Net Zero: 2024 Perspective

Net Zero: 2024 Perspective – Trends and challenges in the global energy transition

We were delighted to welcome back Adair Turner, chair of the Energy Transitions Commission (ETC), for a fifth time, to give his annual assessment of the state of progress towards a global net zero economy. His talk this year was optimistic both in tone and content, although he acknowledged where the continuing challenges lie.

What follows is an adapted Q&A-style summary of his talk. A video of the complete talk can be viewed here and the supporting slides can be found here.

Why are you broadly optimistic about the prospects of achieving global net zero carbon dioxide emissions by the middle of the century?

There is good news about the extraordinary pace of technological advance which makes it possible to deal with our problems. It should be possible for richer countries to achieve net zero by 2050, and developing countries by 2060, at the latest, based on a dramatic fall in the use of fossil fuels. By 2050 the use of oil could be down by as much as 95%, coal by 90% and natural gas by 70%. This will be achieved by the mass electrification of a far wider set of our economic activities than was envisaged in the past. We are on the verge of a new industrial revolution.

Where have the most dramatic technological advances been seen?

Solar photovoltaics is emerging as the extraordinary technology of the energy transition. Conversion efficiency in the lab is already over 30% for perovskite tandem cells, and available product efficiency will probably go above 30% by 2030. The cost of solar PV panels per watt of power has fallen dramatically – by 99.9% since the 1970s. Some optimistic forecasts suggest that by 2027, solar PV will be the cheapest way to produce electricity almost everywhere in the world.

Is there a role for wind?

There is still a role for wind energy, but it will be different across regions. After all, the UK and North West Europe are not sunny all year round. Although some have suggested that wind energy in Europe is in crisis, and it is true that the cost of wind energy has gone up recently, it looks like being a one-off hit due to rising steel prices and higher interest rates. In China there has been no slowdown at all and the cost of wind turbines has declined by 40% in the past three years. Wind will play a large part in the high latitude windy countries. Offshore in particular will be huge.

What role do batteries have to play?

Batteries are getting cheaper and better. Technological innovation has removed worries over the metals required to make them: lithium, nickel, cobalt. For instance, three years ago there were real concerns about the supply of cobalt which comes mainly from Democratic Republic of Congo, with issues relating to local environmental impact, political instability, and child labour. But the industry has innovated so that we can now make batteries with no cobalt input. Zero nickel batteries are also, with LFP batteries (lithium ferrous phosphate) a hugely important new chemistry.

There has also been a relentless improvement in battery energy density – the amount of watt hours in a kg or litre of battery. Energy density is going up at about 6%-7% a year and the potential range for EVs is rising. By the late 2020s, we will see cars with 700/800/900-kilometre ranges on a single charge.

The cost of batteries fell by 90% in the past decade. There was a slight rise in cost between 2021-2023 because of rising commodity prices, but over the last 12 months the cost of nickel and lithium carbonate has come down by 80% thanks to increased supply, and battery costs will come down again.

What role do electric vehicles (EVs) have to play?

Every year EV sales are higher than forecast by the IEA (International Energy Agency). The biggest driver of this is China, where they represent 40% of sales. That figure could be as high as 80% or 90% by 2030.

There is one problem. European manufacturers have focused on the premium end. Only China is offering EVs in the $15k-$25k cost range. Indeed, the BYD Seagull sells for the Chinese currency equivalent of just $10000. If we do not offer lower cost EVs in Europe, we will undermine the capacity of ordinary people to buy them. You can imagine the headline ‘net zero is for the rich, not for the poor.’

By 2030, 30% of all European trucks will have to be non-fossil fuel vehicles, no longer using internal combustion engines (ICEs). We used to think that the 16 metre, 40 tonne truck would be hydrogen-based, but technological advances mean that we now think most will be electric.

You have labelled solar PV plus batteries as “the killer app” of the energy transition – why is that?

As the cost of producing electricity through solar PV continues to fall, and battery storage capacity gets cheaper, it becomes possible to deliver electricity “round the clock” at a price already competitive with new coal or gas plants, and increasingly with the marginal cost of running existing coal or gas plants. That’s not a total solution in places like northern Europe where we also face seasonal balance challenge, but in many low latitude countries with lots of solar and minimal winter heating needs, cheap solar + batteries will dominate electricity systems.

Another unexpected resource for battery storage are all the EV cars sitting unused overnight and indeed for much of their lives. By 2050, if there are 1.5bn EVs on the road, each with a 60-kilowatt hour battery, that is 90 terawatt hours of battery capacity sitting by the side of the road. Each day there are 11 hours of storage capacity sitting out there for free.

What explains the different rate of change (and success) in new technologies?

Technological change happens fast when you can produce vast quantities of what you need in large scale replicable factories, for example producing identical units of solar panels or EVs. Where you need large scale engineering, bespoke to sites or design, you cannot achieve the same cost reductions. Large scale nuclear costs have not come down at all, in fact they have risen.

What about residential homes?

Heating (and cooling) residential homes remains problematic. In the UK, there are still 20m gas boilers. Deploying heat pumps will have a transformational effect on our ability to decarbonise residential heat systems, but it will not be easy. It will require joined-up government to create the incentives and subsidies needed for people to move away from gas boilers. We need massively more skilled tradespeople – plumbers and electricians – to install and maintain heat pumps. And we need better financing options, for example a simple way to increase mortgages to pay for heat pump installations.

What about food and agriculture?

Agriculture accounts for between 20%-25% of all global emissions (and higher if you count the effect of methane over a 20 year rather than 100 year period) Meat sits at the end of two very inefficient energy creating processes: photosynthesis (less than 1% efficient) and the cow (4% efficient). Bluntly, there is no way to get to net zero or stop the continuing deforestation of tropical rainforests without a reduction in the production of red meat.

Lastly, the role of finance

To build the green economy a huge reallocation of capital is required. Investment needs to rise from $1trn in 2020 to $3.5trn a year by 2030 and stay at that level for years thereafter. The good news is that levels of investment are rising in China and the US (following President Biden’s Inflation Reduction Act) and in rich developed countries the investment can be achieved mostly through private sector investment.

However, more finance needs to be steered towards lower income countries, including via the development banks; otherwise, the cost of capital will remain too high for the developing world to decarbonise. The higher the cost of capital, the more you avoid higher up-front capital costs. All the renewable energy sources have relatively high up-front costs, but minimal ongoing costs – the exact opposite of fossil fuels.