Energy Transition Opportunity Set
Climate change is a crisis multiplier and the greatest challenge humanity has faced but solutions are available to us.
2023 was the hottest year on record, May 2024 marked the 12th month in a row of record heat, and that same month, oceans marked 365 days of record-breaking global sea surface temperatures.
The 1.5°C Target
To curb the effects of climate change experienced throughout the world, we need to limit the rise of the global long-term temperature to no more than 1.5°C.
To accomplish this goal:
- Annual emissions need to be cut in half by 2030 from 52-58 gigatonnes to 25-30 gigatonnes
- Net Zero emissions in the energy sector needs to be achieved by 2050
The global emissions path remains above the 1.5°C target even if all countries deliver on current climate commitments and a $150 trillion cumulative investment is required to realize the target by 2050, making alternative solutions and technological innovations necessary.
Rise in the global demand for power
Global demand for power is projected to accelerate and more than double by 2050, from 25,000 terawatt-hours to 64,000 terawatt-hours.
This is largely due to:
The growth in emerging markets’ energy needs
Rising living standards
Electrification across the economy
The decarbonization of hard-to-abate sectors
Renewables are a critical part of the energy transition
The proportion of renewable energy in the global energy mix needs to increase from 32% in 2023 to up to 80% by 2050 to be on the pathway toward a no more than 1.5°C rise of the global long-term temperature. Annual development of over 1,000 gigawatts of renewable power is needed in the 1.5°C scenario.
Global renewables demand has increased as cost has decreased ~85% since 2010, driven by improved efficiencies, public policies, and the need for decarbonization.
Green Hydrogen and Ammonia
Green hydrogen and green ammonia will play a critical role in the decarbonization of hard-to-abate sectors such as iron and steel making, shipping, aviation, heavy-load transportation, and building materials.
Green hydrogen demand is projected to increase to 73-100% (or 125-585 Mtpa) of total hydrogen demand by 2050 as costs of green molecules eventually become more competitive and as commitments to decarbonize advance.
The role of battery storage and critical materials
Battery storage and critical materials are essential to the energy transition.
Critical materials, most notably lithium, cobalt, and nickel, are under scaling pressure as batteries drive growth, with battery demand increasing approximately 33% per year.
It is estimated that 2,000 gigawatts of global energy storage is expected by 2050 to support the need for reliability, flexible capacity, and grid stability solutions.
