It’s Not Only About Gigawatts

Created on January 10, 2024

2024   ·   featured   ·   thoughts

Originally published in Sciences Po Energy Review

Walking into Dubai Expo City on day one of COP28, many of us were skeptical that a climate conference hosted by a major oil nation would bring about any success. Instead, the energy and climate communities melted together under the scorching sun and managed to deliver an unprecedented agreement.

For me, coming to work in the energy field with an environmental background, the connection was clear, but for the past few decades, energy and climate discussions have been conducted in parallel, with sustainability and energy experts speaking to separate audiences, failing to blend, like oil and water.

The paradigm of the energy trilemma, whereby sustainability is placed in competition with energy equity and security in a zero-sum game style, has shaped the energy transition debate. However, renewable energy is increasingly visible as a win-win-win solution to the energy trilemma and as a set of solutions that can adapt to all kinds of scenarios. From increasing energy access through decentralised solar PV, to improving air quality in cities and ensuring a stable and local energy supply in the face of geopolitical tension, renewable energy can help tackle some of the main challenges of the 21st century.

After years of sidelining energy in climate discussions, COP28 was the moment when it became a centrepiece. The Dubai conference started strong, with the EU-led pledge of close to 130 countries to triple renewable energy capacity and double the rate of energy efficiency improvements by 2030 being launched on December 2nd. The discourse of the pledge, backed by civil society, academia, and industry players, was key in shaping the energy sections of the First Global Stocktake released on December 13. Paragraph 28 “further recognised” the need for several global efforts, including “(a) Tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030”.

The COP28 target has been framed as a great victory for renewable energy, but questions remain about whether it is the best tool to push for a quick, equitable and feasible decarbonisation of our energy system. Before challenging any implementation challenges we may encounter, such as the finance gap, or issues of distributive justice, and other socio-economic and geopolitical considerations, we must look at the conceptualisation of the target itself.

This piece will sketch two key critiques of the COP28 target, and argue that renewable energy capacity increase must go hand in hand with a focus on energy beyond the power sector, energy demand reduction, and reducing fossil fuel dependency.

Renewable fuel and heat: The missing 80%

The COP28 target is focused on increasing electricity or power capacity, a carrier that, as of 2020, only represented 23% of Total Final Energy Consumption (TFEC). While the share of electricity in TFEC is estimated to grow to 28% in IRENA’s Planned Energy Scenario (under existing policies) and over 50% by 2050 following IRENA’s 1.5 Scenario the reality is that the target is leaving aside nearly 80% of energy consumption today, in the form of heat and fuels, and that these will still represent a significant share of TFEC in all scenarios.

The so-called renewable energy target is reflective of the biases of broader energy discussions, which have led to an uneven development of renewables across the different energy carriers. While renewables are providing close to 30% of electricity consumed, they represent only 3.7% of fuels, mainly in the form of biofuels, and 9% of heat, mainly coming from bioenergy, solar thermal, and geothermal.

Efforts in shifting to renewable heat and fuels, concentrated, in some cases, in specific regions, are not being recognised in the COP28 target. China represented 73% of solar water heating, and only four countries: China, Türkiye, Iceland and Japan, accounted for 90% of direct geothermal use in 2022. In the case of renewable fuels, North America and Latin America held a combined 69% of supply in 2020. These efforts must also be encouraged and recognised in international forums.

Additionally, the target is biasing efforts towards the most dominant power generation technologies. Solar PV and wind energy are often portrayed as the heroes of the energy transition, and it is true that they represented 73 and 24% of power capacity additions in 2023 respectively. However, we often forget that modern bioenergy is the most used renewable energy source and accounts for 55% of renewable energy supply globally. While it is important to highlight that bioenergy must be linked to stringent sustainability standards, tacking impacts on biodiversity, food availability or human livelihoods, it is equally important that, once those are fulfilled, it is valued as a flexible and accessible renewable energy source.

Even if electrification is a priority and renewable power technology deployment is accelerating at an unprecedented rate, the reality is that renewable fuels and heat are, and will be necessary for the energy transition. Energy use for transport applications will still require the direct use of fuels, despite the rise of hydrogen and e-mobility. Moreover, key industrial processes such as cement and steel production require temperatures above 1,000°C, which are hard to reach via electrification. Here, direct renewable heat can play a key role in decarbonisation.

From accelerating to re-thinking

The other weak point of the target, conceptually, is the use of an absolute growth goal. Tripling renewable energy would mean moving from the 2,282 GW of installed capacity in 2022 to over 11,000 GW in 2030. However, capacity additions must be read in the broader energy consumption context. Over the last few years, growth in renewable energy use has not displaced fossil fuel use. Despite consumption of renewable energy growing by 58% between 2012 and 2022, the share of renewables in final energy consumption only increased from 9.5 to 13%, and consumption of fossil fuel is at a record high, still representing 79% of final energy consumption.

We can triple renewable energy capacity, but this will mean nothing if we also triple our fossil fuel consumption to meet the ever-rising energy demand. Increasing renewable energy capacity without replacing fossil fuels will not be enough to keep the Paris Agreement alive.

Adding the energy efficiency target to the renewable capacity one could be a way to incorporate some of the concerns over the rising energy demand - since higher efficiency would mean lower energy demand for the same output. Here, we run the risk of entering the Jevons’ paradox : an increase in energy efficiency leads to higher energy consumption through reducing energy use costs. Thus, change must be more fundamental than efficiency improvements.

While the debate between shares or absolute growth may seem like a technical one, situated far from the realities of everyday people, it is a decision that is shaping the societal and economic pathway our energy transition is to follow. And it is clear that, despite increased ambitions, we are far from meeting the capacity needed to stay below 1.5. While in 2023 we installed 473 GW of new renewable energy capacity, the tripling target would entail having installed over 1000 GW, and the same from 2024 to 2030.

This is where using renewable energy shares as a Key Performance Indicator (KPI) broadens our toolset. While adding renewable capacity is a way of producing green energy, if fossil fuel consumption equally increases, the share would show no progress. Here, we move from the prevailing accelerationist paradigm to one of re-thinking our economic and societal models, emphasizing a qualitative shift.

Before assessing how politics would have to work in the paradigm of high renewable energy shares, a quick note on economic and technical feasibility is due: Despite concerns about balancing a grid with high shares of variable renewables, more and more players are seriously exploring 100% renewable energy systems. And the economic case for high shares in electricity generation is strong: in the United States, for instance, it is estimated that reaching up to 90% of renewables in the electricity mix would cost just as much as the current system - and that is considering the decreasing benefits of higher shares of wind and solar PV in the energy mix.

Let us go back to the how of this share-based target. Increasing renewable energy shares is achievable through two main mechanisms:

First, removing incentives to fossil fuel production and consumption to reduce their share in the energy mix. On the demand side, we need an orderly and well-planned removal of direct and indirect fossil fuel subsidies which, as of 2022, accounted for over USD 7 trillion worldwide. We also need to start unpacking what climate leadership means. Countries cannot be considered climate leaders when oil and gas exports are at the backbones of their economies. The case of Norway comes to mind here: while 61.3% of energy consumption in 2020 came from modern renewables, oil and gas still represented 93% of domestic energy production, mainly for exports, while oil revenues constituted 4.3% of GDP (compared to 0.2% on average in OECD countries.

The second key leaver to increase renewable energy shares is looking beyond energy generation, to the energy demand side. The lower demand is, the easier it is to cover it, and to do so with renewables. Here is where proposals coming from the degrowth literature can prove invaluable. The main tenet of degrowth is to deconstruct the need for constant and global economic growth as a driver of prosperity, replacing it with other human and social progress indicato rs. Degrowth thus challenges the need for increasing resource use, mainly in high-income economies, and instead calls for a planned downsizing of economic activity, together with a widespread and fair redistribution of resources. While discussing the merits and challenges of degrowth is outside the scope of this piece, it is clear that the degrowth literature highlights an alternative path to that of scaling up our economic and energy systems.

Energy and climate models that include degrowth principles are increasingly being developed: One of these is the Degrowth Path without overshoot scenario by Keyßer and Lenzen , that aims for Net Zero by 2050 without surpassing 1.5 degree warming and focuses on energy demand reduction. Here, renewable energy primary energy demand would only need to increase 1.4 times (or 41%), while fossil fuels consumption would decrease by 31% from 2023 to 2030. This is far lower than the current tripling objective and is enabled by a more systemic approach to the energy and economic system. In an application of degrowth scenarios to the national level, in Australia, Kikstra et al. find that given a reduction in energy demand and economic growth (with it going from 3%/year to −5%/year), the need to upscale wind and solar energy is 40% lower than in the IPCC SSP2 baseline scenario which makes it a more achievable feat.

A shift from an energy planning that promotes acceleration and growth to one that looks at broader social and economic prosperity indicators would also accentuate the advantage of renewable energy as compared to fossil fuel. When we change what we value as a society, our indicators of success, we can also shift incentive structures, and priorities, in this case from profits to prosperity. And one can imagine that the possibilities that renewables offer - as always, if well managed - of energy decentralisation, citizen ownership, and generally the democratisation of the energy system would fit right in with a focus on using less, in a more meaningful way.

Conclusion

It is clear that COP28 set the stage for collaboration, and put energy at the centre, but we may be barking up the wrong tree: the COP28 target encourages growth in renewable power capacity only. A renewable energy target, covering power, heat, and fuel, and focusing on increasing renewable energy shares would force decision-makers to look at the energy system in a more holistic manner. To reach our climate targets while ensuring prosperity, we need to look beyond an increase in renewable energy capacity, focusing on reducing energy demand, shifting consumption patterns (mainly in high-income economies) and addressing our dependence on fossil fuels.

 

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