Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Climate

The Energy Transition Is Slowing Down

Wood Mackenzie’s latest Energy Transition Outlook adds to a dour parade of recent climate reports.

Solar panels being punctured.
Heatmap Illustration/Getty Images

The Paris Agreement goal of holding warming to well less than 2 degrees Celsius over pre-industrial levels is not just increasingly appearing to be out of reach. The energy transition as a whole is slowing down.

This was the stark warning from Wood Mackenzie’s Energy Transition Outlook, the energy consultancy’s annual assessment of global progress toward decarbonizing the economy. “Progress toward a low-carbon energy system is stumbling on multiple fronts, leaving the world dependent on fossil fuels for longer,” the outlook’s authors write.

Alongside the International Energy Agency’s Global Energy Outlook, which found faster than expected global electricity demand imperiling Paris goals, and the United Nations Environment Programme’s Emissions Gap Report, which warned that unless emissions were soon wrenched down “it will become impossible” to limit warming to 1.5 degrees Celsius, the report completes a grim picture. The question now is less “Can the world meet the Paris Agreement goals?” and more “How will we manage once we’ve missed them?”

Wood Mackenzie takes 2.5 degrees of warming as its “base case,” consistent with other estimates, including the IEA’s. The report’s authors have little optimism left about the prospect of reaching net zero emissions by 2050 and limiting warming to 1.5 degrees. Instead, they used to the report to “highlight the potential of a delayed transition,” in which warming rises to 3 degrees, said Jonathan Sultoon, Wood Mackenzie’s head of markets and transitions, on a call with reporters Monday.

“We’re in the middle of the 2020s, the decade that’s pivotal to accelerate the energy transition” Sultoon said, “and no major countries — and very few companies — are on track to meet their 2030 climate goals.”

To meet even the 2.5 degree warming scenario — one that many scientists warn could result in difficult to predict and possibly irreversible climate impacts — would still require that global emissions peak by 2027. Emissions, instead, are rising — by some 1.3% in 2023, according to the United Nations.

The likelihood of slipping from 2.5 degrees to 3 will be determined by politics, Wood Mackenzie’s analysts argue, whether it’s the war in Ukraine and unstable Middle East leading countries to reinvest in fossil fuels for energy security or protectionist policies that block imports of world-leading low-priced Chinese renewable technology.

“China’s the lower-cost producer in clean tech,” Sultoon said. “Either the rest of the world needs to rely on Chinese manufacturing to speed the transition,” or “the West will pay a higher cost — or, in fact, delay the transition. And it looks far more likely to be that latter situation than the former.”

Policymakers in the rest of the high-emitting world, especially the United States, are perfectly aware of China’s dominance of much of the low-carbon technology stack, ranging from solar panels to lithium refining. But they’re seeking to nurture their own industries, seeking both to secure energy supplies in case of global conflict and to protect native workers and industries.

The political or security logic of these movies might be clear enough, but the Wood Mackenzie analysts are skeptical of this approach, at least when it comes to advancing decarbonization. “These dual goals — of decarbonisation and reducing dependence on metals supply from China — are at odds,” they write. “It will take years, if not decades, to shift away from China because it controls up to 70% of global supply chains across several commodities. It is also the lowest-cost producer. The rest of the world may need to rely on Chinese manufacturing or be prepared to either pay a higher cost or delay the transition.”

And then there’s the growth in electricity demand, which the IEA also highlighted. While any scenario that brings down emissions globally to levels consistent with even 2.5 degrees of warming, let alone 1.5, will involve a high degree of electrification of processes currently reliant on the combustion of fossil fuels, new demand for electricity can have ambiguous effects on overall emissions depending on the ability of non-carbon-emitting generation to meet that demand.

“The quick expansion of electricity supply is often constrained by transmission infrastructure which takes time to develop,” the report says. This means new demand could be met by fossil fuels, that the energy transition could become more expensive than it would be under a lower demand scenario, or that some crucial amount of electrification just simply does not happen.

“What happens if geopolitical crises, expanded trade restrictions, or protectionist policies becomes the norm, rather than the exception on a long-term basis? And where you see slower cost declines for alternative energy?” asked David Brown, director of Wood Mackenzie’s energy transition practice. If things continue as they are, that's a question we’ll all have to answer.

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
An hourglass and a boat.
Heatmap Illustration/Getty Images

Today, members of the International Maritime Organization decided to postpone a major vote on the world’s first truly global carbon pricing scheme. The yearlong delay came in response to a pressure campaign led by the U.S.

The Net-Zero Framework — initially approved in April by an overwhelming margin and long expected to be formally adopted today — would establish a legally binding requirement for the shipping industry to cut its emissions intensity, with interim steps leading to net zero by 2050.

Keep reading...Show less
Blue
Spotlight

How a Giant Solar Farm Flopped in Rural Texas

Amarillo-area residents successfully beat back a $600 million project from Xcel Energy that would have provided useful tax revenue.

Texas and solar panels.
Heatmap Illustration/Getty Images

Power giant Xcel Energy just suffered a major public relations flap in the Texas Panhandle, scrubbing plans for a solar project amidst harsh backlash from local residents.

On Friday, Xcel Energy withdrew plans to build a $600 million solar project right outside of Rolling Hills, a small, relatively isolated residential neighborhood just north of the city of Amarillo, Texas. The project was part of several solar farms it had proposed to the Texas Public Utilities Commission to meet the load growth created by the state’s AI data center boom. As we’ve covered in The Fight, Texas should’ve been an easier place to do this, and there were few if any legal obstacles standing in the way of the project, dubbed Oneida 2. It was sited on private lands, and Texas counties lack the sort of authority to veto projects you’re used to seeing in, say, Ohio or California.

Keep reading...Show less
Yellow
Hotspots

A Data Center Is Dead, Long Live a Solar Farm

And more of the most important news about renewable projects fighting it out this week.

The United States.
Heatmap Illustration/Getty Images

1. Racine County, Wisconsin – Microsoft is scrapping plans for a data center after fierce opposition from a host community in Wisconsin.

  • The town of Caledonia was teed up to approve land rezoning for the facility, which would’ve been Microsoft’s third data center in the state. Dubbed “Project Nova,” the data center would have sat near an existing We Energies natural gas power plant.
  • After considerable pushback at community meetings, the tech giant announced Friday that it would either give up on the project or relocate it elsewhere to avoid more fervent opposition.
  • “While we have decided not to proceed with this particular site, we remain fully committed to investing in Southeast Wisconsin. We view this as a healthy step toward building a project that aligns with community priorities and supports shared goals,” Microsoft said in a statement published to its website, adding that it will attempt to “identify a site that supports both community priorities and our long-term development objectives.”
  • A review of the project opponents’ PR materials shows their campaign centered on three key themes: the risk of higher electricity bills, environmental impacts of construction and traffic, and a lack of clarity around how data centers could be a public good. Activists also frequently compared Project Nova to a now-infamous failed project in Wisconsin from the Chinese tech manufacturer Foxconn.

2. Rockingham County, Virginia – Another day, another chokepoint in Dominion Energy’s effort to build more solar energy to power surging load growth in the state, this time in the quaint town of Timberville.

Keep reading...Show less
Yellow