The Cost of Inaction 2024

Decarbonization investments often yield financial benefits Many companies that reduce their carbon emissions benefit from lower spending on fossil energy, a lower risk profile of long-life assets and sometimes stronger market positioning. Levers such as efficiency, renewable power and low-temperature heat electrification are already economical today. As a result, most industries could abate between 10% and 60% of their carbon emissions without additional costs. If (or in regions such as Europe, when) carbon prices climb beyond $110/tCO2e, most companies could economically abate more than half of their current emissions – and some could even reach net zero, as Figure 19 demonstrates.48 This does not mean that decarbonization is not challenging. Companies that have already “picked the low-hanging fruit” often struggle to internally justify much higher spending for long-tail levers. Moreover, companies in emission-intensive industries often have to accept significantly higher costs for implementing immature technologies such as hydrogen or CCUS. Nonetheless, these figures give more reason for optimism than a lot of the conventional wisdom that seems to prevent many companies from accelerating emission reductions more aggressively. Companies could cost-efficiently cut a large share of their emissions FIGURE 19 Cost-efficient scopes 1 & 2 abatement levels at different carbon prices, by industry % of total emissions Additional cost-efficient abatement at $110/tCO2e1 Cost-efficient abatement at $15/tCO2e2 Healthcare Agriculture Automotive FPPP3Ammonia4Steel Cement Retail100% 85% 70% 60% 55% 55%4 50% 25%40% 60% 65%20% 45% 25% 25%35% 15% 10% 10%40% 40%55% 15% 1. $110/tCO2e is based on estimated price of carbon for EU in 2030 . 2. $15/tCO2e is based on estimated lowest price of carbon in 2030 for countries currently with carbon pricing systems implemented. 3. FPPP = forest, pulp, paper & packaging. 4. Dependent on availability of affordable carbon transport options (e.g. pipelines). Sources: BCG’s decarbonization tool, BCG case experience. Most industries could abate between 10% and 60% of their carbon emissions without additional costs. The Cost of Inaction: A CEO Guide to Navigating Climate Risk 30