Davos discussions wrapped up last week and this time, climate change was at the top of the agenda. After the COP 21 in 2015, 55 countries that generate 55 percent of the global emissions ratified the Paris Agreement. To date, 184 parties have ratified the Convention. This global collaboration aims to keep global temperature rises below 2°C by the end of the century. But, are we on track? Is the energy transition moving fast enough? The panel Realizing the Energy Transition addressed the current status of climate change mitigation strategy and assessed global efforts to solve this issue.
The discussion was moderated by Jules Kortenhorst, Chief Executive Officer, Rocky Mountain Institute who was accompanied by the expert voices of Christiana Figueres, Founding Partner of Global Optimism, Vicki Hollub, President and Chief Executive Officer at Occidental Petroleum Corporation, Francesco Starace, Chief Executive Officer and General Manager of Enel SpA and Maria Fernanda Suarez, Minister of Mines and Energy of Colombia.
Figueres is a well-known as the champion of the COP21. “If I could change something about the Paris Agreement, I would have established 1.5°C as the goal instead of 2°C,” she said. According to her, the world does not yet understand the difference this half degree means for global economies. In November 2018 alone, scientists concluded that if climate change is not addressed, the US economy will face a 10 percent setback by the end of the century.
She continued by pointing out that, while some goals are on track, others have fallen by the wayside. “We are doing pretty well on tracking progress, we are doing pretty well in energy generation, we are doing well more or less in electrifying and modernizing transport, we are doing much better in finance and nowhere near where we have to be in land-use, agriculture and deforestation,” she said. “We are nowhere near where we should be on industrial conversion nor with buildings and cities.” She invited every stakeholder to take action now. “Search and replace. Delete 2°C; we are going for 1.5°C,” she said.
On the Oil & Gas front, Hollub explained how this industry can align to this goal. “We have figured out that the best way to get things done is through collaboration,” she said. “Sometimes progress comes from the people that criticize you the most, because we really need honest open feedback.” Her company has joined several coalitions like the Oil and Gas Climate Initiative (OGCI) and she speaks from previous experience. “It took us six years to achieve a regulatory framework that motivated the introduction of Carbon Capture and Storage (CCS) technologies within power plants,” she explained. “When we started working with power generation plants, coal plants, environmentalists and regulators, this started happening more quickly.” Hollub is confident that innovation and technological breakthroughs together with collaboration and allocating resources for this purpose, is the key strategy for these companies.
Nevertheless, the clock is ticking and the deadline is getting closer. According to Figueres, global emissions need to be cut by 50 percent in the next 10 years in order to reach the 2°C goal. To date, there are 18 CCS systems throughout the world. “In order to solve this problem, we will actually have to scale up from 18 to 1,800 units in a couple of years,” she added.
Starace is very optimistic about the future, highlighting the impact of innovation. “I think we are moving faster than we know. The forces that are driving the transition are beyond our control; the important thing is to understand the direction where they are going,” he said. According to him, digitalization and materials science are the main drivers of the transition from a technological standpoint. “Things are made with materials that are lighter, better, cheaper, they wear less so they are performing intrinsically better. These forces are working across the whole value chain,” he explained. “Technology is decarbonizing the system and not through a policy drive approach but for economic reasons. It is becoming cheaper and cheaper.”
But what can emergent economies do about it? Renewables are becoming cheaper, mostly driven by innovation but also market incentives. Countries such as Chile and Mexico are experiencing a series of auctions that are leading the deployment of emissions reductions, but it is a long journey for this to take place in those economies. “This is a moment where all technologies have to work together. To have a reliable, efficient and sustainable matrix you need to use every available source. When designing the energy generation, we have to keep that in mind,” said Suarez. Colombia’s current energy mix holds a 70 percent participation of hydropower, but the country is expecting to celebrate auctions in the coming years to increase its renewable share though solar and wind.
“We have to act as grown-ups. The moral imperative of not being irresponsible and passing this burden to the next generation is crucial,” added Figueres.
For more highlights about this event, click here.