This article was published by The Energy Mix on June 6, 2024.
By Christopher Bonasia
At the halfway point in a climate “make-or-break” decade, global emissions and fossil fuel use must immediately decline to reach net-zero by 2050, allowing more time later for hard-to-decarbonize sectors like aviation, research group BloombergNEF urges in its latest annual energy outlook.
Going by current trends, a global shift to renewable energy sources is inevitable, BNEF says in its New Energy Outlook 2024 report. But quick action and ambitious investment are still needed to keep the world within an adaptable warming limit.
“A net-zero pathway hinges on renewables capacity tripling between now and the end of the decade,” costing just 19 per cent more than a transition that rides solely on the back of market forces, but brings global temperatures to highly destructive levels in 2050.
“Regardless of whether the world heads for net-zero or it ultimately proves a stretch too far, the era of fossil fuels’ dominance is coming to an end,” says BNEF, noting that renewables could still cross a 50 per cent share of electricity generation by 2030 “propelled by economics alone, with no further policy drivers to help.”
The report presents and analyzes two climate scenarios, both of which see energy demand climbing as economic growth continues and living standards rise globally.
The net-zero scenario has renewable energy capacity tripling by 2030 at a cost of US$215 trillion, with global warming limited to 1.75°C—still higher than the 1.5°C Paris agreement target.
Cleaner power generation can drive the emissions cuts needed by 2030, “enabling more time to tackle ‘hard-to-abate’ areas like steelmaking and aviation, where cost-competitive low-carbon solutions have yet to scale,” BNEF writes. But “none of this will be possible without accelerated spending.”
“On the energy supply side, for every dollar that goes to fossil fuels, an average of $3 needs to be invested in low-carbon energy over the remainder of the decade—up from parity today.”
In BNEF’s “economic transition” scenario, climate-influencing sectors like energy and electric vehicles are propelled by market forces alone, though the scenario assumes “a level playing field that allows these solutions to access markets and compete with incumbent technologies”. In other words, the scenario assumes that major oil companies don’t actively lobby against transitioning from fossil fuels while receiving government support, as they do now.
The energy system still shifts off fossil fuels in the economic transition scenario at a cost of $181 trillion, or 19 per cent less than the net-zero transition. Relying purely on market forces would reduce global emissions 27 per cent from current levels by 2050, and still produce half the emissions of a ‘no-transition’ scenario where there is no further progress on decarbonization. Global renewables capacity would more than double from current levels by 2030 and quadruple by 2050.
But while the economic transition scenario “is still slightly better than what governments are currently committed to doing,” it would nevertheless “lead to catastrophic climate impacts” resulting in global temperatures reaching 2.6°C by 2100, says BNEF.
In such a scenario, industrial sectors are unlikely to decarbonize without subsidies as “there are no fully decarbonized production routes for industry that are cheaper than unabated production.” This means that “either subsidies, or some form of carbon pricing, [is] crucial to seeing any emissions reductions in industry based on economics.”
At the country level, Bloomberg says climate pollution from developed countries will fall this decade in the economic transition model, while emissions from developing economies like India, Indonesia, and Vietnam will mostly rise through the late 2030s “as their growing energy needs outpace the speed of clean energy deployment in the short term.” China’s emissions begin falling in 2024, a result of the country’s massive push to install renewable energy.
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