Global Energy Transition: The Race Against Time To Reach Net Zero By 2050 – Report

Decisive action is essential to achieve net-zero emissions by 2050, as the world is currently on a path toward 2.5 to 3 degrees Celsius of global warming. According to Wood Mackenzie’s Energy Transition Outlook report, a significant assessment of the global journey towards a lower carbon future, a series of global shocks has likely made the 2030 emissions reduction targets more difficult to reach. However, with strong and immediate action, there is still a chance to meet the net-zero goal by 2050.

The report examines four different pathways for the energy and natural resources sector. These include Wood Mackenzie’s base case scenario, which projects a 2.5-degree increase, a scenario based on country pledges that aim for a 2-degree increase, a net-zero 2050 scenario targeting a 1.5-degree increase, and a delayed transition scenario projecting a 3-degree increase.

One of the key findings of the report is that approximately $78 trillion of cumulative investment is needed across various sectors, including power supply, grid infrastructure, critical minerals, and emerging technologies, to meet the goals outlined in the Paris Agreement. Globally, energy demand is on the rise due to increasing incomes, population growth, and new sources of demand such as data centers and the electrification of transport. Strong growth in renewable energy sources, particularly solar and wind, is expected to continue across all the scenarios analyzed in the report. While renewables capacity is anticipated to double by 2030 in the base case, this is still short of the global commitment made at COP28 to triple renewables capacity by the same year.

Oil and gas are projected to maintain their roles in the global energy system until 2050. The report suggests that innovation will play a critical role in enhancing the viability of carbon capture and low-carbon hydrogen technologies, which are expected to drive demand to 6 billion tons per annum (Btpa) and 0.45 Btpa by 2050, respectively. However, policy certainty is essential to unlock demand for these new technologies and to increase capital flow into supply chains and critical minerals.

Prakash Sharma, Vice President and Head of Scenarios and Technologies for Wood Mackenzie, noted that a series of global shocks, including ongoing conflicts in regions such as Ukraine and the Middle East, as well as rising populism in Europe and trade tensions with China, pose threats to progress in a decade crucial for energy transition. He stated that while challenges are significant, there is still time to reach net-zero emissions by 2050 if decisive actions are taken now. Without such actions, even the 2-degree goal could be at risk, potentially leading to a trajectory of 2.5 to 3 degrees of warming.

Electrification is highlighted as a vital route to enhance energy efficiency and reduce peak emissions. The report indicates that replacing fossil fuels with more efficient electricity could lead to a global peak in emissions by 2027, followed by a decrease of 35% by 2050. Global final energy demand is projected to grow by up to 14% by 2050, with emerging economies expected to see a 45% increase in demand due to rising populations and prosperity. In contrast, demand in developed economies is predicted to peak in the early 2030s before declining.

The share of electricity in final energy demand is projected to rise significantly, from 23% today to 35% by 2050 in the base case, and to as much as 55% in a net-zero scenario. However, rapid electrification will be challenged by the need for expanded transmission infrastructure.

The growth of renewable energy is anticipated to continue, with solar and wind power accounting for a greater share of the global energy mix. Solar is expected to lead as the biggest contributor, with renewables’ share of electricity potentially reaching 90% by 2050, depending on the scenario. Nevertheless, challenges such as supply chain constraints and the availability of critical minerals could hinder the growth of renewable capacity.

Despite the increase in renewable energy, fossil fuels are projected to continue playing a significant role in the global energy landscape until 2050. Sharma emphasized that while investment in renewables is crucial, oil and gas will still be necessary to meet global energy demands.

The report underscores the need for greater investment in energy supply, estimating that annual investments must double to $3.5 trillion by 2050 in the net-zero scenario. As global warming progresses, failing to meet net-zero goals could lead to increased adaptation costs for governments as they cope with the impacts of climate change.

With the first global stocktake on climate goals concluded at COP28, it has become clear that countries need to raise their ambitions for emissions reductions. The upcoming COP29 meeting will be crucial for finalizing agreements on carbon markets and setting new climate finance goals. Increased cooperation and strengthened nationally determined contributions will be vital to mobilize the necessary investments in low-carbon energy and infrastructure to achieve the target of net-zero emissions by 2050.