The ECCT's Low Carbon Initiative (LCI) arranged a lunch featuring guest speaker Liu Yushen, Co-Head of APAC Commercial for BloombergNEF (彭博新能源亞太區業務總經理 劉羽珅). In her presentation, the guest speaker offered some insights from her firm's recent research, particularly BloombergNEF's New Energy Outlook 2024 report, which presents long-term energy and climate scenarios for the transition to a low-carbon economy. Anchored in real-world sector and country transitions, the report provides an independent set of credible scenarios covering electricity, industry, buildings and transport, and the key drivers shaping these sectors until 2050.

According to the speaker, citing BloombergNEF's research, there is still a narrow window of opportunity to reduce the level of global temperature rises. In addition, progress has been made in the past 20 years to realise an energy transition and the pace has picked up significantly in the past few years thanks to record levels of investment.

BloombergNEF outlines two scenarios, an Economic Transition Scenario (ETS) and a Net Zero Scenario (NZS). The ETS exploratory base case describes how the power, industry, transport and buildings sectors might evolve as a result of cost-based technology changes. It is consistent with a 2.6C warming outcome, assumes no further policy support for the energy transition beyond existing measures and that the low-carbon transition is largely limited to the power and transport sectors. The NZS is a "normative climate scenario", which describes a tough but achievable stretch to get on track for net zero by 2050 by meeting sectoral carbon budgets. It is consistent with a 1.75C warming outcome with no overshoot or reliance on net-negative emissions post-2050 and fully decarbonises power, transport, industry and buildings by 2050.

According to the ETS, an economics-led transition will drive global greenhouse gas emissions down 27% by 2050 from 2023 levels, despite an almost doubling of energy usage. The bulk of the drop (68%) will be caused by a switch from fossil fuels to "clean" power (which includes renewable energy and nuclear power sources), while 15% will come from electrification and another 12% from energy efficiency efforts. Under this scenario, power and transport emissions fall furthest in the base case while minimal progress will be made in cutting emissions from industry and buildings. Emissions from power are expected to peak in 2024 while emissions from transport are expected to peak in 2028, thanks to the adoption of electric vehicles as they become more affordable. Emissions from industry and buildings are expected to remain roughly flat for the next 25 years in this scenario. The scenario assumes that renewable energy capacity will more than double from 2023 levels to 8,900 gigawatts (GW) by 2030, rising to 13,900GW by 2040 and 17,200GW by 2050 while power generation from fossil fuels would fall from 17,400 terawatt hours (TWh) in 2023 to 13,600 by 2030, 11,700 by 2040 and 10,700 by 2050. It also assumes large increases in grid investments and for EVs to gradually replace most Internal Combustion Engine (ICE) vehicles by 2050. The power sector will drive a decline in coal demand while the adoption of EVs is expected to lead to peak oil in 2028. However, the use of gas is expected to increase by about 9% from current levels.

The NZS assumes a much faster switch to clean power and EVs as well as a sharp drop in emissions from industry and buildings, helped by policy support measures and other incentives. However, The NZS requires multiple technology pathways to succeed. It assumes 45% of emissions reductions will be from a switch to clean energy, a further 24% from electrification, 8% from energy efficiency, 14% from carbon capture and storage, 5% from bioenergy, 3% from hydrogen and 2% from carbon removals.

It is expected that renewables (predominantly wind and solar) will dominate the energy mix globally in 2050, accounting for 70% under the ETS and 81% under the NZS (nuclear is expected to account for about 9% of the NZS energy mix), although there will be significant variations according to the country (France, for example, will have a much higher portion of nuclear power in its energy mix).

There is no silver bullet for decarbonising industry. The steel industry might be able to replace the use of coal as a fuel source with hydrogen but most other industries will have to rely on a combination of electrification, heat, bioenergy and CCS.

Both scenarios will require massive investment and technology deployment. Carbon capture and storage has potential but there are big hurdles to overcome in order to scale it up sufficiently. Failure to do so could derail efforts to reduce global temperature rises to below 1.75C. For the aviation sector, switching to sustainable fuels is not feasible currently given the shortage of potential feedstocks while switching to hydrogen also presents technical and scale issues.