Decarbonization: Managing Energy Transition Complexity

As the energy transition enters a more demanding phase, the direction of travel is clear, but delivering decarbonization at scale requires more than ambitious targets and promising technologies. Projects must become commercially viable, companies must translate commitments into credible transition plans, and policymakers and investors must navigate the tensions between climate objectives, energy security, industrial competitiveness and affordability. 

These challenges shaped the discussions of the ‘decarbonization” vertical thematic at Green Summit 2026, where industry leaders, financial institutions, sustainability experts and policymakers explored what it will take to move from transition ambition to measurable progress. Across sessions covering sustainable aviation fuel (SAF), batteries, carbon capture and hydrogen, corporate transition planning, coal phase-out and electrification, a common message emerged: there is no single pathway to decarbonization. Progress depends on making difficult choices, mobilizing capital, building enabling infrastructure and managing the risks of a changing energy system. 

Moderated by Antoine Trieux, Head of New Energies - Low-Carbon Energies at Natixis CIB, the first session within the decarbonization theme brought together Laura Silva Paruta,  Head of Technology & Process, Technip; Nick Terrell, Executive Director, Carbon Catalyst;  Guillaume De Smedt, Deputy VP Sustainability, Air Liquide; and, Philippe Chain, Co-Founder, Senior Strategic Advisor, Verkor, to examine the barriers to scaling sustainable aviation fuel, batteries, carbon capture and storage, and low-carbon hydrogen.

It quickly became apparent that technological progress alone is not enough: deployment also depends on dependable demand, viable economics, coordinated infrastructure, and policies that give investors confidence. For Europe, these challenges are tied to a further priority: building competitive and resilient industrial supply chains.

A common obstacle across technologies is securing long-term buyers. Here, offtake agreements can provide revenue visibility and help projects attract financing, particularly where production costs remain high. This is especially important for SAF, which currently carries a significant cost premium over conventional jet fuel. Its scale-up also depends on the availability and sustainability of feedstocks. Established HEFA production is constrained by supplies of waste fats and oils; e-fuels require substantial renewable electricity and hydrogen, as well as a suitable source of biogenic carbon dioxide; and ethanol-to-jet raises questions about agricultural feedstock competition and land use.

The technologies are also connected through shared infrastructure and energy needs. Hydrogen production by electrolysis depends heavily on access to affordable renewable electricity and on electrolyzer costs and performance. CCS can support emissions reductions in hard-to-abate industries and may complement emerging hydrogen value chains. But the economics of carbon capture vary by application and location, while transport and storage infrastructure can affect project costs. As a result, coordinated investment across production, energy and infrastructure is important.

Batteries illustrate the wider challenge of establishing a competitive European industry. European ambitions face competition from Asian manufacturers with established expertise, production capacity and supply chains. Closing the gap will require sustained investment, skills, sufficient scale, and credible demand, as well as a stable policy environment. Then, there is also the broader question of how Europe can balance open international supply chains with support for domestic industrial capacity.

Public funding and other support can help first-of-a-kind projects reach commercial deployment and attract private capital. Over time, support should enable durable business models rather than sustain projects that cannot deliver lasting emissions reductions. Predictable regulation, carbon pricing and credible demand signals can help investors assess projects; frequent or poorly calibrated policy changes may add uncertainty. For SAF, regulatory frameworks treating European production and lower-cost imports equally could potentially weaken incentives to invest in domestic capacity.

Through the discussion, it was clear that technologies should not be treated as interchangeable or judged solely by announced projects. Each faces distinct constraints and requires a tailored combination of demand creation, financing, infrastructure and policy. Europe’s task is both to accelerate decarbonization and to develop industrial value chains capable of supporting it.

The transition must also translate into deliverable strategies at company level. For corporate leaders, the challenge is to reduce emissions without undermining financial resilience or long-term competitiveness.

The panel “Mission Credible – Director’s Guide: Immersive Simulation on Corporate Transition Plans” explored this challenge through the premise of an Extraordinary General Meeting for Industrial Co, a fictional industrial manufacturer of steel, cement, and building products. Their original decarbonization commitments had become increasingly difficult to deliver.

Facilitated by Hugo van Mol of Debate Mate, playing the role of Cole Furness, the company’s Head of Corporate Communications the exercise brought together perspectives from consulting, ratings, climate strategy and stakeholder engagement. Gautier Dulac and Aymeric Monnot, Project Leaders at BCG, helped frame the strategic choices facing the company. Marie Fischer-Sabatie, Senior Vice President at Moody’s Ratings, brought a credit perspective, while Aliette Hueber, Energy and Climate Consultant at I CARE by BearingPoint, considered the climate credibility of the proposed plan. Robert White, Global Head of ESG for Financial Sponsors & EMEA ESG Market Solutions at Natixis CIB, played the role of Marc Mason, the fictional company’s chief executive.

The company’s original strategy set a target of reducing emissions intensity by 30% by 2030 and reaching net zero by 2050. But as the scenario developed, the gap between ambition and implementation became increasingly apparent. The pace of technological development, the cost of capital, the premium associated with lower-carbon alternatives and the practical difficulty of transforming industrial operations all complicated the original plan.

The simulation demonstrated why targets alone do not constitute a credible transition strategy. Companies need to show how they intend to achieve their goals, which investments are required, what assumptions underpin their pathway and how they will respond if technologies or markets evolve differently than expected. A plan can appear ambitious on paper while remaining vulnerable to operational, financial and execution risks.

The revised strategy took a more pragmatic approach. It placed greater emphasis on near-term energy efficiency, supply-chain security, targeted partnerships, and pilot CCS projects. It also considered physical climate risks and opportunities to develop lower-carbon products. The revised plan did not remove the company’s long-term ambition; it sought to make the route towards it more credible and adaptable, even if the 2030 targets were reduced.

The exercise also highlighted that a transition plan must withstand scrutiny from different stakeholders. From a climate perspective, the question is whether the proposed measures are likely to deliver meaningful emissions reductions. From a financial perspective, the question is whether the company can fund the transition while maintaining resilience and access to capital. From an investor perspective, credibility depends on governance, milestones, transparency and evidence that management is prepared to make difficult decisions.

Moody’s analysis illustrated the potential tension between transition investment and credit quality. Spending on decarbonization can put pressure on financial metrics, particularly when returns are uncertain or costs arrive well before benefits. However, the company’s diversified business, an increased liquidity buffer, and a willingness to adjust dividend distributions helped demonstrate how financial resilience could support a more credible transition.

The climate assessment also improved as the strategy became more specific. Under the Climate Contribution Framework assessment used in the exercise; the company’s score rose from 33% to 59%. The scenario concluded with 70% of shareholders supporting the revised plan, illustrating how a clearer connection between climate objectives, business realities and implementation can strengthen stakeholder confidence.

Robert White, as CEO Marc Mason, captured the central dilemma: “The strategic choice is not between a perfect or an imperfect transition, but rather about managing and balancing different forms of risk.”

The opening plenary and Mission Credible session highlighted an important distinction between retaining global climate ambition and ensuring that corporate commitments remain credible. In the plenary debate, ~90% of participants voted to retain the 1.5°C goal. At Industrial Co’s fictional EGM, 70% of shareholders supported the revised transition plan, despite ICARE’s climate contribution framework assessment finding that its revised interim targets were no longer 1.5°C-aligned but instead aligned with ‘below 2°C’. Support for the revised plan was therefore not a vote to abandon the overarching goal, but an illustration of how a more credible delivery pathway can strengthen stakeholder confidence even when interim ambition is reduced.

These are also questions the Natixis Green and Sustainable Hub is receiving from clients: when underlying assumptions have materially changed, how can companies credibly restate their climate commitments, and can greater transparency and stronger delivery plans build confidence even if headline ambition falls? The lesson for corporate leaders is not to lower ambition whenever delivery becomes difficult. It is to connect ambition with a credible sequence of actions, transparent assumptions and clear accountability. Effective transition plans must be financially viable, operationally grounded and capable of adapting as technologies, regulation and markets change.

Geopolitical tensions have reinforced the economic case for reducing dependence on imported fossil fuels. Electrification offers a way to cut this exposure while improving energy efficiency and creating opportunities for industrial growth.

Through the panel “What’s at Stake: Electrification as a Geopolitical Shield”, moderated by Thatyanne Gasparotto, Head of Green & Sustainable Hub Americas at Natixis CIB, experts from the energy, industrial and financial sectors examined how electrification could reduce economic vulnerabilities. Michael Liebreich, CEO of Liebreich Associates and founder of Bloomberg New Energy Finance, challenged conventional ways of measuring energy dependence. Théo Wittersheim, Research Engineer on Energy Exposure at The Shift Project, presented the case for examining the fossil-fuel content of Europe’s wider economic exposure. Jose Barale, Chairman and Founder of Alubar, brought the discussion to the infrastructure needed to transmit electricity at scale.

Traditional measures of energy consumption can obscure how much useful energy reaches end users. Combustion engines and conventional heating systems lose substantial amounts of energy, whereas electric vehicles and heat pumps can deliver the same services with considerably less energy input. Electrification can therefore reduce overall energy requirements even as electricity demand rises. Looking only at aggregate energy figures risks missing this distinction between the energy consumed and the useful service delivered.

Beyond direct imports of oil and gas, Europe’s exposure also includes fossil fuels embedded in imported goods and services. Théo Wittersheim’s analysis put the fossil-fuel share of European energy exposure at 74%, underscoring the scale of the challenge. Reducing this exposure requires more than changing suppliers: it involves improving efficiency, electrifying end uses and reconsidering how goods are produced and transported.

The panel distinguished between the continuing flow of fossil fuels and the materials used to build electrified infrastructure. Oil and gas must be supplied continuously, leaving importing economies exposed to price shocks and disruption. Materials such as lithium and copper are instead incorporated into durable assets, although their extraction and processing create new supply-chain dependencies. These dependencies still need to be managed through diversification, recycling, efficiency and, where feasible, domestic production.

Michael Liebreich cautioned against equating energy security with complete self-sufficiency. Restricting access to imported technologies, including batteries, may raise costs and slow deployment without necessarily creating competitive domestic industries. Building resilience is more likely to require strategic investment, stronger industrial capabilities and managed interdependence than an attempt to eliminate all foreign supply.

Electrification, however, depends on the grid. Jose Barale described how Brazil has expanded its transmission network through competitive auctions and build-operate-transfer structures. The government identifies the regions requiring infrastructure, while competitive bidding helps determine who builds and operates the lines. This model has supported the connection of generation in the north and northeast with demand centres in the southeast, illustrating how stable regulation and finance can help deliver large infrastructure projects.

The Brazilian experience also highlighted the importance of transmission in a power system with a high share of renewable and low-carbon generation. Hydropower, wind and solar resources are not always located near major centers of demand, so the ability to move electricity over long distances is essential. Aluminium plays a key role in overhead transmission conductors, while copper is widely used in distribution. Advanced aluminium alloys and conductors can increase capacity, although adoption depends on cost, utility requirements and the practical challenges of upgrading existing networks.

The scale of the grid challenge is substantial. Ageing infrastructure needs to be modernized at the same time as new generation, electric vehicles, heat pumps and digital infrastructure increase demand. The panel also considered how digital tools, including artificial intelligence for predictive maintenance, could help operators make better use of existing assets. New construction will remain necessary, but improving the performance of networks already in place can also contribute to affordability and resilience.

The discussion recognized that flexible fossil-fuel generation may sometimes help integrate more renewables, provided it is genuinely used as a transition measure rather than a justification for long-term lock-in. That requires clear rules allowing plants to operate flexibly, control of upstream methane emissions and careful consideration of the infrastructure being built. The climate case depends on the alternative being displaced and on actual operating patterns, not simply on the fuel’s designation as lower carbon than coal.

Electrification could reshape the economics of energy networks – electricity demand in Europe could grow by 3–5% annually as transport, heating and industry electrify, even while total primary energy demand declines. If charging, heating and industrial loads can be shifted to periods of lower demand, the system may accommodate more consumption without proportionate increases in peak capacity. Greater electricity use can then spread fixed network costs across a wider base, supporting affordability as well as decarbonization.

Electrification is not just a technology switch, but an industrial and infrastructure strategy that can reduce exposure to fossil-fuel price shocks. But only if grids, supply chains and market rules evolve alongside demand. It also requires a global perspective: the most cost-effective emissions reductions may not always occur within Europe’s borders, making international value chains and cooperation important to the transition.

The discussion on coal phase-out examined one of the most difficult questions in the energy transition: how to reduce emissions from existing high-carbon assets when energy security, affordability and the availability of alternatives constrain the pace of change. 

Coal remains deeply embedded in several power systems, particularly where it supports reliable electricity supply or domestic energy security. Bringing forward retirement dates can reduce cumulative emissions, but doing so may also create financial losses for asset owners, raise electricity costs, or increase reliance on other sources of energy. The challenge is therefore not simply to announce a phase-out date, but to establish a credible pathway that delivers real emissions reductions while maintaining a reliable supply of power. 

Amaury de Balincourt, Climate, Environment and Sustainable Finance Expert at Natixis CIB, helped frame the financing and transition challenges. Patrice Cochelin, Head of Sustainable Finance Methodology and Analytical Governance at S&P Global Ratings, brought a perspective on how financial institutions can assess transition credibility. David Elzinga, Principal Energy Specialist and Power and Industry Lead at the Asian Development Bank, contributed the development and energy-system perspective. Atsuko Kajiwara, Managing Director at Deloitte Tohmatsu LLC, and Jason Mortimer, Head of Sustainable Investment – Fixed Income at Nomura, added perspectives on transition strategy and investment. Yasuaki Yoneyama, Director of the GX Acceleration Agency, brought the discussion into the context of Japan’s green transformation strategy. 

Japan illustrates the complexity of balancing decarbonization with energy security. The consequences of the Fukushima disaster, the country’s dependence on imported energy, and the need to maintain a stable electricity supply all shape its choices. Transition strategies must account for the realities of the existing power mix, the availability of replacement capacity and the time required to develop new infrastructure. 

The discussion underlined that early retirement is not automatically equivalent to an effective transition. If a coal plant closes but its output is replaced by another high-emitting source, the climate benefit may be smaller than anticipated. Conversely, extending the life of a coal asset without a credible plan for reducing its emissions can lock in high-carbon infrastructure and delay investment in cleaner alternatives. 

This makes the assessment of transition finance particularly important. Investors and lenders need to look beyond a company’s stated ambitions to examine its overall strategy, the emissions profile and remaining life of its assets, the feasibility of its replacement capacity and the expected impact on real-world emissions. Financing should support a measurable transition rather than supporting carbon-intensive activities that are presented as sustainable without actualy delivering meaningful improvements . 

Carbon capture, utilization and storage (CCUS) was part of the broader discussion about potential routes for managing emissions from hard-to-abate activities. Such technologies may have a role in specific circumstances, but their contribution depends on practical questions: whether capture rates are sufficient, whether transport and storage infrastructure is available, how costs are allocated and whether the technology reduces emissions across the relevant system. It cannot be treated as a substitute for assessing the need to reduce unabated coal use. 

The question of who bears the cost of early retirement is equally significant. Asset owners may face stranded investments, workers and communities may depend on existing facilities, and consumers may be exposed to higher prices if replacement capacity is expensive or delayed. Public policy, development finance and private capital may each have a role in distributing these costs and enabling a managed transition. 

The panel’s broader message was that credible transition finance must be judged by outcomes, not only labels. It should account for lifecycle emissions, the wider energy system and the risk of carbon lock-in, while recognizing the constraints faced by individual countries. A successful coal phase-out requires coordinated planning for replacement generation, networks, affordability and reliability. Without these elements, a commitment to retiring assets may be politically difficult to sustain or may fail to deliver the expected climate benefits. 

The panels approached decarbonization from different perspectives, but together they highlighted the conditions needed to move from ambition to implementation. 

First, ambition must be matched by implementation. Whether the subject is SAF, hydrogen, batteries or corporate transition plans, progress depends on turning long-term objectives into investable projects, credible milestones and operational decisions. Announcements matter less than evidence that projects can be delivered and emissions reduced. 

Second, policy and finance must create the conditions for scale. Capital-intensive technologies need predictable frameworks, dependable demand and infrastructure that allows projects to operate competitively. Public support can help bridge early-stage barriers, but it works best when aligned with clear outcomes and durable business models.

Third, the transition must be managed as a system. The deployment of clean fuels, hydrogen and carbon capture depends on energy supplies, transport networks and industrial customers. Coal retirement depends on replacement capacity and reliable grids. Electrification depends on transmission, distribution and flexible demand. Decisions made in one part of the system can accelerate, or undermine, progress elsewhere. 

Finally, decarbonization must account for competing risks. Energy security, affordability, industrial competitiveness, credit quality and climate objectives cannot be considered in isolation. A credible strategy recognizes trade-offs, makes them transparent and establishes how they will be managed. That does not mean accepting delay as inevitable; it means designing pathways that can withstand commercial, political and technological uncertainty. 

The next phase of the transition will be defined less by the number of commitments made than by the quality of the planning and decisions that follow. Progress will require realistic technology pathways, credible corporate plans, robust financing frameworks and sustained investment in infrastructure. Above all, it will require a focus on measurable outcomes: projects built, systems transformed and emissions demonstrably reduced.