In focus: Window to meet 1.5°C target is closing, urgent transformation is needed now

The international community is still falling far short of the Paris goals, with no credible pathway to 1.5°C in place, a new report from the UN Environment Programme (UNEP) says.

The report findings paint a rather gloomy outlook on the capacity of the international community to keep the global warming limit to 1.5°C, stressing that pledges from nations across the globe since COP26 in Glasgow take less than one percent off projected 2030 greenhouse gas emissions. This is a tiny portion of the 45 percent cut that is required to meet the Paris goals or at least 30 percent for the 2°C target.

The report further adds that with the current climate pledges the world is on track for a temperature rise of 2.4-2.6°C by the end of this century.

The stark warnings in the report show that there is an urgent need for unprecedented cuts and a system-wide transformation in the electricity supply, industry, transport and buildings sectors, and the food and financial systems to help avoid climate disasters.

The critical link in making the energy transition mission possible is paving the way for the financial sector to enable the transition to low and zero emissions with the assistance and policies put in place by governments. This in practice means setting up carbon pricing measures and related regulations, creating markets for low-carbon technology, and stimulating innovation as well as setting up climate “clubs” of cooperating countries, cross-border finance initiatives, and just transformation partnerships, UNEP said.

Sustainability funds are one way to approach the need for an equitable and stable transition.

Saudi oil and gas giant Saudi Aramco has created a $1.5 billion sustainability fund to encourage investment in technology needed to support “a stable and inclusive” energy transition.

Aramco disclosed the creation of “one of the world’s largest sustainability-focused venture capital funds” on Wednesday at the sixth edition of the Future Investment Initiative (FII), as part of its efforts to meet the world’s growing energy demand with lower greenhouse gas emissions.

According to Aramco, the fund will target investments globally, however, the initial focus areas will include carbon capture and storage (CCS), greenhouse gas emissions, energy efficiency, nature-based climate solutions, digital sustainability, hydrogen, ammonia, and synthetic fuels.

The shipping industry is also fighting for the introduction of a fund and reward system to help accelerate the sector’s uptake of alternative fuels.

The International Chamber of Shipping (ICS) has submitted a refined proposal to shipping’s UN regulator seeking the establishment of a fund that could raise billions of dollars annually via a flat-rate contribution system. The proposal is being made to the IMO ahead of the Marine Environment Protection Committee (MEPC) in November.

The funds would be committed both to narrowing the price gap, globally, between existing high-carbon marine fuels and alternative fuels, as well as supporting much-needed investment in developing nations for the production of new marine fuels and bunkering infrastructure. The idea is also to reward ships from the IMSF based on the CO2 emissions which are prevented by their use of alternative fuels.

The European Union is grasping the nettle with its REPowerEU plans as it works to make Europe independent from Russia’s fossil fuels before 2030 by investing in the production of clean energy.

The European Investment Bank Group (EIB Group) has agreed to support the REPowerEU plan with additional €30 billion in loans and equity financing over the next five years.

The additional funds from the EIB Group will be directed to renewables, energy efficiency, grids and storage, electric-vehicle charging infrastructure, and breakthrough technologies, such as low-carbon hydrogen.

The package of new, targeted financing approved by the EIB’s board of directors on October 26, 2022, is expected to mobilize up to €115 billion of new investment by 2027, thus making a substantial contribution.

EU member states are seizing the opportunities from the current energy security challenges to bolster their ties and accelerate the switch to low and zero-carbon energy sources.

French and Belgian energy infrastructure operators GRTgaz and Fluxys Belgium have decided to launch a feasibility study for the cross-border hydrogen transmission network, following a market call that raised interest from 17 companies.

The duo conducted consultations in France and Belgium in 2021-2022 to assess the hydrogen transmission needs of market players, i.e. hydrogen consumers and producers.

As a result of those consultations, the two operators identified the Valenciennes area in France and the greater Mons area, including La Louvière and Feluy, in Belgium as a region with considerable potential for hydrogen development. The study started in October 2022.

Danish Ørsted, said to be the world’s leading offshore wind developer, and Norway’s energy giant Equinor have entered into an agreement under which Equinor will supply Norwegian gas to Denmark via Baltic Pipe from 1 January 2023 to 1 April 2024.

The total volumes of gas supplied during the period will be approximately 8 TWh, corresponding to roughly a quarter of the expected total Danish gas consumption.

With this agreement and the production from the South Arne field and from biogas, Ørsted said it has more than covered the consumption of its customers, which are business customers in Denmark and Sweden.

According to the Danish company, the deal strengthens the security of supply in Denmark while also replacing the gas volumes that Ørsted would otherwise need to buy on a volatile European gas market in the period when the Tyra field is not supplying gas to Denmark.

In addition, Ørsted has teamed up with Copenhagen Infrastructure Partners (CIP) to form a 50/50 partnership targeting the development of four large-scale offshore wind projects under the ‘open door’ scheme in Denmark. The projects are planned to include Power-to-X capabilities.

The partners plan to develop two offshore wind farms in the North Sea, 1.1 GW Vikinge Banke and 1.1 GW Jyske Banke Nord, and two in the Baltic Sea, 1.5 GW Bornholm Bassin Syd and 1.5 GW Bornholm Basin Øst.

Meanwhile, Saudi Arabia’s ACWA Power and the Industrial Development Corporation of South Africa (IDC) have signed an extensive memorandum of understanding (MoU) exploring a partnership in the development of green hydrogen and its derivatives in the Republic of South Africa.

Under the MoU with the potential values estimated at $10 billion, ACWA Power will function as the developer for green hydrogen and its derivaties and the IDC will act as co-developer and equity partner in the proposed projects.