The hydrocarbon producing countries of the MENA region believe in their preeminent albeit shrinking source of revenues for decades. But, as shown by some counties of the Gulf net-zero recent pledge, they see economic and political opportunities in moving to the green energy transition. Accelerated renewables-based electrification paves the way for a post-fossil future by Nature Energy explains how the world and particularly the EU in order to achieve its climate and geopolitical goals, it will need to substantially increase its engagement with Gulf states.
Accelerated renewables-based electrification paves the way for a post-fossil future
The research was published in Nature Energy.
Cost-slashing innovations are underway in the electric power sector and could give electricity the lead over fossil-based combustion fuels in the world’s energy supply by mid-century. When combined with a global carbon price, these developments can catalyze emission reductions to reach the Paris climate targets, while reducing the need for controversial negative emissions, a new study finds.
“Today, 80 percent of all energy demands for industry, mobility or heating buildings is met by burning—mostly fossil—fuels directly, and only 20 percent by electricity. Our research finds that relation can be pretty much reversed by 2050, making the easy-to-decarbonise electricity the mainstay of global energy supply,” says Gunnar Luderer, author of the new study and researcher the Potsdam Institute for Climate Impact Research. “For the longest time, fossil fuels were cheap and accessible, whilst electricity was the precious and pricier source of energy. Renewable electricity generation—especially from solar photovoltaics—has become cheaper at breath-taking speed, a pace that most climate models have so far underestimated. Over the last decade, alone prices for solar electricity fell by 80 percent, and further cost reductions are expected in the future. This development has the potential to fundamentally revolutionize energy systems. Our computer simulations show that together with global carbon pricing, green electricity can become the cheapest form of energy by 2050, and supply up to three quarters of all demand.”
The reasons lie mainly in the ground-breaking technological progress in solar and wind power generation, but also, in the end, uses of electric energy. Costs per kilowatt hour solar or wind power are steeply falling while battery technology e.g. in cars is improving at great speed. Heat pumps use less energy per unit of heat output than any type of boiler and are becoming increasingly competitive not only in buildings, but also in industrial applications. “You can electrify more end-uses than you think and for those cases actually reduce the energy consumption compared to current levels,” explains Silvia Madeddu, co-author and also researcher at the Potsdam Institute.
“Take steel production: Electrifying the melting of recycled steel, the so-called secondary steel, reduces the total process energy required and lowers the carbon intensity per ton of steel produced,” says Madeddu. “All in all, we find that more than half of all energy demand from industry can be electrified by 2050.” However, some bottlenecks to electrification do remain, the researchers point out. Slowest in the race to decarbonisation are long-haul aviation, shipping, and chemical feedstocks, i.e. fossil fuels used as raw materials in chemicals production.
Limiting the reliance on negative emissions
The scale of the technological progress holds great opportunities for countries to leapfrog and for investors alike. However, not every technology is a success story so far. “In this study, we constrained the reliance on technologies which aim at taking carbon out of the atmosphere, simply because they have proven to be more difficult to scale than previously anticipated: Carbon Capture and Storage has not seen the sharp fall in costs that, say, solar power has. Biomass, in turn, crucially competes with food production for land use,” Luderer lays out. “Interestingly, we found that the accelerated electrification of energy demands can more than compensate for a shortfall of biomass and CCS, still keeping the 1.5 degrees Celsius goal within reach while reducing land requirements for energy crops by two thirds.”
Era of electricity will come—but global climate policy must accelerate it to meet climate goals
“The era of electricity will come either way. But only sweeping regulation of fossil fuels across sectors and world regions—most importantly some form of carbon pricing—can ensure it happens in due time to reach 1.5 degrees,” Luderer says. Indeed, the simulations show that even if no climate policy at all is enacted, electricity will double in share over the course of the century. Yet in order to meet the goals of the Paris Agreement of limiting global warming to well below two degrees, decisive and global political coordination is crucial: pricing carbon, scrapping levies on electricity, expanding grid infrastructure, and redesigning electricity markets to reward storage and flexible demands. Here, hydrogen will be a crucial chain link, as it can flexibly convert renewable electricity into green fuels for sectors that cannot be electrified directly. “If these elements come together, the prospects of a renewables-based green energy future look truly electrifying,” says Luderer.
A new research report released by Siemens Smart Infrastructure, titled ‘A New Space Race,’ has highlighted the increasingly urgent need to transform global infrastructure to focus on adaptability, resiliency and decarbonisation. Data from the report claims infrastructure leaders worldwide recognise the need for digitalisation to tackle challenges in energy systems and the built environment.
“Infrastructure stakeholders are starting to act with real urgency. They recognise the need to accelerate decarbonisation, to build greater resilience and adaptability, while maintaining competitiveness,” said Matthias Rebellius, CEO, Siemens Smart Infrastructure. “Major change is challenging, but our highest goals are possible if we harness the power of data and new technologies, welcome greater cooperation and keep driving innovation.”
Based on interviews with 500 senior managers from a range of infrastructure disciplines in 10 countries, the report highlights changing priorities in a post-pandemic world. Among its findings is an increasing focus on the role of infrastructure in driving a digitalised energy transition, reducing carbon emissions, enabling future working models, and its potential to play a more active role in the health and wellbeing of people.
Digitalisation as an enabler for decarbonising infrastructure
The report suggests a significant rise in the number of organisations setting low-carbon or net-zero targets, and most respondents are optimistic about these goals, with the majority (94 percent) expecting their organisations to be carbon neutral by 2030.
“Buildings will be a lot more digital in the future”
67 percent of energy infrastructure stakeholders believe that net zero energy is impossible without digitalisation, with AI-driven prediction and automation considered to have the biggest impact on infrastructure assets, projects, and investments over the next five years.
However, the majority (63 percent) of infrastructure stakeholders believe the digitalisation of buildings and power networks is lagging behind digital progress in other industries. Only 31 percent of those questioned said they make full use of the data available to them, with almost half reporting they have not yet done so.
Future adaptability is the most important requirement for buildings
In addition to the impact of infrastructure on the environment, the report also highlights the changing needs and expectations of people in their buildings, factories, facilities, offices, homes and surrounding infrastructure. It claims that for many, adaptability is considered the most critical factor when designing a new building or facility, to allow the re-purposing of spaces to suit changing occupants. Not only was this considered the most important thing to get right; it was also considered the most difficult.
“Buildings will be a lot more digital in the future,” said Rebellius. “A facility manager will not only be able to automate, and remotely control more functionality, they will also benefit from a wider network of better sensors that flow into integrated visualisations and richer datasets. This will support a new level of fine-grained control and insights that are needed to make future buildings more resilient and flexible.”
The panel, “Cleaning up the Power Sector,” was moderated by Julian Brave NoiseCat, vice president of policy and strategy at Data for Progress, a think tank.
Scientists believe that achieving net-zero emissions of greenhouse gases by 2050 is crucial.
“This is what physicists tell us is necessary to prevent — not global warming; it’s too late for that — but global warming at a scale that will cut civilization off at the knees,” said longtime climate activist and author Bill McKibben, a distinguished scholar in environmental studies at Middlebury College.
Clean electricity is a solution, panelists said.
“Seventy-five percent of our carbon problem right now can be solved through clean electricity and electrification,” said Leah Stokes, co-host of the “Matter of Degrees” podcast and an associate professor at the University of California Santa Barbara. “We can use clean electricity to power our homes, our cars, even about half of heavy industry.”
“It’s pretty much a miracle that we’re now at a place where the cheapest way to produce power on planet Earth is to point a sheet of glass at the sun,” McKibben agreed.
We’re now at a place where the cheapest way to produce power on planet Earth is to point a sheet of glass at the sun.
Bill McKibben, Co-founder, 350.org
Yet despite the rise of solar and wind power and the transition away from coal-fired power and natural gas, we’re not moving fast enough.
“Thanks to policy investments over the last decade, we have a toolset available of mature technologies that [are] cheap and ready to scale, including wind and solar power,” said Jesse Jenkins, a macro-scale energy systems engineer and assistant professor at Princeton University. “But we need to be smashing records for the deployment of these energy technologies every year for the rest of our lives.”
How to hit that goal? Panelists identified a way forward — one built on technology and policy and powered by human resolve.
The willpower to divest fully …
Solar and wind power have become cost-effective for a reason: advocacy. Panelists noted that the cost of wind has dropped by approximately two-thirds and the cost of solar power and lithium-ion batteries has fallen as well over the past decade.
“That’s not an accident. That was due to public policy — and that public policy was due to pressure from activists and from advocates, and from public interest groups,” said Jenkins.
That advocacy and involvement will have to scale up massively to reach the 2050 goal, particularly in regards to phasing out the use of fossil fuels.
“Even with [clean] technology available, the hardest thing that humans have ever done, acting with enormous unity, is at every turn [to] keep trying to break the vested interest of the fossil fuel industry and utilities,” McKibben said.
We have to stop using fossil fuels, and we have to stop building any new fossil fuel infrastructure of any variety.
Leah Stokes, Associate professor, UC Santa Barbara
This requires sustained grassroots efforts, such as the anti-fossil-fuel organization 350.org, which McKibben cofounded in 2008.
McKibben cited in particular “the young people around the world rallying around figures like Greta Thunberg,” and said it’s time for high-profile groups to follow suit and publicly renounce fossil fuels — including institutes of higher learning.
“The Massachusetts Institute of Technology is looking a little naked in this regard. Its neighbor Harvard, and its neighbor across the bridge Boston University, have now divested. … It’s time for MIT to pay attention to the physics department and stop trying to profit off climate change, too,” McKibben said.
Stokes called for a “paradigm shift” away from the idea that efficiency can sufficiently mitigate the effects of burning fossil fuels.
“For a long time, we thought if you get a Prius, that’s good enough. If you get a high-efficiency gas furnace, that’s good enough. And what we know now is that it’s not good enough,” Stokes said. “We have to stop using fossil fuels, and we have to stop building any new fossil fuel infrastructure of any variety.”
… and to buildfuriously
Achieving net-zero emissions of greenhouse gases by 2050 is about more than stopping fossil fuels; it requires formidable innovation — and infrastructure — to replace it.
On the technology side, that includes the development of improved hydrogen production, ways to produce steel without emissions, and negative-emissions technologies such as bioenergy, Jenkins said.
On the policy side, advocates and policymakers need the fortitude to commit not just to fossil fuel divestiture, but to building new infrastructure.
It’s all too easy for well-intentioned people to say ‘no’ to [a] project without understanding that we have to say ‘yes’ to something, somewhere.
Jesse Jenkins, Assistant professor, Princeton University
“We have to shift this whole country into a mode of infrastructure-building that we haven’t seen in my life,” said Jenkins, who said the U.S. is living off of the fruits of the 20th-century investments in highways, cities, and power systems “that really petered out in the 1970s.”
“That has to fundamentally change if we’re going to build a net-zero emissions economy,” Jenkins said, which requires building wind and solar at more than twice the average pace over the next decade and doubling (or tripling) the total amount of transmission capacity in the country to support electrification over the next 30 years.
“It’s a challenge for environmental activists and others who are organizing. We’re very good at stopping things. Now we have to figure out how to accelerate and support the growth of substantial amounts of infrastructure,” Jenkins said.
New projects of this enormity require stakeholder buy-in on a regional scale.
“If we just go project by project, and we leave it to a private company to navigate where the wind project goes or where the transmission line goes, it’s all too easy for them to fumble that,” Jenkins said. “And it’s all too easy for well-intentioned people to say ‘no’ to that project without understanding that we have to say ‘yes’ to something, somewhere.”
Stokes said, “We need businesses right now to be calling up their congressmen, calling up their senators and saying, ‘We want you to actually do this. We want you to act on climate change and act on investing in American families.’”
Policy is key
Stokes visualizes progress along what she calls a “narwhal curve” to track clean energy deployment.
“We need to be getting upward of four or five percentage points if we want to get to 100 percent clean electricity by 2035, which is what President Biden campaigned on and won on and is trying to legislate on currently,” she said.
McKibben called Biden’s agenda the “first serious climate legislation” to arrive on the Hill.
A key component, currently held up by opposition from West Virginia Senator Joe Manchin, is the Clean Electricity Performance Program, a proposed government incentive for utilities to receive grants if they deploy clean power at the necessary pace and scale, without a burden on consumers.
“That’s really important because it means that everyday customers who are paying their electricity bills are not going to carry the costs of this transition — the federal government is going to help make electricity bills cheaper while doing this clean energy deployment,” Stokes said.
On the flip side, utilities that don’t move quickly enough would pay a penalty. “It’s not about making bad, dirty stuff more expensive — it’s about making cheap, good, clean stuff cheaper,” Stokes said.
“If you look at the bill in Congress right now, it is our best opportunity to dramatically accelerate that feedback cycle … by primarily investing in the growth of clean energy technologies and driving and accelerating trends that really are already underway,” Jenkins said.
These include investing in electric vehicles, including rebates and tax credits for consumers, as well as investment in electric vehicle manufacturing and carbon capture technologies.
In part two of Climate Fight: the world’s biggest negotiation, a series from The Anthill podcast on the UN climate summit in Glasgow, we’re talking to experts about the grand goal of the negotiations: reaching net-zero emissions.
More than 130 countries have set or are considering a target of net-zero emissions by mid-century. At COP26 – the annual meeting of the UN Framework Convention on Climate Change (UNFCCC), which the UK is hosting this year – world leaders will be urged to submit emission reduction targets for 2030 that will put them on track to reach net-zero by 2050.
And what does net zero mean, exactly? “All it really means is that our dangerous interference with the Earth’s climate will stop when we stop emitting greenhouse gases into the atmosphere,” says James Dyke, a senior lecturer in global systems at the University of Exeter. With time and the world’s remaining carbon budget running perilously short, net-zero emissions entails not only “the amount of carbon that we will emit”, Dyke explains, but also “the amount of carbon that we will remove.”
Carbon capture and storage is one technology that climate scientists hope could help in that effort. Our producer, Tiffany Cassidy, visited the Boundary Dam coal-fired power plant in Saskatchewan, Canada, to see it in action. This is the first power station in the world to successfully use this technology, and we learn that it now captures two thirds of its carbon emissions.
“It’s not going to be just one technology that is going to help us to reach net zero,” says Mercedes Maroto-Valer, director of the Research Centre for Carbon Solutions at Heriot-Watt University. “It’s going to be a portfolio of different technologies that are going to be ready at different times.”
There are options for removing carbon from the atmosphere, such as planting trees or direct air-capture machines; and preventing it getting there in the first place, such as carbon capture and storage; and replacing fossil fuels with zero-carbon alternatives, such as green hydrogen – but none of them are ready to be deployed at anything like the scale necessary to offset the more than 40 billion tonnes of CO₂ which countries emit each year.
As the awesome challenge of decarbonising the world bears down on us, Myles Allen, professor of geosystem science at the University of Oxford, tells us that there is no longer room for half-measures:
We didn’t save the ozone layer by putting a tax on deodorant. We went to the manufacturers of CFCs and just said, no, you can’t produce these things that are going to destroy the ozone layer. We’ve got to do the same thing for fossil fuel producers.
Join us, and a host of academic experts, as we stake out the path to net zero.
The Climate Fight podcast series is produced by Tiffany Cassidy. Sound design by Eloise Stevens and the theme tune is by Neeta Sarl. The series editor is Gemma Ware.
Insurance Journal reviews the construction industry as to how it is globally impacted by climate change. The author L.S. Howard explains how Global Construction Industry Faces Climate Change.
Global Construction Industry Faces Climate Change Challenges, Opportunities: Marsh
1st October 2021
Climate change and the race to net-zero greenhouse gas emissions (net zero) are arguably the greatest challenges that face the construction industry – but will drive new opportunities, according to a report published by Marsh and Guy Carpenter, subsidiaries of Marsh McLennan.
The infrastructure boom is set to fuel global economic growth over the next decade, with global construction output expected to grow by 6.6% in 2021 and by 42% by 2030, driven largely by government stimuli and the demand for residential construction, said the report, titled “Future of Construction: A Global Forecast for Construction to 2030.”
The global construction market is expected to grow by US$4.5 trillion over the decade to 2030 to reach US$15.2 trillion, said the report, noting that just four countries — China, India, US, and Indonesia — will account for almost 60% of this growth. At the same time, the top 10 global construction markets are expected to account for almost 70% of the growth over the same period.
Although the near-term outlook for the global economy remains clouded by a surge in inflation, supply-chain bottlenecks and the Delta variant, the global construction industry is set to lead global economic recovery from the pandemic over the medium-term and is expected to grow faster than the manufacturing or service sectors, said the report, which was written with Oxford Economics.
However, as the sector grows, so too does the risk of greater pollution and waste, the report warned, explaining that construction and the wider built environment currently accounts for around 40% of the world’s global greenhouse gas emissions. (Editor’s note: A Marsh representative explained that “the wider built environment” relates to the construction supply chain, namely the inputs and outputs associated with construction projects.)
During the global transition to net zero, the industry needs to radically reduce the amount of carbon embedded in new construction, infrastructure and buildings, which is already a “huge challenge.”
“An emerging deconstruction industry that will reuse huge existing urban stockpiles of construction materials could reduce embedded carbon in the construction of new buildings and infrastructure,” the Marsh report continued.
In addition, the climate crisis is driving huge demand to decarbonize energy networks and develop renewable energy, the report said, citing Saudi Arabia’s Giga Projects, which is leading net zero initiatives.
“Sustainable and quality infrastructure is a driver of economic growth and social progress and is an enabler to achieving Sustainable Development Goals (SDGs) and Paris Agreement commitments.”
Further, it continued, environmental, social, and governance (ESG)-related capital for infrastructure grew 28% in 2020, which was largely due to a flow of fundraising into sustainability-related strategies. “Given that significant equity is usually allocated to infrastructure by major construction companies and developers using their own corporate balance sheets, opportunities exist for those companies that develop new technologies, designs, and processes.”
“Climate change and the ESG agenda – and the risks and opportunities they present – are among the biggest challenges the global construction industry faces over the next decade. These forces are changing risk profiles for the sector,” commented Richard Gurney, global head of Construction, Marsh Specialty, in a statement.
“Organizations must adapt in order to harness the sector’s massive potential for growth while playing a pivotal role in the advancement of economies and communities around the world,” he said.
“The construction and engineering industry is entering a period of exciting opportunity but also one that will require new ways of approaching risk by the insurance and reinsurance sectors,” said Simon Liley, co-head, Global Engineering, Guy Carpenter.
“These dynamics call for effective knowledge sharing from industry innovators at one end all the way through to reinsurance actuaries at the other,” Liley noted. “Understanding the shifting profile of exposure, technology, and sources of capital will be important to enable insurers and reinsurers to establish underwriting platforms and offer products that meet the construction industry’s changing needs.”
Other Marsh/Carpenter projections for the industry to 2030 include:
Predicted average annual growth in construction of 3.6% per annum – faster than either the services or manufacturing sectors.
The next decade for construction will see global growth up by 35% compared to the previous decade, driven by unprecedented levels of stimulus spending on infrastructure and the unleashing of excess household savings; it will represent more than 10% of GDP in North America.
Global infrastructure construction is forecast to grow by an annual average of 5.1%.
Annual growth in UK infrastructure is expected to average 3.7%, rivaling China over the period as UK mega projects provide heightened growth.
Urbanization is expected to turbo charge growth in emerging markets. Overall growth of the world’s population could add another 2.5 billion people to urban areas by 2050 with almost 90% of this happening within Asia and Africa.
“It is unusual to see construction outstripping growth in both services and manufacturing over a more sustained period. We would normally expect to see construction growing faster than other sectors of the economy for shorter periods in a cyclical upturn,” said Graham Robinson, Global Infrastructure and Construction lead at Oxford Economics and lead author of “Future of Construction.”
“However, it’s not surprising that construction is expected to power the global economy over this next decade, considering the unprecedented nature of the stimulus spending on infrastructure by governments and the unleashing of excess household savings in the wake of COVID,” Robinson affirmed.
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