Released October 25, 2023 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--In about a month, the annual U.N. climate change conference will convene in the United Arab Emirates. In the run-up to that event, known formally as Congress of the Parties 28 (COP28), organizations concerned about global warming have turned up the volume and frequency of their concerns, particularly after the sweltering summer of 2023. The current moment is an inflection point, goes the argument, and we need more concerted and dramatic actions now to ward off a soon-to-be-unlivable planet.
Companies in the hydrocarbon business apparently don't share that same level of urgency. Recent blockbuster transactions in the Oil Patch--such as ExxonMobil Corporation's (NYSE:XOM) (Irving, Texas) $59.5 billion acquisition of Pioneer Natural Resources Company (NYSE:PXD) (Dallas, Texas) and Chevron Corporation's (NYSE:CVX) (San Ramon, California) $53 billion purchase of Hess Corporation (NYSE:HES) (New York, New York)--show that the leadership of oil companies believe that hydrocarbons are here to stay, whatever investments those companies may have made in low- and no-carbon businesses.
For more on those transactions, see October 16, 2023, article - ExxonMobil's Acquisition of Pioneer May Link Lithium Extraction Interests and October 24, 2023, article - Chevron to Buy Hess, Add Bakken Shale to Oil & Gas Holdings.
The split between hydrocarbon companies and the global warming community has turned the topic of global warming into two separate monologues, where each side focuses on its key messages and engages in precious little dialogue with the other. As climate change organizations clamor for more and faster action by governments and corporations, large oil companies are doubling down on hydrocarbons.
That makes a recent comment from Fatih Birol, executive director of the International Energy Agency (IEA) (Paris, France) seem a tad optimistic. In releasing the agency's annual World Energy Outlook 2023 on October 24, he said, "The transition to clean energy is happening worldwide and it's unstoppable. It's not a question of 'if,' it's just a matter of 'how soon.' "
A clean energy global economy could lead to "immense benefits," he continued, such as "new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone. Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world's energy and climate future look weaker than ever."
"Governments, companies and investors need to get behind clean energy transitions rather than hindering them," he said.
The IEA has long believed that only government intervention in energy markets, potentially including a carbon tax, tougher environmental regulation or heightened energy efficiency ratings for end-use equipment and appliances, is the only way to transform a global economy built on hydrocarbons to one that is cleaner. As time shortens in the fight against global warming, even greater government intervention is needed, it said in the World Energy Outlook 2023.
In signing the Paris Agreement in 2015, leaders from nearly 200 nations pledged to undertake actions that would keep the world's long-term average temperature gain to 1.5 degrees Celsius above pre-industrial times. That is the number beyond which the worst effects of global warming are thought to be irreversible. Currently, world temperature gain is about 1.2 degrees Celsius, the report noted. Hence the IEA's rising level of alarm.
The IEA still believes limiting temperature gain to 1.5 degrees Celsius is possible, but the probability of that recedes a bit every day, the agency said.
In recent years, the IEA has well documented the world's uneven march toward a clean energy global economy, detailing massive worldwide investments in renewable energy while also fretting over the increased use of hydrocarbons, particularly in emerging and developing economies. Emerging and developing countries' projected increased use of those fuels will lead to an increase in greenhouse gas (GHG) emissions that is expected to swamp the reductions from mature economies, it projected. For more on those IEA reports, see June 7, 2023, article - Solar Drives Record Global Renewable Buildout This Year and August 1, 2023, article - Global Coal Use Hit Record in 2022, Continues to Rise.
The IEA's newest report, World Energy Outlook 2023, has a heightened urgency: will the global economy be able to decarbonize fast enough to stem the worst predicted effects of global warming, a preview of which has been on display in recent years: hotter temperatures, drier soils, more severe weather.
The new IEA report proposes a global strategy for "getting the world on track by 2030 that consists of five key pillars, which can also provide the basis for a successful COP28 climate change conference." They are:
World Energy Outlook 2023 reviews the impressive achievements that have been made in clean energy in recent years, which makes the agency believe that not all is lost in the fight against global warming.
Renewable electric generation is expected to account for about 80% of new electric power generation capacity by 2030 under current policy settings, with solar alone accounting for more than half of this expansion, the agency wrote in its new report. However, this scenario considers only a fraction of solar's potential, it added. By the end of the decade, the world is projected to have the ability to manufacture more than 1,200 gigawatts (GW) of solar panels per year. But only about 500 GW of those panels currently are planned to be deployed in 2030. If the world were to reach deployment of 800 GW of new solar photovoltaic (PV) capacity by the end of this decade, it would lead to a further 20% reduction in coal-fired power generation in China in 2030 compared with a scenario based on today's policy settings. Electricity generation from coal and natural gas across Latin America, Africa, Southeast Asia and the Middle East would be 25% lower, it predicted.
In looking out to 2030, the agency envisions a global energy system where clean technologies beyond solar play a significantly greater role than today. This includes:
"Investment in clean energy has risen by 40% since 2020," the agency wrote. "The push to bring down emissions is a key reason, but not the only one. The economic case for mature clean energy technologies is strong. Energy security also is an important factor, particularly in fuel-importing countries, as are industrial strategies and the desire to create clean energy jobs."
The agency continued: "Not all clean technologies are thriving. Some supply chains, notably for wind, are under pressure. But there are striking examples of an accelerating pace of change. In 2020, one in 25 cars sold was electric; in 2023, this is now one in 5. More than 500 gigawatts (GW) of renewables generation capacity are set to be added in 2023--a new record. More than $1 billion per day is being spent on solar deployment. Manufacturing capacity for key components of a clean energy system, including solar PV modules and EV batteries, is expanding fast."
This momentum is why the IEA recently concluded, in its recently updated Net Zero Roadmap report, that a pathway to limiting global warming to 1.5 °C is very difficult, but it still is possible.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Companies in the hydrocarbon business apparently don't share that same level of urgency. Recent blockbuster transactions in the Oil Patch--such as ExxonMobil Corporation's (NYSE:XOM) (Irving, Texas) $59.5 billion acquisition of Pioneer Natural Resources Company (NYSE:PXD) (Dallas, Texas) and Chevron Corporation's (NYSE:CVX) (San Ramon, California) $53 billion purchase of Hess Corporation (NYSE:HES) (New York, New York)--show that the leadership of oil companies believe that hydrocarbons are here to stay, whatever investments those companies may have made in low- and no-carbon businesses.
For more on those transactions, see October 16, 2023, article - ExxonMobil's Acquisition of Pioneer May Link Lithium Extraction Interests and October 24, 2023, article - Chevron to Buy Hess, Add Bakken Shale to Oil & Gas Holdings.
The split between hydrocarbon companies and the global warming community has turned the topic of global warming into two separate monologues, where each side focuses on its key messages and engages in precious little dialogue with the other. As climate change organizations clamor for more and faster action by governments and corporations, large oil companies are doubling down on hydrocarbons.
That makes a recent comment from Fatih Birol, executive director of the International Energy Agency (IEA) (Paris, France) seem a tad optimistic. In releasing the agency's annual World Energy Outlook 2023 on October 24, he said, "The transition to clean energy is happening worldwide and it's unstoppable. It's not a question of 'if,' it's just a matter of 'how soon.' "
A clean energy global economy could lead to "immense benefits," he continued, such as "new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone. Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world's energy and climate future look weaker than ever."
"Governments, companies and investors need to get behind clean energy transitions rather than hindering them," he said.
The IEA has long believed that only government intervention in energy markets, potentially including a carbon tax, tougher environmental regulation or heightened energy efficiency ratings for end-use equipment and appliances, is the only way to transform a global economy built on hydrocarbons to one that is cleaner. As time shortens in the fight against global warming, even greater government intervention is needed, it said in the World Energy Outlook 2023.
In signing the Paris Agreement in 2015, leaders from nearly 200 nations pledged to undertake actions that would keep the world's long-term average temperature gain to 1.5 degrees Celsius above pre-industrial times. That is the number beyond which the worst effects of global warming are thought to be irreversible. Currently, world temperature gain is about 1.2 degrees Celsius, the report noted. Hence the IEA's rising level of alarm.
The IEA still believes limiting temperature gain to 1.5 degrees Celsius is possible, but the probability of that recedes a bit every day, the agency said.
In recent years, the IEA has well documented the world's uneven march toward a clean energy global economy, detailing massive worldwide investments in renewable energy while also fretting over the increased use of hydrocarbons, particularly in emerging and developing economies. Emerging and developing countries' projected increased use of those fuels will lead to an increase in greenhouse gas (GHG) emissions that is expected to swamp the reductions from mature economies, it projected. For more on those IEA reports, see June 7, 2023, article - Solar Drives Record Global Renewable Buildout This Year and August 1, 2023, article - Global Coal Use Hit Record in 2022, Continues to Rise.
The IEA's newest report, World Energy Outlook 2023, has a heightened urgency: will the global economy be able to decarbonize fast enough to stem the worst predicted effects of global warming, a preview of which has been on display in recent years: hotter temperatures, drier soils, more severe weather.
The new IEA report proposes a global strategy for "getting the world on track by 2030 that consists of five key pillars, which can also provide the basis for a successful COP28 climate change conference." They are:
- Tripling global renewable electric capacity
- Doubling the rate of energy efficiency improvements
- Slashing methane emissions from fossil fuel operations by 75%
- Implementing innovative, large-scale financing mechanisms to triple clean energy investments in emerging and developing economies, and
- Enacting measures to ensure an orderly decline in the use of fossil fuels, including an end to new approvals of unabated coal-fired power plants
World Energy Outlook 2023 reviews the impressive achievements that have been made in clean energy in recent years, which makes the agency believe that not all is lost in the fight against global warming.
Renewable electric generation is expected to account for about 80% of new electric power generation capacity by 2030 under current policy settings, with solar alone accounting for more than half of this expansion, the agency wrote in its new report. However, this scenario considers only a fraction of solar's potential, it added. By the end of the decade, the world is projected to have the ability to manufacture more than 1,200 gigawatts (GW) of solar panels per year. But only about 500 GW of those panels currently are planned to be deployed in 2030. If the world were to reach deployment of 800 GW of new solar photovoltaic (PV) capacity by the end of this decade, it would lead to a further 20% reduction in coal-fired power generation in China in 2030 compared with a scenario based on today's policy settings. Electricity generation from coal and natural gas across Latin America, Africa, Southeast Asia and the Middle East would be 25% lower, it predicted.
In looking out to 2030, the agency envisions a global energy system where clean technologies beyond solar play a significantly greater role than today. This includes:
- Nearly 10 times as many electric cars on the road worldwide as is the case today
- Renewables' share of the global electricity mix nearing 50%, up from around 30% today
- Heat pumps and other electric heating systems outselling fossil fuel boilers globally, and
- Three times as much investment going into new offshore wind projects than into new coal- and gas-fired power plants
"Investment in clean energy has risen by 40% since 2020," the agency wrote. "The push to bring down emissions is a key reason, but not the only one. The economic case for mature clean energy technologies is strong. Energy security also is an important factor, particularly in fuel-importing countries, as are industrial strategies and the desire to create clean energy jobs."
The agency continued: "Not all clean technologies are thriving. Some supply chains, notably for wind, are under pressure. But there are striking examples of an accelerating pace of change. In 2020, one in 25 cars sold was electric; in 2023, this is now one in 5. More than 500 gigawatts (GW) of renewables generation capacity are set to be added in 2023--a new record. More than $1 billion per day is being spent on solar deployment. Manufacturing capacity for key components of a clean energy system, including solar PV modules and EV batteries, is expanding fast."
This momentum is why the IEA recently concluded, in its recently updated Net Zero Roadmap report, that a pathway to limiting global warming to 1.5 °C is very difficult, but it still is possible.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
