CHALLENGE

CHAPTER 01

THE 2050 CHALLENGE

HIGHLIGHTS 01

• Despite good progress in some areas, there are large gaps between the current deployment of energy transition technologies and the levels needed to achieve the 1.5°C Paris climate goal. A 1.5°C compatible pathway requires a massive transformation of how societies consume and produce energy. By 2050, the world would need to have net zero emissions, requiring a cut of nearly 37 gigatonnes (Gt) of annual emissions. Global energy consumption would need to decrease by 11% from 2019 levels though ambitious energy efficiency improvements, with a simultaneous increase in the share of renewables in the global energy mix – to 79% by 2050, from 19% in 2019. Renewables would have to increase across all end-use sectors, while a high rate of electrification in sectors such as transport or buildings would require a ten-fold increase in renewable electricity capacity by 2050.

• A 1.5°C compatible pathway would bring long-term energy security and energy price stability.

Energy efficiency and renewables combined can make countries less dependent on energy imports, diversify supply options and help decouple economies from volatile international fossil fuel price fluctuations.

• The required scale-up of renewables would require significant and decisive co-ordinated actions across public and private sectors. This would require political will, comprehensive policy frameworks targeting a myriad of barriers and greater levels of both private and public investment.

• Investments in energy transition technologies, while having reached record levels, are still not large enough and are concentrated in just a few countries and regions. For the energy transition to become truly global, access to financing has to widen considerably. Energy transition cumulative investments would need to reach more than USD 115 trillion by 2050.

• The recent pledges made by countries at the 26th United Nations Climate Change Conference (COP26) in Glasgow and in their updated Nationally Determined Contributions (NDCs) are welcome but they are still not ambitious enough to achieve climate goals. There is an estimated gap of 20 Gt between the updated NDCs and other pledges made around COP26 (e.g. related to net zero emissions and cutting methane), and the efforts required to realise the 1.5°C climate goal by 2050. In addition, NDCs must be translated into concrete actions, with specific targets (e.g. for renewable energy), and policies covering all end uses to attract the investment needed. Rapid acceleration is needed to close the gap if policy makers want to be serious about achieving the Paris climate goals.

• On a positive note, the costs of renewable electricity are continuing to fall and renewables are now the cheapest power options in most regions. In 2020, a total of 162 gigawatts (GW), or 62% of the total new renewable power generation capacity added globally, had electricity costs lower than the cheapest source of new fossil fuel-fired capacity. The global weighted-average levelised cost of electricity (LCOE) of newly commissioned utility-scale solar photovoltaic (PV) projects fell by 85% between 2010 and 2020, that of concentrated solar power (CSP) by 68%, onshore wind by 56% and offshore wind by 48%. Renewables are now the default option for capacity additions in the power sector, where they dominate investments.