Last year, likely for the first time in living memory, global energy demand fell compared to the previous year. In 2020, as flights were grounded, factories temporarily closed and commuters consigned to their homes, global energy demand is estimated to have declined by 4%.
Only one part of global electricity markets continued to grow. According to a new report by the International Energy Agency (IEA), renewable-energy generation grew at its fastest rate in two decades, by 45%, contributing an additional 280GW to the world’s supply — more than the whole energy-generation capacity of Germany alone.
Most of these gains went to new wind and solar installations, though hydro-electric capacity also expanded markedly. China accounted for 80% of new solar and onshore wind installations, as developers rushed to meet a deadline requiring subsidised projects to be connected to the grid by the end of 2020. The US also witnessed a scramble to install additional renewable capacity before government subsidies expired.
These are examples of positive government pull factors which have incentivized society to adopt renewable technology. Across the globe, the world’s major economies are taking significant steps towards maintaining their net-zero pledges.
The economic slowdown caused by the pandemic likely reduced global carbon dioxide emissions by about 7% this year, but that temporary fall will only have a significant effect if countries prioritize a green recovery. This fifth anniversary of the Paris Agreement, due to take place in November this year, is expected to see countries increase their commitments in this sphere.
At this stage it will be important to induce the talks with a healthy dose of realism, not just measureless ambition. We must ask just how well-grounded the climate commitments are in terms of actual budgets, policies and regulations. After all, energy policy experts have been advising the international community in global climate negotiations, technology analysis and policy design for the last two decades, but the results are difficult to quantify.
In our future ambitions we must set clear strategies as well as targets. The leaders of China, Japan and South Korea each announced goals in recent months for reaching net zero carbon emissions by mid-century. But the detailed plans for how they will get there are largely missing.
The truth of the matter is that even if established clean technologies like renewable energy are at the core of the transition, the pace of change required to meet the Paris goals remains daunting. Socioeconomic issues will also have to be put front and center of any coherent and sustainable agenda.
This isn’t to say that net-zero solutions are not technically conceivable for a range of energy-intensive industries, especially agriculture and transport methods, but the speed and scale at which they would have to ramp up to meet a 2050 deadline is tremendously ambitions.
Analysis from the Payne Institute found the deployment of renewable power would need to accelerate two- to three-fold. Global renewable energy use would need to go from around 20% of energy today to 65% by 2050, and from 28% to 85% of the power sector. Electric vehicle use would have to skyrocket, from less than 10 million EVs today to more than 1.5 billion by 2050.
To make these transformations financially viable, investors need to be confident that the world is committed to a cleaner future. In other words, because perceived risk will increase costs, uncertain or delayed government action constitute big risks. International financial organizations, as well as green banks and development banks, will have to play a leading role in encouraging private investment.
Finally, the international community will also need to support countries that need assistance. Climate change is not the primary priority for most of the world, especially developing countries – while it is an existential crisis for others, such as some small island states. These realities need to be acknowledged if we are to make meaningful progress.