The Paris Agreement goal of limiting global temperature to 1.5C above pre-industrial levels is unreachable without an immediate scale-up of energy transition technologies, experts say. “The good news is that we have seen progress – but it is linear progress,” says Roberto Bocca, Member of the Executive Committee and Head of Energy, Materials and Infrastructure at the World Economic Forum. “The progress we need to address the challenge is exponential.” Changing the energy system quickly enough to avoid the worst impacts of climate change will require an investment “in the trillions per year for multiple years”, he says. “The task is huge.”
We should be investing at more than twice the speed and the scale that we are doing at the moment
Last year saw 294GW of renewable energy capacity installed worldwide. Although this was a record, with EDP alone installing 2.6GW of wind and solar, it was only about 6 per cent above the almost 277GW of capacity that came online in 2020, marking a slowdown in installation rates at a time when the buildout of renewable energy should be accelerating.
Little impact on fossil fuels
Furthermore, primary energy use worldwide also increased by almost 6 per cent in 2021, so the additional renewable capacity barely had any effect on fossil fuel consumption. The International Energy Agency expects renewable capacity to grow by a further 8 per cent in 2022, topping 300GW for the first time. But the IEA also says global capacity additions of wind and solar PV need to almost double current forecasts for the next five years if the world is to achieve net zero emissions by 2050, in line with the requirements of the Paris Agreement.
Meeting this objective will require not only much greater investment in renewables but also an increased focus on areas such as energy efficiency and demand, Bocca says. “We know there is the possibility of adding efficiencies in the order of 30 or 40 per cent,” he says. “Either we go for that, or we will pay more. We cannot think it will be secure, renewable and cheap. There are real trade-offs.”
Much of the investment and work in moving towards net zero needs to be done this decade, because any further delays will make it practically impossible to reach the target in time. This timeframe is also important because of innovation, which may be critical in achieving climate goals but will need time to reach fruition.
Current attempts to create almost limitless clean energy through nuclear fusion, for example, could fail because the Environment is not expected to be ready for commercialisation before the end of this decade, and could take several more decades to scale. But, says Stilwell:
We already have the key renewable technologies and business models necessary to tackle climate change – what we need now is focused execution on scaling them up globally
Scaling up innovative technologies
This includes relatively new but rapidly growing technologies such as hybrid plants, floating solar, floating offshore wind and hydrogen made from renewable energy. EDP is already pioneering these technologies with projects such as the first floating wind project in continental Europe, floating solar plants in Portugal and Singapore, 1.3GW of hybrid schemes combining sun, wind and water, and plans to invest in 1.5GW of renewable hydrogen by 2030.
EDP is fortunate in that its home market of Portugal is committed to the energy transition, with around three fifths of electricity generation coming from renewable sources. “Some people were a bit sceptical or cynical about the fact that Portugal was investing so much in renewables,” Stilwell says. “Today, it looks like an extremely smart decision, because the Portuguese domestic consumer has seen a reduction in prices. There is a surplus being generated in the system, which is being given back to the consumer.”
The Portuguese experience has allowed EDP to become a global leader in renewable energy, with a presence in 29 countries worldwide, and shows the value of relying more on locally sourced renewables at a time when the conflict in Ukraine is driving up the price of energy across Europe. European policymakers are hoping to speed up renewable energy adoption on the continent with REPowerEU, a package of measures designed to make Europe independent from Russian fossil fuels before 2030.
The package includes proposals to streamline the permitting of renewable energy projects and speed up the development of hydrogen plants. Lawmakers and network operators can still do more, Stilwell says. “There’s a gap between the long-term objective and what needs to be done over the next couple of years,” he says.
We know what the 2030 target is but we don’t know what is going to happen in the next 12 months
At the same time, the European Commission is pumping up the debate around market design and putting in place an emergency response to the energy crisis, which includes price caps on renewables. “It is clear that we need collective efforts and massive investments to mitigate the rising energy prices and ensure stability of supply,” adds Stilwell. ‘We need supportive, stable and predictable regulation, together with simpler and faster permitting, licensing and network interconnection to continue to incentivise investment in clean technologies.”
