July 2023 was the hottest month ever recorded on Earth. We are running out of superlatives to convey the urgency of climate change. In the countdown to COP28, the world must rally to draw up a realistic roadmap for fast-tracking the energy transition and slashing emissions before 2030.
By Christian Bruch, CEO of Siemens Energy
We are eight months into 2023, and almost every month this year has been in the top five hottest on record. As we continue to witness the effects of intensified climate change, we are now at the stage of “now or never”. Every fall in CO2 emissions counts because the reality is that the world is not making the desired progress. In 2022, global emissions reached a record high of 36.8 billion tons of CO2. And while global energy demand is expected to surge by approximately 25% by 2030, we are still faced with the sobering fact that around 775 million people still lack access to the most basic means of electricity.
To reach net zero, the world must radically rethink how it lives and must recognize that energy is not merely a commodity; it is the foundation for social development, economic growth and prosperity. The absence of a resilient electricity supply hinders economic growth and slows down social development. Avoiding dependencies on one or a small number of fuels, technologies, or countries and, in turn, strengthening the resilience of infrastructure and ecosystems to withstand climate change will be key to breaking this cycle. Moreover, the energy transition also provides a huge opportunity to become the most significant transformation since the industrial revolution.
Everything that slows the implementation of energy technologies will also slow the fight against climate change.
Leaders take note: “We are at the stage of now or never.”
Tackling energy transition means tackling multiple sectors causing global greenhouse gas emissions in parallel. As the graph below shows, emissions come from many different sectors to which there is no single or simple solution.
With the implementation of the Paris Climate Agreement in 2015 and its long-term goal to keep the rise in mean global temperature well below 2 °C there is no question about what we have to work towards. Build out renewables as fast as possible, strengthen the electrical grids, develop green hydrogen for hard-to-abate sectors, and most importantly, drive energy efficiency wherever possible.
The energy industry has the knowledge and ability to develop innovative technologies to build an energy system for a net zero future. What is required is that global conferences, like that of COP28, do not merely turn into an exercise of sharing information, leading to vague recommendations. Only through concrete and actionable measures will we drive the desired change. In the words of secretary-general of the United Nations, António Guterres “leaders must lead, no more waiting for others to move first”. Let me highlight four points.
A successful energy transition will require:
1. A lot of Investment: For the energy transition to succeed, the use of renewable energies must be massively increased worldwide. By 2050, the share of renewable energies in the United States needs to triple at the very least. The Asia-Pacific region will have to increase its share by four times to 10 times compared with 2020 – by comparison in Europe, we assume a three- to fourfold increase. Such gains can be achieved only if the framework conditions are right, regulatory barriers are lowered, and, in particular, access to enormous quantities of materials is guaranteed. After all, we know that the material intensity per installed kW is significantly higher compared with conventional technologies.
2. Effective Implementation: The need to carry out new grid infrastructure and renewable projects is greater than ever. Making this possible will require a ramp-up of resources, factories, and infrastructure. Since the volumes we are talking about are so huge, it will be necessary to set boundary conditions for energy projects as effectively as possible. It is not just about easier, faster, and more predictable permitting procedures but also more standardized equipment and concepts.
3. Innovation: 45% of all emissions savings in 2050 will come from technologies that have yet to reach the market. The question, therefore, is how do we make innovative technologies commercially viable in the energy market? Because energy projects have such a long life span, it is tough to implement technologies that, despite being innovative, haven’t been proven in the long term. An example of what can happen if innovation is pushed too fast and without a balanced risk and reward profile can currently be observed in the wind industry. It has made great technical progress in recent years, but the market remains flawed. This needs to be addressed so turbine suppliers can earn what they require in order to fund innovation. If we want innovation to thrive, we must define how a risk and reward profile can be distributed fairly.
4. Global Trade: There is no doubt that pushing for diversification of supply chains and technologies is the right approach. However, we should not fool ourselves. Diversification comes at a cost and requires time. While diversifying, we also need to ensure that we keep global trade open and viable. Everything that slows the implementation of energy technologies will also slow the fight against climate change.
To conclude, while the challenges facing COP28 cannot be underestimated, neither can the vast opportunity of solving its problems if done right. COP28 will bring together a diverse set of stakeholders – we should not miss the opportunity for all of them to leave as climate change leaders.
I would be interested to hear your take on the matter – let me know in the comments section of the LinkedIn Article: https://tinyurl.com/4xm45b5y
About the author: Christian Bruch is President and Chief Executive Officer of Siemens Energy AG, one of the world’s leading energy technology companies. The company works with its customers and partners on energy systems for the future, thus supporting the transition to a more sustainable world.
August, 2023 (updated version)
Combined picture and video credits: Siemens Energy; iStock Photo