Filenews 23 September 2024
In 2023, at the 28th annual United Nations Climate Change Conference, nearly 200 countries pledged to help reach "net zero" – the point at which human civilization will no longer emit greenhouse gases – by 2050. More than half of the world's largest companies have made quantified commitments. If we succeed, we may limit global warming to not much more than 1.5 degrees Celsius, which would already be costly and damaging.
The need for this has been extremely difficult for humanity to accept. It was only during last year's UN meeting that world leaders acknowledged for the first time in writing that a sustainable Earth requires a "transition away from fossil fuels". We now face a second intellectual leap, just as complex: accepting the staggering scale and urgency of moving to net zero. Only then will there be a chance of achieving it.
The timeline is painfully short – just 26 years. The International Energy Agency (IEA) produces detailed transition scenarios, tracking more than 550 clean energy technologies and 400 milestones we'll need to meet along the way. The list of sectors requiring revolutionary progress includes energy efficiency, wind power, solar infrastructure, energy storage, and much, much more. Only in a handful of these fields are we moving in the right direction with the necessary speed.
There are many possible paths, but none of them are easy. Beyond the technological challenges, the transition requires surprisingly high amounts of money. Estimates vary: in 2022, global consulting firm McKinsey found that businesses, governments, and households around the world need to spend a total of $275 trillion between now and 2050, peaking at 8.8% of global Gross Domestic Product in the short term. A new report from the BloombergNEF research team puts the price of achieving net zero lower than McKinsey, though the figure still impresses: $215 trillion.
It is important to recognize, however, that this huge expense is not just a cost. It is an excellent investment in a new energy system, paving the way for profitable industries, surplus jobs and lower energy costs for consumers from goods such as electric vehicles and heat pumps. Also, about two-thirds of trillion spending can be redirected by phasing out the fossil fuel system, according to McKinsey. However, the required injection of new money amounts to $3.5 trillion a year on average, roughly equivalent to half of all corporate profits or a quarter of all tax revenue around the world.
However, wealthy societies have achieved projects of comparable huge ambitions in the past. Net-Zero 2050 may seem unlikely, but in pure financial terms, it is possible. In it, there is something resembling hope.
To understand the challenge, we could look at some of the targets that the IEA notes we need to achieve by 2030 to be realistically close to the target.
Embracing Renewable Energy Sources
Renewables – particularly solar and wind – are the current star of the transition, yet our recent advances are only a fraction of the increase needed. We need to harness solar and wind energy at unprecedented speed, tripling production by the end of the decade. Solar power accounted for three-quarters of the new renewable energy added to the global grid last year, yet the IEA compares the pace needed by 2030 to installing the equivalent of one of the world's largest existing solar power stations, such as the multimillion-dollar Manhattan-sized Bhadla Solar Park panel in northwestern India. almost every day. The global wind farm industry had its best year in 2023, adding 117 billion watts of capacity, equivalent to the electricity used by 30 million American households. Six years from now, the annual increase should equal the power used by 80 million homes. Such an explosion of renewables is possible, but it would cost more than $1 trillion a year.
Electrification of everything
In transportation, most net zero models predict an overwhelming transition to electric cars and trucks instead of increasing the use of trains, buses and bicycles. Electric cars are, along with the development of solar panels, actually a bright spot in net zero accounting. If existing plans to scale up EV production go ahead without problems and the number of charging stations increases from 3 to 17 million (neither is a sure bet), the sector will continue to live up to the IEA's model. Imagine a world 10 years from now in which every new passenger vehicle sold is electric. According to BNEF, such a rapid transition is possible – at an average cost starting at $2.6 trillion per year.
As we electrify activities currently powered by fossil fuels, the electricity supply itself must increase from 20% of the energy we consume to nearly 30% by 2030. This means that electricity transmission networks need to grow by about 2 million units each year, even though expansion projects today often take 5 to 15 years to plan, permit and complete. The IEA estimates that the annual price tag for upgrading the network will exceed $600 billion by the end of this decade. BNEF forecasts annual spending of $800 billion by then.
III. Optimising energy use
However, we need to reduce overall demand for energy, even though the world's population and economy continue to grow. According to the IEA, the solution is a drastic boost to energy efficiency – doing more with less energy. In 2022, the global annual rate of improvement in energy efficiency doubled compared to the average rate of the previous five years, reaching an impressive 2%. Now it must more than double again, to almost 5% by 2030. By then, we should allocate $1.8 trillion each year for a combination of efficiency boosts and other "end-use" gains, such as developing EVs and heat pumps to replace gasoline vehicles and diesel burners, as well as electrify industrial operations. This dollar amount is greater than Switzerland's GDP.
Demand reduction
There is another way to reduce the amount of energy we use – to require less energy. In this field, expectations are low. BNEF modelling assumes that our appetite for goods and services provided by energy will continue to grow in line with current trends. The IEA places greater emphasis on behavioural changes, such as driving and fewer flights or lowering the thermostat, noting that these "achieve demand reduction quickly and at no cost". However, the agency's scenario predicts that only 5% of emissions reductions will come from such lifestyle changes, mostly in rich countries. In poorer corners of the globe, the main goal is to give households that cook with firewood or charcoal access to stoves that either burn less wood or run on greener forms of energy, such as solar power or natural gas. "Clean cooking" is practiced by 600 million more people today than in 2010. However, we still have 2.3 billion people to cover by the end of 2030. The annual cost of this transition, at least, is relatively low: $8 billion. The IEA points out that governments spent 100 times that amount to keep consumer prices under control during the oil and gas crisis in 2022.
Land use diversification
The way we use land also needs to change drastically. By 2030, deforestation—the global loss of trees that absorb carbon dioxide—must reach its own net zero, through reduced logging and increased forest restoration, the cost of which McKinsey estimates at $40 billion a year. The IEA adds that we need to grow many more fast-growing woody crops, such as poplars, willows and eucalyptus, to use them as biofuels. These plantations could eventually cover as much of the Earth's land area as the whole of France or Spain. By the time we reach net zero in BNEF's scenario, the full range of "fuel crops", including soybeans, sugarcane and canola, will cover almost as much of the planet as the European Union.
Increasing the use of hydrogen
Electricity alone probably can't fully power the future – we'll still need some fuel – and the IEA sees hydrogen as a promising option. It could, for example, play an important role in iron and steel production by offering a process that emits steam instead of coal. There are currently no iron or steel plants running on hydrogen, although several have been proposed. They need to be put into use quickly: the IEA hopes to see demand for hydrogen fuel grow at an average annual rate of 80% by 2030. The agency acknowledges that this represents a "massive scale up of production" and that the hydrogen industry does not currently have the necessary equipment and infrastructure, nor does it have a large market. The IEA's model proposes that investment in hydrogen will increase from $1 billion a year today to $150 billion six years from now.
Carbon capture
Finally, we need to capture carbon emissions, either at source – such as cement, iron and steel, natural gas and power plants – or directly from the atmosphere. The IEA lowered its expectations on that front last year, noting that the industry's track record so far has been "largely one of the expectations that has not been met." However, the agency's scenario still recommends increasing carbon sequestration by 2,200% by 2030. BNEF is even bolder, calling for a rapid increase of 7,700%. The research team eventually envisions a $6.8 trillion carbon capture and storage network that accounts for one-third of emissions reductions by 2050. Otherwise, other technologies will have to grow faster to make up the deficit in this field.
By 2030, countries around the world will also have to spend about $1.1 trillion a year preparing infrastructure, agriculture and water systems for a warmer planet, according to the Global Adaptation Center. The cost of climate disasters was recently estimated at $143 billion a year in a study published by Nature Communications, while the cost of warming the global economy through lower agricultural yields, damaged infrastructure and other impacts could reach $38 trillion each year by 2050, even if we eventually achieve net zero.
Performance – Editing: George D. Pavlopoulos
