Pathways to Paris: the transformation tool for a climate-neutral Germany

Your expert for questions

Johannes Erhard
Net Zero Expert at PwC Germany
Tel.: +49 89 5790-7120
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PwC tool assists you on your path to net zero

The Paris Agreement states that global warming should be limited to well-below two degrees Celsius. Efforts should also be made to limit warming to the more stringent target of 1.5 degrees. However, this objective can only be achieved by immediately and comprehensively decarbonizing the economy. In addition to nation states, companies around the world are now being called upon to drive the required transformation forward. The financial markets are also playing a vital role here because investors, banks, insurance undertakings and pension providers are increasingly considering corporate mitigation measures and transition planning in their decisions on capital allocation.

Still, in many companies uncertainties persist with regard to the transition pathways of their operating sectors. Major, often unanswered questions are: (How) can companies reduce greenhouse gas emissions in line with their sectoral decarbonization requirements? How economical will the necessary measures be? What is the most cost-efficient abatement plan? This makes it challenging to develop business transformation plans for achieving a climate-neutral Germany by 2045.

A tool from PwC Germany assists companies in drawing up their transformation plans for climate neutrality by 2050 – from renewable energy to specific key technologies for reducing greenhouse gas emissions across various industries. Financial sector specialists and industry experts can also use the tool to analyze transformation pathways and requirements together with their financial implications.

The tool makes it possible to examine the costs and effects of major reduction measures and to compare the resulting emissions pathway against the target pathway of the respective sector.

Users thus obtain an indicative roadmap that meets the minimum requirements of the Paris climate objectives and clearly presents cost implications and needs for investment. The web-based tool is free-of-charge and does not store any data.

Transformation requires clear pathways forward

A reliable tool based on practice 

The transformation tool has been developed by climate and industry experts at PwC Germany and WWF Germany as part of the “Pathways to Paris” project. It is available for ten sectors within the German economy. 

The assumptions and requirements underlying the tool were validated in a series of 30 workshops with over 80 actors from the real economy, the financial sector and academia. 

The sector-specific transition pathways of the scenario “Towards a Climate-Neutral Germany by 2045” serve as the basis for the tool. This scenario was developed by Prognos, the Oeko-Institut and the Wuppertal Institute (2021) on behalf of the Climate Neutrality Foundation, Agora Energiewende and Agora Verkehrswende. It describes the sector-specific transformations that are necessary to achieve the objective of a climate-neutral Germany by 2045 while adhering to the minimum requirements of the Paris Climate Agreement.

“In order to achieve climate neutrality by 2045, companies need a clear pathway to transformation and investors require reliable methods for assessing the progress of the transformation process. Our tool addresses this pressing market demand”.

Dr. Nicole Röttmer, Global Climate Clients and Industry Lead, PwC Germany

Ten sectors – ten target pathways towards net zero

Road freight

Key technologies for emission reduction

  • Battery-electric drive
  • Hydrogen drive
  • Catenary trucks

Main drivers of investment

  • New drive technologies

Residential real estate

Key technologies for reducing emissions

  • Heat pumps

  • Regeneratively produced district heating

  • Renovation and modernization

Main drivers of investment

  • Investment costs for heat pumps

  • Investment costs for district heating

Commercial real estate

Key technologies for reducing emissions

  • Heat pumps

  • Regeneratively produced district heating

  • Renovation and modernization

Main drivers of investment

  • Investment costs for heat pumps

  • Investment costs for district heating

Electricity generation

Key technologies for reducing emissions

  • Onshore wind energy
  • Offshore wind energy
  • Photovoltaics

Main drivers of investment

  • Expansion of regenerative energy capacities

 

Steel production

Key technologies for reducing emissions

  • Direct reduction using green hydrogen
  • Electric arc production route

Main drivers of investment

  • Investment in new production routes

Cement production

Key technologies for reducing emissions

  • CCS (carbon capture & storage)

  • Use of alternative binders

  • Regenerative heat sources

Main drivers of investment

  • CO2 capture and infrastructure

  • Conversion of furnaces into alternative heat sources

Livestock farming – dairy sector

Key technologies for reducing emissions

  • Regional, nitrogen-optimized feed

  • Pasture grazing

  • Using slurry for energy

  • Covering of manure storage facilities

Main drivers of investment

  • Conversion of husbandry systems

  • Conversion of slurry management systems

  • Fodder changeover

High Value Chemicals

Key technologies for reducing emissions

  • Electrification or conversion of steam crackers to biogenic resources (e.g. synthetic naphtha)

Main drivers of investment

  • Conversion of steam crackers

Ammonia production

Key technologies for reducing emissions

  • Using biogenic resources (biogas/biodiesel) or switching to electrolysis for the production processes of steam reforming and partial oxidation

Main drivers of investment

  • Conversion of plants

Automotive industry

Key technologies for reducing emissions

  • Battery electric vehicles

Main drivers of investment

  • Alternative engine systems

  • Production changeover

“With the Pathways to Paris transformation tool, companies from across ten sectors gain a practical instrument for charting out paths towards climate neutrality and for understanding the cost implications of climate action in detail.”

Johannes Erhard, Net Zero Expert at PwC Germany

Final overview

In order to drive climate action forward effectively and achieve the objective of climate neutrality by 2045, companies need two things: First, they need a reduction pathway that is compatible with the Paris Climate Agreement as well as cost-efficient measures for pursuing it.

At the same time, international investors need reliable methods for assessing companies based on their transformation performance. This is essential so that they can manage the immense investments required in a targeted manner. 

With the Pathways to Paris transformation tool, PwC Germany and WWF Germany have cooperated to develop a web-based, free-of-charge tool that addresses this need and thus contributes towards climate neutrality in Germany.

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Dr Nicole Röttmer

Dr Nicole Röttmer

Global Climate Clients and Industry Lead, PwC Germany

Tel: +49 40 6378-1191

Johannes Erhard

Johannes Erhard

Net Zero Expert, PwC Germany

Tel: +49 89 5790-7120

Prof Dr Jürgen Peterseim

Prof Dr Jürgen Peterseim

Net Zero Expert, PwC Germany

Tel: +49 30 2636-5409

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