Clean energy transition needs to be three times faster than previous transitions to fossil fuels to limit global warming: BCG
- The proportion of clean energy in global energy supply must rise to 50 to 70 per cent by 2050 from 12 per cent in 2021, Boston Consulting Group says
- Current policies would raise global temperatures by 2.7 degrees Celsius by 2100, higher than 2015’s Paris Agreement target of 1.5 degrees Celsius
Renewables and other low-carbon solutions’ share in the global energy supply must rise four to six fold by 2050 to reach the Paris Agreement’s goal of limiting global warming to 1.5 degrees Celsius, according to Boston Consulting Group (BCG).
The clean transition needs to be around three times faster than previous energy transitions, for example when the world made the transition from traditional biomass to coal, and then to oil and natural gas.
The report said the proportion must rise to 50 to 70 per cent by 2050 from 12 per cent in 2021, and that these energy sources must match the maximum shares held by coal and oil roughly three times faster than those commodities did and ultimately account for most primary energy by 2050.
“Society has gone through energy transitions in the past – but nothing like this one,” said the report which was published on Wednesday. “The adoption of coal occurred over roughly five decades and the shift from coal to oil took more than three decades. To limit global warming to 1.5 degrees Celsius above pre industrial levels, we must ramp up renewables and other low-carbon solutions at warp speed.”
By 2050, global electricity consumption is projected to double, while over 775 million people around the world will still have no access to electricity, and societies will need more than 20 megawatt hours (MWh) of primary energy per person to reach high levels of prosperity. To meet these competing demands, society must massively accelerate the substitution and abatement of fossil fuels, according to BCG.
To achieve those transitional targets, the world must rapidly increase energy efficiency, electrify end uses via applications such as electric vehicles or heat pumps, decarbonise power supplies, use low-carbon fuels in hard-to-abate use cases, and deploy carbon capture, according to BCG.
“Most of the tools we need to bring our energy system to net zero are already available,” said Maurice Berns, a BCG managing director and one of the co-authors of the report. “What we need, urgently, are the policies, proven business cases, and capabilities to effect the biggest and most critical peacetime transformation in our economic history.”
The report came right ahead of the G20 summit in India this weekend, where global leaders of the world’s largest economies will discuss solutions to tackling climate change and opportunities for economic cooperation.
Current policies would raise global temperatures by 2.7 degrees Celsius by 2100, far beyond the 1.5 degrees Celsius target that countries set in the Paris Agreement in 2015, according to the United Nations.
The global energy transition’s success will hinge on progress in the US, China, Europe, and India, as the four economies account for 60 per cent of expected energy-related emissions from 2030 to 2050, according to the report.
China, the world’s largest carbon emitter, will play a key role in driving the global energy transition, due to its dominance in the global clean energy supply chain.
“China is a leader in low-carbon manufacturing, but it is a laggard in reducing coal generation,” said the report. “Pairing China’s innovation in clean tech with reduced demand for coal can accelerate the pace of the transition.”
China accounts for 60 per cent of the global critical minerals refining value chain, 75 per cent in clean tech manufacturing, and 50 per cent in deployment, according to the International Energy Agency.
An investment of US$37 trillion will be needed by 2030 to finance the energy transition, while there is an investment gap of US$18 trillion, according to BCG. Total investments in building global wind and solar capacity needs to reach between US$20 trillion and $30 trillion through 2050, a sharp increase required from the current US$650 billion and $950 billion.
The economics of the global energy systems will fundamentally change as a result of the transition, with energy’s shift from an extracted to a manufactured resource requiring much heavier upfront investment but lower operating costs. Energy transport costs will also increase significantly due to the energy mix change, which is likely to lead to global industry production centres relocating to where energy is less costly, the report said.
