Freddie Sarhan is the CEO of Sapphire Technologies and has extensive experience in international business development and operations.
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At a very high level, energy transformation is the process of changing energy from one form to another. While the process may sound technical and specific to the energy sector, it can actually impact business leaders in a variety of industries. As we turn the page to 2022 and start over, it is imperative that leaders take note of the key sustainability trends driving energy transformation this year and beyond.
About 30% of the world’s energy comes from renewable sources. While the year may be young, there is a growing demand to increase that percentage, proving that sustainability is more than a buzzword as leaders around the world take action. Investments in technology are expected to continue to increase. Not only are we making progress in energy transformation, but it is becoming a profitable business and satisfying energy regulators at the same time.
However, before companies put all their sustainability eggs in one basket, there are a few key energy transformation trends to keep in mind.
Reduce carbon emissions
Leaders across industries are beginning to prioritize energy-saving measures like never before in an effort to cut costs and reduce carbon emissions. Looking at this trend from a global standpoint, one of the reasons for the acceleration is due to the implications and disruptions caused by the ongoing war in Ukraine, which has affected energy resources across Europe. As European countries lived through the reality of a war-induced energy crisis, accelerated transition to renewable energy.
Another factor in the conversation about energy transformation and reducing carbon emissions is focused on the idea of ​​the circular economy. At its core, a circular economy focuses on reducing, reusing and recycling from production to consumption. While this concept may seem difficult to achieve, leaders can look to what other countries are doing as a possible blueprint for the energy transition. For example the European Union (EU) recently passed a law specifically aimed at a more circular process for the development of sustainable batteries to support the energy transition.
Embrace policy incentives
It is not only the EU that is making progress with policies on cleaner energy practices. The US announced the Inflation Reduction Act (IRA) last year with hopes of increasing investment and production through renewable energy tax credits, grants, loans and much more. For example, the bill provides small business owners with tax credits to aid the transition to more sustainable energy sources, such as low-cost solar energy.
While the law was announced last year, now is the time when we will see these tax credits rolled out to individuals and businesses. While these incentives are a step in the right direction towards achieving sustainability goals, energy transformation takes time. Currently, American business leaders are quite dependent on fossil fuels. That is not to say that progress is not being made when it comes to the shift to the use of renewable energy sources. Recent research shows that from last year almost 25% of electricity generation in the US came from renewable energy sources.
Harnessing innovation and investment
The green energy market is experiencing strong growth, with a forecast for a impressive prospect in the next seven years. The acceleration of companies and solutions entering the market means new technology and innovation. As cleantech leaders come together to address challenges, progress is also being made when it comes to solutions aimed at generating energy and reducing the overall carbon footprint.
Artificial intelligence (AI) also plays a vital role in companies looking to create energy efficient solutions. See how quantum computing is already being used to develop advanced models to improve processes. While there is still much to learn about tackling the complexities of quantum computing, the opportunities for energy transformation in industries such as automotive and aerospace remain high due to their reliance on traditional practices.
Energy transformation conversations and actions help business leaders achieve clean energy goals. We can still expect energy transformation to be a top priority for industries around the world as we move into 2023. In the US alone, historic steps were taken last year to encourage and incentivize leaders to take steps toward cleaner energy solutions. That is why I believe that sustainability will continue to become more feasible thanks to breakthroughs in technology and innovation. The coming year is a good time for all companies to define their role in the energy transformation.
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