Research by BloombergNEF (BNEF) has reveal global emissions from fossil fuel consumption likely peaked last year, as power demand has fallen this year due to coronavirus pandemic-related restrictions.
In its New Energy Outlook (NEO) report, BNEF said emissions from the energy sector have fallen by around 10 per cent this year as a result of the COVID-19 pandemic.
Even if they rise again with economic recovery, they will never reach 2019 levels again.
From 2027 onwards, emissions are seen falling at a rate of 0.7 per cent per year to 2050.
This is due to the rise in wind and solar power, increased uptake of electric vehicles and improved energy efficiency across industries, the report said.
BNEF said the stark drop in energy demand due to the coronavirus pandemic would remove some 2.5 years’ worth of energy sector emissions between now and 2050.
BNEF’s latest projection of the evolution of the global energy system over the next 30 years, using its proprietary Economic Transition Scenario, shows that emissions from fuel combustion peaked in 2019.
The report said this prospect is based on a huge build-out of super-competitive wind and solar power, the uptake of electric vehicles and improved energy efficiency across industries.
Together, wind and solar will account for 56 per cent of global electricity generation by mid-century and together with batteries take 80 per cent of the US$15.1 trillion invested in new power capacity over the next 30 years, according to the analysis.
An additional US$14 trillion would be invested in the grid to 2050.
The BNEF study shows coal-fired power will peak in China in 2027 and India in 2030, collapsing to 12 per cent of global electricity generation in 2050.
In contrast, gas is the only fossil fuel to keep growing throughout the outlook, up 0.5 per cent year-on-year to 2050, growing 33 per cent in buildings and 23 per cent in industry where there are few economic low-carbon substitutes.
Yet, despite the progress of the energy transition, and the decrease in energy demand brought by Covid-19, BNEF still sees energy sector emissions putting the world on course for a 3.3 degrees Celsius temperature increase by 2100.
Jon Moore, CEO of BNEF commented: “The next ten years will be crucial for the energy transition.
“There are three key things that we will need to see: accelerated deployment of wind and PV; faster consumer uptake in electric vehicles, small-scale renewables, and low-carbon heating technology, such as heat pumps; and scaled-up development and deployment of zero-carbon fuels.”
Whereas NEO previously focused on the electricity sector, this year’s report includes detailed chapters on industry, buildings and transport to give a full-coverage, economics-led view of the energy economy to 2050.
The report also features a Climate Scenario investigating a clean electricity and hydrogen pathway to holding temperatures to well below 2.0°C.
Seb Henbest, chief economist at BNEF and lead author of NEO 2020, said: “Our projections for the power system have become even more bullish for renewables than in previous years, based purely on cost dynamics.
“What this year’s study highlights is the tremendous opportunity for low-carbon power to help decarbonise transport, buildings and industry, both through direct electrification and via green hydrogen.”
NEO 2020 sees total oil demand peaking in 2035 and then falling 0.7 per cent year-on-year to return to 2018 levels in 2050.
Electric vehicles are projected to reach upfront price parity with internal combustion vehicles in the years leading up to the mid-2020s.
After that their adoption accelerates, eating more and more into the oil demand growth that otherwise comes from aviation, shipping and petrochemicals.
Ultimately, energy use in buildings, industry and certain parts of the transport sector, such as aviation and shipping, have few cost-competitive low-carbon options, and so remain heavily reliant on gas and oil products.
Matthias Kimmel, senior analyst at BNEF and co-author of the report, commented: “To stay well below two degrees of global temperature rise, we would need to reduce emissions by six per cent every year starting now, and to limit the warming to 1.5°C, emissions would have to fall by 10 per cent per year.”
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