Two global reports this week have indicated that the world is undergoing a massive transition in energy use and carbon dioxide emissions. The BP Energy Outlook 2020 released on Monday indicated that global CO2 emissions may have already peaked in 2019 and are likely to decline hereafter depending on how countries build back after Covid-19. It also said there is a declining role of fossil fuels, offset by an increasing share of renewable energy.
The Energy Transitions Commission (ETC), a coalition of energy-producing companies, environmental NGOs, banks, et cetera., has released a report, ‘Making Mission Possible’, on Wednesday which said developed countries could reach a net-zero emissions by 2050 and developing countries like India could do so by 2060 with large scale changes in energy use.
Ajay Mathur, co-chair, ETC and Director General, The Energy and Resources Institute (TERI) said it is possible that the global CO2 emissions have already peaked in 2019. Here are the excerpts from the interview:
Q. Where will the money come from for the transition to net-zero emission (overall balance in CO2 emitted and CO2 removed) economy?
A. All developing countries are growing. They are going to invest in new capital because of growing demand and also to replace existing capital stock as it finishes its life. We need the money in any case. The question is under what circumstances will that money flow? Money will flow if it is making profits. Whether it is domestic banks or international funds they will invest. Invested in renewable energy in India right now, investments will happen because investors see money coming back with a profit. If you consider the total amount of money that is needed between 2020 and 2050 is 1 to 2 percent of the additional cost to transition to net-zero scenario in this period. We need profit-making investment opportunities. (Achieving net-zero emissions by 2050 would cost an estimated 1 trillion-2 trillion dollars a year of additional investments according to ETC).
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{{/usCountry}}Q. The BP energy outlook report indicated that global CO2 emissions may have peaked in 2019? Is that possible?
A. Globally, it may be possible. If the US and China have started recording declining CO2 emissions at least between 2019 and 2020 then clearly the world is on a declining path. In India, the question is slightly different. We still haven’t reached our peak electricity consumption. Everyday electricity demand is more than what it was yesterday. Where does that electricity come from? Today solar is the cheapest electricity we have but only when the sun is shining. At night coal electricity is the cheapest. In the short term, we will have a share of coal and renewable energy increase. This will continue till renewables plus storage (battery) produce electricity which costs less than coal. Last month, Solar Energy Corporation of India tenders said that solar plus storage will be provided at a price which is competitive to coal electricity in two years’ time. It will then not make sense in investing in energy generation from coal. It is quite possible that we may have peaked but like they say, ‘one swallow does not a summer make’. We have to see how things change.
Q. Did the pandemic contribute to the fact that we may have peaked earlier than expected?
A. We saw a peak for energy demand in February or March this year which was less than energy demand last year. How the recovery now occurs is anybody’s guess. It’s too early to say. There are many people who think the way I do who are investing in renewable energy but it’s very difficult to forecast.
Q. Your report speaks about achieving net-zero emissions by 2060. What does that mean for the common man?
A. For a common person, I will suggest five things. 1) Buy the most energy-efficient air conditioner you can. The largest source for the increase in demand for electricity in India is from air conditioners. We have 50 percent more efficient air conditioners than those available in 2007. 2) Anybody who has the option should set up rooftop solar. It makes economic sense. 3) Use electric two-wheelers, they make sense in urban areas. Even electric cars and taxis make sense but this will depend on the building of charging stations. 4) For industries, it makes sense to consider electricity or hydrogen instead of coal but reliability of supply matters. 5) Steel is looking at tripling capacity in the next 15 years in India. We mix coke and iron ore to make steel. Can we use something else instead? Our report talks about using hydrogen. A company in Sweden is trying hydrogen technology. We need scale to grow and prices to decline. This is the kind of picture we see till 2060 which will help the world to move toward zero carbon.
Q. What are the global factors, conditions which have led to this transition in energy?
A. It’s difficult to find one or two reasons. One is the regulatory requirement in many parts of the world to move towards renewable energy. Countries like Germany were ready to accept and move at a higher cost. Production promoted economies of scale and led to prices coming down. We started seeing a decline in prices of renewable energy so that they became competitive with fossil fuel energy. Regulatory requirements and decrease in cost are the two main reasons for the shift we are seeing.