There have been few upsides from the Covid-19 pandemic that continues to ravage large parts of the global economy, but evidence of one benefit is beginning to emerge.
Greenhouse gas emissions from the energy sector have peaked, and the stark drop in energy demand caused by the pandemic will remove two and a half years’ worth of emissions between now and 2050, , according to new research from BloombergNEF (BNEF).
The group’s New Energy Outlook (NEO) 2020 shows that emissions from burning fossil fuels peaked in 2019 and are set to drop by around 10% in 2020. While emissions will rise again as economies recover, they will never again reach 2019 levels, the clean energy analysts say, and from 2027, they will fall by 0.7% a year to 2050.
That is because there will be “a huge build-out of super-competitive wind and solar power, the uptake of electric vehicles and improved energy efficiency across industries,” the report says. By 2050, wind and solar will generate more than half of global electricity (56%), and along with batteries, they will attract four fifths of the $15.1 trillion that will be invested in new power capacity in the next three decades, the Outlook predicts. Another $14 trillion will be invested in grid networks over the same period.
Seb Henbest, chief economist at BNEF and lead author of NEO 2020, said: “Our projections for the power system have become even more bullish for renewables than in previous years, based purely on cost dynamics. What this year’s study highlights is the tremendous opportunity for low-carbon power to help decarbonize transport, buildings and industry – both through direct electrification and via green hydrogen.”
The NEO predicts that coal-fired power will peak in China in 2027 and in India by 2030 so that by 2050, it generates just 12% of global electricity. BNEF predicts electric vehicles will reach cost parity with internal combustion vehicles within the next few years.
As a result, oil demand is set to peak in 2035 and then fall 0.7% a year so that by 2050 it will have returned to 2018 levels, with most future demand coming from aviation, shipping and petrochemicals. However, the use of gas will continue to grow, rising by 2050 by a third in buildings and 23% in industry where there are few economic low-carbon substitutes.
But, the report says: “despite the progress of the energy transition, and the decrease in energy demand brought by Covid-19, BNEF still sees energy sector emissions putting the world on course for a 3.3°C temperature increase by 2100”. Matthias Kimmel, senior analyst at BNEF and co-author of the report, commented: “To stay well below two degrees of global temperature rise, we would need to reduce emissions by 6% every year starting now, and to limit the warming to 1.5 degrees C, emissions would have to fall by 10% per year.”
Jon Moore, CEO of BNEF commented: “The next ten years will be crucial for the energy transition. There are three key things that we will need to see: accelerated deployment of wind and PV; faster consumer uptake in electric vehicles, small-scale renewables, and low-carbon heating technology, such as heat pumps; and scaled-up development and deployment of zero-carbon fuels.”
The Hydrogen Economy
The report, which previously focused only on the electricity sector, also looks at industry, buildings and transport “to give a full-coverage, economics-led view of the energy economy to 2050”. The report also features a Climate Scenario investigating a clean electricity and hydrogen pathway to holding temperatures to well below 2 degrees.
In this pathway, a low-carbon future energy economy supplies 100,000TWh of clean electricity – or five times all of the power produced today – by 2050. This would require a power system that is six to eight times larger than today’s, with a third of the energy used to make hydrogen.
According to BNEF a clean electricity and green hydrogen pathway requires between $78 trillion and $130 trillion of new investment between now and 2050 to cover growth in electricity generation and the power grid, as well as manufacturing, storing and transporting hydrogen.