“The age of fire is over. Now it’s time for the digital age.”
So says Jean-Pascal Tricoire, CEO of energy and automation firm Schneider Electric, which this week was announced on the Global 100 index as the world’s most sustainable company. Schneider develops systems that manage electricity for businesses and industry, in recent years working with corporations such as Walmart WMT -0.1%, Marriott and Deloitte to improve the energy efficiency of their properties.
Tricoire, who has helmed Schneider since 2006, claims it is companies such as his that will be key to delivering on net zero emissions targets. And, keen to be seen to walk the walk, the firm has committed to accelerating its goal to achieve carbon neutrality by five years, from 2030 to 2025. Investors, for their part, seem convinced: Schneider has seen its share price double over the past two years, and rise inexorably despite the crippling coronavirus pandemic.
Now, with news that the company has ranked #1 for sustainability out of an assessment of over 8,000 listed companies by research firm Corporate Knights, Schneider seems to have demonstrated not that it is simply riding a wave of green enthusiasm, but that it is offering its own vision of what constitutes climate-friendly business.
“We have two competing objectives which are essential,” Tricoire says. “The first one is that everybody gets access to energy, because energy gives you access to a decent life. But at the same time we need to reduce emissions by a factor of two in the next 20 years.”
Perhaps unsurprisingly, Tricoire is something of an electricity evangelist. He likes to remind people that while combustion technology has taken us a long way, it is deeply inefficient. He notes that the internal combustion engine, for example, typically converts 17-21% of the energy stored in gasoline into power at the wheels. “Electric vehicles can get more than 60% of their electrical energy to the wheels. And when that electricity is derived from solar power or wind, carbon emissions are negated almost entirely,” he says.
“The only problem with renewables is intermittency,” Tricoire says, referring to days when there is little wind to turn turbines, or little sun to be captured by solar panels. “But you can really manage your consumption with digital, so you charge your car at times of day when electricity is cheap, green and plentiful.”
Electrifying Everything
Long before decarbonization was a buzzword, Schneider was trying to convince its customers, including large corporations, that they could reap savings through better energy management. In the ostentatious 1980s and 90s, that sort of thing might have sounded tedious to executives looking to accrue buzz around their brand. Nowadays, however, energy efficiency is the hottest ticket in town, and the business of decarbonization is a branding no-brainer: from Microsoft to McDonald’s, the biggest names in business are committing to slashing their emissions. Meanwhile, in the public sector, governments are under pressure to continually upgrade their climate ambitions. For an electrification firm, it’s a good spot to be in.
“Right now, electricity accounts for only 20% of our consumption of energy, but in the next 20 years that will rise to 40%,” Tricoire says. “And the objective is to get savings, efficiency and energy reduction accessible to a much larger number of people in a much shorter amount of time, right?”
“But the challenge is not technology. The problem is human beings. We tend to do things as we are used to doing them.”
Paradoxically, Tricoire notes, while society is slow to adapt, it also has a tendency to be distracted by the new while ignoring old, in-built problems: shiny, big-ticket items like electric cars and wind turbines attract the lion’s share of the attention, while tackling the more complex, less glamorous issue of inefficient housing and offices is something few people want to talk about. Furthermore, big, bold bits of tech offer the comforting, likely misguided impression that the future will deliver us from our present problems.
“The point is we shouldn’t wait for the next big innovation,” he says, “because everything we need does exist: the internet of things; big data; artificial intelligence. All you need is a change of mentality.”
Nowhere is that change of mentality more pressing, Tricoire says, than in society’s approach to the existing built environment, which today consumes some 40% of the energy we use. And cities, overall, produce 70% of man-made carbon emissions.
“The biggest transition will be making sure that buildings can transition to electrification,” he says.
Right now, however, that transition is progressing slowly. Very slowly. Across Europe, buildings are being renovated for efficiency at a rate of just 0.2% each year.
“If we keep going at that rate, using old techniques to retrofit buildings, we’ll be done in about 350 years — which for you and me may be a bit late,” Tricoire notes, drily.
In pursuit of net zero, the EU is pursuing what it calls the “renovation wave,” a continent-wide effort to ramp up energy efficiency renovation of existing buildings, 75% of which are energy inefficient. But that effort is intended to only double the rate of renovations by 2030.
In the U.K., conditions are arguably worse: here, 8.5 million properties are more than 60 years old, and at least 90% of existing buildings will need to be retrofitted in order to meet 2050 net zero emissions targets. The U.K.’s own Business, Energy and Industrial Strategy (BEIS) Committee has repeatedly warned that the country has “no chance” of reaching its net zero emissions target by 2050 without a major change of pace in making buildings energy efficient.
Tricoire’s pitch, then, is that digitization is the quickest way to effect that change. He claims digitization can accelerate the speed of improving building efficiency by a factor of 10, for a fraction of the cost of insulation and double glazing.
“Digital is a fantastic catalyst, because it's the only thing that disrupts the equation of efficiency,” he says. “I think every home should be digitized before it’s insulated. You can save much more energy in much less time, in a much cheaper manner, with a return on investment in three years.”
So what is digitization all about? And do the claims about it stand up to scrutiny?
Digital retrofitting is the process of connecting all the things that use energy in a building so that they are able to communicate with one another. In turn this means they can be controlled automatically or via artificial intelligence, switching off heating, cooling or lighting when rooms aren’t occupied, monitoring temperatures so conditions don’t get uncomfortable, and warning administrators or homeowners when parts need adjustment or maintenance. Such systems can be scaled up or down, from small houses to multi-building complexes, and can nowadays be done wirelessly, meaning the process takes little time and doesn’t require miles of cable or the tearing up of floors or ceilings.
Once that’s done, Tricoire claims, the consumer, whether it’s a family or a business, starts saving energy immediately. “Digitization is like a Fitbit FIT 0.0% for your home,” he says. “Remember, these aren’t theoretical savings, they’re measurable.” Schneider’s sell is that their systems pay themselves off within a few years, whereas insulation and double glazing can take a decade or more to see a return on investment.
Tricoire further believes the advantages of digitization are made more apparent in light of government decarbonization policies: for example, U.K. prime minister Boris Johnson’s pledge to ban gasoline-powered cars in 2030.
“That’s only nine years from now, but the U.K. will make it happen — and it will change everything,” he says. “It will change our homes, because from that point, that’s where you will charge your electric car. The same is true for parking spaces and office buildings.”
The overall point Tricoire is making is that the fabric of the stuff around us will have to fundamentally change in order to accommodate electrification, not least to take advantage of grid flexibility. As reported by Forbes.com, in a decarbonized, decentralized energy system, energy intermittency is balanced by flexible distribution, and that calls for smart grids. On a national scale, smart grids enable two-way communication between energy providers and consumers, balancing supply and demand by taking advantage of the diverse forms of power generation and storage inherent to a modern electricity network.
At the smaller, consumer scale, digitized, smart systems powered by artificial intelligence can likewise take advantage of grid flexibility by, for example, charging EV batteries or running appliances during times of day when electricity is cheaper.
The key to a better way of life, in Tricoire’s way of thinking, is to ensure that all parts of the built environment work together to comprise a more harmonious whole. Schneider calls this “systemic efficiency”: a planning approach that takes into account electrification, low energy usage and circular systems for water and waste. Such a view requires a much longer-term approach than that associated with the here-one-minute, gone-the-next flavor of late-20th/early 21st century capitalism.
Schneider insists the upsides of such an approach are huge: the company claims that a systemic efficiency approach, promoting retrofitting, digitization and circularity, could cut Europe’s emissions by 263 million tons of CO2 per year in 2030. (For reference, the EU emitted some 3.3 billion tons of CO2 in 2019; if emissions were to remain around that level, Schneider’s projected cut comes to just under 8% of total EU emissions.)
“You might change your car every five or ten years, but the decisions we make about buildings and about industry are here to stay,” Tricoire says. “Those decisions can impact carbon emissions, pollution and society for the next 50 years.”
Needless to say, Tricoire is impatient for such changes to be effected more broadly. But he sees the logic of the “digital age” as being irresistible; a no-brainer.
“Look, this is basic physics,” he insists. “The only way to go carbon-free is to get rid of combustion. Every carbon emission is the by-product of combustion.”
But with Schneider’s new title of being the most sustainable corporation, the company will now need to lead by example.
“Shame on us, for not doing the work of socializing this,” Tricoire says. And by “us,” it can be inferred that he’s talking not just about his own company, but about a whole generation. “This needs to happen now. This isn’t the future — it’s today.”
About Schneider Electric
Schneider Electric is leading the Digital Transformation of Energy Management and Automation in Homes, Buildings, Data Centers, Infrastructure and Industries. With global presence in over 100 countries, Schneider is the undisputable leader in Power Management - Medium Voltage, Low Voltage and Secure Power, and in Automation Systems. We provide integrated efficiency solutions, combining energy, automation and software. In our global Ecosystem, we collaborate with the largest Partner, Integrator and Developer Community on our Open Platform to deliver real-time control and operational efficiency. We believe that great people and partners make Schneider a great company and that our commitment to Innovation, Diversity and Sustainability ensures that Life Is On everywhere, for everyone and at every moment.
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