Decision time for energy transiton

We are entering 2025 with continuing questions if not unease over the progress and direction of the global energy transition agenda. It’s a conclusion based on the generally agreed assumption that only cooperative undertakings between countries everywhere will get us to Net Zero in a desirable timeframe.

This should not come as too much of a surprise, especially for visitors to EAGE’s outstandingly successful GET 2024 Conference and Exhibition in Rotterdam in November. Many presentations at the event demonstrated without a doubt that the geoscience community is enthusiastically embracing research and development of current technical solutions where it can help provide pathways to Net Zero, e.g., wind, geothermal, hydrogen and carbon capture and storage (CCS).

Unfortunately, scientific endeavour can only take us so far. The report card of meaningful take-up of many of these technologies still remains sketchy. Wind turbines are of course the big success story to date with their contribution to total electricity generation worldwide closing in on 10%. Even here in the short term, prospects of continued rapid expansion may be faltering due in some cases to government withdrawal of subsidies, regulatory hurdles and some environmental pushback, all factors affecting the investment model. The US, Sweden and Denmark, countries that have up to now welcomed windpower projects, provide examples of weakening interest, notably the latest offshore wind licensing round in Denmark which did not attract a single bid.

CCS was a major focus of GET, understandable as much geoscience technology experience from the oil and gas industry is directly transferable, so feasibility as such is not so much in question. Exemplary European projects such as Northern Lights (Norway) and Porthos (Port of Rotterdam) have to be set against a frustrating reality. Global capture capacity of operational commercial carbon capture and storage (CCS) facilities totalled 51 million metric tons (MT) as of July 2024, a fraction of what is needed given global energy-related CO2 emissions grew by 1.1% in 2023, increasing 410 Mt to reach a new record high of 37.4 billion tonnes (Gt). This compares with an increase of 490 Mt in 2022 (1.3%).

That said, many countries are increasing efforts to develop new CO2 capturing techniques in order to lower greenhouse gas emissions. According to energy analyst Statista, there were 628 projects in the commercial carbon capture and storage (CCS) facilities pipeline worldwide; 50 of these were operational, while almost 290 were in early development with the majority of upcoming projects confined to North America.

Meantime geothermal has still to deliver power generation at scale, and is currently responsible for less than 1% of global electricity generation. Hydrogen power is even more nascent.

Investment trends tell the renewables story so far. Solar PV and wind power continued to dominate, according to REN21 based on multiple sources. Solar PV accounted for 63% of the 2023 total and wind power for 35%, almost mirroring the 2022 figures.  China, the US and the UK together accounted for 66.5% of global wind power investment in 2023.  Investment in geothermal energy did expand by nearly 27-fold in 2023 to $8 billion, with more than half of this in the US ($4.3 billion). 

Renewable power installations attracted far more investment than fossil fuel power plants in 2023.  Investment in new renewable power capacity accounted for 82% of the total global investment in new power generation, including fossil fuels and nuclear but excluding grids and storage. Leaving aside power infrastructure, REN21 estimates that when both upstream and downstream oil, gas and coal and related infrastructure investments are considered, the combined total annual investment in fossil fuels dwarfs that in renewable power and fuels.  Investment in upstream oil and gas increased 9% in 2023 to around $538 billion with national oil companies in the Middle East and Asia responsible for nearly all of the increase. 

A test of international determination to reduce CO2 emissions will be reached next month (February 2025). This is when parties to the UN Paris Agreement are mandated to submit their climate intentions via Nationally Determined Contributions (NDCs), a statement every five years outlining plans to reduce greenhouse gas emissions to help meet the 2050 Net Zero target. The UN Emissions Gap Report (October 2024) states that emission cuts of 42% are needed by 2030 and 57% by 2035 to get on track. Failure, it says, could result in a temperature increase of 2.6-3.1°C over the course of this century.

G20 nations (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, UK and US) are charged with needing to do the heavy lifting. Responsible for three quarters of current global emissions, G20 members will largely determine when global emissions reach net zero. All except Mexico and the African Union have at least set net-zero targets. But the Emissions Gap Report records limited progress on key indicators of confidence in net-zero implementation, including legal status, the existence and quality of implementation plans and the alignment of near-term emission trajectories with net-zero targets. A complicating factor for some countries like India is that climate change is actually inviting more fossil fuel consumption to counter extreme heat.

Climate change was not at the top of the agenda at the last G20 meeting in Brazil in November., in fact it was something of a bust, convened under the cloud of President Trump’s imminent return to office threatening, among other things, a tariff war, likely opposition to the 2105 Paris climate accord and measures to boost US oil and gas production. There was no condemning of hostilities in Ukraine and Palestine/Lebanon or cautionary statements about rising protectionism worlwide and no explicit commitment to transition away from fossil fuels (despite the landmark roadmap agreement achieved at the Dubai COP28 in 2023).

Such events do not bode well for concerted worldwide action. Last November’s COP29, the foremost international gathering on climate change, didn’t exactly exude united resolve. The optics alone of holding the event in the oil and gas mecca of Baku, Azerbaijan did not bode well. What transpired was an exercise in frustration once again dividing rich and poor nations. The headline trebling to $300 billion of the pledged annual contribution to be made by wealthy nations by 2035 to help poorer nations cope with climate change was greeted as grossly insufficient. The estimated yearly figure needed to reduce emissions and build resilience in vulnerable countries is said to be some $1.3 trillion yearly by 2030. True there were some vaguish agreements on reducing methane emissions and carbon credit trading. However, energy analyst Rystad concluded ‘COP29 has set the stage for transformative change, but the focus must now shift to execution. Whether through targeted financing, aggressive methane reductions, or enhanced NDCs, the race to net-zero emissions requires actionable policies grounded in robust frameworks. The time for ambition has passed – action is now the ultimate test.’

Any international agreement may also be imperilled by some potentially tectonic shifts in the world economic order. Weeks before COP29, the 16^th annual international BRICS meeting held in Kazan, Russia, on 22-24 October 2024 was widely regarded as the most meaningful to date. Dismissed by some as a Russian statement of imperviousness to Western sanctions, the membership has grown from Brazil, Russia, India, China, and South Africa to also include Egypt, Ethiopia, Iran, and the United Arab Emirates summit with Saudi Arabia also close to joining. This alignment is sometimes portrayed as a formative Global North and South divide.

This bloc would represent over 40% of global oil supply. The presence of major oil exporters alongside key importers such as China and India – neither of which favoured Western sanctions on Russia – highlights the bloc’s potential to establish alternative trade mechanisms that bypass the dominance of the US dollar and the financial influence of the G7, and bring a different perspective to any energy transition initiatives.

In the blame game, the popular knee-jerk response is to paint the oil and gas industry as the villain in this disappointing climate change narrative. Topped by the US, global oil production is this year expected to reach a new peak of 103 million barrels per day, according to the International Energy Agency. Analysts are divided on future trends. No need to rehearse the energy trilemma to explain why oil companies do what they do. Of course, recent modifications to decarbonisation programmes in companies like bp, Shell and Equinor are not a good look, and it would be nice if energy companies invested more in the alternatives, but that’s not what their stakeholders want.

So, as ever, it is up to society and governments to assume command of this ship. As we can see from global trends that clearly isn’t happening yet. Nor does there appear to be much urgency in public discourse. Campaigner Greta Thunburg, Just Stop Oil, Extinction Rebellion UK, etc. have been relatively quiescent of late despite major floods, heatwaves, wildfires, etc around the world attributed to changes in our climate. One explanation for this may be the so-called issue attention cycle, a concept first articulated by economist Anthony Downs in 1972. The basic premise is that the media cannot sustain public interest for very long in any issue however important before ennui sets in. The exception occurs when the concern directly affects people. In this context climate change is not tangible or upsetting enough in our daily lives.

Public indifference or apathy can only be countered with better understanding of what’s at stake, otherwise the sensationalist claims of madcap climate deniers, doomsters and so forth will be amplified in social media and other public forums potentially drowning legitimate decision-making on CO2 emissions. This is why EAGE is right to advocate a communication policy that promotes the value of geoscience to a wider audience than the bubble of our own professional community. How this can be done is an important discussion.

Scientific endeavour can only take us so far

Up to society and governments to assume command |of this ship