The global energy system is at a tipping point towards a net-zero future. As COP28 kicks off this week, Rystad Energy outlines 10 key steps needed to accelerate the transition, limit global warming, and ensure a clean and reliable energy future.
The transition from fossil fuels to clean energy is gaining momentum, and significant progress has been made in the adoption of clean technologies around the world. Despite the progress made so far, a faster expansion is still needed, and global** and business leaders will play a fundamental role in setting the pace.
However, slow infrastructure development, underinvestment in new technologies, and poor grid optimization limit meaningful progress. International cooperation is also crucial, but recent global tensions and conflicts have proven to be setbacks in recent years. While these tensions accelerate the shift to renewable energy, they also decentralize the global ** chain, which can be detrimental to the development of clean technologies.
Lars Nitter H**ro, senior cleantech analyst at Rystad Energy, said: "Recent energy and climate policy trends reflect a shift in protectionism, with an increasing emphasis on sovereign energy. The focus of this shift is on boosting domestic industry, reducing dependence on international **, attracting investment and creating local jobs, as well as controlling the **chain. In order to effectively navigate this shift, the international community must avoid it".
Jon Hansen, Vice President of Global Energy Systems at Rystad Energy, confirmed: "We have identified 10 steps that can significantly accelerate the world's energy transition while putting the most ambitious goals of the Paris Agreement within reach. These steps aim to target low-cost, impactful decarbonization options that can accelerate the deployment of renewable energy, improve energy efficiency, address market failures, and incentivize the investments needed to achieve net-zero emissions.
1.Rapid development of renewable energy
*The chain is ready to scale development quickly, but the rollout needs to be accelerated. If new capacity is to meet the required targets by 2030, permitting times will need to be shortened and short-term financing barriers such as high interest rates need to be eased.
According to our latest model, global renewable energy capacity needs to grow from about 36 tw increased to almost 112 tw to cope with 1Global warming scenario of 6 degrees. Solar PV will account for around 65% of the required expansion, but more needs to be done before the world can embark on this path. Based on existing projects, policies and industry trends, global renewable energy generation will reach only 8 tw by 2030 and 11 tw as early as 20342 tw。
In order to accelerate the development of renewable energy and allow the West to carry out reforms, policy support from Asia and the optimization of the global solar ** chain are needed. In addition, contracts for difference (CFDs) in markets with high renewable energy penetration can mitigate the financial risk of cannibalization, thereby promoting stable investment in renewable energy projects.
2.Double the energy efficiency
Of the 500 EJ of primary energy from fossil fuels, only 250 EJ was ultimately used. If solar, wind or hydropower are the main energy sources, the end user will receive around 440 EJ.
When molecules are burned to produce electricity or motion, only 30-50% of the chemical energy is converted into useful energy. The remaining energy is lost to the environment in the form of heat. In contrast, for renewable energy sources such as solar or wind, 70-90% of the primary energy is available to the end user, even after taking into account storage and distribution. Heat pumps in industry and buildings are able to generate heat more efficiently than traditional electric radiators. Therefore, the transition from fossil fuels to renewable energy sources will lead to a revolution in energy efficiency.
In addition, the energy efficiency of buildings, appliances, and machines has improved by 1% per year over the past few decades due to better materials and design. However, this trend requires stronger regulatory and policy incentives to accelerate the level needed to align with the most ambitious climate scenarios.
3.Take meaningful action on methane
Methane accounts for 15-20% of global greenhouse gas emissions, but reducing methane emissions is often overlooked in net-zero strategies. Methane is at least 25 times more potent as a greenhouse gas than carbon dioxide, so clear targets, monitoring, penalties for non-compliance, and incentives for methane capture are essential.
Agriculture, especially livestock and landfills, is an important part of methane emissions**. Supporting investments in emerging agricultural technologies such as cellular agriculture and precision fermentation can significantly reduce methane emissions. In addition, facilitating landfill gas capture and anaerobic digestion can convert these emissions into energy or hydrogen, reducing the release of methane into the atmosphere.
The oil and gas industry also contributes significantly to methane emissions, mainly from production and transportation infrastructure leaks. Implementing best practices for regular and advanced leak testing, followed by timely repairs, minimizing combustion, and accelerating the deployment of modern air-pneumatics, can significantly reduce emissions.
4.Put a price on carbon
The gradual maturation of carbon values will send a strong fiscal signal to polluters to reduce their emissions. This is especially important in hard-to-abate industries, where carbon** has a direct impact on the adoption of clean technologies. In the cement industry, for example, the business case for using carbon capture, utilization, and storage (CCUS) is reinforced by carbon value.
Currently, CCUS is costly, but advances in chemical absorption processes are expected to significantly reduce costs in the coming years. Chemical absorption is leading the way in the adoption of CCUS technology in the cement industry, accounting for 32% of the declared technology in upcoming projects, including a project led by Heidelberg Cement, which aims to capture 400,000 tonnes per year.
5.Scaling up investments in clean technology
By 2025, investment in clean technologies, including solar and wind, will outpace investment in oil and gas. However, it is crucial to accelerate this process, especially in emerging countries and in areas such as green hydrogen.
In 2023, 70% of low-carbon investments will be made in eight countries, of which 50% will be in China and 20% in G7 countries. The remaining 30% is mainly done in advanced economies, with the exception of India, which accounts for 25%。Therefore, it is critical to stimulate early market demand for low-carbon products in emerging economies by investing in mature end-user technologies that can boost demand for electrification and clean technologies.
6.Optimize grid utilization
Limitations in the power grid often hinder the development of renewable energy. It is widely accepted that the integration of new variable renewable energy sources will require massive investment in grid infrastructure, but this is inaccurate. Only 40-50% of the grid is actively utilized, so improving grid efficiency can significantly reduce the amount of new capacity required.
By implementing existing and affordable technologies such as topology optimization and dynamic line ratings, transmission capacity can be increased by 30-40% and 20%, respectively. This will greatly improve the resilience, flexibility and efficiency of the grid. In addition, robust energy storage solutions can manage demand spikes during heat waves and cold snaps.
7.Embrace the electrification of road transport
The shift to electric vehicles is critical to reducing our dependence on fossil fuels. Road transport alone accounts for 19% of the world's final energy demand and 15% of global CO2 emissions. In order to heat up 16 degrees is on track and an ambitious but achievable target of 70% EV penetration should be set.
To facilitate the industry's accelerated transformation, fiscal incentives such as the $7,500 per vehicle subsidy mandated by the US Inflation Reduction Act and the expansion of the charging network are crucial.
8.Reduce, reuse,**
The circular economy is essential for an effective decarbonization strategy. The reuse of materials, such as the reuse of EV batteries for stationary energy storage, and a significant increase in the rate, are critical. Without concrete actions and supporting policies, opportunities for sustainable industry practices may be missed.
For industries that are difficult to cut, such as steel production, it is especially important to utilize. Primary steel production emits 23 tonnes of CO2, while recycled steel produces only 680 kg of CO2 per tonne, reducing emissions by 70%. This highlights the critical role of recycled steel in environmental sustainability and should be noted by policymakers.
9.Cutting inefficient fossil fuel subsidies
Inefficient subsidies for fossil fuel consumption have caused serious distortions in the global energy market. These subsidies encourage the inefficiency and increased use of fossil fuels, create an imprecise ** signal for fuel efficiency, and provide an unfair advantage in the transition to clean energy technologies.
While the direct financial impact of these subsidies is considerable, it is further exacerbated by environmental and health impacts. Organized phase-out should be implemented to level the playing field, adjust market dynamics, achieve sustainable energy use, and promote a smooth transition for economies and consumers Xi to subsidizing energy**.
10.Avoid tensions that impede progress
To effectively tackle climate change, global leaders must confront the risks of tensions and the trend towards chain autonomy. While local production has boosted domestic industries, it can significantly slow the energy transition by encouraging a subsidy race in key cleantech industries such as batteries, hydrogen, and solar photovoltaics. Moreover, injecting capital into these industries is not the solution, especially given the associated skills shortages. (Compiled by Xiao Chen).
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