Sunday, June 20

Goodbye, coal … hello! economic progress


The horizon is clear: 2050; but the main thing is that it is also clear. In 2020, almost 40,000 million tons of carbon dioxide were emitted, according to the bulletin 4C Carbon OutlookDecember, published by the University of Exeter and the European Union. Although the data dropped as a result of the measures taken by governments against Covid-19, the climate will not stabilize until global CO2 emissions are practically zero.

Today, fossil fuels account for 80% of energy consumption. With the United States reincorporated into the Paris Agreement – through Joe Biden’s commitment to support the zero emissions objective – the EU, and with it Spain, remain firm in their reduction plans. The middle of the second millennium is the period in which the EU -with its countries- and the US have committed to having a decarbonized economy, which means, according to the International Energy Agency (IEA), 90% of the world’s electricity generation comes from renewable sources.

However, while on the other side of the pond a reduction of between 50% and 52% is imposed by 2030, on this shore of the Atlantic the intermediate goal is set at 55%. To achieve it, the EC estimates that the annual investment in the energy system should be around 350,000 million euros more between 2021 and 2030 compared to the period 2011-2020, explains the economist of the euro zone in Axa Investment Managers Apolline Menut.

In your report Europe’s path to net zero (Europe’s path to net zero), Menut affirms that this is equivalent to an annual increase of 1.7% of the GDP, taking into account that the public investment of the EU represented an average of 3.1% between 2000 and 2019. For his part, the sales manager for Spain and Portugal from DNB Asset Management, Mikko Ripatti, affirms that in the coming decades an annual investment of more than 2% of world GDP will be needed, which is currently around 90 billion dollars.

It seems clear that the trend of the main economic blocs towards the decarbonization of their societies is accelerating, says Felipe Requejo, leading global partner of the energy and resources sector in Spain at the consulting firm Deloitte. But to achieve this transition, the IEA believes that annual investment in clean energy globally should triple by 2030 and reach four trillion dollars.

LAW AND CHALLENGES

The new Spanish Climate Change and Energy Transition Law, approved just 15 days ago, is part of the European Green Pact, and seeks make the Old Continent the first climate neutral. It introduces the necessary stability so that the investments to be mobilized have adequate legal coverage so that all agents advance in decarbonization, highlights the president of the Electric Power Companies Association (Aelec), Marina Serrano.

For Deloitte’s partner responsible for the energy regulation area, Oliverio Álvarez, the transformation require actions in the short, medium and long term in various areas. It refers mainly to electricity, energy vectors -biofuels, wind and solar renewables, hydrogen and storage- sustainable mobility, building, industry, agriculture, waste and circular economy. In this sense, policies and regulation are crucial.

The most relevant challenges for Requejo will be the need to integrate massive amounts of renewable energy into electricity generation; achieve adequate management of low-emission zones and modal changes in mobility; improve the energy efficiency of current buildings and ensure that new buildings have almost zero energy consumption; in addition to decarbonizing industry and agriculture without producing relocations.

The Aelec companies -including Iberdrola, Endesa, EDP and Viesgo- will be carbon neutral in 2030 and favor new electrical uses so that the main consumption segments -industry, transport and buildings- can be electrified, says Serrano.

They will do so with proposals to develop green hydrogen for high temperature industry and heavy transport, where direct electrification is not yet possible, and with the development of recharging infrastructures and the promotion of the use of heat pumps in buildings. .

ELECTRIFICATION RATIO

If we want to achieve the objectives, in Serrano’s opinion, the electrification ratio should increase from the current 22% to more than 30%, which should be the aspiration in 2030. Ambitious investment plans in renewable electricity and in distribution networks are on the roadmap of these companies to integrate all renewable production and allow the consumer to play a more active role in decarbonization, adds.

But the energy transition is not only an environmental and social plan, confirms Requejo; it entails a plan of economic and industrial transformation. The Naturgy energy group, which in the last three years has reduced its absolute emissions by 30% by closing its coal plants and increasing its renewable generation by 32%, agrees that decarbonization is an opportunity to progress from many points of view.

In fact, the Green Deal plans to mobilize one trillion euros in sustainable investments over the next decade; while, according to the Government, the ecological transition will attract more than 200,000 million of investment and generate between 250,000 and 350,000 jobs a year in Spain.

Also there will be relevant changes in the trade balance, as energy imports are reduced [en gran parte de combustibles fsiles], so that the country’s energy dependence will decrease very significantly, reaching 61% in 2030, says Requejo.

Furthermore, Deloitte’s lead partner predicts that a successful development of the energy transition will allow us to decouple economic growth from growth in energy consumption. This would lead, according to their calculations, to the GDP produced per unit of final energy consumption multiplying by 2.5 between 2017 and 2050.

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