Future energy financing switches to renewables
STATKRAFT'S 2019 LOW EMISSIONS SCENARIO SHOWS HOW FAST THE ENERGY WORLD IS CHANGING
Confining global warming to the new target of 1.5°c from the Paris Climate Agreement will cost much less than allowing temperatures to rise relentlessly this century. This is one of the key findings from this year’s Low Emissions Scenario report by our parent company, Statkraft, Europe’s largest generator of renewable energy.
It’s the fourth year the Low Emissions Scenario report has been published and once again the main change, Statkraft says, has been the need to bring down the future cost estimates for solar power.
Other key findings from this year’s Low Emissions Scenario report, which is based on a 2°c pathway, include:
LOWER COSTS WILL HELP EMISSIONS FALL
Statkraft predicts that, by 2050, energy-related greenhouse gas emissions should be 44% lower than now, driven by rapidly reducing costs for solar PV (down 50%) and wind (down 40%).
As costs decline for renewable energy, the report expects electrification to become the most important climate measure for buildings, industry and transport. Statkraft also believes the bill to keep to the 1.5°c will be within 1% of GDP in 2050. This is far less than the 5-10% of global GDP calculated to be the cost if temperatures are allowed to rise by 3°c over this century.
PURE ENERGY TO DOMINATE
Statkraft’s report predicts global solar PV capacity will increase by a factor of 30 and wind capacity eightfold, making the power sector 80% renewable by 2050. It notes that renewables can now be profitably installed in most countries where new capacity is required and should soon be able to challenge existing plants on costs.
The pace of technological development into the future remains key. The Low Emissions Scenario assumes the cost per MWh will continue to fall steeply and capacity to expand rapidly until around 2030. After this, the decline in costs is expected to slow down, firstly for wind and then for solar.
SUSTAINABILITY TO TAKE CENTRE STAGE
Increased climate awareness is largely due to the consequences of global warming becoming more visible. The report points out that 62 million people were affected by natural disasters in 2018. Floods displaced 35 million while over nine million were impacted by drought. Two hurricanes in the US cost $49 billion and, in northern Europe, the record-breaking hot summer led to major losses in food production.
Statkraft’s report also notes that we have already reached a global average temperature that is around 1°C higher than in pre-industrial times. The last four years have been the warmest in history and the effects of climate change are being felt in more and more areas.
Highlighting the impact sustainable practices and a circular economy are having on businesses, the report calculates that energy intensity will fall by 42% between now and 2050, showing that businesses will continue to use energy much more efficiently.
THE TRANSPORT REVOLUTION IS HERE
Electricity demand for transport is expected to grow twenty-fold by 2050. The report also predicts that electric and hydrogen trucks will be competitive with diesel within the next five years and the cost of combined solar PV and battery installations is set to fall by over 60% by 2050.
Battery-electric and hydrogen-powered vehicles with fuel cells are expected to offer complementary solutions. The Low Emissions Scenario report estimates that the percentage of electric and hydrogen vehicles of total new sales worldwide will approach 100% for passenger cars and 60% for heavy vehicles by 2050.
TIME IS OF THE ESSENCE
Statkraft’s Low Emissions Scenario shows just how quickly the world energy order is changing and how important it is for not just Great Britain, but for the World, to keep up. Only last month, the Commons Science and Technology Committee urged greater action to achieve net zero emissions by 2050, setting out a series of recommendations including: a strategy for decarbonising heat, a timetable for bringing forward the ban on conventional cars and vans, and the need for strong policy support for onshore wind and solar power.
The report also calls for much earlier action from governments and businesses, noting that global emissions rose by 1.7% last year on the back of rising demand for oil and coal, particularly in Asia and the United States.
WHAT THIS MEANS FOR YOUR BUSINESS
2020 holds out the prospect for energy policy initiatives to finally come forward after some delay. Energy and carbon reduction will soon return to the forefront when Glasgow hosts 30,000 delegates in the United Nations Climate Summit next year.
Businesses need to stay ahead of the game, follow upcoming events carefully and be proactive on their sustainability journey. To stay within the 1.5°c limit, businesses need to double their current actions, and quickly, particularly improving their sustainability efforts and reducing their carbon footprint; as the report highlights, there is significant advantage in doing so. With the falling costs of renewables, there needs to be a much quicker and wider uptake of renewable energy and technologies within businesses, as well as more proactive and collaborative activities from organisations.
Statkraft’s full report contains interesting insights into a changing energy landscape, including a comparative cost analysis between the 1.5°c and 2°c pathways.
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