Investing early in low-carbon technology is better for business than investing later

• Investing early in decarbonisation can generate financial benefits

• Investment and maintenance costs will be more favourable for next five years

• Government stimulus and ongoing technological developments are bringing decarbonisation within reach

Decarbonisation is a strategic opportunity for businesses

In the Netherlands, the transition to low- or zero-carbon operations, also known as decarbonisation, is in full swing. That said, most sectors of the economy still have a lot of decarbonisation to achieve before their processes and activities are in line with the 2030 carbon reduction goals. Research by ABN AMRO’s Group Economics department shows that Dutch companies that choose to invest sooner rather than later in low-carbon technology boost their operating margins and increase their competitiveness – in addition to contributing to meeting climate objectives. The full report, titled It pays to invest in low-carbon technology, was published today. In particular, the research shows it is financially more favourable to invest before 2029, when both investment and maintenance costs are likely to be lower than in 2030 and after. International studies also confirm that companies with consistent sustainability measures can achieve higher operating margins.

The technology is available right now

A range of decarbonisation technologies are already available, such as electrification, energy efficiency measures and renewable energies. There are new technologies in the pipeline that are expected to hit the market between 2025 and 2050, but their number is still relatively low. The extension of the emissions trade system in 2027 will encourage almost all Dutch companies to reduce their carbon emissions. A survey among ABN AMRO’s clients reveals various motives for not investing – or not yet – in decarbonisation. For two in five companies, a lack of sufficient know-how and/or funds is keeping them from making such investments. Another obstacle that companies perceive is electricity grid congestion. But ABN AMRO believes that new forms of collaboration between businesses could offer quick solutions to free up grid capacity. As soon as grid congestion eases, demand for low-carbon technologies, especially those involving electrification, will soar. And so will their price tags. This provides further reason to invest in these technologies sooner rather than later, and to keep a close eye on net congestion trends in the region.

Stagnation and even worsening of various Dutch sectors

To meet the European Green Deal’s objective of climate neutrality in 2050, many sectors still need to undertake action on the climate on a large scale. Indeed, greenhouse gas (GHG) emission levels have remained unchanged or even risen in seven sectors: air transport, construction, business services, agriculture, government & healthcare and textile & clothing. Of these, air transport is the biggest negative outlier, with an 8% increase in GHG emissions. Meanwhile, the pace of reduction is worryingly slow in the industrial sector, and most notably for oil, food and chemicals companies. Decarbonisation is often complex in these industries, with considerable differences between them when it comes to achieving the best possible result.

Government and innovation can be drivers

Besides stricter government regulation and investment in energy infrastructure, innovation also plays a key role in decarbonisation. Further development of existing technologies like hydrogen, carbon capture and electrification is increasingly bringing them within reach. On the other hand, some low-carbon technologies are still in their infancy. “For many companies, bringing decarbonisation investments forward can be beneficial. Financially, it’s more favourable to make these investments in the near future than in the medium term,” says Casper Burgering, Senior Economist Sustainability Research in ABN AMRO’s Group Economics department. “Achieving climate goals ultimately hinges on a few factors, like the affordability of the transition, reliable infrastructure, sufficient grid capacity, and financial stimulus of demand for green solutions. Companies that decarbonise now strengthen their market position and increase their attractiveness to both investors and customers.”

Focus on climate goals at ABN AMRO Decarbonisation Summit

For years now, ABN AMRO has been engaging with its clients about ways to achieve the 2030 climate goals. The bank helps clients navigate their transition to sustainable operations. With this in mind, ABN AMRO is organising the second edition of its Decarbonisation Summit on 5 February 2025, during the ABN AMRO Open tennis tournament in Ahoy Rotterdam. At the summit, the bank will share its views on the challenges that society, the economy and its clients face, and on possible solutions. The aim of the event is to inspire ABN AMRO’s clients in their efforts to tackle and solve decarbonisation issues.