McKinsey: Low Cost Renewables Will Outcompete Fossil Assets By 2030

At-a-Glance:

The energy transition is accelerating. In 2020, renewables outpaced fossil fuels in Europe for the first time. According to the latest research from McKinsey, demand for fossil fuels will never return to pre-pandemic levels. To learn more, read McKinsey: Low Cost Renewables Will Outcompete Fossil Assets By 2030.” Reading this article may require a subscription.

 

Key Takeaways:

  • McKinsey’s 2021 Global Energy Perspective Report predicts that fossil fuel demand is set to peak globally by 2029 and that by 2036, half of the global power supply will be generated by intermittent renewable energy sources.
  • While an earlier peak in hydrocarbon demand means a substantial reduction in forecasted carbon emissions, the world remains significantly off the 1.5°C pathway and will run out of its carbon budget for 2100 in the early 2030s.
  • Many pandemic related recovery packages are providing significant support to the hydrocarbon industry. The 2020 Climate Transparency Report said that by mid-October 2020, G20 countries had spent nearly $400 billion on support for the energy sector – with 53.5% going to the fossil fuel sector.
  • McKinsey’s Christer Tryggestad concludes: “According to our estimates, annual emissions would need to be around 50 percent lower in 2030 and about 85 percent lower by 2050 than current trends predict to limit the global temperature increase to 1.5°C.”

 

Path to 100% Perspective:

The shift toward renewable energy sources over fossil fuels appears to be the way forward. Governments around the world will need to use this shift as motivation to put policies in place that encourage greater investment in renewable energy. There is a tremendous opportunity in this moment for G20 countries, which are responsible for around 75% of global emissions, to rethink their energy investments and bank on low-cost renewables to meet net-zero targets and pave the way for a 100% renewable energy future.

 

 

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Why ‘Carbon Neutral’ Is the New Climate Change Mantra

At-a-Glance:

Becoming carbon neutral — also known as climate-neutral or net zero — is now a legal requirement in some countries, while European authorities are adopting legislation to become the first net zero continent. Even oil companies are getting in on the act. Buildings, airlines and events have also made the pledge, while investments groups managing almost $5 trillion of assets have committed to having carbon-neutral portfolios by 2050.To learn more, read Why ‘Carbon Neutral’ Is the New Climate Change Mantra.” Reading this article may require a subscription.

Key Takeaways:

  • What is carbon neutral? It means cutting emissions to the very limit and compensating for what can’t be eliminated.
  • What are carbon offset credits? Developed by the United Nations and non-profit groups, these let the buyers emit a specified amount of greenhouse gas, which is offset by using the money raised to fund carbon-reduction projects such as reforestation.
  • Who’s trying to be carbon neutral? Dozens of countries have committed to go net zero, or at least outperform carbon-reduction targets set out in the landmark 2015 Paris Agreement on climate change.
  • What’s driving this? CO2 pollution is still rising — 2019 was another record — and is unlikely to peak before 2040, driven by growing use of fossil fuels, says the International Energy Agency.
  • How will the goals be reached? To get anywhere close to net zero by 2050, the world must invest $2.4 trillion in clean energy every year through 2035, according to the UN’s Intergovernmental Panel on Climate Change. Much will ride on technologies that on the grand scale required are as yet unproven, including carbon capture, using hydrogen as fuel and removing carbon dioxide from the atmosphere.

Path to 100% Perspective:

Understanding the evolving terminology is useful, but embracing a plan that is possible, practical and affordable will combine knowledge with measurable results. As organizations add renewable energy to their net zero goals, it is important to develop a power system with flexibility, reliability and sustainability in mind. Renewable energy can actually generate renewable fuels that can be used to create a sustainable grid with a path to faster decarbonization.

 

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