Energy is both the engine of the modern global economy and one of the biggest drivers of our sustainability challenges, including climate change. Providing access to affordable sources of energy will be critical to alleviating poverty and ensuring peace and prosperity for the 9 billion people expected to inhabit Earth in 2050. However, if we don’t find ways to address the negative sustainability impacts of our energy sources—including many of the newer technologies, from unconventional fossil fuels to fuels and technologies that specialize in reducing carbon—these benefits will be undermined.
This week, BSR released the first working paper from our Future of Fuels initiative, which brings together critical players from the corporate, NGO, and public sectors in a series of facilitated dialogues, supported by research, designed to:
Develop a credible and holistic framework for understanding the total life-cycle impacts—social, economic, and environmental—of different fossil-based transportation fuels.
- Develop a shared perspective on how these impacts, as well as the costs and availability of these fuels, are likely to change over time.
- Based on the above, create a common roadmap for industry players and partners to promote more sustainable transportation fuels and supply chains.
The objective of our “Sustainability Impacts of Fuels” paper is to assess what is known about the impacts of different transportation fuels in the context of their market outlook or current and projected viability as large-scale solutions. Importantly, we offer a full life-cycle framework for understanding and addressing the total sustainability impacts of transportation fuels, summarized in the figure below.
Sustainability Impacts of Current Fuels
Below are some key findings of this first paper, which is based on an extensive review of publicly available literature and interviews with experts (see report for full list of sources):
What We Do (And Don’t) Know About Fuel Impacts
The first theme in our findings concerns the need to dramatically improve our understanding of the complex, interconnected sustainability impacts of fuels. Fuel use is responsible for some of the greatest sustainability impacts companies face, and yet there remains a significant lack of knowledge about what these impacts are. Specifically:
- Our knowledge of the total sustainability impacts of fuels has numerous gaps. Some impacts are relatively well-understood, such as the comparative life-cycle greenhouse gas emissions of different oil feedstocks. Other impacts are not understood at all or are disputed, such as the relative socioeconomic impacts of large-scale energy projects in different regions.
- It is critical that issues be addressed at a systemic level in order to avoid unintended consequences or promotion of solutions that will fail to have the desired large-scale impact. All fuels have multiple sustainability impacts, which in turn are linked to other impacts. Understanding this complex total system is critical to creating durable and scalable solutions that don’t simply replace one set of problems with another.
- Addressing systemic issues requires a long-term perspective that is often at odds with the short-term requirements of business and politics. Companies need to develop an approach to fuel sustainability that involves “planning for the long term urgently,” which means finding ways to act now—due to long lead times for change—and creating the funding and decision-making mechanisms needed to enable long-term investments.
Future Uncertain: The Market Outlook for Fuels
Our second theme considers the future outlook for different fuels. There is great uncertainty with respect to the possible development paths of almost all fuels. However, there are certain physical and economic realities that we can use to establish expectations and support sensible investments for sustainability. Specifically:
- Advanced technologies are taking off but still require major investments and policy support to become commercially significant. This transition will involve substantial efforts and costs that will be borne by a combination of public- and private-sector incentives and policies over an extended time period. Recognizing that significant time will be required for advanced fuel technologies to have major commercial impact, companies should promote the commercialization of these technologies now as part of their broader fuel sustainability portfolio.
- Oil will remain a driving force. There are many different scenarios for the future energy mix, yet almost all conclude that we will continue to rely on fossil fuels for a large share of our energy needs for at least the next 20 to 40 years. In North America, the viability of unconventional resources may slow the transition to lower-carbon fuel sources due to economic and security-of-supply objectives.
- The greatest certainty is enhanced diversification. While there is a range of outlooks about the share of various specific fuels in the future, all agree that we face a long period of transition, and that the energy mix will become increasingly diverse. Companies that want to advance fuel sustainability should focus on increasing the benefits and reducing the negative impacts of all sources, rather than searching for a “silver bullet” solution.
First Look: What Can Be Done to Advance Fuel Sustainability?
Our final theme, which concerns the potential pathways to improve the sustainability of transportation fuels, can be summarized as follows: A greater focus on broad collaborative solutions will be needed to support the transition to more sustainable fuels. Specifically:
- Scaling up efficiency and best practices in production and consumption is a top shared opportunity area. For all of the divergent views of fuels sustainability, there is a notable consensus around the idea that energy efficiency and best production practices represent a win-win for all. There is a large amount of work to be done through collaborative arrangements that promote the best technologies and techniques for fuel use and production.
- Value chain transparency and collaboration is an area of high innovation potential. Currently, some of the most inspiring analogs for fuel sustainability can be found in the supply chain sustainability efforts in manufacturing industries, where companies develop transparency and capacity-building systems together. We need to bring these approaches to the fuels industry and value chain.
- Business and government will need to work together more creatively to develop effective long-term energy policy. Significant changes to current energy outlooks will require a combination of new public policies and major leadership efforts that go far beyond individual company decisions related to the production and procurement of individual transportation fuels.
The next stage of the Future of Fuels initiative will focus on understanding how companies can use the information and frameworks developed in this first paper to promote better fuel choices.
In the meantime, we welcome your comments on the work we have done to date, as well as your ideas and participation in the path forward.
Article by Eric Olson, Senior Vice President, Advisory Services, BSR, appearing courtesy 3BL Media.