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COVID-19: ADVICE FOR STaff, STUDENTS AND COMMUNITY

Green power to the people

Wednesday 20 January 2021

Professor Paul de Leeuw
Professor Paul de Leeuw, Director of the RGU Energy Transition Institute, looks at what 2021 might bring in the drive towards Net Zero.

After a truly challenging 2020, hopefully 2021 will offer something to look forward to. As each year has its own unique challenges, 2021 will probably be defined by the global response to both COVID-19 and the climate emergency. The global COVID vaccination programme, the upcoming COP26 meeting and the prospect to ‘build back better, greener and fairer’ will provide the opportunity to tackle some of the world’s greatest challenges.

With the COVID-19 situation rightfully occupying the headlines, it is important to remember that the climate emergency hasn’t gone away. 2020 was the hottest year on record and the world’s six warmest years on record have all occurred from 2015. Since 1980 the global temperatures have been above the average of the 20th century. So, what is going to change?

New commitments - The United Nations COP26 summit in November 2021 will be a key meeting to mitigate the worst impacts of climate change and to achieve the 1.5°C limit set out in the 2015 Paris Agreement.

As part of the COP26 summit, each country has to put forward specific plans and legally binding commitments to limit global warming by 2050 or earlier. No one knows what the future holds, but there is a growing consensus on the destination – net zero by 2050 or earlier. Although the journey to get there is still undefined, there is growing alignment about what needs to be done and by when.

With more than 120 countries already pledged to deliver net zero by 2050, with the USA expected to sign-up in the coming months and China committing to be carbon neutral by 2060, there is a real opportunity to ‘build back better and greener’. At the same time this can create jobs, make the global economy more competitive and help steer the world towards a more resilient and cleaner future. These commitments will fundamentally change the global energy system, with solar, wind and hydrogen emerging as the dominant and diverse energy sources that can power, heat, cool and move the world.  

New politics - The energy transition will inevitably change future energy geopolitics. The big three – coal, oil and gas – have dominated the global energy scene for almost a century, with over 80% of production of these global commodities concentrated in less than 20 countries.

Solar, wind and hydrogen are going to be the key future energy building blocks and the power and energy generated by these low carbon alternatives will replace the traditional, globally traded commodities. Given the constraints of wind and solar generation capacity, energy generation is likely to become more localised, more integrated and increasingly centred around energy clusters, matching supply and demand in regions or countries.

With the expectation that almost every country or region in the world will become an energy producer, the global energy system is going to change. This new world of increased energy independency, breaking the link with imported commodities, will also shift responsibility and accountability to national and regional governments for meeting the net zero obligations under the Paris Climate Change agreement. The increased localisation of energy will enable governments to have a bigger impact in shaping their own energy destiny and employment opportunities.

New approaches – The transition from fossils fuels into lower carbon energy sources will also require different approaches and new business models. The UK, for example, is looking to increase its installed offshore wind capacity from c. 10 GW in 2020 to around 40 GW by 2030. To deliver this additional capacity, it will require the installation of up to 2,500 new wind turbines over the next nine years. To do this, will require the installation of one new wind turbine every weekday for nine years.

Similar approaches and types of developments are needed to develop solar, hydrogen and carbon capture at scale. The energy transition is going to be a volume, efficiency and continuous improvement challenge, which in turn will require a ‘lean manufacturing’ mindset. The energy industry can leverage the experience of other high volume/high value manufacturing industries (such as the automotive industry) to develop the new business models and processes required.

New players/companies - New opportunities will inevitably create new players. This shift is already happening. Global energy giants such as BP, Shell, Total and ExxonMobil are now joined by a new generation of energy powerhouses such as NextEra (USA), Orsted (Denmark) and Enel (Italy). In terms of market value, Orsted is already roughly equivalent to BP ($80 billion+), whilst NextEra is almost twice the value at around over $160 billion.

With the expectation that up to 2% of the global Gross Domestic Product will need to be spent on an annual basis to mitigate the worst impacts of climate change, there is room for all to operate. Against this backdrop, it is no surprise that the investment community is already favouring funding for the low carbon energy sector over that for the fossil fuel industry. With new investment into renewables energy estimated to be up to $2 trillion per year, there will be plenty of opportunities for existing and new companies to support the energy transition.

New jobs and opportunities – The energy sector has traditionally been a key area for high skill and high value jobs. In developed economies such as the USA and the UK, the energy industry (including mining, exploration, production, refining, generation, transmission, distribution and storage) typically represents around 2-4% of the national workforce. Although the fossil fuel workforce is expected to decline over the coming years, significant growth is expected in the renewables sector to meet the new net zero obligations.

The skills developed in the oil and gas industry are highly transferable to adjacent energy sectors. Robert Gordon University (UK) analysis indicates that over 90% of the skills in the oil and gas industry can be readily applied to offshore wind, carbon capture or hydrogen developments. Although the future renewable energy sources may require fewer people to operate in the long term compared to the oil and gas industry, the capital programmes and technologies required to develop the renewables industry will provide a significant amount of new jobs over the coming decades.

The UN COP26 submit in Glasgow (UK) in November 2021 will be a great opportunity to shape the future path to ‘build back better and greener’ and at the same time create jobs, make the global economy more competitive and help steer the world towards a more resilient and cleaner energy future. It will require governments, companies and other stakeholders to lead as never before to ensure the sustainability of our planet.

COVID-19 has helped to unite the world against a common cause and we now need a similar approach in tackling the climate emergency. The COVID-19 situation has demonstrated that the global community can step up to do remarkable things. Now is the time to build on that momentum. Green power to the people indeed. 

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