When will the world be fossil-free?



Despite an ever-increasing number of countries committing to a net-zero economy, there still seems little chance of a fossil fuel-free future. Roger LewisEnvironmental, Social and Corporate Governance (ESG) expert at Downing LLP explains.

Roger Lewis, ESG specialist at Downing LLP.

Photo: Downing LLP

And we are at the mercy of geopolitics. Take a look at the recently reported earnings of both listed and national oil companies, as well as Glencore, the world’s largest coal miner. These were not achieved by the efficient action of managers, the game-changing products of scientists, or the effective strategic direction of governments, but simply by the impact of war on raw material prices and the associated reopening of coal mines in Europe and Asia.

Indeed, in a climate change engagement call with a French utility in December, I was reminded of the low-carbon superiority of nuclear over the UK’s return to dirty coal for primary power generation. However, nuclear power has always had a country-level love/hate relationship in its role in phasing out fossil fuels all the way back to the 20th century. High costs – which can be overcome by small, modular reactor technology – risk of military crossover; safe waste management; and major accidents, which have occurred somewhat since Britain’s own year in 1957 with Windscale, have plagued the industry.

Lose property?

Given this situation, will the vast hydrocarbon reserves remaining on the planet such as China, Indonesia, Russia and India at the beginning of 2023 really remain in the ground and become “unburned” or waste stocks? Can be.

One of the latest scenarios from the International Energy Agency (IEA) estimates that fossil fuel production will peak in the middle of this decade. Individual days where countries got all of their consumption from entirely renewable electricity were first achieved and reported in 2019, and are now moving towards longer periods. Country-specific renewable energy targets continue Ukraine’s pre-war upward trend. In mid-2021, the EU announced its Fit for 55 plan – a 55% reduction in greenhouse gas emissions (compared to the 1990 baseline) by 2030, including a target for solar and wind power to account for at least 40% of the energy mix. . A global assessment of nationally determined contributions at the COP28 climate change summit in Dubai in November could fulfill the original aim of the Paris Agreement to name and shame countries that are not doing enough to reduce their emissions compared to their peers.

And, of course, the same war that has led to a regression toward fossil fuels has simultaneously advanced energy security and a green transition strategy in three discernible ways. Firstly, with household energy efficiency measures. Second, policy makers – led by the US anti-inflation law, closely followed by green industry subsidies from Brussels – and asset owners and managers have increased interest in renewable energy and clean technology. These moves include battery storage as technology advances and other ways to overcome solar and wind intermittency.

Third is the gas supply. More liquefied natural gas production plants and contracts are signed and the gas is used more widely as a transition fuel or when demand rises through peak power plants. Although gas is still a fossil fuel, it has a lower carbon content than coal, giving it the nickname “the cleanest dirtiest fuel.” The EU agreed to include “the operation of fossil gas-fired power plants” as a “sustainable” activity that mitigates climate change in its controversial investment tax, provided the gas meets certain criteria. The key questions are how long will this transition take and what is too long? The IEA’s World Energy Outlook scenarios provide guidance, but we are back to the difficulty of predicting an exact end date for all fossil fuels.

All of this explains why key indicators of carbon reduction progress – such as the Washington-based non-profit World Resources Institute’s State of Climate Action 2022 report, progress updates from public body the UK Climate Change Committee and the IEA’s World Energy Outlook. progress in some areas but none in others. The same is true for businesses, as the Climate Action 100+ investor engagement initiative’s 10 benchmark indicators – ranging from targets and net zero to green capital spending and lobbying – have made mixed progress.

And that’s why the coexistence of fossil fuels and renewable energy seems to continue for the foreseeable future.

About the author: Roger Lewis is a seasoned ESG professional providing expertise to £1.8bn ($2.15bn) London-based investor Downing LLP. His areas of focus are planning and implementing strategy and governance, integrating ESG into investment and engagement activities, promoting advocacy with industry associations, and defining solutions to meet future responsibilities.

David is a passionate writer and researcher who specializes in solar energy. He has a strong background in engineering and environmental science, which gives him a deep understanding of the science behind solar power and its benefits. David writes about the latest developments in solar technology and provides practical advice for homeowners and businesses who are interested in switching to solar.

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