To a large extent, keeping warming below 1.5 ° C requires corresponding substantial and sustained reductions in GHG emissions from energy, as energy production and consumption contributes about 75% of emissions. This would require reducing energy-related emissions to zero by 2050.
First of all, the good news. Going to zero emissions is possible in energy, according to reports from the Energy Transition Commission (
), with the following key points.
Moreover, within energy, some sectors will be easier to decarbon than others, the difference depending largely on the commercial availability of low-carbon technologies. In the first category, the electricity sector is considered to be the most accessible fruit, followed by light transport (eg cars) and construction sectors. The latter category, on the other hand, includes the transport of heavy goods vehicles (eg trucks) and industry (eg steel).
Second, key technologies include renewable energy (RE; p.
). While some of them, like REs, are now commercially ready, others will likely be in the next decade (eg green hydrogen). So, given that the development of these technologies is appropriate, we have a technically feasible path to “net zero”.
Third, building a zero carbon economy by the 2050s will require a dramatic acceleration in the pace of investment over the next 30 years. We would need to increase the capacity for renewable electricity, hydrogen production and CCS 6, 15 and 8 times respectively the current levels. The macroeconomic cost of this huge investment is
, representing barely 1 to 2% of global GDP.
decarbonization will not happen unless countries set clear targets for emissions reduction and deep electrification, with policies to support key technological developments, price carbon, boost energy efficiency and ensure the development of key infrastructure. Coordinated international action is also needed to mobilize the large capital flows needed to finance the rapid development of renewable electricity in developing countries.
Now for the bad news. We’re not even on target on the lowest fruit – the deep decarbonization of the power sector. According to a report from the Climate Policy Initiative (CPI) from December 2020, we are not even on track to meet the previous decarbonization targets set at the Paris COP (Conference of the Parties) 21 in 2015. According to the targets from Paris, we need to peak at around now, and quickly reduce them to zero by 2050.
The point is, we are not reducing the carbon intensity of electricity generation fast enough. That is, we are moving too slowly on both the installation of renewable energy capacity and the dismantling of fossil energy capacity. Due to blocked fossil fuel capacity, overall carbon intensity is actually deteriorating, and the required carbon intensity of new finance will turn negative by 2025.
We must therefore redouble our efforts to withdraw fossil fuel capacity, particularly coal. In many cases, generating electricity from new renewable energy sources is cost effective compared to existing coal-fired electricity generation. We can take these coal-fired plants out earlier than planned and replace them with renewable energy plants. According to a June 2020 Rocky Mountain Institute (RMI) report (bit.ly/3s76YWA), we can save $ 39 billion immediately, with savings rising to $ 141 billion by 2025.
However, phasing out existing coal-fired power plants is not easy, given various considerations regarding costs, system balancing requirements, jobs, and local taxes. The RMI report suggests practical refinancing options to finance the retirement of coal-fired power plants, reinvest in clean energy, and provide bridging funding for workers and local communities. In addition, as a December 2020 report from the Institute for Energy Economics and Financial Analysis (IEEFA) (bit.ly/3iAXSOE) shows, reallocating coal-fired power plants as RE assets may further address issues related to the early withdrawal of coal-fired power stations.
In short, we need to act quickly on the deployment of renewable energy power plants and the retirement of coal power plants. Technology and economics are on our side. We have to make politics work.