In focus: Advanced economies should pave the net-zero way as bolder action is needed

Although achieving the current net-zero targets is still possible due to the fast-paced development of clean energy technologies, experts believe that we need to make moves that are more strategic. The International Energy Agency (IEA) believes that “bolder action” is necessary this decade and that advanced economies should be the ones paving the way.

In its new edition of the Net Zero Roadmap, which outlines a route to net-zero emissions for the global energy sector by 2050, the IEA recognizes the importance of fostering an “equitable” transition that takes different national circumstances into account.

It explains that advanced economies need to reach net zero sooner to allow emerging and developing economies more time. In turn, the net-zero pathway will achieve full access to modern forms of energy for all by 2030 through annual investment of nearly $45 billion per year – just over 1% of energy sector investment.

Within the updated scenario, a huge policy-driven ramping up of clean energy capacity is expected to cut fossil fuel demand, making it 25% lower by 2030, and reducing emissions by 35% compared with the all-time high recorded in 2022, thus fossil fuel demand is forecasted to fall by 80% by 2050.

One of the report’s standout findings is the potential of ammonia as a decarbonization solution for the shipping industry. While there are currently no commercial ships operating on ammonia, approximately 150 ammonia-ready vessels were on order as of the end of 2022, representing about 15% of typical annual vessel orders.

According to the IEA, this presents a golden opportunity to rapidly develop the necessary safety protocols. Specifically, in line with IEA’s projections from its 2023 NZE Scenario, ammonia is forecasted to reach 6% share in 2030, 15% share in 2035, and a substantial 44% share in 2050, making it the winner in the fuel selection palette of shipping’s decarbonization.

In line with this, a recent report by the United Nations Conference on Trade and Development wrote that the transition to decarbonized shipping will require an additional $8 billion to $28 billion annually to achieve full decarbonization of ships by 2050.

In another report, the Global Hydrogen Review 2023, the IEA noted that the slow roll-out of financial incentives and cost pressures related to new low-emissions hydrogen puts investment plans for future projects at risk, even though the number of announced projects continues to expand rapidly.

Although more than 40 countries worldwide have set out national strategies, installed capacity and volumes remain low as developers wait for government support before making investments. As such, low-emissions hydrogen still accounts for less than 1% of global hydrogen production and use and will need to grow more than 100-fold by 2030 to get in line with the Net Zero Scenario, the IEA said.

The Global Underwater Hub (GUH), the UK’s trade and industry development body for the underwater sectors, shed light on the importance of underwater cables in the successful path to the energy transition. Namely, GUH believes that failures in underwater cables could derail global ambitions as their reliability is paramount to the success of offshore wind and the energy transition.

Estimates show that around 85% of the total value of offshore wind insurance claims relates to subsea cables, resulting in the capacity and coverage and the cost of repairs typically running into millions, with warranties rarely covering the high cost of business interruption.

“If these critical components become uninsurable, offshore wind projects around the world will be derailed, making global 2050 net zero targets completely unachievable,” GUH Chief Executive Neil Gordon said.

Luckily, governments and industry big shots are not stopping and are ramping up their decarbonization portfolios on a regular basis. In recent news, it is worth mentioning that the U.S. Department of Energy (DOE) has supported six small business-led marine energy projects with close to $6.8 million in an effort to drive innovation in the marine energy industry.

In East Asia, a ground-breaking ceremony was held for the first subsea power cable factory in Taiwan. The factory, expected to be fully operational in 2027, will specialize in the production of high- and medium-voltage AC subsea power cables for offshore wind.

In terms of the always-emphasized cross-border cooperation, the UK and Germany signed a joint declaration of intent to collaborate on the development of an international hydrogen industry, and Greece and Saudi Arabia agreed to establish a special purpose company for the development of an electricity interconnector.