As we endure these challenging times, the climate emergency persists, and the planet continues to be threatened. Without a strong and stable economy, the funds to invest in a greener, cleaner future simply won’t be there. Even with the fall in carbon emissions, our modelling shows that the pandemic will only reduce demand through to 2050 by 8%.1
Put simply, we’ve only clawed back one year in the race against climate catastrophe, and we can’t be complacent. We need to work hard now to ensure that the ‘new normal’ keeps carbon emissions on a downwards trajectory and that investments in green technology and initiatives are given priority.
In DNV GL’s Transition Faster Together 2020 report series, we highlight the need for:
• Renewable technology rapidly deployed at scale
• Expanded, reinforced and upgraded grid infrastructure
• Greater energy-efficiency measures to accelerate the energy transition.
In the study, we summarize key insights from industry experts and leaders and conclude on five calls to action that can really help us chart a greener, more resilient, sustainable path.
1. Support the development and deployment of new technologies
Renewable power generation has grown six-fold in the UK over the past decade, helping the UK cut the carbon intensity of its power by 58%.2
However, analysts warn the country needs to ensure its grid is sufficiently flexible to maintain stability while integrating increasing levels of renewables capacity. Upwards of 37THw of excess electricity will be generated annually by 2030, with significant investment in smart grid technologies required to ensure grid stability.
In order to accommodate an increase in renewables, power grids will need the ability to integrate new technologies more quickly. For instance, over the next five years, new and emerging technologies such as bifacial solar modules, larger wind turbines, floating solar and floating wind will play an increasing important role. Likewise, there is also the need for high-efficiency equipment and appliances to be easily accessible both in terms of availability and cost. The journey from concept to commercialization must ramp up to establish proven climate change solutions more rapidly.
2. Government commitment, policy and regulatory frameworks need clarity
Used to dealing with societal pressure on climate action, the UK government is now facing demands from five of the country’s biggest energy companies (BP, Royal Dutch Shell, National Grid, SSE and Drax) to set a deadline to slash emissions to net zero. It follows the president elect Joe Biden’s pledge to decarbonize the electricity system of the US by 2035.3
Although renewable energy technologies are becoming less dependent on government support, decarbonization projects face continued transition risks related to policy making and implementation. While many governments are good at putting together strategies for energy programmes, they are often slow to implement changes.
Without a higher degree of cross-party cohesion policy, uncertainty and delay will continue.
3. Post-pandemic investment is vital
Facing the unprecedented challenge of transitioning to a clean energy future amid a global pandemic creates the risk that long-term economic uncertainty will dampen climate initiatives. But it also presents an opportunity.
From inexpensive capital for renewables and energy storage projects to substantial
investments in power systems, post-pandemic economic stimulus packages will drive the uptake of low or zero carbon solutions.
Despite positive signals from governments regarding economic support, project delays
due to supply-chain disruption and lender concerns are possibilities. In many regions inflexible regulation also drives up the cost of renewable energy projects. Support for global supply chains and partnerships are needed to reduce costs, making projects economically feasible and drive long-term progress for the industry globally and locally.
4. Foster cross-collaboration
Renewables will need to be integrated into the grid, the grid will need to communicate digitally with various stakeholders, and the public will move from being energy consumers to producers and buyers. The only way to ensure the success of this new landscape is through cross-collaboration.
One aspect of collaboration which is set to sweep in major changes for the industry is
sector coupling – the integration of different sectors such as industry, households and services, and transport, driven by electrification. A recent study of the German and British power markets including the use of green hydrogen could lead to greenhouse gas emission reductions of 83% by 2050.4
The aim is to foster a competitive landscape that will reduce the cost of procurement power and have a positive impact on the business case for renewables.
5. Develop workforce skills
The energy sector needs to recruit aggressively in the next decade to enable its workforce to keep pace with the energy transition. Offshore Renewable Energy Catapult and OGTC for instance, have called for up to £416bn of investment over the next 30 years to realise a ‘Net Zero North Sea’, which they say could unlock £125bn annual value for the UK economy and support 232,000 jobs by 2050 – up 66% from today.5
Industry will also need to join forces with the education sector and academic institutions to ensure that the workforce of tomorrow is agile, diverse and technologically and digitally adept to adjust and keep abreast of changes.
To support the existing workforce, organizations need to invest in practical skills training combined with a mindset shift to ensure their employees have the expertise to add value on top of technology implementation.
Our Energy Transition Outlook reveals that the average global temperature is most likely to be 2.3°C above pre-industrial levels in 2050 if we do not accelerate our global decarbonization efforts. This level of warming risks severe global environmental and societal impact. We are now facing the immense challenge of transitioning to a clean energy future much faster while being in the middle of an unprecedented global pandemic.
Despite the challenge ahead, there are reasons to be optimistic. Innovation is thriving, the technology available to us is impressive, there are substantial opportunities for investments, and governments around the world have started implementing climate policies that will help to steer us in the right direction.
COP26 President and Secretary of State for the Department of Business, Energy and Industrial Strategy, Alok Sharma, reinforces the need for speed: “while we rightly focus on fighting the immediate crisis of the coronavirus, we must not lose sight of the huge challenges of climate change.”
To put this into context, we need to see the 8% carbon reduction reported for 2020 – driven by the massive shifts that the coronavirus pandemic has brought to our lives – every year.