Given the recent energy transition enthusiasm, one could be forgiven for thinking that since a handful of developed countries are showing measurable success in squeezing out fossil fuels from electricity production, then the rest of the world can simply follow suit. For instance, the United Kingdom has almost eliminated coal from its power generation mix, when it once was over 60% (1990)1. Over 30 years, Europe has halved its coal power production and the United States has shaved it by a third2. Surely this is a lesson for the rest of the world? But still today, fossil fuels produce around 60% of power globally, which is roughly 42% share of the world’s CO2 emissions3. Unsurprisingly, the question of how to meet rising global power demand sustainably - which is growing at an average rate of around 3% per year4 - is constantly debated. The way power is being used is evolving too, with the increasing electrification of our economies and smarter ways of consuming power driven by the market, making balancing power a little trickier.
So does this all mean that the way power is produced is set for a meaningful change? In short, the answer is yes; but even though ambitious pledges suggest a big shift on the horizon, fossil fuelled-power plants are to remain mainstream for some time yet, particularly for industrial economies. Essentially the risk landscape will change, owing to how power system operators around the world balance renewable and low carbon resources with cleaner and more efficient fossil fuelled assets. So rather than an overnight revolution, it is more a case of an all-round power system evolution.
The transition of the global power industry towards a more sustainable model gathered some momentum in 2015, thanks to the concerted political will from world leaders supporting the scaling up of clean technologies in both generation and grid5. Yet despite some hugely impactful declarations over the last decade, which have pushed the power sector’s energy transition effort significantly further forward, the pace of the power system’s transformation globally has so far delivered mixed results, proving that some economies have greater challenges than others when it comes to transitioning.
This is particularly the case for energy-intensive export orientated economies, who are either still building on their fossil fuel base or keeping them on life support, historically driven by a rationale for cost efficiency, infrastructural accessibility and societal acceptance. A change in this attitude, altering the very fabric of these countries’ socio-economic models, is going to take considerable time to facilitate a “just transition”, particularly while new technologies promising comparable security, reliability and affordability of power supply are still evolving.
In the effort to shift power production from fossil fuels to low-carbon sources, OECD countries have generally fared better than non-OECD countries. However, in percentage terms power demand in non-OECD countries has grown more rapidly than in OECD countries, by 5.1% per year versus 0.2% since 20106. In other words, despite all the energy transition rhetoric to date:
Figure 1 to the left shows that since 2010, despite low-carbon sources growing 3.8% per year on average, global power output from fossil fuels has still increased by 2.1%. And Figure 2 on the next page shows that fossil-fuelled power production in OECD countries has shrunk by an average of 1.3% per year since 2010, yet grew 4.2% in non-OECD countries.
Furthermore, Figure 3 to the right shows that fossil fuels' share of overall energy production is considerable and steady, averaging around 64% since 2000. To date, low carbon energy sources have essentially only manged to pick up the slack from power demand growth, rather than reverse the trend for growing fossil-fuelled power production. We should ignore the anomaly from the pandemic which attributed a greater role to renewables, because the drop in global industrial activity ate into fossil fuel production first. Consider that the IEA expects final consumption of electricity to double by 2050, then it seems that, at best, the current global trend is going to be hard to reverse. This is particularly the case for a handful of industrialised economies that also happen to be the countries adding the lion’s share of global power demand growth.
In the current climate, a swift global energy transition is not going to happen if environmental aspirations are to fit in with current political, social and economic objectives. To maintain the delicate balance between power supply security, affordability and sustainability, governments are prioritising and rationalising each element of this power sector trilemma differently. So while some are increasingly reducing their power industry’s impact on the environment, having numerous energy choices at their disposal, others battle over access to affordable power and reliable heat energy (for district heating). It is ever more acute in countries where power and heat are practically considered a social service. And while for some countries fossil-fuelled generation is just one of many sources of secure power supply, for others they represent the only means of national energy security (often along with Nuclear), while also ensuring affordable and flexible power to meet growing and more varied electricity demand.
Even with growing fossil-fuelled power production, this increasingly ostracised capacity is becoming measurably more efficient, which naturally means a better ratio of power production over emissions. But is it enough? According to the World Economic Forum (WEF) 2021 insight report, global investments into energy transition have doubled from US$250 billion in 2010 to US$500 billion in 20207. But even with this significant influx of funds, overall emissions from fossil fuel combustion and industrial processes globally still increased to 33.9 Gt CO2 equivalent in 2020 compared to 31 Gt CO2 eq. in 20108. Heavily supporting this rise are power sector emissions, as evidenced by Figure 4 to the top left of this page.
Considering that the power sector (electricity and heating) accounts for about 42% of fossil fuel emissions (about 13.5 Gt CO2 eq. in 2020)9, over the last decade, the global share of electricity output from fossil-fuel generation (Coal, Gas and Oil) has decreased by just three percentage points to 64%10. Figure 5 above shows that coal-fired generation in the mix is almost three-quarters of the total fossil fuel CO2 emissions; clearly, this is a stubborn sector11.
The growth in power demand, combined with some of the growth economies’ preference for fossil-fuelled generation, does somewhat contradict overall political sentiment. This apparent resistance to changing course is unsurprising, due to the underlying differences in the world’s regional socio-economic development. Out of 115 countries benchmarked by the World Economic Forum (WEF), only 25% were in position to shift their practices and balance energy security and climate challenges with power supply affordability12. In addition, there is a significant common understanding gap as to which economic activities (and technologies) contribute to the achievement of shared environmental objectives (including the final target level for all greenhouse gas [GHG] emissions) while safeguarding economic and social prosperity, and what support these objectives require.
The IEA has forged its place as an energy transition standard bearer, guiding the world to what should happen if all economies toed the line. But is it too populist and unrealistic? To create a common approach to decarbonisation in its 2019 Sustainable Development Scenario (SDS), the IEA already proposes to balance the deployment of renewables for all regions with other forms of generation, including lifetime extensions of nuclear generation (and, where applicable, new nuclear launches), thereby promoting “a cleaner and more inclusive energy future”13.
It highlights the importance of:
As a follow up from SDS, in May 2021 the IEA came up with the Net-Zero Emissions Scenario (NZE) that created a global benchmark for what and when is required across sectors (and by various players) to achieve carbon neutrality in the energy sector and industrial processes by 2050. The NZE Scenario from the Roadmap to Net Zero for the Global Energy Sector by 2050 (the IEA Roadmap) estimates that to reach carbon neutrality by 2050, global clean energy funding has to surge to around US$5 trillion annually by 2030 (compared to about US$2.3 trillion annual energy sector spending in recent years), out of which US$1.3 trillion per year should be allocated to renewables15.
It is hoped that this unprecedented influx of investment, alongside regulatory measures (severely restricting use of fossil-fuels in electricity, heating, and transport), will help bring down total CO2 emissions to 21.1 Gt by 2030, using technologies already available today.16 When compared to Bloomberg’s forecast of the energy sector transition in its Economic Transition Scenario (ETS), emissions from fuel combustion in power, transport and industry, based on current trends and commitments, are expected to fall to a comparable level, but not until 2050 (declining 0.7% per year to 26 Gt CO2)17. This decline in emissions will only be 16% below 2019 levels, resulting in global temperatures 3.3oC higher by 2100. Bloomberg recognises that to achieve global warming below the two degrees scenario, emissions should decline at a rate of 6% per year to 2050. This urgency to accelerate the decline ten times as fast as previously thought explains the importance that the IEA attributes to investment towards the rapid deployment of available technologies by 2030. In addition, it strongly advocates for the share of this investment to support widespread research, development and demonstration of innovative technologies and solutions18.
The latter is significant because in contrast to 2030, by 2050 half of the CO2 reductions in the IEA NEZ scenario will come from technologies currently at proof of concept or testing phases for electricity and heating, industry, transport and buildings19. According to the IEA, the biggest innovative opportunities will come from advanced batteries, hydrogen electrolysers and direct air capture/storage20. This amounts to hitting a moving target that is only vaguely in sight.
While the IEA believes in the technical and socio-economic feasibility of its Roadmap, by its own admission the pathway “remains narrow and extremely challenging”21. Notably, despite sending the shock waves across and industry and getting significant coverage, the IEA Roadmap is a demonstration of what is required to achieve net zero by 2050, but not what can or will actually happen22. And that is possibly the best interpretation. Notwithstanding an overwhelming global consensus on drastically diminishing the role of fossil fuels and their eventual phasing out of the energy mix, if the whole energy system is to be transformed in the most cost-effective way - as opposed to simply adding renewables into the mix - the pace of this suggested transformation will not suit all countries23. After all, 102 out of 115 countries reviewed by the WEF have failed to show steady gains in energy transition over the past decade24.
Nevertheless, a sustainable power industry by the mid-2030s has become a target for the EU, the UK and the US, according to Ember25. In its 2021 Zero Carbon Power report, Ember states that these states are united in their mission of delivering clean electricity by the mid-2030s to achieve net zero energy by 205026. With Wind and Solar becoming the dominant source of electricity from 2030, displacing existing fossil-fuelled power generation, these countries hope to future-proof their power systems by enhancing their flexibility and secure access to a low-carbon baseload power.27 It is all well and good for the OECD markets to boast of their progress but evidently, as it stands, their gains will be partially negated by non-OECD markets who will continue to depend on fossil fuels28.
If by all accounts fossil fuelled power production is essential for the foreseeable future, then working to improve it seems a more pragmatic approach than dreaming up its demise. Rather ambitiously, the Carbon Tracker Initiative believes fossil-fuelled generation will be “pushed out of the electricity sector by mid-2030s, and out of total energy supply by 2050” on an economic basis, thanks to competition from Wind and Solar (at their current 15-20% growth rate)29. However, Bloomberg sees the economic feasibility of renewables’ share going further than 70–80% as being limited, even for the leading countries30. It is even less likely that renewables will grab such a giant share, given the growing value of energy security—an argument gaining new traction, even for developed economies when falling out with neighbours and subsequently threatened with power disruption.
Notably, the Bloomberg’s new energy outlook projects Wind and Solar to meet 56% of global electricity demand by 2050, subject to receiving support from batteries, peaking plants and demand side flexibility31. So while the growing role of Wind/Solar in achieving net zero is a given, in most scenarios they remain only one energy transition pillar. And while in its Roadmap the IEA reduces fossil fuel usage dramatically by 2040 and envisages that by 2050 some 70% of the world’s power output will come from Solar PV and Wind, the remainder 30% will be split between other forms of renewable sources such as Hydropower, some forms of Bioenergy and Geothermal (about 20%) and low carbon sources such as Nuclear(a further 10%), heavily aided by new technologies and energy carriers (e.g. CCUS and Hydrogen)32.
According to the 2020 Global Status Report (REN21) by Renewables Now, 172 countries currently have national targets for renewable energy sources. In addition, renewable regulatory policies are penetrating heating and cooling (23 countries compared to none in 2004) and transport (70 countries compared to less than ten in 2004)33.
Notably, while the current share of Wind and Solar electricity output grew by just seven percentage points (from 2% in 2010 to 9% in 2020, according to the IEA) the past decade’s funding facilitated a quintuple drop in the cost of energy of Solar PV technology (from US$ 0.38 /kWh to US$ 0.07/kWh) and a 1.6 times decline for Offshore Wind technology (US$ 0.86 /kWh to US$ 0.053/kWh), according to the WEF34. Unsurprisingly, this levelised cost of energy still varies drastically by country and location. With a difference between the lowest and the highest costs for Solar PV as much as US$88/MWh ($26/MWh in India and $114/MWH in Japan), their penetration in certain locations will depend on further cost reductions to the renewable technology and system integration35.
Yet the achieved drop in capital expenditure has boosted the most recent renewable uptake, when “the demand for renewable energy grew three times faster than demand for fossil fuels and nuclear over a five-year period” according to the REN21 report36. According to IRENA, at the end of 2020 Wind and Solar generation accounted for 733 GW and 714 GW respectively37. Yet this was not fast enough to meet the growing energy demand, when renewables accounted for less than a third of the total increase in the final energy use.
Staying on course to net zero, according to the IEA Roadmap, would require a massive deployment of all available renewable technologies (Wind, Solar, Hydro, Geothermal). Essentially it means increasing their total share of output from 29% in 2020 to nearly 90% in 2050. Notably, in 2020 global renewable capacity amounted to 2,799 GW, out of which Hydropower accounted for 43%, Wind and Solar 26% each, and 5% were Bioenergy (127 GW), Geothermal (14 GW) and Marine Energy (500 MW)38. According to the IEA NZE scenario, global renewable capacity will have to triple by 2030 and exhibit a nine-fold increase by 2050. In the twenty years following 2030, global Solar PV additions will have to constitute 600 GW annually, while Wind capacity increases per annum are projected at 340 GW39.
This reliance on intermittent capacity is substantiated by several assumptions, amongst which are back-up forms of baseload low-carbon generation (inclusive of Nuclear), enhanced grid flexibility and a roll-out of innovative technologies, as well as greater energy efficiency. There is also an assumption for the progressive effectiveness of renewable technologies.
But there is an efficiency issue quietly plaguing the renewables industry. While the challenges with the consistent efficiency of renewable output have been known from the outset, knowledge gathered from operational data suggests further technical solutions are required to improve the effectiveness and reliability of these technologies.
In the case of Solar, particularly utility-scale solar farms, the challenge is a gradual loss of PV panel output owing to “soiling”. According to the National Renewable Energy Laboratory (NREL) the energy losses from an accumulation of dust, soot and other particles (as well as fungus in humid climates) already amount to 7% in parts of the United States and are as high as 50% in the Middle East, which suffers from dustier conditions40. Naturally the current inability to predict and measure the amount of soiling, together with the high costs associated with current manual cleaning, increase the investment risk for this technology. This calls into question the realistic effective Solar PV panel lifespan, consistent output efficiency and revenue.
For wind generation, the scaling up in height and blade lengths (for better energy capturing) over the years have brought to the forefront some challenges surrounding their structural security, transportation and recycling. But most importantly, the task of understanding accurately the most effective operating zone in the atmosphere for these larger wind plants. Historic assumptions are not accurate enough to predict the technology’s efficiency output, revenue dynamics and, consequently, investment potential41.
Directing investment towards both the deployment and perfecting Wind and Solar technologies by 2030 is therefore crucial for these technologies to underpin the electricity sector’s future decarbonisation42.
So while there is no question as to whether renewables should be deployed on a greater scale where technologically, economically and socially possible, it has also become apparent that achieving net zero emissions through predominantly Wind and Solar is questionable without a future reliance on a variety of other energy carriers and fuels.
The prejudice against nuclear power, driven predominantly by safety concerns stemming from Generation I and II, and intrinsically high Capex cost somewhat chocked demand for this technology. But technological advancements in Generation III and III+ reactors and the emergence of small modular reactors (SMR) may revive the uptake of this technology, particularly for countries keen to address both power supply security and environmental concerns. Notably in recent years, emerging economies such as China, India, Russia and others have predominantly kept the development of nuclear power on life support, but a global nuclear renaissance has merit.
Nuclear energy is gaining new traction from economies that strive to achieve decarbonisation of both electricity and heating. Subject to type, there are six leading Generation IV designs that are at various stages of development, demonstration or deployment. They offer significantly more advanced, sustainable and reliable performance, and promise improved economics. On top of that, they offer compelling secondary purposes, such as hydrogen production and heat energy.
According to the World Nuclear Organisation (WNO) May 2021 update, nuclear power globally is growing steadily, with 56 full size reactors under construction (62.5 GW) and with 99 reactors (102.03 GW) that have either received funding or policy commitment. In addition, 325 reactors (354 GW) have been proposed, and over 30 countries actively consider nuclear programmes43 44.
Not surprisingly, the IEA’s NZE model estimates nuclear capacity to increase at a rate of about 24 GW per year by 2030 and through to 2050 (compared to an average of 6 GW per year between 2011–20). Although on a global scale, Nuclear is expected to maintain an 11% share in total global power output (accounting for life extensions, new launches, and retirements), on a country-by-county basis, nuclear power output will vary from under 10% to above 50%45. Notably, as a critical component in delivering carbon neutrality by 2050, the IEA models Nuclear in combination with fossil-fuelled plants with CCUS technology46.
Whichever permutation materialises, pragmatically a total global expulsion of fossil fuels from power production in the foreseeable future is unlikely. Yes, there is a perceived global consensus on the need to drastically reduce the use of fossil fuels in order to reach carbon neutrality by 2050. However, for this to happen, the IEA NEZ model factors oil usage to fall by 75%, natural gas by 55% and coal by 90% during the period 2020–50. In a world where the big industrial economies are still growing coal and gas-fired capacities to such a degree that it still overwhelms any reductions made by the OECD countries, it’s hard to see that that trend might jump into full reverse in the near term.
Notably, when compared to Bloomberg’s outlook in their ETS scenario, the decline in fossil fuels is less steep. Their share of power output is modelled to reduce by almost three times but retain a 24% overall share of generation (down from 62% today)47.
The overall aggressive IEA view for the demise of fossil-fuels therefore hinges on an unprecedented global cooperation and “a singular, unwavering focus” towards achieving carbon neutrality. Yet this prerequisite for reaching net zero faces an obvious challenge for economies - across all continents - that depend on fossil fuels for electricity, heating, cooling, transport and/or industrial applications. And while the resolution to put an end to the unbated coal-fired power investment has indeed been expressed by the G7, global funding is readily available either domestically (through various fossil-fuel subsidies) or externally to support the fossil fuel agenda48.
Regarding the latter, between 2000–19 through its Belt and Road Initiative (BRI), Chinese investment into coal-fired generation in Indonesia, Vietnam, Pakistan, Bangladesh and Turkey amounted to US$25.4 billion49. China’s influence as a major coal-financier is now also extended to the Western Balkans, Russia and Central Asian States50. While China aspires to carbon neutrality by 2060 and demonstrates conformity with overall global environmental goals (through large-scale manufacturing and the deployment of renewable technologies) the BRI initiative is at the heart of its international strategy and constitution. This in turn means that countries at the receiving end will support fossil fuels when affordability and reliability of power supply is a priority, especially when technologies that can provide climate solutions consistent with demand growth are not yet readily available or accessible. Furthermore, the G7 appeal relates to unbated coal-fired power, in other words without technologies to substantially reduce CO2 emissions.
As Michelle Manook of the World Coal Association suggests elsewhere in this Review, clean coal refers to several technologies and measures that help mitigate its impact on the environment by removing or substantially reducing polluting emissions into the atmosphere. In relation to coal-fired generation, the most commonly discussed technologies right now are carbon reducing technologies and associated efficiency measures.
The availability of carbon reducing technologies such as Carbon Capture Use and Storage (CCUS) has a significant bearing on the accuracy of the forecasts produced today by various reputable actors; this is because of the extent to which fossil fuels can be used under zero-carbon scenarios. And although the basic CCUS concepts are well known (CCUS from industrial and power plant sources, Direct Air Capture [DAC], Bioenergy Carbon Capture and Storage [BECCS]), the development of cost-effective, reliable and large-scale facilities has proved to be challenging. Out of 189 Nationally Determined Contributions (NDC) submitted by 2017, only 11 jurisdictions factored CCUS into their decarbonisation pathways (key regions pioneering CCUS use are North America, Europe, Middle East, and Asia Pacific). In its 2020 report, the IEA Clean Coal Centre reported on 19 operational CCUS facilities that can store 37-38 Mt CO2/year, with four more due to be completed in 2021, ten in advanced design stages and 18 in early development51.
Yet despite its slow commercialisation, over the past decade there have been reductions in capital and variable CCUS costs in certain designs by as much as 57% and there is a prospect of reducing it by a further 50% from current levels, through “learning-by-doing”, by 206052; this explains why CCUS technology remains one of the pillars delivering decarbonisation.53 So the IEA NZE scenario, which assumes 50% of fossil-fuelled capacity remaining in use by 2050, will be coming from facilities equipped with CCUS. These include gas conversion to hydrogen, natural gas used in electricity and industry and life extensions of recently launched plants54. The financial viability of clean coal generation through large-scale CCUS remains a sticking point, but still there is an obvious reason for progressing its development.
According to the IEA’s Sustainable Development Scenario (SDS), over the next 20 years energy efficiency could deliver a reduction of more than 40% in energy-related greenhouse gas emissions55. The upgrade, modernisation and retrofitting of the world’s operating coal fleet improves the average global efficiency of electricity production from coal from around 37.5% to 49%, which will consequently achieve a GHG emissions reduction. According to the 2018 IEA’s Efficient World Scenario (EWS), the energy efficiency improvements since 2000 saved 12% of energy and emissions by 2017, with the largest energy saving impact on industry (51%), followed by buildings (38%) and transport (11%)56. The next generation solutions (deep retrofits and upgrades) and policy measures (for example, the integration of industry standards, codes and best available technologies), as well as the digitalisation of energy systems and policies linked to changes in consumer behaviour (electric vehicles, heating and cooling solutions, economic incentives, awareness campaigns etc), could altogether enhance energy saving and consequently a further reduction in emissions, thereby opening up new opportunities. Already, available cost-effective technologies are sufficient to double global energy efficiency by 2040.
The improvements to material efficiency (use of less or different materials for the same industrial output, reuse and recycle) is critical to energy intensive industries, where raw materials could represent up to 50% of total operating costs (metallurgical, pulp and paper etc.) and could deliver measurable environmental benefits. The deployment of CCUS and fuel switching to new carriers (such as Hydrogen, Biofuels, synthetic fuels and the like) is estimated to reduce emissions by 15–38%, particularly for construction, aluminium, paper and chemical industries57.
The global examples of successful energy efficiency programmes include China’s energy saving initiative for 1,000 industrial enterprises and India’s Perform, Achieve and Trade scheme that covers 13 energy intensive sectors (including thermal generation, aluminium, cement, textile, steel, pulp, railroad, refineries, petrochemicals and others and achieves energy savings through respective tradable certificates58). Energy efficiency measures are embedded into power sector regulation of all former Soviet Union states as the most cost-effective ways for mitigating industrial emissions, whilst advancing economic development and social wellbeing59. Investment in energy efficiency is considered “vital” to ensure Europe’s future as a sustainable, yet prosperous economy”60.
Notably, the recognition of energy efficiency measures input into achieving environmental goals has prompted discussions regarding the tagging of energy efficiency loans to the EU sustainable finance taxonomy61. And on a regional basis, European counties (particularly those of Eastern Europe) account for 86% of investment into energy efficiency, whilst US and Asia-Pacific countries predominantly rely on innovative technologies62.
To untap the environmental potential of energy efficiency measures for the consumers, utilities are yet to encourage changes in consumer behaviour to take the pressure off the system during the peak times of the day63. This involves investment in efficiency measures that support demand-side flexibility and offer fuel switching (to water heaters, heat-pumps, EV charges, household batteries etc.) to deliver significant customer energy and cost savings as well as reductions in infrastructure costs64.
In turn, policymakers are compelled to support the power industry by enabling an energy transition environment. By encouraging a transition, regulators should guarantee just and stable returns on investment into new business models, technologies, solutions and R&D. Yet electricity prices and tariffs that could facilitate a fair recovery of costs and warrant financial rewards for the asset owners, whilst supporting a transition, are still a novelty in economies where heat energy and electricity supply are considered a basic social obligation, and therefore remain heavily regulated.
Yet the dynamic interaction between the power system and consumers is becoming more critical in achieving environmental goals.65 As the world gradually transitions its power system to cleaner forms of electricity away from dependable fossil fuel supplies, the ability of a power system to adapt and integrate new variable ways of power production and delivery, as well as flexible consumption, becomes essential. The global drive for adaptable and flexible power systems is underpinned by innovation.
Remarkable advances have been already achieved in solar, wind, nuclear and bioenergy technologies, as well as grid infrastructure automation and digitalisation. They were complemented by R&D and innovative solutions for e-mobility (including vehicle-to-grid), energy storage, fuel cell, grid flexibility, and hydrogen-ready (gas turbines, heating, transport) technologies. The acceleration of innovative solutions is anticipated further for grid edge capability, hydrogen production-transportation-storage, utility scale batteries and advanced biofuels. According to IRENA, more than 110 technologies, most of which are already known today, will impact the pace and success of the energy transition across 13 different sectors of the energy system66.
However, the current challenges vary, from their cost-effective application to the ability of scaling up, as well as in their successful integration into present practices. This is because the power system’s energy transformation requires innovative solutions to reach beyond technologies to such areas as market design, business models and system operation.
This means “rethinking the power sector decarbonisation agenda” through a holistic approach, looking at the whole system from sources of energy to the end-consumers and creating strong coherent economic incentives to both reduce emissions and invest into innovative solutions across all sectors.67 This could require curbing energy market practices that currently underpin the energy trilemma and the socio-economic development in some countries.
The current energy transition euphoria can sometimes look a little like that popular cartoon image where we are hastily building the track just ahead of the speeding train. But it is important to put everything into context; it’s also important not to get carried away with sensationalist reports that the end is nigh for fossil fuels just because low carbon resources have had a good pandemic. Typically, they lead the power system’s merit order for running, so in a deep recession they are naturally going to eat into fossil-fuelled power production.
Yet the transformation of the energy systems globally is without doubt underway. We have a good idea what is in store to 2030; it is beyond that date that things can get vague quickly68. Understanding what that means in every economy is important for appreciating the new landscape of associated risks - in particular, market risk. It is a huge undertaking that requires balancing multiple economic activities across many sectors. It entails setting economy-wide coherent decarbonisation targets and policies by country to substantiate and balance economic, social and environmental costs and benefits. And while the deployment of renewable generation will dominate the decarbonisation agenda, reaching net zero entails simultaneously pulling together all available resources and toolkits69. In some cases, policy makers and influencers are hoping the method is invented in time to solve the problem. So to reiterate, the transition will not happen overnight; until then, many economies will maintain a solid fossil fuel footing.
From energy efficiency measures, innovation and use of alternative energy carriers and fuels, to the deployment of negative emissions technologies and to sustainable (and modular) nuclear, bioenergy and substantially more efficient fossil fuelled capacity - each element has a place in steering the transition. With the innovation testing toolkits, right policies and financial backing, this mission is realistic, even for the harder-to-abate sectors70. But despite the anti-fossil fuel rhetoric, it’s clear that it does not spell the end of coal or gas but instead upgrades their raison d'être to enable a “just transition” for all.
Christopher de Vere Walker is a Power and Renewables research analyst, consultant and awarded thought-leader, with 23 years’ energy experience. cdvw@seepx.com
Katya de Vere Walker is an electric power expert with 20 years’ experience specialising in Power sector policy and regulations with a focus on the energy transition. katya@seepx.com
1 See: UK Energy in Brief 2020; Page 19 and page 27 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/904503/UK_Energy_in_Brief_2020.pdf 2 See IEA Electricity Information 2020 https://www.iea.org/subscribe-to-data-services/electricity-statistics 3 See https://www.iea.org/data-and-statistics/data-browser?country=WORLD&fuel=CO2%20emissions&indicator=CO2EleBySource 4 SEEPX Energy calculations. 5 For example, the UN Sustainable development goals set at UN General Assembly in 2015; the UN Framework Convention on Climate Change Paris Agreement 2015, adopted by 196 parties. 6 https://www.iea.org/data-and-statistics/data-browser?country=OECDTOT&fuel=Energy%20supply&indicator=ElecGenByFuel, https://www.iea.org/data-and-statistics/data-browser?country=NONOECDTOT&fuel=Energy%20supply&indicator=ElecGenByFuel, and SEEPX calculations 7 See Fostering Effective Energy Transition, 2021 edition, Insight report, 2021 World Economic Forum; page 9 http://www3.weforum.org/docs/WEF_Fostering_Effective_Energy_Transition_2021.pdf
8 See IEA https://www.iea.org/data-and-statistics/data-browser?country=WORLD&fuel=CO2%20emissions&indicator=CO2BySector 9 See IEA CO2 Emissions from Fuel Combustion https://www.iea.org/subscribe-to-data-services/co2-emissions-statistics 10 See SEEPX Energy calculations and date from the IEA (https://www.iea.org/data-and-statistics/data-browser?country=WORLD&fuel=Energy%20supply&indicator=ElecGenByFuel) 11 See https://www.iea.org/reports/global-energy-co2-status-report-2019 (Global Energy & CO2 Status Report 2019, IEA. In 2018 coal-fired generation accounted for 30% of global carbon emissions] 12 See WEF_Fostering_Effective_Energy_Transition_2021.pdf (weforum.org) page 15 13 See 928908_NEO2020-Executive-Summary.pdf (https://www.iea.org/reports/world-energy-model/sustainable-development-scenario) 14 See https://www.iea.org/reports/world-energy-model/macro-drivers#abstract 15 See https://www.iea.org/reports/net-zero-by-2050; chapter 2, page 47
16 See Net Zero by 2050 – Analysis - IEA 2030 “We need to drive huge leaps in clean energy innovation”; page 53 of the Roadmap 17 See https://about.bnef.com/new-energy-outlook/ 18 See https://iea.blob.core.windows.net/assets/0716bb9a-6138-4918-8023-cb24caa47794/NetZeroby2050-ARoadmapfortheGlobalEnergySector.pdf Chapter 2, page 81-82 of the Roadmap 19 See Net Zero by 2050 – Analysis - IEA A 2050 “clean energy world” ; page 55 and page 82 of the Road map 20 See Net Zero by 2050 - A Roadmap for the Global Energy Sector (windows.net) page 99 of the Road map 21 See Net Zero by 2050 - A Roadmap for the Global Energy Sector (windows.net) page 83 of the Road map 22 “6 takeaways from the IEA’s net-zero scenario”, Derek Brower, FT May 20 2021 23 See https://www.reuters.com/business/energy/asia-snubs-ieas-call-stop-new-fossil-fuel-investments-2021-05-19 24 See https://www.powerengineeringint.com/emissions-environment/ieas-bold-net-zero-report-yields-mixed-reactions-from-industry page 19
25 See https://ember-climate.org/about/ 26 See https://ember-climate.org/wp-content/uploads/2021/04/Zero-Carbon-Power.pdf 27 See Electricity Market Report – December 2020 (windows.net) page 29 28 See Zero-Carbon-Power.pdf (ember-climate.org) page 14 29 See https://carbontracker.org/reports/the-skys-the-limit-solar-wind 30 See New Energy Outlook 2020 | BloombergNEF (bnef.com) 31 See https://about.bnef.com/new-energy-outlook 32 See https://www.iea.org/reports/net-zero-by-2050 33 See https://www.ren21.net/reports/global-status-report 34 See WEF_Fostering_Effective_Energy_Transition_2021.pdf (weforum.org) page 9 35 See https://www.energy-transitions.org/wp-content/uploads/2021/04/ETC-Global-Power-Report-.pdf 36 See gsr_2020_full_report_en.pdf (ren21.net) page 15 37 See https://www.energy-transitions.org/wp-content/uploads/2021/04/ETC-Global-Power-Report-.pdf
38 See https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2021/Apr/IRENA_-RE_Capacity_Highlights_2021.pdf?la=en&hash=1E133689564BC40C2392E85026F71A0D7A9C0B91 39 See https://www.iea.org/reports/net-zero-by-2050 40 See https://www.nrel.gov/news/features/2021/scientists-studying-solar-try-solving-a-dusty-problem.html 41 See Three challenges to wind energy potential (techxplore.com) 42 See Robots can make Offshore Windfarm maintenance better, safer, cheaper - Energy Post 43 See https://world-nuclear.org/information-library/facts-and-figures/world-nuclear-power-reactors-and-uranium-requireme.aspx 44 See https://www.world-nuclear.org/information-library/current-and-future-generation/plans-for-new-reactors-worldwide.aspx 45 See Net Zero by 2050 - A Roadmap for the Global Energy Sector (windows.net) page 115 of the Roadmap 46 See https://www.iea.org/reports/net-zero-by-2050
47 See https://about.bnef.com/new-energy-outlook/ page 8 of outlook summary 48 See https://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/052121-g7-ministers-call-for-end-to-unabated-coal-fired-power-investment 49 See https://green-bri.org/belt-and-road-initiative-quick-info/ 50 See Metzger_Chinas-Belt-and-Road-Initiative-and-Coal-May.pdf slide 5 51 See https://www.iea.org/reports/ccus-in-power 52 See Carbon-capture-utilisation-and-storage-status-barriers-and-potential-CCC304-Exec-Sum (3).pdf page 1 Executive Summary; pages 5 and 12 of the Report 53 See The Role of Fossil Fuels in a Sustainable Energy System | United Nations 54 See https://www.iea-coal.org/report/carbon-capture-utilisation-and-storage-status-barriers-and-potential-ccc-304/ page 22 55 See https://www.iea.org/reports/world-energy-model/sustainable-development-scenario 56 See https://iea.blob.core.windows.net/assets/d0f81f5f-8f87-487e-a56b-8e0167d18c56/Market_Report_Series_Energy_Efficiency_2018.pdf
56 See https://iea.blob.core.windows.net/assets/d0f81f5f-8f87-487e-a56b-8e0167d18c56/Market_Report_Series_Energy_Efficiency_2018.pdf 57 See Transforming Industry through CCUS – Analysis - IEA ; Transforming Industry through CCUS (windows.net) page 12 58 See Incentive to Save - Power Line Magazine; PAT scheme results in mitigation of about 87 million tonnes of CO2 per year - Power Line Magazine 59 See D_Russia_NadezhdinEEPresentation_1.pdf (unescap.org) 60 See https://www.eib.org/attachments/efs/eibis_2019_report_on_energy_efficiency_investments_en.pdf 61 See https://ec.europa.eu/eefig/news/update-taxonomy-and-tagging-2020-11-12_en 62 https://www.eib.org/attachments/efs/eibis_2019_report_on_energy_efficiency_investments_en.pdf 63 https://www.aceee.org/research-report/u2101 64 https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2017/Jun/IRENA_Energy_Transition_Innovation_2017.pdf
65 See CTABP v4 (oracle.com) pages 3-4 66 https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2017/Jun/IRENA_Energy_Transition_Innovation_2017.pdf 67 See UK as an example at Rethinking Decarbonisation Incentives for Net Zero policy - Energy Systems Catapult 68 See Absolute Impact OilGas Co pledges CarbonTracker May21.pdf ; Absolute Impact 2021 - Carbon Tracker Initiative 69 See Innovation Toolbox (irena.org) 70 https://www.energy-transitions.org/publications/mission-possible/#download-form
