Every week, new reports show that countries around the world will pay the price if they don't reduce carbon emissions quickly. So, how much will it cost to put the technology in place to reduce carbon emissions on a large scale?
A report released by BloombergNEF (BNEF) shows that by 2050, the cost of the clean energy transition will reach $5.3 trillion. Its European Energy Transition Outlook 2022 provides an example for Europe to emerge from the current energy crisis, pointing out two clean energy development paths.
Clean energy development path
Russia has always been the EU's main supplier of oil, coal and natural gas. The outbreak of the Russia-Ukraine conflict has led to unstable energy supply in Europe and soaring energy prices. In this situation, the need for the development of renewable energy in Europe is even more urgent.
The BNEF report mentioned that there are two feasible clean energy solutions for Europe in the future, namely the "Economic Transition Scenario" and the ambitious "Net Zero Scenario".
In the Economic Transition Scenario, Europe would see a sharp reduction in coal use and a 28% drop in its use of fossil fuels by 2050, and the rise of electric vehicles would also help reduce oil demand by 30% by 2050.
However, natural gas demand fell by 5% over the same period. BNEF says this is because natural gas for building heating cannot fully replace coal heating. The agency also forecasts that the decline in natural gas demand will begin to flatten after 2030.
In this scenario, fossil fuels would still account for 60% of Europe's energy mix by 2050, a relatively small decline compared to 69% in 2022.
Net-Zero Opportunities in Europe
In contrast, BNEF also forecasts a net-zero emissions scenario for Europe, where by 2050 Europe will be electrified, use green hydrogen (an energy source produced from water and renewable energy) on a large scale, and move completely away from fossil fuels.
In this case, wind and solar will become the main energy sources in Europe, replacing fossil fuels and eliminating carbon emissions from energy.
BNEF noted that to achieve this net zero scenario, Europe would need to "rapidly reduce oil and gas consumption" within a decade, reducing oil demand by more than 50%.
In order to achieve this, Europe needs to continue to vigorously popularize electric vehicles, heat pumps and electrify industrial processes, the report said.
In 2021, wind and solar accounted for only 18% of Europe's energy mix, but according to BNEF's net zero assumption, by 2035, combined with battery storage technology, this could reach 70%.
Solar, wind and hydrogen investments
To achieve this, Europe needs to increase its solar and onshore wind power capacity by 2025 to double the number from 2016-2020. Another 60-80% increase in power generation capacity is needed between 2026 and 2030, the report said
BNEF added: "Most new gas plants in Europe need to be compatible with hydrogen, and converting existing gas plants to run on hydrogen is also an option."
BNEF said that in some industries where electrification is difficult, green hydrogen can help reduce carbon emissions. Europe needs to develop a "hydrogen-ready infrastructure" to achieve this, which means developing hydrogen-powered transport and storage infrastructure.
In addition, more wind and solar infrastructure will need to be built to drive the use of green hydrogen.
Between 2021 and 2050, Europe needs to invest a total of $3.8 trillion in emerging power generation projects, especially wind and solar, BNEF said. At the same time, $1.5 trillion needs to be invested in facilities to produce clean hydrogen.
The energy transition is costly, but not transitioning will pay even more.