vast majority (88%) of respondents say electrification is likely to make their business more competitive, with 84% saying it would reduce long-term operating costs.
Maria Mendiluce, CEO, We Mean Business Coalition suggests that the study points to a shift in the global economic landscape: “Businesses are increasingly seeing electrification as the foundation of future competitiveness, energy security and economic resilience. At a time of geopolitical instability and fossil fuel volatility, companies are not retreating from the transition – they are moving faster toward it.”[ii]
Government policy failing to keep pace
However, the study identifies a major bottleneck: government policy is not keeping pace with business requirements. More than two thirds (72%) of business leaders said that government policies are moving too slowly on electrification, with 62% indicating they would move their operations if their government did not offer enough support.
Expanding and future-proofing electricity grids ranked as the top policy measure businesses say would help them accelerate electrification, with 89% supporting electricity grid upgrades. More than half of businesses (54%) cite insufficient grid capacity as a barrier to electrification, and 69% say businesses are electrifying faster than governments are preparing power systems for.
More broadly, survey participants highlighted a range of policy barriers relating to electrification, with the top five being: insufficient government incentives or support; insufficient government investment in grid upgrades; policy instability when governments change; delays or unpredictability in permitting processes; carbon pricing/taxation uncertainty.
To address these challenges, business leaders identified the following top five solutions: expanding and future-proofing electricity grids, government grants and subsidies to reduce upfront costs, clear long-term government planning and timelines, lower electricity prices and faster grid connection and planning approvals.
Bruce Douglas, CEO, Global Renewables Alliance says: “Businesses know which way the wind is blowing. This polling highlights that their competitiveness depends on how fast they can electrify with renewable energy. It is no surprise to see their top request to governments is to build and modernise grids facilitating access to cheap, secure electricity.”[iii]
References
[i] PoweringUpBusiness_Global_Report_Final.pdf
[iii] Ibid
