With strict targets to reduce carbon emissions in a bid to contain rising global temperatures to within 2℃ above pre-industrial levels, the million dollar question is, can these be met?
For our sector the question is much more than academic. For one thing, the energy sector is the largest contributor to global carbon emissions, accounting for about two-thirds of the total, and therefore the one on whose shoulder the biggest burden of responsibility falls.
But also the response is driving the most far reaching changes the sector has seen, impacting industry players and consumers alike.
Well, the good news is that its technically possible for the industry to do its bit, reducing global energy-related emissions by 70% by 2050 and completely by 2060, according to a new study from the International Energy Agency (IEA) and International Renewable Energy Agency (IRENA), Perspectives for the Energy Transition.
And what does that ‘bit’ involve? Quite simply, at a high level, keep installing more and more renewables.
According to the study, currently renewables generation accounts for 24% of global power and 16% of primary energy supply. In order to achieve decarbonisation by 2050, renewables use will need to increase by four times, contributing to 80% of power generation and 65% of total primary energy supply. This is alongside additional energy efficiency measures and other low carbon technologies including nuclear and carbon capture and storage.
In itself, this won’t be sufficient, however. Significant additional policy interventions will be required to ensure the integration of such high levels of renewables and the accommodation of their flexibility needs.
In addition, stronger price signals and carbon pricing would be required to ensure that climate considerations are taken into account in investment decisions.
A notable feature of the transition is that fossil fuels are still needed through 2050, standing at a third of today’s level. Among fossil fuel types, the use of coal would decline the most, but natural gas would continue to play an important role.
Surprisingly perhaps the total investment in energy supply would not need to rise over today’s level to achieve these renewables levels. However, significant additional investment of $29trn would be needed in industry and households for more efficient appliances, building renovations, renewables and electrification.
This amounts to about 0.4% of GDP but according to IRENA the stimulus that could be created, along with other pro-growth policies, is up to 0.8% of GDP.
Further, the new jobs created would more than offset job losses in the fossil fuel industry, while other co-benefits could include lowered air pollution and lowered household energy expenditure.
“Critically, the economic case for the energy transition has never been stronger,” says IRENA Director-General Adnan Z. Amin. Today around the world, new renewable power plants are being built that will generate electricity for less cost than fossil-fuel power plants. And through 2050, the decarbonisation can fuel sustainable economic growth and create more new jobs in renewables.”
According to the study, success in this energy transformation will depend on urgent action, with delays adding to the costs.
Among other notable messages from the study, the transition needs to span end-use sectors in addition to the power sector.
Electric vehicles would need to become the dominant mode of passenger and freight road transport. Renewables deployment would need to move beyond the power sector into heat supply and transportation. And bioenergy supply would need to be a priority.
Further, technology innovation lies at the core of the transition. Near-term, scaled-up research, development, demonstration and deployment spending for technological innovation would help to ensure the availability of crucial technologies and to further bring down their costs.
And additional low carbon technologies that are not yet available to the market at significant scale, such as electric trucks or battery storage, will be required to complement the existing options.
The study also points out that the energy needs of those without access remains a high priority.
In 2015, 32Gt of energy related CO2 were emitted globally. To reach the 2℃ target, the emissions will need to fall continuously to 9.5 Gt by 2050.