3 Critical Challenges in the Transition to Net-Zero

Achieving the net-zero emissions target needed to limit global temperature rise will require an unprecedented transformation of the world’s energy system. The effort is underway, but much more work needs to be done to create a sustainable and resilient system that can meet rising energy demand while greatly reducing greenhouse gas emissions. Rystad Energy’s just-launched annual flagship report Global Energy Scenarios 2024 provides a strategic roadmap for a low-carbon future and an in-depth look at what it will take to achieve the IPCC’s 1.6°C scenario.

Our analysis centers on three essential tasks: decarbonizing the power sector, electrifying key end-use sectors and addressing residual emissions. Each task plays a crucial role in achieving emissions reductions. A decarbonized power sector alone contributes 40% of the targeted reductions, with electrification in transport, industry and buildings adding another 40%. Addressing the remaining 20% focuses on residual emissions, particularly in sectors that are challenging to fully electrify. This distribution reflects the balance needed to drive down emissions, emphasizing the importance of technology adoption and strong policy frameworks.

In the power sector, the rapid deployment of renewables — particularly solar and wind — marks a key milestone. Solar installations reached a record 360 GWac in 2023, a 60% year-on-year increase, underscoring solar’s scalability and significant cost declines. Wind power continues to complement solar’s growth, especially in regions with favorable wind resources. At the same time, battery storage solutions are proving indispensable for renewable-heavy grids, enhancing resilience by storing surplus energy and releasing it when generation dips.

Electrifying the economy is reshaping demand across key sectors, fundamentally altering the global energy landscape. The transport sector, for example, is witnessing a rapid shift to electric vehicles (EV), which are projected to account for 23% of global passenger vehicle sales in 2024.

The efficiency benefits of electrification are equally noteworthy. Electric systems such as EVs and heat pumps are far more energy-efficient than combustion-based technologies. EVs, for example, use only a fraction of the energy required by conventional vehicles to achieve the same mobility, while heat pumps provide three to four times more heat per unit of electricity than traditional systems. This shift in the energy landscape emphasizes the concept of “useful energy.” Unlike fossil-fuel systems, where substantial energy is lost through extraction, transportation, and combustion, renewables and electrification can deliver a higher proportion of energy directly at the point of use, maximizing each unit of energy’s effectiveness.

Addressing residual emissions, which are more challenging to eliminate through electrification, is also critical. Carbon capture, utilization and storage (CCUS), green hydrogen and biofuels are essential for reducing emissions in heavy industry, aviation and cement production. In cement, for example, where emissions are inherent to the production process, CCUS offers a viable solution. Scaling biofuel use in aviation will also be key to reaching net-zero emissions in this hard-to-abate sector. However, many projects remain high-risk, emphasizing the need for targeted policy support and technological advances to make these solutions viable.

The new report also looks at potential climate upsides. Of particular interest are recent innovations in land use such as agrivoltaics. By co-locating solar installations and agricultural activities, agrivoltaics allows regions to meet peak solar demand with just 1.1% of global agricultural land, while an expansion to 3.8% could cover total energy needs under the 1.6°C pathway. This dual approach supports food and energy security, particularly in regions with strong solar resources, by contributing to both sustainable food production and clean energy generation.

Finally, we recognize that methane emissions reduction offers an opportunity for near-term impact, given methane’s intense but short-lived warming potential. Precision fermentation in agriculture, for example, can reduce methane emissions by up to 97% compared to conventional methods, while better leak detection and mitigation in the oil and gas sector promises further reductions. These measures provide high-impact solutions that complement long-term CO? reduction efforts, delivering immediate climate benefits.

Source: By Rystad Energy for Oilprice.com