By Jarand Rystad, CEO
There are two common beliefs on the future of energy. One is that primary energy will continue to grow at pace with the global economy, and the second is that it will be simply too expensive to replace fossil fuels with renewables. Both beliefs are widespread but behind the times, concluding erroneously that fossil fuels will continue to dominate for decades, and that global warming cannot be limited to 1.5 or even 2.0 degrees.
In this report, we prove that these beliefs have no support in recent data on the development of the energy system. On the contrary, our observations show that new disruptive technologies are already being implemented at a pace that will outcompete fossil fuels sufficiently fast to limit CO2emissions to between 650 gigatonnes (Gt) to 1,200 Gt which correspond to 1.6-to 1.9-degree scenarios, respectively, of global warming according to IPCC’s carbon budgets. In addition, new technologies for methane emission reduction are coming, representing an upside of up to 0.2 degree of avoided global warming. Thus, the 1.5-degree target is within reach.
Let me first explain why primary energy will soon peak at around 630 EJ and then decline. When molecules are combusted to make electricity or motion, only 30-50% of the chemical energy is converted to useful energy. The rest represents heat-losses to the environment. With renewable energy like solar or wind, 70-90% of the primary energy is available for the end user, even including storage and distribution.
Increased use of heat pumps in industry and buildings also enables much more efficient heat generation than traditional electric radiators. Thus, a transition from fossil fuels to renewables means a revolution in energy efficiency. Of the 500 EJ of primary energy from fossil fuels today, only 250 EJ is used by the end user, while about 440 EJ would be made available if the 500 EJ of primary energy came from solar, wind or hydro.
Moreover, energy efficiency improvements in buildings, appliances and machines have been one percent per year over the last decades led by better materials and design. This trend is now accelerating. End users are getting ever more energy services per megajoule consumed. Thus, under the assumption that more than half of the energy mix is renewables, a global population of 10 billion people in 2055 will have access to more energy services per capita than today –even if the primary energy production is down by around 10%.
But can we believe in the assumption that such a large share of primary energy consumption will be renewable? This will not only require current electricity generation of around 29000 TWh is replaced by renewables, but also that electricity has grown sufficiently to electrify relevant end user segments like buildings, road transportation and industrial heat and machines.
The answer can be found by carefully tracking the pace of the deployment of technologies that can outcompete current fossil fuel-based technologies and mitigate about 38 Gt of CO2 emissions. In Rystad Energy we have built an organization geared to do just that. We have identified 12 core technologies that could do the job, representing the difference between 2.5-degree global warming and 1.5-degree global warming.
Even if a combination of technologies is needed –suggesting no technology could go at it alone –we can in a simplified manner list the contribution necessary to avoided global warming for each of the 12 technologies.
Solar PV heads the list, contributing 0.25 degrees of avoided global warming. Solar need to grow from 250 GW new installations in 2023 to 1,300 GW per year in the mid-2030s.
This sounds aggressive, however 1,200 GW of named manufacturing capacity is already under construction. After solar, three other technologies are needed, each contributing to 0.12 degrees of avoided global warming. This includes batteries, electric vehicles and chemical absorption CCUS. Wind power, the hydrogen chain and geothermal/heat pumps each have the potential to reduce global warming by 0.08 degrees, while biofuels, high temperature heat storage, circular economy measures and agricultural process changes are collectively poised to deliver the remaining 0.15 degrees of avoided global warming, including reductions to methane emissions. This must all happen by the 2055s if global warming is to be limited to 1.5 degrees.
In this report we will show which pace each of these technologies must track to reach the target, and what pace can actually be observed today. We see no major showstoppers like material shortages, but policy support initiatives such as carbon pricing and subsidies are essential to reach the lower end of the range.
Finally, another feature with a renewable energy system based on electrons, not molecules, is that 15 billion tonnes of logistics related to fossil fuels can be avoided, corresponding to 45% of tonne milage in shipping. Moreover, electrical machines have five times more horsepower per kg; this effect will also scale to lighter and leaner foundations and buildings. Thus, the future energy system will not only be cleaner, but also leaner