The power sector has a huge role to play
In any feasible path to a net-zero-carbon economy, electricity’s share of total final energy demand will rise from today’s 20% to over 60% by 2060. As a result, total global electricity generation must grow from about 20,000 TWh today to 85-115,000 TWh by mid-century (about 5 times as big) at the same time as fossil fuels are phased out, according to the ETC.
Hydrogen demand will rocket
Achieving a net-zero-CO2 emissions economy is highly likely to require an increase in global hydrogen production from 60 Mt per annum today to something like 425-650 Mt by mid-century, according to the ETC.
But Green Hydrogen production costs are falling rapidly
Bloomberg New Energy Finance predicts renewable hydrogen could be produced for $0.8 to $1.60/kg in most parts of the world before 2050. That would make green hydrogen cost competitive with current natural gas prices in Brazil, China, India, Germany and Scandinavia on an energy-equivalent basis.
Energy efficiency is a non-negotiable
Strong policies to improve energy efficiency, increase materials efficiency and circularity, and manage demand for heavy-duty transport could reduce the additional demand for electricity by around a quarter, according to the ETC. Given the scale of the investment challenge, it is vital to maximize the opportunity. Saving a KWh remains a great deal cheaper than generating an additional KWh, IEA data shows.
Upfront investment needs remain significant
In the industrial sectors, total incremental capital investment from 2015 to 2050 could amount to $5.5 to $8.4 trillion, according to McKinsey. A particular difficulty is creating strong enough financial incentives to trigger the required investment from the private sector. In heavy industry, very long asset lives could delay the deployment of new technologies, unless there are strong policy incentives for early asset write-offs. In steel, for instance, a switch from blast furnace reduction to hydrogen-based direct reduction may require scrapping of existing plants before end of useful life.
Will there be enough carbon storage?
As Carbon Capture and Storage needs to become more widespread as a means to tackle residual industrial emissions, underground carbon storage will become ever more important, according to IPCC. A comprehensive survey is needed to ascertain the true global scale of the capacity and the differences between regions.
Plastics recycling doesn’t work without consumer buy-in
Reaching zero lifecycle emissions from plastics constitutes a significant challenge, as it requires eliminating end-of-life as well as production emissions, according to Material Economics. Limits to sustainable biomass supply will likely make it impossible to entirely substitute fossil fuels with bio-feedstock. It will therefore be essential to manage existing fossil fuel-based plastics through mechanical and chemical recycling, as well as secured end-of-life storage for solid plastic but this will require coordination and buy-in along the value chain from suppliers, to consumer brands and on to consumers themselves.