The Paris Agreement was adopted by 196 countries at the UNFCCC Conference of the Parties (COP 21) in Paris, on 12 December 2015 and entered into force on 4 November 2016. The agreement intends to reduce and mitigate greenhouse gas emissions.
Energy Transition and the Role of Energy Exchange in India
The present turbulence in the global energy market is not inconsequential. However, Europe will transition to a renewable-dominated power system more rapidly primarily because it aims to accelerate its renewables build-out to achieve energy security. But higher energy crises may dampen investment in clean energy elsewhere. These two effects tend to offset each other globally over time.
Energy exchange in India can play a significant role in this transition. Supply chain disruption will continue in shorter term, delaying the global EV milestone. High prices will encourage energy-saving behavior among power consumers. Due to pandemic-related changes in work habits, there is expected to be annual reduction in passenger trips affecting aviation. The non-fossil energy nudge slightly above 50% of global energy needs by the year 2050.
Oil and Gas Industry in Energy Transition
Rapid electrification and enormous efficiency gains in power generation and end-use could drive the transition. On a long-term basis, the world will spend significantly less on energy as a proportion of GDP, providing policymakers with confidence to accelerate growth. Bold and brave policy choices are critical in the face of climate change. As per COP proceedings and IPCC, urgency is expressed for mitigation of emissions to secure net zero by the year 2050, as massive early actions to curb record emissions are critical, and the window to act is closing. There are opportunities for intensified efforts involving the future of the Indian Oil and Gas Industry in Energy.
Electrification is the most potent engine of the global energy transition; renewables are squeezing the fossil share of the overall energy mix to just below 50%.
Despite short-term raw material cost challenges, solar and wind capacity growth is unstoppable and expected to grow 20 and 10-fold, respectively. Solar energy in India has experienced tremendous growth, transforming the nation’s energy landscape and reducing its reliance on fossil fuels for sustainable development.
The Future of Oil and Gas Industry in India
Hydrogen only supplies 5% of global energy demand in 2050, a third of the level needed for net zero. Green hydrogen from dedicated renewables and the grid will become dominant over time, and blue hydrogen and blue ammonia will retain essential goals in the long term. Pure hydrogen used scales in manufacturing from the early 2030s and derivative form (ammonia, e-methanol, and other e-fuels) in heavy transport from the late 2030s.
Massive early action to curb record emissions is critical; the window to act is closing. No new oil and gas will be needed after 2024 in high-income countries and after 2028 in middle and low-income countries. OECD regions must be net zero by 2043 and net negative after that; China needs to reduce emissions to net zero by 2050. Renewable electricity, hydrogen, and bioenergy are essential, but more is required. Almost a quarter of net decarbonization relies on carbon capture, removal, and land use changes (reduced decarbonization).
Drivers of Change and the Role of Oil and Gas Industry in Energy Transition
- Technological and market development are insufficient drivers of the change needed for net zero, war footing-like policy support for technology adoption, restriction on use inefficient and financial incentives to reduce carbon-intensive behaviour, and early actions across regions and sectors are needed.
- Low-income areas need dedicated technology and financial assistance to transition at the required rate. Different regions and sectors have different starting points and capabilities, and if the world is to reach net zero in 2050, leading areas and sectors have to go much further and faster. Some sectors, like power, will achieve net zero before 2050, while other sectors like cement and aviation, will still have remaining emissions. Maritime needs a strengthened IMO strategy to reduce emissions by 95% by 2050.
- Global CO2 emissions were 38 GT in 2020, and by 2050, the annual emission gap will be 22 GT CO2 with cumulative emissions resulting in above 0.2 deg C difference. Between 2050 and 2100, net annual emissions are estimated to reduce from 22 GT to zero slowly. In 2100, the emission gap is 7 GT CO2 of harmful emission, corresponding to a 0.7 deg C temperature difference. The gap must be closed by reducing emissions by replacing fossil fuel with renewables and nuclear, energy efficiency improvements, and carbon capture and removal, including net harmful emissions from bioenergy, direct air capture, and nature-based solutions.
As the world moves toward a sustainable and greener future, the oil and gas industry in India has a pivotal role in shaping the energy landscape, not only within the country but on a global scale. Embracing the transition is essential for securing a sustainable future for future generations.
Sources: Official websites of the International Energy Agency and DNV
Citation: This Insight may be cited as InfEneTy ‘Energy Transition’ 04.11.2022
Tags: Energy transition; Paris Agreement; Clean energy; Renewable energy; Renewable power; Net zeroAbout InfEneTy
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