Renewable energy investment needs to increase eight-fold — some $131 trillion — for the world to hit climate change targets, according to a new report.
The International Renewable Agency (IRENA) reviewed how to limit global temperature rises to 1.5°C and achieve net-zero emissions by 2050 in its “World Energy Transitions Outlook Report.”
IRENA says electricity must overtake fossil fuels as the dominant energy source before that mid-century date. To achieve that, an extra 30% investment is needed to reach the anticipated $131 trillion figure.
Global energy demands have increased by almost 50% in the last twenty years. Renewables supplied only 15.7% of that energy demand in 2019 while fossil fuels contributed 84.3% that year.
To meet climate change targets, IRENA predicts electric power needs to make up just over half of all energy consumed by 2050, compared with 20% in 2018.
Francesco La Camera, Director-General of IRENA, warned: “The window of opportunity to achieve the 1.5°C Paris Agreement goal is closing fast. The recent trends show that the gap is not decreasing but widening. We are heading in the wrong direction.”
Increased Renewable Electricity Production
According to the International Energy Agency (IEA), electricity generated by renewables will expand almost 50% in the next five years to nearly 9,745 terawatt-hours. That’s the equivalent of the combined electricity demand of China and the European Union.
More and more renewable electricity is coming online, too. Overall, renewables will account for 95% of net global power capacity increases from now until 2025.
Solar power will provide two-thirds of additions thanks to a 36% decrease in generation costs. In comparison, wind power will make up 30% of that new capacity.
By 2025, a third of all the world’s electricity will be supplied by renewable energy sources, surpassing coal’s electricity generation. Hydropower will create half of that renewable electricity, followed by wind and solar power. More and more energy suppliers offer green energy plans to further increase the demand for renewables.
Changes in Investment and Behaviors
IRENA’s report says keeping a lid on rising temperatures will require electricity to surpass fossil fuels as the dominant energy source before 2050. More and more economies will need to electrify transportation and heating to help cut carbon emissions.
Transportation will see the highest growth of electrification with a 30-fold increase, cutting 70% of its carbon emissions.
These trends are showing already. Global electric car sales rose from a then record 2.1 million in 2019 to a new high of 3.2 million in 2020.
Heating is a vastly underexploited area for renewable energy. Half of the global energy consumption in 2018 was used for heating, making it responsible for 40% of all carbon emissions.
But renewables provided only 10% of heating energy, predicted to rise to 12% by 2024. Greater take-up of electricity-powered heat pumps would reduce reliance on gas and oil-based heating systems and cut carbon emissions.
Investors have also been attracted to renewable energy stock, with the S&P Clean Energy Index up by 138% in 2020. IRENA’s report claims that for each $1 million invested, renewables create three times as many jobs as fossil fuels.
Keeping Industry Clean
Industry cannot switch some of its high-temperature processes to electricity, but green hydrogen may be the solution. By weight, hydrogen contains around three times as much energy as fossil fuels. It is relatively easy to transport and store and could replace coal and natural gas in the industrial sector.
Green hydrogen is made with an electrolyzer that splits water into hydrogen and oxygen. Using renewable electricity like solar panels to power the electrolyzer makes the hydrogen “green.”
Renewable power, green hydrogen, and modern bioenergy must dominate the globe’s future energy needs to meet the 1.5°C temperature rise limit, following IRENA’s report.
Key points to achieving this include increased electricity use in buildings, industry, and transport, plus extended use of green hydrogen, feedstocks, and synthetic fuels.
Technology advances may help, too. Researchers at the U.S. National Renewable Energy Laboratory claim to have created a liquid from food waste to help the aviation industry. When blended with jet fuel, the paraffin-type fluid could cut a plane’s greenhouse gas emissions by 165% compared to fossil energy alone.
Renewables in the Fast Lane
The question is not where the renewable journey is taking us but how fast we need to get there.
Francesco La Camera concluded: “We need a drastic acceleration of energy transitions to make a meaningful turnaround.”
Opinion writer: Tom Shearman
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