Equinor Perspective Calls for Climate Action
The transition to a more sustainable energy system is too slow. A sustainable development path, consistent with the 2°C target, does not allow for further delays in policy, industry and consumer action to reduce emissions, according to the latest Energy Perspectives published June 7 by Norwegian producer Equinor (formerly Statoil).
Cutting global emissions of greenhouse gases fast enough to enable the Paris Agreement to succeed requires an unprecedented level of co-operation between countries and regions, and this is not looking likely today: of the three scenarios considered – Renewal, Rivalry and Reform – the second one most accurately describes the state of play today.
Its cheapness and security of supply give rise to more coal use; while energy efficiency measures and other necessary steps are too expensive. Gas, subject to disruption whether sent by pipeline or tanker, is too risky. The rise of autocratic regimes and the weakening of democratic forces lead to short-termism and relatively expensive solutions, rather than long-term co-operation needed for the Paris Agreement.
“Unfortunately, we currently see too many signs of the Rivalry scenario. If continuing, they will negatively impact necessary global collaborative efforts and economic growth which are keys to drive the world in a sustainable direction,” says Equinor’s chief economist Eirik Waerness.
The three scenarios span a vast outcome space for all important characteristics of the global energy system, such as macroeconomic development, global energy demand, greenhouse gas emissions, energy mix and oil and gas markets towards 2050. The report shows how policy, technology and market conditions can move development in different directions, both desired and undesired.
Despite ambitious goals set in the Paris Agreement, both the use of coal and CO2-emissions increased in 2017. Oil and gas demand is also growing. In the transport sector, electrification increases but is far from keeping pace with the overall growth in global vehicle sales. In short, even with technology development happening quicker than expected, the transition taking place is too slow, much due to insufficient policy actions.
“The climate debate is long on targets, but short on action. We believe it’s possible to achieve climate targets set out in the Paris agreement, but that requires swift, global and coordinated political action to drive changes in consumer behaviour and shift investments towards low carbon technologies. Delaying actions will make it very hard to reach the climate targets,” says Waerness.
Electricity demand increases consistently in all scenarios, with solar and wind making up significant shares of generation mix in 2050. In the Renewal scenario required for the Paris Agreement, 49% of the electricity demand in 2050 will be accommodated for by new renewable energy, compared to around 5% in 2015.
This growing demand, and the need to phase out coal and reduce demand for fossil fuels, imply an enormous call for investments in new electricity production capacity, as well as infrastructure and storage technologies. Also in a scenario consistent with the 2°C target, there will still be significant demand for fossil fuels. Gas holds up among fossil fuels with an expected demand in 2050 only 10% below 2015. Oil however, sees a decline in demand of around 38%.
Large investments in new oil and gas resources will be needed as only around half of the demand in 2050 can be supplied from existing fields. In the other scenarios, the investment challenge is even bigger owing to a much higher demand.
The full report, now in its 8th consecutive year, may be read here.