The Energy Transitions Commission (ETC) is a coalition of over 45 global energy producers, energy 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, Longi Solar, Tata Group, Volvo Group, and the World Resources Institute.
Clean electrification will be at the center of this transition enabled by rapidly declining renewable energy prices, with clean hydrogen technology playing a complementary role in sectors that are difficult or impossible to electrify.
Making Clean Electrification Possible: 30 Years to Electrify the Global Economy explains why it is not only necessary but also feasible and affordable to fivefold the size of the global power grid when transitioning to renewable energy.
The concurrent report Making the Hydrogen Economy Possible: Accelerating Clean Hydrogen in an Electrified Economy explains the complementary function of clean hydrogen and how a combination of private sector collaboration and policy support will accelerate the initial ramp-up of clean hydrogen production and usage to 50 million tonnes by 2030.
The Paris climate agreement committed the world to keeping global warming to less than 2 degrees Celsius over pre-industrial levels — and aiming for no more than a 1.5 degree Celsius increase in the planet’s average temperature. To accomplish this goal, the world must achieve net-zero GHG emissions by about the mid-century mark.
According to the ETC, it is theoretically and economically feasible to achieve net-zero GHG emissions over the next 30 years. The global energy system is about to undergo a dramatic transformation – a net-zero GHG economy would be based on plentiful, inexpensive zero-carbon electricity.
Electricity could account for up to 70% of final energy demand by 2050, up from 20% today, with overall electricity consumption projected to more than double in the coming decades. The fastest and most effective way to decarbonize the economy is to switch to renewable electricity as the primary source of final energy.
Renewable energy and storage costs are rapidly declining, making it possible to achieve the necessary major expansion of clean energy systems at a low cost, according to the studies. Wind and solar energy, on the other hand, would increase from 10% of total electricity production today to about 40% by 2030 and over 75% by 2050.
Wind and solar installations on an annual basis would also increase by 5-7 times by 2030, and by more than 10 times by 2050. They must also be followed by the simultaneous introduction of additional zero-carbon generation technologies (such as hydro and nuclear), flexibility options, storage, and power networks in order to achieve large-scale zero-carbon power systems.
According to the ETC, this is unquestionably possible if consistent national decarbonisation policies are implemented and adequate power market architecture unlocks private financial flows. Renewable energy investments, mostly wind and solar, will account for the overwhelming majority (approximately 80%) of total investments needed to achieve a net zero economy.
Over the next 30 years, over $80 trillion in investment will be expected globally (approximately $2.5 trillion per year on average). This involves investment in renewable energy to promote both direct and indirect electrification, as well as infrastructure investments in the electricity grid. Although this is a sizable amount, it is less than 1% of global GDP and therefore manageable in the current macroeconomic setting.
Clean hydrogen would supplement direct electrification in decarbonizing industries where direct electrification is likely to be technologically prohibitively costly or impossible, such as steel production and long-distance shipping. By mid-century, a net-zero GHG emissions economy would almost certainly need approximately 500 to 800 million tonnes of clean hydrogen per year, a 5-7 fold increase over current hydrogen usage.
Due to falling renewable electricity and electrolyser equipment costs, green hydrogen generated by water electrolysis is likely to be the most cost-competitive and thus the primary production route in the long term. By 2050, it will account for approximately 85 percent of total output. However, blue hydrogen derived from natural gas with high carbon capture rates (90 percent+) and low methane leakage (0.05 percent) will be critical during the transition period and in some very low-cost gas locations.
“We now have the technologies to completely decarbonise electricity generation at low cost: and electrification is the key to zero carbon production in most of the economy. By mid-century even rich developed countries will need 2-3 times as much electricity as today, and developing economies 5-10 times as much. Governments, businesses and investors need to recognise the scale of the new industrial revolution required and the huge opportunities it creates.”
Lord Adair Turner, Chair, ETC.
“The ETC demonstrates that rapid decarbonisation of the global power system is desirable, attainable and affordable. It’s the bedrock of the Race to Zero emissions and provides the expansion of zero carbon power needed for other sectors to also decarbonise. The ETC highlights how countries setting out clear strategic plans for electrification and decarbonisation will enable companies and innovators to deliver the massive increase in clean power needed.”
Nigel Topping, UK High Level Climate Action Champion, COP26.
“Clean hydrogen will be key to decarbonising sectors where direct electrification is impossible or too expensive. Steel can be made zero carbon using hydrogen as the reduction agent; ocean-going ships will likely burn ammonia made from green hydrogen: and hydrogen can provide electricity when the wind isn’t blowing and the sun not shining. In total the world may need to produce and use 5-7 times as much hydrogen as today, and there are no inherent barriers to achieving that. But strong public policy support and visionary private investment is needed to drive clean hydrogen growth at the fast pace now required.”
Lord Adair Turner, Chair, ETC.
“Green hydrogen made from renewable electricity will be the best complement to deep electrification to achieve a sustainable and decarbonised energy sector. It will bring investment opportunities and qualified jobs, while making our economy cleaner and more competitive. Policy commitments to scale up this new economy are necessary and will bring important economic and environmental benefits in the years to come.”
Agustin Delgado, Chief Innovation and Sustainability Officer, Iberdrola.
