5 things we learned about decarbonization at the BNEF Summit

Renewables alone are not the path to a low-carbon energy future — the reality is far more complex.

This was the overriding message from speakers and delegates at the Bloomberg New Energy Finance (NEF) London Summit 2019 in October.

“Any solution (for decarbonization) needs to be embedded in the realities of the world we live in, while working in partnership towards achieving the larger goal of a more sustainable society,” said Makoto Kanda, Chief Regional Officer EMEA for Mitsubishi Heavy Industries, in his opening remarks.

Cutting the planet’s carbon emissions to a level sufficient to keep global warming in check will only be achieved through a broad mix of solutions, transforming key sectors like power, transport and industry.

Kanda identified the use of hydrogen and carbon capture, usage and storage (CCUS) as two technologies that will play important roles in decarbonizing these sectors.

Jon Moore, CEO of BloombergNEF, explained that leadership from industry will be critical in the forthcoming energy transition as economies seek to decarbonize. “The scientists have played their part,” he said. “Now, it’s for countries and industries.”

Here are five key takeaways about decarbonization from the recent BNEF Summit:

1. Renewables are key

Wind and solar continue to fall in price and grow in use, while the cost of energy storage is also predicted to fall to enable greater penetration of renewables. One terawatt of wind and solar — enough to power the entire United States — has been deployed over the past two decades, and these technologies will form a key part of the solution.

And innovations such as floating offshore wind have been disruptive, taking a significant step towards decarbonizing power generation.

But there are major gaps between climate trends and our long-term energy goals. While wind and solar are set to account for almost half of the global power mix by the middle of the century, other solutions will be needed.

2. “Phase 2” technologies are also needed

There are physical limits to the deployment of renewables and the level to which energy use can be electrified. In order to decarbonize sufficiently to keep global warming below 2°C, we will also need “Phase 2” technologies, to do everything from helping to stabilize energy grids and providing seasonal back-ups, to facilitating heat and industrial energy applications.

As fossil fuels — particularly coal — are phased out in the coming decades, technologies such as hydrogen, biogas and CCUS will need to come into play across sectors including power, residential heat and road transport.

3. CCUS is critical

BloombergNEF research found that CCUS for both coal and combined cycle gas turbines (CCGT) will be essential in decarbonizing the energy supply.

While renewables play an increasingly influential role in the energy mix, almost three-quarters of global primary energy demand is expected to be met by coal, oil and gas by mid-century. Widespread adoption of CCUS technologies could remove CO₂ from power generation and hard-to-electrify industries, which demand vast amounts of heat.

Carbon capture could also be used to create blue hydrogen from fossil fuels, helping establish market supply and paving the way for cleaner green hydrogen.

4. Green hydrogen can be economically viable

Green hydrogen offers a way to efficiently store excess energy from renewables, such as offshore wind, and is also a clean fuel for hard-to-abate energy uses, such as long-haul transport and industrial processes.

BloombergNEF predicts the cost of electrolyzers could fall rapidly in the same way that solar photovoltaic panels have over the past decade, making green hydrogen economically viable. Within a decade, green hydrogen could start to become more competitive than coal and natural gas for heavy industry processes like steelmaking, with prices continuing on a downward trajectory in the following decades.

5. We need to decarbonize industrial heat to stand a chance

Industrial heat accounts for more than a third of global energy consumption, with the steel, cement and chemical sectors being the biggest industrial energy users and biggest industrial emitters of CO₂.

Fossil fuels currently power the high-heat processes of these industries, as well as form the raw materials of products like cement.

Unlike many industrial processes, these sectors are difficult to decarbonize by electrification. But intense heat can be generated using alternative energy sources like hydrogen, synthetic fuels and biogas, together with adopting CCUS to prevent carbon reaching the atmosphere.