February 23, 2024

The world cannot expect to fulfill the Paris Agreement’s goal of limiting the increase in temperature at 1.5 degrees Celsius relative to pre-industrial levels if current trends in government policy and industry practice remain, Equinor ASA has said.

The majority state-owned Norwegian company also noted Russia’s invasion of Ukraine has added to the challenge of striking a balance between energy decarbonization and energy security.

And while recent laws such as the USA’s Inflation Reduction Act may accelerate the shift to clean energy, the same may result in “inefficiencies” that make the transition more costly, Equinor said in its annual “Energy Perspectives” analysis released Thursday.

Climate Budget

Equinor presented two scenarios, metaphorically called “Walls” and “Bridges”, in which the world would find itself by 2050 in terms of climate mitigation results.

“Walls” sees countries remaining in the status quo and exhausting the so-called climate budget by 2033. That is, some two decades before reaching 2050, the world will have exceeded the limit of 500 gigatons (GT) in carbon dioxide emissions the United Nations has set for 2020-50 to limit the warming rate at 1.5C.

In contrast “Bridges” sees the globe limiting energy-related CO₂ emissions at 445 GT, “compliant with a 50% probability of no more than a 1.5°C temperature rise”.

‘Walls’

“Walls signify the abundance of barriers blocking fundamental and accelerated change in the global energy system”, the report said.

Equinor said the Russian-Ukraine war and the resulting geopolitical tensions have made it difficult to bolster international cooperation toward climate goals. “The energy transition is limited by cooperation and trust, and although climate policies continue to tighten, with momentum driven mainly by the industrialized regions, the scenario does not meet all stated targets and does not move fast enough to satisfy the goals of the Paris Agreement”, the report said.

These geopolitical tensions “have made the trade-off between the three criteria of the energy trilemma (energy affordability, energy security and energy decarbonization) more challenging”, the company said in a press statement accompanying the report.

“The Walls scenario builds on current trends in market, technology and policy, assuming them to continue developing at a slowly accelerating pace in the future”, the report said.

This scenario sees governments continue prioritizing “short-term economic growth over long-term climate goals”, it added.

‘Bridges’

In contrast the “Bridges” scenario envisions a “benign geopolitical landscape” of cooperation and friendly competition among countries, the report said.

“Energy markets become more integrated and technological advancements are shared more readily”, it said. “Climate action remains the key driver, and all regions are under pressure to rapidly phase out fossil fuels, build renewable capacity, improve energy efficiency and make drastic behavioral changes.”

Peak Demand for Fossil Fuels

Current commitments would mean consumption of fossil fuels peaking later, in 2026, in the “Walls” scenario, with a “gentle” decrease thereafter, the report said.

For gas, demand peaks 2039 and becomes 10 percent higher 2050 compared to current levels.

Peak demand for fossil fuels comes 2025 in the “Bridges” scenario, with gas demand falling to about a third of today’s levels in 2050.

“By 2050, all remaining fossil fuel use is either fully abated or compensated by carbon removal” in the latter scenario, the report said.

Renewables

Wind power capacity is seen rising eight times and that of solar photovoltaics 13 times in 2050 relative to current levels in “Bridges”.

“In Walls, wind capacity is five times greater, and solar PV capacity nine times greater in 2050 compared with today”, the report said.

While both scenarios see electric vehicles displacing internal combustion engines, the “Bridges” scenario boosts transport decarbonization by expanding the use of hydrogen in fueling air and marine mobility.  

To contact the author, email jov.onsat@rigzone.com

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