The world cannot hope to meet the Paris Agreement target of limiting temperature rise to 1.5 degrees Celsius relative to pre-industrial levels if current trends in government policy and industry practice continue , said Equinor ASA.
The mostly state-owned Norwegian company also noted that Russia’s invasion of Ukraine has added to the challenge of striking a balance between energy decarbonization and energy security.
And while recent laws like the US Inflation Reduction Act may accelerate the shift to clean energy, they may also lead to “inefficiencies” that make the transition more costly, Equinor said in its annual analysis “Energy Outlook” published Thursday.
Climate Budget
Equinor presented two scenarios, metaphorically called ‘walls’ and ‘bridges’, where the world would find itself in 2050 in terms of climate mitigation outcomes.
“Walls” sees countries staying the status quo and exhausting the so-called climate budget by 2033. That is, about two decades before we reach 2050, the world will have passed the 500 gigatonne (GT ) of US carbon dioxide emissions. Nations have set a target of 2020-50 to limit the rate of warming to 1.5ºC.
Instead, “Bridges” sees the world capping energy-related CO₂ emissions at 445 GT, “meeting a 50% chance of not exceeding a 1.5°C temperature rise.”
‘walls’
“The walls signify the abundance of barriers blocking fundamental and accelerated changes in the global energy system,” the report said.
Equinor said the war between Russia and Ukraine and the resulting geopolitical tensions have made it difficult to strengthen international cooperation towards climate goals. “The energy transition is constrained by cooperation and trust, and while climate policies continue to tighten, with momentum driven mainly by industrialized regions, the scenario is not meeting all the targets set and not moving fast enough to meet the goals of the Paris Agreement,” the report said.
These geopolitical tensions “have made the compromise between the three criteria of the energy trilemma (energy affordability, energy security, and energy decarbonization) more difficult,” the company said in a press release accompanying the report.
“Walls’ scenario is based on current market trends, technology and policy, assuming they will continue to develop at a slowly accelerating pace going forward,” the report said.
This scenario means that governments continue to prioritize “short-term economic growth over long-term climate goals,” he added.
‘Bridges’
Instead, the “bridges” scenario envisages a “benign geopolitical landscape” of cooperation and friendly competition between countries, according to the report.
“Energy markets are becoming more integrated and technological advances are more easily shared,” he said. “Climate action remains the key driver, and all regions are under pressure to rapidly phase out fossil fuels, build renewable capacity, improve energy efficiency and make drastic behavioral changes.”
Peak demand for fossil fuels
Current commitments would mean fossil fuel consumption would peak later in 2026 in the “walls” scenario, with a “gentle” decline thereafter, the report said.
For gas, demand peaks in 2039 and is 10% higher in 2050 compared to current levels.
Fossil fuel demand peaks in 2025 in the “Bridges” scenario, with gas demand falling to around a third of current levels by 2050.
“By 2050, all remaining fossil fuel use will be fully mitigated or offset by carbon removal” in the latter scenario, according to the report.
Renewables
Wind energy capacity increases eight times and solar photovoltaic capacity 13 times by 2050 relative to current levels in “Bridges”.
“In Walls, wind capacity is five times greater and solar PV nine times greater in 2050 compared to today,” the report says.
While both scenarios see electric vehicles displacing internal combustion engines, the ‘Bridges’ scenario increases transport decarbonisation by expanding the use of hydrogen to power air and marine mobility.
To contact the author, please email jov.onsat@rigzone.com
