Accelerating the path to net zero

“Is 1.5 degrees C on life support?” asks Dr Angela Wilkinson, secretary general of the World Energy Council (WEC). According to research by PwCOpens in a new window our current decarbonisation efforts need to happen 11 times faster than the global average achieved since 2000, if we are going to reach the targets of the Paris Agreement.

New measures are essential to strengthen energy markets against supply disruptions and price spikes. But the world also needs to continue to move towards the goals set by the Paris Agreement — and doing so will require going well beyond temporary solutions. To ensure the long-term focus remains on accelerating net zero, energy companies, wider industry, governments and consumers must come together.

“The complexities we face are so great that we need sectors, regulators, policymakers, digital experts and capital providers to work together to speed up the race against climate change,” says Jeroen Van Hoof, global energy, utilities and resources leader, PwC Netherlands. “Sector convergence is critical — collaboration between energy companies and chemicals companies, for example between producers of batteries and electric vehicles. That all needs to happen in sync with the right policy support at the same time. This will not be done by start-ups only; it will require the capabilities of large companies in energy and their expertise.”

Technology is crucial to accelerate the path to net zero, but it needs support

A shift to clean energy relies on a range of energy sources and technologies and the infrastructure to support them. Battery storage systems, hydrogen production, grid integration and carbon capture, utilisation and storage (CCUS) must all be scalable and commercially viable.

Elisabeth Brinton, corporate vice president of sustainability at Microsoft, says there is a role for evolving consortiums such as the Northern Lights project, where Microsoft collaborates with Shell on carbon capture and sequestration as a service to bring technology benefits to the wider market.

For Angela Wilkinson of the WEC, it comes down to a ‘social transformation’: access and incentives as part of a just transition on a global level. “For the next decade we don't have a shortage of technologies, we don't have a shortage of money — we have a shortage of absorptive capacity,” she says. “There's plenty of money around, but how do we create an enabling environment for new technology? A lot of work is being done at the level of big projects and micro projects, but what’s missing is the middle scale.”

Policymakers step in to speed up progress

Collaboration between the public and private sectors is now crucial, and in some countries new climate policy and regulation is starting to bring them together. For example, the US Inflation Reduction Act of 2022 earmarks some $369bn for energy security and climate change programmes over the next 10 years, prioritising initiatives in disadvantaged communities. According to Teresa Mattamouros, (formerly) managing director at EQT Partners, the act is already driving investment. “In practical terms, there was a lot of private capital waiting on the sidelines to invest in hydrogen, carbon capture and other technologies, but the numbers just didn't make economic sense,” she says. “With this bill it makes economic sense, so we are starting to look at a lot of projects with different eyes. We’re hoping that it's a good example of how policy can accelerate the transition and improve energy equity at the same time.”

“In practical terms, there was a lot of private capital waiting on the sidelines to invest in hydrogen, carbon capture and other technologies, but the numbers just didn't make economic sense,” she says. “With this bill it makes economic sense, so we are starting to look at a lot of projects with different eyes. We’re hoping that it's a good example of how policy can accelerate the transition and improve energy equity at the same time.”

In the EU, meanwhile, a €140bn windfall tax on fossil fuel producers is designed to help fund member states’ transitions to green energy.

Ben Wilson, chief strategy and external affairs officer at National Grid, supports reform of energy regulation and markets to deliver the energy transition.

“And we need planning regimes that allow us to invest more in the local communities that host this infrastructure – and we need those regimes to deliver in a few years rather than a decade if we're going to hit our targets.”

Renewables are starting to become the most attractive option 

Considerable investment is still needed to integrate electricity grids with renewable energy sources — about the equivalent of every dollar spent on zero-carbon generation before 2050, according to Wilson. But he says we are seeing the beginnings of a “self-accelerating energy transition,” whereby the cost of renewables makes them the most commercially attractive option.

“Typically, we've talked about a trilemma of reducing emissions, maintaining affordability and preserving security of supply,” says Wilson. “But if you look at the current situation — certainly in the UK and Europe, but also in the north-east of the US where we operate — renewables are now by far the cheapest source of electricity generation. All levers point in the same direction, which is more and more renewables.”

This is a reason to be optimistic, but is it enough? “The diversity in energy systems has increased globally, and there’s no one-size-fits-all solution,” says Wilkinson. “To form the new energy system, cities, communities and regions all need to be involved, with a regulatory environment that enables their voices and choices to be understood.”