Why re­new­ables are not enough

Financial Mirror (Cyprus) - - FRONT PAGE -

At the United Na­tions in New York on April 22, world lead­ers rat­i­fied the global cli­mate agree­ment reached in Paris last De­cem­ber. One hun­dred ninety-five coun­tries, rang­ing from rich­est to poor­est, have now agreed to limit global warm­ing to well be­low 2C above pre-in­dus­trial lev­els, with the goal of not exceeding 1.5C. They have also com­mit­ted to “in­tended na­tion­ally de­ter­mined con­tri­bu­tions” (INDCs) to limit or re­duce green­house-gas emis­sions by 2030. This is a ma­jor achieve­ment, but it is far from suf­fi­cient.

In fact, even if all INDC tar­gets were achieved, the world would still be head­ing to­ward even­tual warm­ing of some 2.73.4C above pre-in­dus­trial lev­els. To keep warm­ing well be­low 2C, emis­sions in 2030 must be more than 30% be­low those en­vis­aged in the INDCs.

This will be an enor­mous chal­lenge, given the need for ma­jor strides in eco­nomic de­vel­op­ment over the same pe­riod. Be­fore this cen­tury is over, we should seek to en­able all the world’s peo­ple – prob­a­bly more than ten bil­lion by then – to achieve the stan­dards of liv­ing cur­rently en­joyed only by the wealth­i­est 10%. That will re­quire a huge in­crease in en­ergy con­sump­tion. The av­er­age African, for ex­am­ple, to­day uses about one-tenth of the en­ergy used by the av­er­age Euro­pean. But by 2050, we must re­duce en­ergy-re­lated emis­sions by 70% from 2010 lev­els, with fur­ther cuts needed to achieve net zero emis­sions by 2060.

Meet­ing those ob­jec­tives will re­quire both an im­prove­ment in en­ergy pro­duc­tiv­ity (the amount of in­come pro­duced per unit of en­ergy con­sumed) of at least 3% per year and the rapid de­car­bon­i­sa­tion of en­ergy sup­ply, with the share of zero-car­bon en­ergy in­creas­ing by at least one per­cent­age point each year.

This im­plies a mas­sive ac­cel­er­a­tion of na­tional ef­forts. Over the last decade, en­ergy pro­duc­tiv­ity has grown by only 0.7% an­nu­ally, and the share of zero-car­bon en­ergy rose by only 0.1 per­cent­age point per year. More­over, even if the INDCs were fully im­ple­mented, th­ese an­nual growth rates would reach only 1.8% and 0.4 per­cent­age points, re­spec­tively.

Im­pres­sive progress is al­ready be­ing made in one cru­cial area: elec­tric­ity gen­er­a­tion. So­lar power costs have fallen 80% since 2008. In some places, new sup­ply con­tracts have set prices as low as $0.06 per kilo­watt hour, mak­ing so­lar power fully com­pet­i­tive with coal and nat­u­ral gas.

Be­tween now and 2030, the INDCs in­di­cate that re­new­able-power ca­pac­ity will grow four times faster than fos­sil-fuel ca­pac­ity, with 70% of this new re­new­ables in­vest­ment in emerg­ing and devel­op­ing economies. That chal­lenges that are of­ten ig­nored. Met­als, chem­i­cals, ce­ment, and plas­tics are vi­tal build­ing blocks of the modern econ­omy, and in­volve pro­cesses that can­not be eas­ily elec­tri­fied. De­car­bon­i­sa­tion may in­stead re­quire the ap­pli­ca­tion of car­bon cap­ture and stor­age tech­nolo­gies, while newly de­signed build­ing ma­te­ri­als could re­duce de­mand for car­bon­in­ten­sive in­puts.

Given th­ese chal­lenges, fos­sil fu­els will un­doubt­edly play a role in trans­port and heavy in­dus­try for some time to come, even as their role in elec­tric­ity gen­er­a­tion de­clines. And, even in elec­tric­ity gen­er­a­tion, emerg­ing economies’ INDCs im­ply sig­nif­i­cant new in­vest­ments in coal or gas ca­pac­ity. Taken to­gether, the INDCs suggest that coal could still ac­count for 35% of global elec­tric­ity gen­er­a­tion in 2030.

But that level of coal gen­er­a­tion is likely to be in­com­pat­i­ble with the be­low-2C tar­get. And, be­cause coa­land gas-fired power sta­tions last 50 years or more, such in­vest­ments raise the risk of ei­ther lock­ing in emis­sion lev­els in­com­pat­i­ble with the cli­mate tar­get, or forc­ing ma­jor as­set write-offs.

The chal­lenge now is to find an eco­nom­i­cally sen­si­ble path that en­ables emerg­ing economies to ful­fill their grow­ing en­ergy needs, while en­sur­ing that the world meets its cli­mate ob­jec­tives. It is tech­no­log­i­cally pos­si­ble. But it will re­quire ac­tion by many very dif­fer­ent ac­tors.

Gov­ern­ments have a vi­tal role to play, but so, too, do in­cum­bent fos­sil-fuel-based en­ergy com­pa­nies and newen­trant com­pa­nies de­ploy­ing or devel­op­ing new tech­nolo­gies. NGOs can help to iden­tify re­quired poli­cies and hold gov­ern­ments and com­pa­nies to ac­count. In­di­vid­ual con­sumers are also im­por­tant, be­cause their be­haviour shapes en­ergy de­mand.

De­spite their var­ied back­grounds, eco­nomic in­ter­ests, and points of view, all of th­ese ac­tors must en­gage in an in­formed de­bate that recog­nises all of the com­plex­i­ties of the chal­lenge ahead. The shared ob­jec­tive is clear: to build a low-car­bon econ­omy that can keep global tem­per­a­tures well within 2C of pre-in­dus­trial lev­els, while de­liv­er­ing pros­per­ity for a world of ten bil­lion peo­ple or more.

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