A Just Energy Transition
The Beauty of the Scandinavian Model
eyesonsuriname / rystad energy
Amsterdam, January 28th 2023 — Hopefully we can all agree that the end of the hydrocarbon age, when it inevitably arrives, will not be brought about by the world running out of coal, oil and gas.
The move from higher to lower emitting energy sources will proceed across 195 different countries – with each nation adopting a unique approach driven by its infrastructure, resources, policies and probability of success.
At country level, the energy transition must be a fair one, leaving no nation behind. In each country, the phasing out of the existing energy system must be synchronized with a realistic plan for ramping up a new energy system.
This is paramount and vital in order to avoid volatility and a series of energy crises, while maintaining security of supply.
Taking a global view, a new narrative has emerged on the premise that 1.5°C is no longer a credible target for global warming. In Rystad Energy, however, we remain optimistic, as we believe several recent developments may have been overlooked by more pessimistic forecasts.
01) First, two new policy commitments that will curb heating have come into play: the global methane pledge made last year has the potential to curb heating by 0.2°C, while the follow-up pledge to end deforestation could reduce warming by a further 0.1°C.
02) Second, disruptive technologies – referring to innovations that are cheaper and better than existing technologies – tend to penetrate markets much faster than anticipated.
This is now the case for electric vehicles, which have seen sales numbers soar and which are likely to push gasoline and diesel cars out of the market within a decade or two.
The same goes for solar cells and wind turbines in the power market, which are now delivering power at a cost significantly below fossil fuel levels.
Our studies of supply chain capacities show that solar PV capacity is poised to grow by 1000 GW per year in new installations by 2030, which is the capacity needed to deliver 1.6°C according to our calculations.
A similar story is developing for wind and batteries, as the current pace of expansion will deliver the capacity needed to push coal and gas out of the power market in the 2030s.
Moreover, progress within low carbon technologies for buildings and industries will generate a rapid decline of emissions in these sectors from the mid-2020s. Finally, the surge in CCUS and direct air capture projects will contribute to significant CO2 removal starting in the mid-2030s.
In aggregate, our detailed assessment shows that it will still be possible to limit CO2 emissions to 650 Gt in aggregate from 2020 until the year that net zero is achieved. This corresponds to 1.6°C of global warming, according to IPCC budgets, which assume status quo on other greenhouse gases.
With the afore-mentioned upside from methane and deforestation, our conclusion is that the 1.5°C scenario is still within reach, albeit with many uncertainties.
If policies for the hard-to-abate sectors are not developed or are implemented unsuccessfully, we see a downside scenario in which between 1000 and 1350 Gt is emitted before reaching net zero, corresponding to a global temperature rise of 1.8 to 2.0°C.
Our most recent
Global Energy System model brings all the above insights together into one place and tracks energy production to final use. This comprehensive overview and understanding of the global energy mix as it evolves is a critical tool for decision makers navigating the energy transition towards a sustainable future.
rystadenergy / for eyesonsuriname