July 13, 2022 | Energy Future & Transition
The future of the energy sector is uncertain, but it is important to consider sustainability as a pillar of the industry. With the world's population growing and increasing demand for energy, finding ways to produce and use energy sustainably is essential.
We live in a fossil fuel-powered world. They provide 64% of the global electricity supply and 80% of today’s energy. However, each decade, we face many reasons to reduce our dependence on them.
The most recent example would be the energy crisis of 2021-22 that spread across Asia and Europe. It led to blackouts throughout vital industrial areas and electricity rationing in China. Deserted petrol stations and leaping prices of fossil fuels and natural gas were seen across the UK and Europe.
Some say it was due to the rising growth after the worst COVID-19 pandemic had waned. Others blame the extreme weather that led to increased demand. And now, the Russia-Ukraine crisis brings us to the brink of another energy crisis.
The global energy mix has not seen a difference in composition since 1965. While clean energy sources have been added over the years, the majority of our dependence remains on fossil fuels, which will continue until 2040, according to the U.S. Department of Energy's Energy Information Administration (EIA).
Every ton of greenhouse gas emissions pushes the global temperature to the 1.5 degree Celsius limit. Beyond this, scientists believe it would be difficult to reverse the permanent damages to the Earth through air and water pollution and the socioeconomic impact on the disadvantaged. We are now at a “carbon budget” of 12-15 years - the remaining carbon emissions we are permitted without exceeding the limit.
So, where do we go from here?
Influencing Factors
In the last century, the Earth has undergone tremendous change due to deepening industrialization and urbanization trends as energy demands increase. Given the rising population (expected to reach 9.7 billion by 2050) and modern living standards, this is set to rise even further. As cities grow, the answers to food, water, and energy security questions lie in proactively reaching out for sustainable energy sources.
This is where renewable energy sources have an important role, mainly due to their contribution to decarbonization efforts since they diversify the existing energy sources, reduce pollution, and ease energy poverty while promoting “green economic growth.”
The UN believes that governments must identify the balance between economic growth and energy security to achieve economic growth in the new age. Current predictions state that doubling the share of renewables in energy production by 2030 can increase world GDP by 1.1% and global welfare by 3.7%.
Renewable energy can meet two-thirds of the global energy demand while reducing greenhouse gas emissions between today and 2050. Positive economic growth, the synergies of multiple renewable energy sources, socioeconomic benefits, and scalable technology will assist in making renewable energy crucial to tomorrow’s energy mix.
New Energy Sector Pillars
Renewable Energy Sources - Renewable energy sources will increase their share to 63% of the primary energy supply by 2050. According to IRENA, solar and wind will be the main contributors to this transformation, powering two-thirds of the total energy supply. However, concerns remain about cost and scalability due to its unpredictability, high transportation and maintenance costs, and grid instability. On the other hand, IRENA predicts that as solar and wind projects increase, the synergies will lead to decreasing costs.
By 2050, installation costs for onshore wind projects are expected to be $650 - $1000/kW, and the levelized cost of electricity (LCOE) in the range of $0.02 - $0.03/kWh. Installation costs for solar PV projects are expected to be $165 - $481/kW, and the levelized cost of electricity is $0.01 - $0.05/kWh.
Energy Efficiency - Today’s energy efficiency goals focus on reducing CO2 emissions by 89% between 2020 and 2050. Combining multiple trends such as digitization and increasing consumer awareness with the right policies can lead to a 67% decrease in final energy demand. Energy efficiency measures should concentrate on industries, buildings, and behavioral changes.
Electrification - The residential sector will gradually need to move away from using natural gas for heating and cooking. The industrial sector will benefit from emerging technologies for providing high heat solutions for their processes. Hydrogen will play a significant role. The transportation sector is looking at implementing strict fuel-economy standards with reduced emissions and completely cutting down on cars with internal combustion engines (ICEs) from 2035. Electric vehicles will make up 20% of all cars in 2030 compared to 1% today. Long-range transport such as air and marine vessels will rely on hydrogen and biofuels for their primary energy source.
Fossil Fuels - WEF states that fossil fuels will remain dominant after 20 years, especially for developing nations. Rewiring all residential homes to accommodate electrification of the primary heating needs will take time. Industries will continue using fossil fuels as feedstock for their chemical processes.
It is essential to consider the emerging sustainable technologies such as carbon capture, utilization, and storage (CCUS). This technology can capture significant CO2 emissions from oil and gas reservoirs, power generation facilities that use fossil fuels, and even the atmosphere, which is then compressed and transported for other uses.
Nuclear power remains a carbon-free solution, reducing 60 gigatonnes of CO2 emissions over the last 50 years. However, the cost, safety, and waste disposal constraints will remain an impediment for the foreseeable future.
Grid and Infrastructure - Energy transmission and distribution alongside innovative digitization tools for energy management will be the next big thing in the energy industry. Smart grids use advanced methods to manage the amount of electricity generated and supplied. By 2030, the grid investments for Net Zero Emissions will reach 800 billion USD, of which digital investments are 312 billion USD.
Energy Storage - The global energy storage market is expected to reach 270 GW by 2026. This includes batteries and pumped storage. China, Europe, and the US will significantly contribute to the increase.
Policy - Various "green" policies and market rules are being initiated to bring forward changes in global governance regarding the energy sector and public behavior. For example, the EU Green Deal talks about transforming the EU into a climate-neutral continent by 2050.
In this manner, multiple countries and regions have announced such policies to address the Announced Pledges Scenario (APS) and the goals of Net Zero Emissions (NZEs) by 2050. As of 2022, 17 countries have introduced the commitments to NZEs in their legislation, 34 countries have embedded this goal in their policy documents, 18 countries have made the pledge and the remaining states are still in discussions.
The Renewables Global Status Report (GSR), released annually by the Renewable Energy Policy Network for the 21st Century, provides a detailed picture of our progress in the dependence on various energy sources, the mix of clean energy, and our path toward sustainability goals. One suggested measure to mark this progress is measuring the total final energy consumption (TFEC), which records worldwide energy consumed. According to this measure, we’ve only achieved 13% of our energy needs through climate-friendly energy sources.
Bottom Line
The global energy sector transition depends on what kind of policies are adopted and the resources available. Energy transition must be based on the fact that it accelerates decarbonization and uses renewable resources to attain sustainability and save the earth from climate change.