Sustainability
GLOBAL ENERGY
B y the time you read this article, the world will have marked the 10th anniversary of the Paris Agreement on climate change at COP30. This COP in Belém, Brazil, is a significant one. Signatories to the Paris Agreement are expected to present their new Nationally Determined Contributions (NDCs), outlining their commitments to reduce greenhouse gas emissions and mitigate climate change. However, most have failed to deliver on the promises made in their previous NDCs and the world is nowhere near the trajectory needed to meet the Paris Agreement’s goals. That is despite mounting evidence of severe climate events and growing concern that the pace of climate change is accelerating. Even more troubling is that populist politicians have launched campaigns against climate action, and net zero in particular. Donald Trump has withdrawn the US from the Paris Agreement, slashed funding for green energy, and encouraged the oil and gas industry to “drill, baby, drill”. All of this has unfolded against a backdrop of heightened geopolitical tension created by Russia’s war against Ukraine and the conflict in Gaza. Energy remains at the heart of this fragmented geopolitical landscape, with Washington using energy exports to put pressure on major trading partners. It begs the question: how do you make sense of this increasingly complex and messy situation? The global energy system is responsible for more than 70 per cent of human-generated greenhouse gas emissions. To tackle climate change,
we must rapidly reduce our reliance on fossil fuels and shift to low-carbon electricity, primarily from wind and solar power. This presents a huge challenge. Energy historians note that transitioning to new energy sources usually takes several decades, citing the previous shifts from coal to oil, then gas. They also point out that these transitions involve adding new energy sources alongside those that already exist to meet increasing demand. Renewable energy sources are being added to fossil fuel consumption, but the latter continues to grow. We haven’t yet reached a point where low-carbon energy begins to replace fossil fuels. The ‘gradualist’ perspective uses this historical record to argue that energy transitions are too complex and, for some, too costly. It claims that the pace of change demanded by the Paris Agreement is unrealistic. Naturally, this view benefits fossil fuel companies and countries that rely heavily on fossil fuel exports. However, most countries are net importers of fossil fuels. This might lead them to a different outlook. Those who challenge the gradualist view argue that a rapid shift to low-carbon energy is crucial to reduce the physical risks of climate change. They argue that this energy transition is unique because it is driven by the necessity to minimise the existential threat posed by climate change. A growing number of vocal ‘S-curve optimists’ – who expect the transition to sustainable energy to resemble an ‘S-shape’ graph, accelerating quickly before levelling off again – also note that clean
“The world is nowhere near the trajectory needed to meet the Paris Agreement’s goals” that emerging ‘electrostates’ will soon outpace the ‘petrostates’ in economic strength and geopolitical influence. There is certainly growing evidence that the recent global energy crisis is accelerating the shift to low-carbon energy to reduce dependence on imported fossil fuels. technology now offers the cheapest method of generating electricity in many parts of the world. Consequently, they believe These two perspectives are also reflected in many of the different energy and climate scenarios that have been drawn up. The gradualist approach is common in most exploratory scenarios that project our future based on current trends Conversely, the perspective of S-curve optimists supports normative scenarios that set a target – such as achieving a net zero energy system by 2050 – and plot a route back to the present to create a future that is Paris aligned. and depict a future that is far from ‘Paris aligned’. Geopolitics plays a key role in shaping both futures. Most exploratory scenarios view geopolitical competition and fragmentation as the main obstacles to progress. In contrast to this, normative
The messy mix How will the energy transition really unfold?
by Michael Bradshaw
Warwick Business School | wbs.ac.uk
wbs.ac.uk | Warwick Business School
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