Net-Zero Goals Still Offer Best Climate Hopes

Copyright © 2021 Energy Intelligence Group

Net-zero goals by countries and companies remain an imperfect framework to tackle global decarbonization — and may very well fail. But threading that unlikely needle still may offer the best shot at staving off the world’s worst climate outcomes, panelists told the Energy Intelligence Forum this week. Reaching net zero by 2050 will require “herculean and unprecedented efforts” and have a “very narrow” chance of success, Fatih Birol, executive director of the International Energy Agency (IEA), said. But he expects that even oil-producing nations may raise their game on the path to collaboration in the face of the challenge. As if on cue, the United Arab Emirates announced Thursday a plan for net-zero emissions by 2050, which would see 600 billion dirhams ($163 billion) invested in renewable energy in the coming decades. This makes the UAE the first country in the oil-rich Middle East to launch a concrete initiative to achieve that climate commitment. Still, experts say more action is needed as energy use rebounds as the world comes out of the pandemic. “The gap between ambition and reality when it comes to climate around the world is unfortunately growing as we see emissions going up,” said Jason Bordoff, dean at the Columbia Climate School. The coming decade is especially crucial for new technologies to gain momentum to help replace oil and gas, panelists said, especially as the UN's Intergovernmental Panel on Climate Change has flagged a 50% emissions-reduction goal by 2030 to keep the world on track for the following decades. “It’s not just a 2050 goal,” said Jules Kortenhorst, CEO of the Rocky Mountain Institute. “It’s how we’re going to get implementation started tomorrow.”

A key point of tension will be to what extent carbon offsets will be accepted by society and investors as part of the path to decarbonization. Many oil companies, especially in the US, have leaned harder on the “net” end of their net-zero goals, targeting carbon capture and storage (CCS) and nature-based solutions to give them latitude to continue producing oil and gas. But considerable skepticism remains around this approach, including from the IEA, whose Net Zero by 2050 road map largely sidestepped the impact of offsets. Many argue that companies frittered away time that they could have used to get serious about offsets. But others, including the Oil and Gas Climate Initiative (OGCI), argue it would be foolish to reject solutions with potential to remove CO2 from the air when the world needs to reduce every molecule of carbon it possibly can. Jennifer Morgan, executive director of Greenpeace International, told the Forum that climate collaboration agreements should reject the premise of carbon trading systems or offsets. “They're a scam,” she said. “They don't work.” The IEA sees potential to scale up carbon capture to be part of the solution, Birol told the Forum. But fundamentally he still sees the climate challenge as “essentially an energy problem.” OGCI chairman Bjorn Otto Sverdrup, however, believes a system of swaps and credits can play a meaningful role.

Skepticism on corporate net-zero goals still exists, especially as many of those frameworks have different details and fine print. But panelists also expressed optimism that companies could take on the challenge and were making progress on decarbonization. The effort will require collaboration between businesses, governments and others, Darryl Willis of Microsoft told the Forum, and he has been encouraged by such efforts so far. Climate tech has seen an “incredible flow” of capital in the last year or two, said Emily Reichert, CEO of Greentown Labs, a Houston-based business incubator based around low-carbon ventures. As a key example Willis cited the Northern Lights carbon capture project in Norway, where the tech giant is working alongside companies like Equinor and Royal Dutch Shell as well as the Norwegian government. The hope is that the project can “create a new business system around carbon management that we hope will help standardize and … better scale, at good economic return, CCS throughout Europe and around the world." Panelists also said they expect the transition may unfold more quickly than expected as coordination efforts ramp up and technological innovation makes headway.

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