Global Energy, Industry and Financial Leaders Outline Next Decade Priorities for a Net-Zero-Carbon Economy

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New Delhi, September 2020: A coalition of 40 leaders from global energy producers, energy-intensive industries, financial institutions and environmental advocates – including ArcelorMittal, Bank of America, BP, Development Research Center of the State Council of China, EBRD, HSBC, Iberdrola, Ørsted, Shell, Sinopec Capital, Tata Group, Volvo and the World Resources Institute among others – argues in this report that the world can and must achieve net-zero greenhouse gas emissions by mid-century and that “zero must mean zero” with no permanent reliance on negative emissions to balance continued energy and industrial emissions. It also lays out the steps needed in the next decade to achieve that objective.

In its new report, “Making Mission Possible – Delivering a Net-Zero Economy”, the Energy Transitions Commission (ETC) shows that clean electrification must be the primary route to decarbonisation: it highlights that dramatic falls in the cost of renewable energy make this easily affordable and argues that all growth in electricity supply should now come from zero-carbon sources with no need to build any new coal-fired power capacity to support economic growth and rising living standards.

The Report demonstrates that it is technically and economically possible to have a carbon-free economy by around mid-century at a total cost of less than 0.5 per cent of global GDP by taking three overarching steps:

  • Using less energy while improving living standards in developing economies, by achieving dramatic improvements in energy efficiency and shifting to a circular economy;
  • Scaling up clean energy provision by building massive generation capacities of cheap clean power, at a pace five to six times higher than today, as well as expanding other zero-carbon energy sources such as hydrogen;
  • Using clean energy across all sectors of the economy by electrifying many applications in buildings, transport and industry, and deploying new technologies and processes using hydrogen, sustainable biomass or carbon capture in sectors that cannot be electrified, like heavy industry or long-distance shipping and aviation.

India has adequate renewable energy resources to support a zero-carbon power system delivering 6,000 TWh or more in 2050 at close to no cost to electricity consumers, living standards or economic growth, thanks to the increasing competitiveness of India’s solar and wind energy. Detailed analysis by ETC India shows that wind and solar generation could increase to ~32 per cent of India’s power generation by 2030 with total low/zero carbon increasing to 47 per cent of the total. Moreover, the total system cost, allowing for necessary storage and flexibility resources, will be no higher than if new coal capacity were installed instead. Consequently, India can deliver rapid increases in electricity supply to support rising prosperity at a competitive total system cost, without building any more coal plants beyond those currently under construction.

The signatories acknowledge that this report is published in “an unprecedented context”. They argue that the COVID-19 pandemic has demonstrated the unpreparedness of the global economy to systemic risks and that the massive public spending now being dedicated to stimulating economic recovery constitutes a unique opportunity to invest in a more resilient economy.

The ETC estimates that additional investments required to achieve those goals will be in the order of US$1 trillion to US$2 trillion per year, equivalent to 1 per cent to 1.5 per cent of global GDP. This represents only a small increase of global investments which currently amount to about a quarter of global GDP, and would contribute to global economic growth.

“There is no doubt that it is technically and economically possible to reach the zero-carbon economy which we need by 2050; and zero must mean zero, not a plan which relies on the permanent and large-scale use of “offsets” to balance continued GHG emissions. But action in the next decade is crucial – otherwise, it will be too late,” ETC Co-Chair Adair Turner said.

Fellow ETC Co-Chair Ajay Mathur added, “In India as in many countries, climate change is already impacting people and disrupting the economy. Governments from developed and developing countries will find in this blueprint practical recommendations on how to enhance their national strategies and ramp-up their commitments as part of the Paris agreement.”

The Report outlines three critical priorities for the 2020s and practical actions that nations and non-state parties can commit to in the run-up to the COP26 United Nations Framework Convention on Climate Change in November 2021 to put mid-century objectives within reach.

Speed up the deployment of proven zero-carbon solutions: Governments, investors and corporates need to work hand-in-hand to build up massive capacities of zero-carbon power generation to enable the clean electrification of the economy.

Create the right policy and investment environment by removing fossil fuel subsidies, increasing carbon prices and combining them with border carbon adjustments in the absence of an internationally-agreed carbon price, putting in place regulations – like fuel mandates or lifecycle emissions standards for manufactured products – that create additional incentives for decarbonisation where price signals are insufficient, and working with financial institutions to channel investment not only to green activities but also to energy-intensive industries making their transition.

Bring the next wave of zero-carbon technologies for harder-to-abate sectors to market so they can be deployed in the 2030s and 2040s, by focusing public and private R&D on critical technologies (like hydrogen, sustainable fuels or carbon capture), creating demand for new green products and services (through “green buyers’ clubs, public procurement, and product regulations), and financing the first commercial-scale pilots through smart use of de-risking public funds alongside private capital.

The ETC’s blueprint is intended to allow all developed economies to reach net-zero emissions by 2050 at the latest, including China which has the resources and technology leadership to become a rich developed zero-carbon economy by 2050. All developing nations would be able to reach net-zero emissions by 2060 at the latest, but require development finance to de-risk and attract private green investment.

The report integrates findings from ETC’s landmark 2018 Mission Possible report and subsequent region-specific studies with updated analysis to reflect the latest trends in the readiness and cost of key emission-reducing technologies.

Quotes:

Dominic Emery, Chief of Staff, BP – This new report from the ETC shows that the shift to a net-zero economy by 2050 is both technologically possible and economically vital as societies look to build back better from the pandemic.  Reimagining the energy system for a zero-carbon future is central to almost every aspect of this shift, which is why at bp we are transforming our business, aiming to increase renewable energy generating capacity 20-fold by 2030 and reduce oil and gas production by 40 per cent over the next decade. Corporate action matched by policy leadership will be key if society is to drive transition at the pace required by science.”

Stephen Fitzpatrick, Founder, Ovo Energy

“The transition to a zero-carbon society offers an enormous opportunity to revitalise the global economy, improve air quality and raise living standards. Making Mission Possible provides a clear and practical blueprint for the delivery of a clean energy future, not least through the implementation of renewable electricity generation worldwide and the wholesale electrification of transportation and heating; all underpinned by intelligent digital energy infrastructure.”

John Holland-Kaye, Chief Executive Officer, Heathrow

“In tackling the climate crisis, carbon is our shared enemy. At a time that we are feeling the impact of constraints on our mobility it is encouraging that we are working together to make decarbonising aviation a reality.  We urgently support the development of sustainable aviation fuels – it will enable our industry to take action now to achieve Net Zero. Now is the time to turn ideas into action and preserve the benefits of aviation in a world without carbon so that future generations can enjoy what we have now.”

Ian Simm, Founder and Chief Executive Officer, IMPAX Investment

“As this report makes clear, it is possible to achieve a net-zero economy in the developed world by 2050, but it will require significant and targeted investment into clean energy.  Making Mission Possible highlights how the investment community will benefit from a successful energy transition, but in order to do so, we need to move at speed and at scale.”

Thomas Thune Anderson, Chairman of the Board, Ørsted 

“Renewable energy is fundamental to delivering a net-zero economy by 2050. The ETC report provides a blueprint for a green economy and calls for global leaders to take action in the next decade. And everyone needs to act to help create a world that runs entirely on green energy.”

To read the full report, visit the ETC website www.energy-transitions.org

ETC Commissioners:
Marco Alvera, Chief Executive Officer – SNAM
Thomas Thune Anderson, Chairman of the Board – Ørsted
Brian Aranha, Executive Vice-President: Head of Strategy, CTO, R&D, CCM, Global Automotive, Communications and Corporate Responsibility – ArcelorMittal
Lord Gregory Barker, Executive Chairman – EN+
Pierre-André de Chalendar, Chairman and Chief Executive Officer – Saint Gobain
Marisa Drew, Chief Sustainability Officer & Global Head Sustainability Strategy, Advisory and Finance – Credit Suisse
Dominic Emery, Chief of Staff – BP
Stephen Fitzpatrick, Founder – Ovo Energy
Will Gardiner, Chief Executive Officer – DRAX
John Holland-Kaye, Chief Executive Officer – Heathrow Airport
Chad Holliday, Chairman – Royal Dutch Shell
Timothy Jarratt, Chief of Staff – National Grid
Hubert Keller, Managing Partner – Lombard Odier
Zoe Knight, MD and Group Head of the HSBC Centre of Sustainable Finance – HSBC
Jules Kortenhorst, Chief Executive Officer – Rocky Mountain Institute
Mark Laabs, Managing Director – Modern Energy
Richard Lancaster, Chief Executive Officer – CLP
Li Zheng, Executive Vice President – Institute of Climate Change and Sustainable Development, Tsinghua University
Martin Lindqvist, Chief Executive Officer – SSAB
Auke Lont, Chief Executive Officer and President – Statnett
Johan Lundén, SVP Head of Project and Product Strategy Office – Volvo
Dr Ajay Mathur, Director General – The Energy and Resources Institute; Co-Chair – Energy Transitions Commission
Dr María Mendiluce, Chief Executive Officer – We Mean Business
Jon Moore, Chief Executive Officer – BloombergNEF
Julian Mylchreest – MD, Global Co-Head of Natural Resources (Energy, Power & Mining) – Bank of America
Damilola Ogunbiyi, Chief Executive Officer – Sustainable Energy For All
Nandita Parshad, Managing Director, Sustainable Infrastructure Group – EBRD
Andreas Regnell, Senior Vice President Strategic Development – Vattenfall
Carlos Sallé, Senior Vice President of Energy Policies and Climate Change – Iberdrola
Ian Simm, Founder and Chief Executive Officer – Impax
Mahendra Singhi, MD and Chief Executive Officer – Dalmia Cement (Bharat) Limited
Dr Andrew Steer, President and Chief Executive Officer – World Resources Institute
Lord Nicholas Stern, IG Patel Professor of Economics and Government – Grantham Institute – LSE
Dr Günther Thallinger, Member of the Board of Management – Allianz
Simon Thompson, Chairman – Rio Tinto
DrRobert Trezona, Head of Cleantech – IP Group
Jean-Pascal Tricoire, Chairman and Chief Executive Officer – Schneider Electric
Laurence Tubiana, Chief Executive Officer – European Climate Foundation
Lord Adair Turner, Co-Chair – Energy Transitions Commission
Huang Wensheng, Chairman of the Board – Sinopec Capital
Senator Timothy E. Wirth, President Emeritus – United Nations Foundation
Zhang Lei, Chief Executive Officer – Envision Group
Dr Zhao Changwen, Director General – Industrial Economy – Development Research Center of the State Council
Cathy Zoi, President – EVgo