One of the unmistakable trends of 2020 and early 2021 has been the growing momentum of companies and countries announcing various “net zero” commitments to address climate change. While ranging in ambition and timing, such commitments have important implications for the industrial environments in which field service takes place. At the same time, innovations in field service have much to offer in enabling the long journey toward net zero. Let’s explore these questions in turn: What is net zero? What does it mean for field service? And how can field service support net zero goals?
What is Net Zero?
The scientific basis for net zero is clear. According to the Intergovernmental Panel on Climate Change (IPCC), limiting global temperature increases to 1.5 degrees—which would avoid many of the severe impacts associated with a 2-degree rise—requires “rapid and far-reaching transitions” in energy, industry, transport, and other sectors. Specifically, global CO2 emissions would have to drop 45 percent below 2010 levels by 2030, and then reach net zero around 2050—implying that any remaining emissions would need to be balanced by removal. In his recent book, How to Avoid a Climate Disaster, Bill Gates emphasizes two numbers: 51 (billion tons of greenhouse gas emissions) and zero (the goal), arguing that achieving net zero will be “the most amazing thing that humanity has done.”
Net zero commitments are, in effect, the company-level or country-level version of aiming for a “net zero” state. Not all goals are equal. Some focus just on carbon while other focus on all greenhouse gases (including, for example, methane from gas flaring). Some companies are looking beyond scope 1 emissions—which come from their assets—to address scope 2 emissions—which come from the electricity they buy—and scope 3 emissions—which come from their suppliers. Microsoft, for example, has committed to becoming “carbon negative”—offsetting more than it emits—and to remove its scope 1 and scope 2 historical emissions by 2050. Recent net zero commitments range from oil and gas majors to China. Larry Fink, of asset manager BlackRock, is pressing CEOs to articulate net-zero targets and strategies, suggesting they risk being dropped from his firm’s portfolio.
What Does Net Zero Mean for Field Service?
Net zero goals, on their own and absent real action, mean little. Only time will tell whose goals are real, and whose are window dressing. The most useful initial indicator is whether these goals are being backed up with quantifiable investments in the energy transition technologies that will be critical to achieving net zero commitments.
“Energy transition” investments are, in fact, now a defined market. Bloomberg New Energy Finance estimates the market at $500B in 2020, roughly doubling since 2013. The largest segment of these investments is renewable energy—onshore wind, solar, and offshore wind. Newer segments include the electrification of heat and transport, battery storage, carbon capture and storage, and hydrogen. Reflecting rapidly growing investor interest, some of these newer areas have been the focus of “climate SPACs” (SPACs, or special purpose acquisition companies, are blank-check funds that can take companies public without an IPO).
At ServiceMax we partner with many service organizations that are already participating in the energy transition market. These typically reflect diversification opportunities: from wind into solar; from solar into solar plus storage; from oilfield service into carbon capture; from gas power into hydrogen. And the broader industry imperatives are unchanged: improve asset performance; reduce equipment costs; reduce operating costs; ensure safety & compliance.
What Can Field Service Do for Net Zero?
But what will change is the intensity of competition between technologies based on “levelized cost of energy,” or LCOE. As transportation, heat, and areas of industry become increasingly electrified (some analysts call it “the electrification of everything”), companies will need to focus even more on lowering the cost of their technology on a cost-per-energy basis (typically expressed as $ or EUR/MWh).
Because the “magic metric” of LCOE reflects a combination of equipment and operating costs, service has an inherently important role to play. Field technician (or engineer) utilization and productivity, and O&M cost reductions, all drive down the numerator. Improved asset uptime and performance, and better product design through service data, in turn, drive up the denominator. And without safety and compliance, there is no equation. Service, as you can see, is central to this equation, and to the energy transition.
But the net zero movement, and accompanying energy transition investments, imply some important changes to which service organizations will need to adapt. All of these revolve around the nature of the asset. We will see more energy assets; more types of assets; more distributed assets; more complex and connected assets; and more complex service processes.
The capabilities of our new Asset 360 for Salesforce product align well with these needs. More energy assets require real-time asset tracking. More types of assets call for asset entitlement visibility. More distributed assets increase the importance of field parts management. More complex and connected assets place a premium on tech enablement & support. And more complex service processes demand process flow management.
While Asset 360 for Salesforce was not designed exclusively with the energy transition in mind, their alignment makes sense. Some of our largest customers are front and center in the transition and play a heavy role in shaping our product roadmap. They understand the importance of asset-centricity and the extent to which an asset-centric focus will differentiate between leader and laggard.