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

A year before COP26, new report from Energy Transitions Commission highlights actions required by 2030 to achieve zero-carbon economy by mid-century

NEW DELHI, 16 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 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 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% 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% of India’s power generation by 2030 with total low/zero carbon increasing to 47% 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% to 1.5% 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 3 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.

1. 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.

2. 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.

3. 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.

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

ETC Commissioners:

Mr. Marco Alvera, Chief Executive Officer – SNAM

Mr. Thomas Thune Anderson, Chairman of the Board – Ørsted

Mr. 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+

Mr. Pierre-André de Chalendar, Chairman and Chief Executive Officer – Saint Gobain

Ms. Marisa Drew, Chief Sustainability Officer & Global Head Sustainability Strategy, Advisory and Finance – Credit Suisse

Mr. Dominic Emery, Chief of Staff – BP

Mr. Stephen Fitzpatrick, Founder – Ovo Energy

Mr. Will Gardiner, Chief Executive Officer – DRAX

Mr. John Holland-Kaye, Chief Executive Officer – Heathrow Airport

Mr. Chad Holliday, Chairman – Royal Dutch Shell

Mr. Timothy Jarratt, Chief of Staff – National Grid

Mr. Hubert Keller, Managing Partner – Lombard Odier

Ms. Zoe Knight, Managing Director and Group Head of the HSBC Centre of Sustainable Finance – HSBC

Mr. Jules Kortenhorst, Chief Executive Officer – Rocky Mountain Institute

Mr. Mark Laabs, Managing Director – Modern Energy

Mr. Richard Lancaster, Chief Executive Officer – CLP

Mr. Li Zheng, Executive Vice President – Institute of Climate Change and Sustainable Development, Tsinghua University

Mr. Martin Lindqvist, Chief Executive Officer – SSAB

Mr. Auke Lont, Chief Executive Officer and President – Statnett

Mr. 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

Mr. Jon Moore, Chief Executive Officer – BloombergNEF

Mr. Julian Mylchreest, Managing Director, Global Co-Head of Natural Resources (Energy, Power & Mining) – Bank of America

Ms. Damilola Ogunbiyi, Chief Executive Officer – Sustainable Energy For All

Ms. Nandita Parshad, Managing Director, Sustainable Infrastructure Group – EBRD

Mr. Andreas Regnell, Senior Vice President Strategic Development – Vattenfall

Mr. Carlos Sallé, Senior Vice President of Energy Policies and Climate Change – Iberdrola

Mr. Ian Simm, Founder and Chief Executive Officer – Impax

Mr. Mahendra Singhi, Managing Director 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

Mr. Simon Thompson, Chairman – Rio Tinto

Dr. Robert Trezona, Head of Cleantech – IP Group

Mr. Jean-Pascal Tricoire, Chairman and Chief Executive Officer – Schneider Electric

Ms. Laurence Tubiana, Chief Executive Officer – European Climate Foundation

Lord Adair Turner, Co-Chair – Energy Transitions Commission

Mr. Huang Wensheng, Chairman of the Board – Sinopec Capital

Senator Timothy E. Wirth, President Emeritus – United Nations Foundation

Mr. Zhang Lei, Chief Executive Officer – Envision Group

Dr. Zhao Changwen, Director General Industrial Economy – Development Research Center of the State Council

Ms. Cathy Zoi, President – EVgo