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Breakingviews - Guest view: 2021 is tipping point to hit net zero

PARIS (Reuters Breakingviews) - This year will have a lasting impact on our world. The pandemic is taking a heavy human toll, the global economy is struggling, inequality is on the rise, and there are many uncertainties about the future.

A person holds an earth globe during the Global Climate Strike of the Fridays for Future movement in Sao Paulo, Brazil September 20, 2019.

Amid this grim reality, recent advances in technology and the growing number of pledges by countries and companies to reduce their carbon emissions to net zero by the middle of this century give us growing cause for optimism about the coming decades.

Economic recovery packages being drawn up by governments around the world provide an opening to tackle the social, economic and climate crises at the same time. The way to do this is through investments and policies targeting clean energy technologies – this can stimulate growth, create new employment and put the world on a more sustainable path.

As the leaders of the International Renewable Energy Agency and the International Energy Agency, we want to highlight three no-regret areas for action to help navigate the current crisis while moving towards a cleaner energy future.

EFFICIENCY FIRST: WE NEED TO DRIVE ECONOMIC ACTIVITY UP AND EMISSIONS DOWN

This can take the form of more efficient cars, washing machines, buildings, industrial machinery and much more. Worryingly, recent trends indicate that global progress on energy efficiency is not only inadequate for reaching international climate goals, but also slowing down even further. Worldwide improvements in energy efficiency are estimated to have fallen below 1% last year to their slowest annual rate since 2010. This calls for urgent policy action.

Well-designed efficiency policies can boost weakened economies and secure long-term economic and environmental benefits. For example, programmes to refit buildings create construction jobs, permanently reduce consumers’ energy bills and bring down emissions. These kinds of efforts would soften some of the impacts of the Covid-19 crisis, which has hit households and small businesses particularly hard.

RENEWABLES CAN ACCELERATE ENERGY TRANSITIONS AND JOB CREATION

Almost 30% of global electricity today comes from renewable sources like hydropower, wind and solar. They have been the most resilient energy source to the impacts of the Covid-19 crisis. Renewables are now the cheapest option to produce electricity in most parts of the world.

They are set to overtake natural gas and coal in the coming years. But their deployment needs to accelerate further to create more jobs in these critical clean energy industries and steer the world closer to reaching international climate goals. Other renewables like biofuels have suffered amid the economic crisis and need even greater policy attention.

CLEAN ENERGY INNOVATION IS AT A TIPPING POINT

In periods of economic crisis, there is the temptation to cut budgets for projects with long-term objectives. Governments and companies must avoid doing so. A significant portion of the emissions reductions required to meet international climate goals will come from technologies that are currently still at the prototype or demonstration stage. Moreover, the scope of innovation must expand to cover all parts of the energy system.

Decarbonising the global power sector will only take the world a third of the way to net-zero emissions. Innovation is needed to sharply reduce emissions in transport, industry and the buildings sector. This means rapid progress in key areas like hydrogen, bioenergy, electric vehicles, heat pumps and more. Governments and companies should be acting now so they can lead the industries of the future. These emerging energy technologies have the potential to grow into huge markets worth hundreds of billions of dollars in the coming decades. We must remember that changes in business models, market design and how systems operate are key ingredients of systemic innovation.

Decarbonising the global energy system is a monumental task, but the science shows the urgency of shifting from today’s unsustainable status quo by accelerating the clean energy transitions that are already underway around the world. We must act rapidly. The Intergovernmental Panel on Climate Change makes it clear that in order for the world to limit global warming this century to 1.5 degrees Celsius, global carbon emissions must decrease by 45% from their 2010 levels by 2030 to reach almost zero in 2050. This is a task that requires all hands on deck.

Governments have the largest role in shaping the next steps. They can either accelerate progress or opt for the false sense of security that business-as-usual offers. Time will tell whether the choices we are making today will take us towards a sustainable recovery and a clean and resilient future. But we will not be able to say we were unaware of the implications of our decisions.

- Fatih Birol is executive director of the International Energy Agency. Francesco La Camera is director-general of the International Renewable Energy Agency.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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