Green energy will dominate electricity generation by 2038
The global energy transition from fossil fuel energy sources to renewable alternatives is gaining momentum, according to a new report from EY. However, with the toughest part of the journey still to come, and a lack of investment, these efforts are at a make-or-break moment going into 2024.
2023’s COP28 was among the most divisive and combative to date. Hosted in Dubai, the UN’s annual climate summit was under the presidency of the United Arab Emirates – and commenced with Sultan al-Jaber, the oil-rich gulf state’s minister of industry and advanced technology, provoking a backlash by claiming there was no scientific basis for phasing out fossil fuels.
In comments first reported by The Guardian and investigative journalism organisation the Centre for Climate Reporting, al-Jaber – who held the role of COP28 President throughout the event – said there was “no science” behind calls for a phase out of fossil fuels, and suggested doing so would not allow for sustainable development “unless you want to take the world back into caves.” While a spokesperson for COP28 later attempted to walk back the comments – telling CNBC that “the COP President is clear that phasing down and out of fossil fuels is inevitable” while adding of the earlier story that “nothing in it is new or breaking news” – the debate would surface again at the close of the event.
The draft text for Dubai’s COP28 climate deal did not include the phasing out of fossil fuels – something which swiftly drew widespread criticism from major players, highlighting enduring rifts on the international summit’s final day. While a clause about the transitioning away from fossil fuels was added in and agreed on, it was has since also come in for criticism due to its “vague” nature, and lack of a clear time-frame for that policy.
Without that timeframe, all of this suggests that a new report from EY may be just as foreboding as it is encouraging. The research found that the global energy mix is set to tip away from oil and coal, and toward power generated from alternative sources by 2050. According to EY’s researchers, the shift to renewables is taking place faster than initially expected at present, predicting that by 2038 green energy will dominate global electricity generation. Further to this, it will create 62% of the power mix by mid-century.
Even so, the pace still falls short of meeting the 1.5C global warming target set out in the Paris Agreement of 2016, necessitating further acceleration. While the present decade will witness a peak in fossil fuel usage, EY’s paper notes that these carbon-based sources will continue to be part of global energy mix for an extended period, due to hard-to-abate sectors.
For example, decarbonising a largely hydrocarbon-powered industrial sector will be far more difficult than much of the progress already made – and will ultimately determine the success of the world’s transition to clean energy. This is a point which echoes research from KPMG in late 2023, which found that while the UK has assumed status as a ‘net-zero leader’ at present, that risks being squandered if it cannot meet challenges in the building, industrial and transport sectors.
To that end, Andy Brogan, EY-Parthenon’s global energy leader, warned, "we’re trying to rewire the global economy to meet an urgent environmental imperative and we can’t risk delay". To ensure that the push away from fossil fuels accelerates sufficiently, he added that governments and investors needed to challenge the state of play – where current returns do not provide sufficient motivation for needed expenditure, resulting in challenges for energy and resources companies trying to secure and allocate capital.
Policies enhancing the attractiveness of low-carbon alternatives for investors are essential, he contended, emphasising the need to "release the handbrakes". Only then can the world ensure the economic fundamentals for decarbonisation are intact, and safeguard the provision of affordable energy to speed up the transition.
