A new study released by research firm Wood Mackenzie states that achieving goals set under the Paris Climate change agreement remains a herculean task.
In its annual Energy Transition Outlook, the research firm says the world must combine coronavirus recovery efforts with massive investments in renewable energy and clean infrastructure if it is to limit global warming to 2 degrees or lower.
Wood Mackenzie says renewables, green hydrogen and carbon capture, use and storage are key technologies in fighting climate change.
The study states that the world needs to be much more efficient, substantially more electrified and make circular economy a priority to be able to achieve the targets.
At the present rate of progress, Wood Mackenzie’s base case indicates the world is on a 2.8C-3C pathway – not a 2C or lower – warming trajectory.
An obstacle blocking the path to a 2-degree world is the emissions-intensive capital stock already embedded in our energy systems.
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Prakash Sharma, Wood Mackenzie’s head of markets and transitions for Asia Pacific, said: “The coronavirus pandemic has slowed climate change mitigation efforts this year. As the world begins to reconstruct its economy, all energy and natural resources sectors will face a survival of the fittest. We call it the ‘Darwinian Challenge’ because society and investors must evolve and adapt to the changes needed to overcome the twin crises and prepare for the future.
“Nearly $20 trillion, or 25% of global GDP, is earmarked for spending over the next 12-18 months to deliver a coronavirus vaccine, tackle unemployment, rebuild public health systems and get economies back on track. This investment figure only has tiny proportions allocated to the promise of the Paris Agreement targets. Some jurisdictions, such as the EU, have doubled down on green goals, but it is currently up in the air in the US and China. While China recently set a goal of achieving carbon neutrality by 2060, this does not overwrite the country’s intent to greenlight thermal coal plant construction as part of its next five-year plan.
“Whether economic recovery targets will be achieved in time and on budget will have major implications for public and private sector finances, inflation and FX rates. Given this uncertainty, we have developed scenarios in our 2020 Energy Transition Outlook to quantify potential high and low cases for commodity markets out to 2030.
“While the world is adding renewable power generation capacity and manufacturing electric vehicles, it is still not enough. No efforts have been made to decarbonise the existing infrastructure. Emissions will continue increasing unless there is an incentive to rationalise the carbon-heavy assets or retrofit it with carbon capture storage (CCS) – a Herculean task without an appropriate tax on carbon.”
David Brown, Wood Mackenzie’s head of markets and transitions for Americas, said: “The world’s transition to clean energy and net-zero emissions is clearly tied to electrification. We see it progressing slowly in our base case and forecast electricity’s share in final energy consumption to reach 26% by 2040 from around 22% today.
“However, electrification and efficiency improvements slow emissions growth in our outlook. We see energy emissions peaking at 36.3 billion tonnes in 2030 and then falling approximately 4% by 2040, still about 2.6% higher than 2019 levels.
“We expect coal, gas and oil to still contribute around 80% of primary energy supply by 2040, which is a far cry from the 50% maximum needed for the world to reach net-zero by 2050.