How will the world’s energy system evolve between now and 2050? The energy systems of 9 critical countries make up 63% of global emissions, after all. The simple answer: It will require governments and companies to take determined, responsible, and pragmatic action to transition to low carbon energy tech.
That’s according to the 2022 New Energy Outlook, which affirms that there are plausible pathways to get on track for well below two degrees Celsius of global warming.
Getting there requires immediate action, however.
What would a future look like in which the global energy transition is primarily driven by the economic competitiveness of key technologies? The BNEF New Energy Outlook explores two scenarios: an Economic Transition Scenario and the Paris-aligned Net Zero Scenario.
Economic Transition Scenario (ETS): If no new policy action to accelerate the clean energy transition occurs, the rapid growth of renewable energy and electrification of transport eliminate about half of the world’s energy related emissions in 2050. It could be a world where policy makers and the private sector pursue only the technological transformations which pay for themselves.
These technologies do win on their own merit, without need for additional subsidy, though. That’s because there will be dramatic cost reductions in wind, solar, and battery technology over the last decade following a hiatus during the current inflationary crunch.
The Outlook outlines that renewable energy will dominate the power sector by 2050, with wind (36%) and solar (29%) supplying nearly two-thirds of the world’s electricity demand. Those impressive stats will be a result of their cost competitiveness in the vast majority of geographies.
Despite rapid gains for clean energy, the Economic Transition Scenario falls far short of achieving net zero by mid-century. By 2050, emissions have fallen 29%, but unabated coal, oil and gas still emit 24.6 gigatons of CO2 per year. The result is a trajectory consistent with 2.6C of global warming, breaching the goals of the Paris Agreement.
Wind and solar provide about two-thirds of the world’s power generation by 2050 in the ETS, and these two technologies, combined with battery storage, account for an overwhelming 85% of the 23 terawatts of new power capacity additions installed over the next three decades. Power sector emissions fall by 57%, and emissions in the overall transportation sector fall by 22% to 2050, driven by the road segment’s transition to electric vehicles. Global coal, oil, and gas use all peak over the next decade, with coal reaching a high point and starting to decline immediately, while oil does the same in 2028 and gas in the early 2030s.
Transport — including road, aviation, shipping, and rail — will also see emission reductions by 2050 due to the rise of electric vehicles (EVs) in the road segment, driving a structural transformation away from liquid fossil fuels and toward reliance on electricity. This yields a 22% reduction in overall (Scope 1) transport emissions by 2050, or 13% after accounting for emissions from power generation.
Net Zero Scenario (NZS): Taking a sector-led approach, a credible pathway unfolds to meet the goals of the Paris Agreement. This scenario combines faster and greater deployment of a variety of low carbon energy tech in power with the uptake of cleaner fuels in end use sectors, most notably hydrogen and bioenergy. The world can stay on track for 1.77 Celsius and global net zero by 2050 with rapid deployments of clean power generation, electrification, and, to a lesser extent, carbon capture and storage and hydrogen.
Switching power generation from fossil fuels to clean power is the single biggest contributor to global emissions reduction, accounting for half of all emissions abated over 2022-50. This includes displacing unabated fossil fuel with wind, solar, other renewables, and nuclear — largely mature technologies that exist at scale today. By 2050, the global power system is dominated by wind (48% of generation) and solar (26%), with the rest provided by other renewables (7%), nuclear (9%), hydrogen and coal or gas with carbon capture.
The remainder of emissions reductions come from demand-side efficiency gains and recycling, hydrogen, bioenergy, and carbon capture and storage, together accounting for roughly the last quarter of emissions reductions. Although these appear to play a smaller role, the growth required for these technologies is still remarkable. Carbon capture and storage capacity grows from about 40 megatonnes in 2021 to 1.7 gigatons by 2030, and over 7 gigatons by 2050. Hydrogen use more than quintuples, from over 90 million tons of largely fossil-based hydrogen today, to about 500Mt of emissions-free hydrogen by 2050.
Actions Toward Low Carbon Energy Tech Begin Now
Clean power deployment needs to quadruple by 2030, as does a major investment in carbon capture and storage, advanced nuclear technologies, and hydrogen, according to the report’s authors.
To get on track this decade, there needs to be $3 invested in low-carbon supply for every $1 in fossil-fuel supply. Because electrification and economic growth will quadruple the planet’s power demand by 2050, a massive acceleration in the build-out of power grids, manufacturing capacity for low carbon technologies, and supply of critical metals and materials needs to take place.
To achieve such scenarios, the report includes prescriptions for 6 key action areas for policy makers and private sector actors, building on a framework developed by Bloomberg and BNEF for the NetZero Pathfinders initiative. These are:
- Accelerate deployment of mature climate solutions
- Support the development of new climate solutions
- Manage the transition or phase-out of carbon-intensive activities
- Create appropriate climate transition governance structures
- Support the transition in emerging markets and developing economies
- Scale up the supply of critical materials
Final Thoughts about Low Carbon Energy Solutions
The Outlook was released immediately after COP27. Critics have decried the end results of the annual climate conference this year, saying that it produced little in the way of global warming reductions.
“Our Net Zero Scenario and Economic Transition Scenario describe very different pathways for the energy transition, and by extension for the global climate crisis, and the fork in the road is upon us,” states David Hostert, global head of economics and modelling at BNEF and lead author of the report.
“Policy makers returning home from COP27 have an opportunity to start closing the so-called ‘implementation gap’, by removing barriers to the deployment of renewable energy and electric vehicles,” Hostert says, “accelerating the development of newer technologies like hydrogen and carbon capture and actively managing the transition away from unabated fossil fuels.”
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