Sustainable energy choices - part 1: The need for relevant data and a life cycle view
Featuring Nicole Zethelius, Rich Hampshire and Peter Warren
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Energy and utilities companies increasingly recognize that environmental sustainability is both a business imperative and competitive differentiator. In this two-part episode of our Energy Transition Talks podcast series, CGI experts Nicole Zethelius, Rich Hampshire and Peter Warren discuss the need for relevant and actionable data to advance the energy transition. This article provides a summary of the discussion. Listen to part two of this podcast.
With a long-term focus on improving operational efficiency, energy companies and utilities often reduced environmental impacts as well. But today, there is a pressing demand for them to push forward their environmental, social and governance (ESG) agendas. In the 2021 CGI Voice of Our Clients findings, 70% of oil, gas and utilities executives feel strongly that sustainability is core to their ability to create value for customers.
Making informed energy choices with relevant data
The energy and utilities sector is an essential piece of a highly complex sustainability puzzle. One challenge is that definitions and terms differ significantly across cultures and geographies. Nicole notes that overcoming this challenge requires a "clear common denominator of information for consumers and businesses on the best practices and best solutions around energy." Measurable, quantifiable, qualitative and quantitative information is needed to assess the entire life cycle of energy sources to make informed decisions about sustainability.
Rather than viewing an energy source simply as "green" or "not green," Nicole suggests the focus be on gauging how mature and prepared the energy type is to meet future fundamental shifts in society or the environment. "We need newer and different types of data to assess [an energy source] and look at it from a much longer-term perspective," she says.
Using greater automation and intelligence in the new energy system
"Data underpins a lot of the decisions that need to be taken," agrees Rich. Decarbonization initiatives across industries primarily are focused on electrification or replacing fossil fuels. This puts immense pressure on the electricity and gas sectors to be at the vanguard of the energy transition, he adds.
In addition, growing use of electric vehicles, heat pumps and other “behind-the-meter” energy sources such as solar panels in homes and businesses, fundamentally alters the way the energy system functions. Ensuring consumers and businesses to continue to enjoy reliable power requires greater visibility into the energy system. "This comes from access to data. It comes from a much more intelligent infrastructure, the ability to collect that data, to analyze that data, and make meaningful decisions," says Rich.
"I see an absolute role for technology and digital technology to help automate some of those processes in the same way we've adopted smartphones into our lives over the last 15 years or so," says Rich. The types of automation and intelligence that are now an everyday part of life, thanks to smartphones, will become increasingly important in the energy system as well, he adds.
Stay tuned for part 2 of this episode which focuses on the importance of transparent and traceable ESG data for accountability, auditability and trust in the market.
All those factors. We'll get into some of those in a bit, including around data and other components.
And my friend Rich from the UK. How are you, sir?
Very good. Thank you, Peter. I’m Richard Hampshire based out of our UK and Australia operation, primarily working with our utilities clients on the energy transition, as we progress through that, and how it's going to affect their need for digital solutions and greater use of data. Historically, I’ve worked for one of our clients, particularly in energy retail, but by academic background, I'm a power engineer.
Chapter 2: Trends in sustainability in energy and utilities
Very good. Thank you. As we are building these different podcasts, we obviously have a bit of a dress rehearsal. We went through this, and the question was how are we going to talk about utilities and sustainability and what's going on, as it's actually happening in real-time and moving along. In our prep session, we thought we'd have five minutes of material, and we talked for an hour. So, we'll try and be concise today.
What we sort of landed on is that energy and utility companies have been actually driving towards sustainability. In our Voice of Our Clients survey of last year, utilities were number one, and oil and gas was number three by industry, of having this as a concern as they want to drive their business. I would argue that, because they've been driving efficiency for years, doing things that took out cost, or reduced the number of trips something had to make, they've been actually driving towards sustainability. Sustainability's probably been core to them for a long time.
Chapter 3: Importance of using data to prove sustainability
Nicole, how do you see that moving forward as we go into the more formal Scopes 1 (direct GHG emissions), 2 (electricity indirect GHG emissions) and 3 (other indirect GHG emissions) of sustainability?
We're looking at the trends in terms of sustainability, and we look at hard to abate sectors. Energy happens to be one of those. What we need to be able to do is utilize data to prove just how sustainable that is—what it means to be sustainable, whether it's relevant in one region or another region. We do see that the definition and terminology around sustainability differs so greatly between cultural ideologies and geographical location.
We need to be able to provide a clear, common denominator of information to consumers and to businesses on what is the best practice and best solutions around energy. This is one of the main goals, in the end, looking at the density of usage and the transition to using electricity more abundantly than before. Utilities is an essential component to the puzzle and the complexity around sustainability.
We do need to have this measurable, quantifiable, qualitative and quantitative information around just what is the difference between green hydrogen and blue hydrogen. What is the difference between solar energy sources or wind power? Really, to look at the whole entire life cycle assessment so that the decisions that are made today are informed decisions, whether that's by a household or a business.
Chapter 4: Assessing sustainability maturity
It's kind of cool. Your point about measurable is an interesting one. It’s that, not only do they need to change, but they need to know where they are today. They have to do a bit of an assessment of their situation today so that the mix of how they are doing, if they're doing a lot of things—let's say through energy production for electricity, through hydroelectric, some solar or some wind, maybe they still have some coal, maybe they still have some natural gas, or have to have it just to do some load balancing and nuclear. All of those things have different factors, would you agree, and different scores on greenness? I don't know how you would reference it in ESG.
We look at it from a maturity perspective. If you are to actually do it the proper way, instead of just looking at it, whether green or not green, I think it's on a scale of just how mature and prepared that type of electricity or power is compatible with future fundamental shifts in society or in the environment, and how they can handle change. So, sustainability really deals with that preparedness, that readiness, and that maturity around it. Even if we look at, for instance, solar energy and wind energy, they are fairly new sources of energy. We need to keep that into consideration when we are buying into renewables, that this whole decision-making process needs to be really brought to light.
We need to use newer and different types of data to assess it and look at it from a much longer-term perspective, because we don't want to be in a situation where we are today, where it was a level of good intention to transition from burning wood, for instance, to using gasoline. And now, we are in a situation where we want to move away from gasoline, or move away from other sources that we use too much of, so that we can balance out the sheets of resource utilization. This is where it boils down to. What kind of information do we need to be able to measure that?
Chapter 5: Greater visibility requires access to data
Thanks. And, Rich, what's your thought on that? You have a long history of working for utilities, working in the industry. You've seen the shift from data, I know you're a fan of open data, as well within the UK market. How do you see all of this moving forward? Not just for what we traditionally did with that data, but as we move into ESG.
I think data underpins a lot of the decisions that need to be taken. But, from a utilities perspective, why are utilities taking this so seriously? Particularly, Nicole highlighted electricity and hydrogen. I'm much taken with a statistic from 2020, that 73% of all greenhouse gas emissions come or arise from the consumption of energy, and that's from the World Resources Institute (WRI). If you break that out, 17.5% of those emissions are the energy used in buildings. 11.9% is road transport. So, if we look at that, approximately 30% of energy use in buildings and road transport combined, contributes to global greenhouse gas emissions. (See WRI website for the latest figures.)
So, if we start to think about what other sectors are doing to reduce emissions, to address climate change, they're looking to decarbonize largely through electrification or the replacement of natural gas or oil. If we think about that, there's great pressure on the electricity and gas sectors to decarbonize and to be at the vanguard of that. Now, if we start to think about how they're achieving that, then it is a shift away from conventional oil, coal, gas generation, even away from nuclear generation, although that's obviously low carbon, towards renewables, towards wind, towards solar.
It's also a change on the demand side as well, as we adopt more electric vehicles, as we potentially heat our homes using heat pumps and other electric means, as we start to adopt solar panels actually behind the meter in our homes and businesses. If we look at that from a strategic level, in terms of the way the electricity system particularly operates, then it's changing fundamentally the dynamics of that system.
If you're going to continue to operate that system, and for all of us to continue to benefit from and enjoy the levels of reliability that we get today, then much greater visibility of the system is going to be required. Where does that come from? It comes from access to data. It comes from a much more intelligent infrastructure, the ability to collect that data, to analyze that data, and make meaningful decisions.
Then, for us as consumers, as energy users, how many of us actually think about that? I think it's safe to say most of us will walk into a room, throw a light switch, and we just expect it to work. Indeed, the success of the sector is that we have that expectation. We've come to take it for granted.
So, do I see, us as individuals, being actively involved in taking those decisions? That's potentially quite hard. But I see an absolute role for technology, and digital technology, to help automate some of those processes in the same way that we've adopted smartphones into our lives over the last 15 years, or so. We now walk around with something in our pocket that basically tells us where we need to be, gives us access to the internet, helps us make decisions around how we move around, what trains we get on the morning, what time to get to the railway station. That sort of automation, that sort of intelligence, is increasingly going to become important in the energy system.
Well, thank you very much everybody. This concludes part 1 of our 2 parts on energy and sustainability. Thank you very much and we’ll see you in the second half.
Head of Sustainability & ESG Strategy and Practice
Nicole Zethelius heads CGI’s sustainability and ESG (environment, social and governance) strategy and practice. In her role, Nicole helps clients identify and adopt effective sustainability initiatives using strategy, ESG due diligence, and the right technological solutions.
Vice-President, Global Industry Lead, Energy & Utilities
Sustainable energy choices - part 2: Tracking and tracing relevant data