Editing IPCC:AR6/WGIII/TS (section)

=== TS.5.1 Energy ===

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'''A broad-based approach to deploying energy-sector mitigation options can reduce emissions over the next ten years and set the stage for still deeper reductions beyond 2030 (''' '''''high confidence''''' ''').''' There are substantial, cost-effective opportunities to reduce emissions rapidly, including in electricity generation, but near-term reductions will not be sufficient to limit warming to 2°C (&gt;67%) or limit warming to 1.5°C (&gt;50%) with no or limited overshoot. {6.4, 6.6, 6.7}

'''Warming cannot be limited to 2°C or 1.5°C without rapid and deep reductions in energy system CO''' 2 '''and GHG emissions (''' '''''high confidence''''' ''').''' In scenarios limiting warming to 1.5°C (&gt;50%) with no or limited overshoot ( ''likely'' below 2°C), net energy system CO 2 emissions fall by 87–97% (interquartile range 60–79%) in 2050. In 2030, in scenarios limiting warming to 1.5°C with no or limited overshoot, net CO 2 and GHG emissions fall by 35–51% and 38–52% respectively. In scenarios limiting warming to 1.5°C with no or limited overshoot ( ''likely'' below 2°C), net electricity sector CO 2 emissions reach zero globally between 2045 and 2055 (2050 and 2080) ( ''high confidence'' ) ''.'' {6.7}

'''Limiting warming to 2°C or 1.5°C will require substantial energy system changes over the next 30 years. This includes reduced fossil fuel consumption, increased production from low- and zero-carbon energy sources, and increased use of electricity and alternative energy carriers (''' '''''high confidence''''' ''').''' Coal consumption without CCS falls by 67–82% (interquartile range) in 2030 in scenarios limiting warming to 1.5°C with no or limited overshoot. Oil and gas consumption fall more slowly. Low-carbon sources produce 93–97% of global electricity by 2050 in scenarios that limit warming to 2°C (&gt;67%) or below. In scenarios limiting warming to 1.5°C with no or limited overshoot ( ''likely'' below 2°C), electricity supplies 48–58% (36–47%) of final energy in 2050, up from 20% in 2019. {6.7}

'''Net zero energy systems will share common characteristics, but the approach in every country will depend on national circumstances (''' '''''high confidence''''' ''').''' Common characteristics of net-zero energy systems will include: (i) electricity systems that produce no net CO ''2'' or remove CO ''2'' from the atmosphere; (ii) widespread electrification of end uses, including light-duty transport, space heating, and cooking; (iii) substantially lower use of fossil fuels than today; (iv) use of alternative energy carriers such as hydrogen, bioenergy, and ammonia to substitute for fossil fuels in sectors less amenable to electrification; (v) more efficient use of energy than today; (vi) greater energy system integration across regions and across components of the energy system; and (vii) use of CO ''2'' removal including DACCS and BECCS to offset residual emissions. {6.6}

'''Energy demands and energy sector emissions have continued to rise (''' '''''high confidence''''' ''').''' From 2015 to 2019, global final energy consumption grew by 6.6%, CO 2 emissions from the global energy system grew by 4.6%, and total GHG emissions from energy supply rose by 2.7%. Fugitive CH 4 emissions from oil, gas, and coal, accounted for 18% of GHG emissions in 2019. Coal electricity capacity grew by 7.6% between 2015 and 2019, as new builds in some countries offset declines in others. Total consumption of oil and oil products increased by 5%, and natural gas consumption grew by 15%. Declining energy intensity in almost all regions has been balanced by increased energy consumption. {6.3}

'''The unit costs for several key energy system mitigation options have dropped rapidly over the last five years, notably solar PV, wind power, and batteries (''' '''''high confidence''''' ''').''' From 2015 to 2020, the costs of electricity from PV and wind dropped 56% and 45%, respectively, and battery prices dropped by 64%. Electricity from PV and wind is now cheaper than electricity from fossil sources in many regions, electric vehicles are increasingly competitive with internal combustion engines, and large-scale battery storage on electricity grids is increasingly viable. (Figure TS.7) {6.3, 6.4}

'''Global wind and solar PV capacity and generation have increased rapidly driven by policy, societal pressure to limit fossil generation, low interest rates, and cost reductions (''' '''''high confidence''''' ''').''' Solar PV grew by 170% (to 680 TWh); wind grew by 70% (to 1420 TWh) from 2015 to 2019. Solar PV and wind together accounted for 21% of total low-carbon electricity generation and 8% of total electricity generation in 2019. Nuclear generation grew 9% between 2015 and 2019 and accounted for 10% of total generation in 2019 (2790 TWh); hydro-electric power grew by 10% and accounted for 16% (4290 TWh) of total generation. In total, low- and zero-carbon electricity generation technologies produced 37% of global electricity in 2019. {6.3, 6.4}

'''If investments in coal and other fossil infrastructure continue, energy systems will be locked-in to higher emissions, making it harder to limit warming to 2°C or 1.5°C (''' '''''high confidence''''' ''').''' Many aspects of the energy system – physical infrastructure; institutions, laws, and regulations; and behaviour – are resistant to change or take many years to change. New investments in coal-fired electricity without CCS are inconsistent with limiting warming to well below 2°C. {6.3, 6.7}

'''Limiting warming to 2°C or 1.5°C will strand fossil-related assets, including fossil infrastructure and unburned fossil fuel resources (''' '''''high confidence''''' ''').''' The economic impacts of stranded assets could amount to trillions of dollars. Coal assets are most vulnerable over the coming decade; oil and gas assets are more vulnerable toward mid-century. CCS can allow fossil fuels to be used longer, reducing potential stranded assets. (Box TS.8) {6.7}

'''Box TS.8 | Stranded Assets'''

Limiting warming to 2°C or 1.5°C is expected to result in the ‘stranding’ of carbon-intensive assets. Stranded assets can be broadly defined as assets which ‘suffer from unanticipated or premature write-offs, downward revaluations or conversion to liabilities’. Climate policies, other policies and regulations, innovation in competing technologies, and shifts in fuel prices could all lead to stranded assets. The loss of wealth from stranded assets would create risks for financial market stabilityand reduce fiscal revenue for hydrocarbon-dependent economies, which in turn could affect macroeconomic stability and the prospects for a Just Transition. (Box TS.4) {6.7, 15.6, Chapter 17}

Two types of assets are at risk of being stranded: (i) in-ground fossil resources and (ii) human-made capital assets (e.g., power plants and cars). About 30% of oil, 50% of gas, and 80% of coal reserves will remain unburnable if warming is limited to 2°C. {6.7, Box 6.11}

Practically all long-lived technologies and investments that cannot be adapted to low-carbon and zero-emission modes could face stranding under climate policy – depending on their current age and expected lifetimes. Scenario evidence suggests that without carbon capture, the worldwide fleet of coal- and gas power plants would need to retire about 23 and 17 years earlier than expected lifetimes, respectively, in order to limit global warming to 1.5°C and 2°C {2.7} . Blast furnaces and cement factories without CCS {11.4} , new fleets of airplanes and internal combustion engine vehicles {10.4, 10.5} , and new urban infrastructures adapted to sprawl and motorisation may also be stranded. {Chapter 8; Box 10.1}

Many countries, businesses, and individuals stand to lose wealth from stranded assets. Countries, businesses, and individuals may therefore desire to keep assets in operation even if financial, social, or environmental concerns call for retirement. This creates political economic risks, including actions by asset owners to hinder climate policy reform {6.7; Box 6.11} . It will be easier to retire these assets if the risks are communicated, if sustainability reporting is mandated and enforced, and if corporations are protected with arrangements that shield them from short-term shareholder value maximisation.

Without early retirements, or reductions in utilisation, the current fossil infrastructure will emit more GHGs than is compatible with limiting warming to 1.5°C {2.7} . Including the pipeline of planned investments would push these future emissions into the uncertainty range of 2°C carbon budgets {2.7} . Continuing to build new coal-fired power plants and other fossil infrastructure will increase future transition costs and may jeopardise efforts to limit warming to 2°C (&gt;67%) or 1.5°C with no or limited overshoot. One study has estimated that USD11.8 trillion in current assets will need to be stranded by 2050 for a 2°C world; further delaying action for another 10 years would result in an additional USD7.7 trillion in stranded assets by 2050. {15.5.2}

Experience from past stranding indicates that compensation for the devaluation costs of private-sector stakeholders by the public sector is common. Limiting new investments in fossil technologies hence also reduces public finance risks in the long term. {15.6.3}

'''A low-carbon energy transition will shift investment patterns and create new economic opportunities (''' '''''high confidence''''' ''').''' Total energy investment needs will rise, relative to today, over the next decades, if warming is limited to 2°C or lower (&gt;67%), or if warming is limited to 1.5°C (&gt;50%) with no or limited overshoot. These increases will be far less pronounced, however, than the reallocations of investment flows that are anticipated across subsectors, namely from fossil fuels (extraction, conversion, and electricity generation) without CCS and toward renewables, nuclear power, CCS, electricity networks and storage, and end-use energy efficiency. A significant and growing share of investments between now and 2050 will be made in emerging economies, particularly in Asia. {6.7}

'''Climate change will affect many future local and national low-carbon energy systems. The impacts, however, are uncertain, particularly at the regional scale (''' '''''high confidence''''' ''').''' Climate change will alter hydropower production, bioenergy and agricultural yields, thermal power plant efficiencies, and demands for heating and cooling, and it will directly impact power system infrastructure. Climate change will not affect wind and solar resources to the extent that it would compromise their ability to reduce emissions. {6.5}

'''Electricity systems powered predominantly by renewables will be increasingly viable over the coming decades, but it will be challenging to supply the entire energy system with renewable energy (''' '''''high confidence''''' ''').''' Large shares of variable solar PV and wind power can be incorporated in electricity grids through batteries, hydrogen, and other forms of storage; transmission; flexible non-renewable generation; advanced controls; and greater demand-side responses. Because some applications (e.g., aviation) are not currently amenable to electrification, it is anticipated that 100% renewable energy systems will need to include alternative fuels such as hydrogen or biofuels. Economic, regulatory, social, and operational challenges increase with higher shares of renewable electricity and energy. The ability to overcome these challenges in practice is not fully understood. (Box TS.9) {6.6}

'''Box TS.9 | The Transformation in Energy Carriers: Electrification and Hydrogen'''

To use energy, it must be ‘carried’ from where it was produced – at a power plant, for example, or a refinery, or a coal mine – to where it is used. As countries reduce CO 2 emissions, they will need to switch from gasoline and other petroleum-based fuels, natural gas, coal, and electricity produced from these fossil fuels to energy carriers with little or no carbon footprint. An important question is which new energy carriers will emerge to support low-carbon transitions.

Low-carbon energy systems are expected to rely heavily on end-use electrification, where electricity produced with low GHG emissions is used for building and industrial heating, transport and other applications that rely heavily on fossil fuels at present. But not all end-uses are expected to be commercially electrifiable in the short to medium term {11.3.5} , and many will require low GHG liquid and gaseous fuels, that is, hydrogen, ammonia, and biogenic and synthetic low GHG hydrocarbons made from low GHG hydrogen, oxygen and carbon sources (the latter from CCU, [[#footnote-013|20]] biomass, or direct air capture {11.3.6} ). The future role of hydrogen and hydrogen derivatives will depend on how quickly and how far production technology improves, that is, from electrolysis (‘green’), biogasification, and fossil fuel reforming with CCS (‘blue’) sources. As a general rule, and across all sectors, it is more efficient to use electricity directly and avoid the progressively larger conversion losses from producing hydrogen, ammonia, or constructed low GHG hydrocarbons. What hydrogen does do, however, is add time and space option value to electricity produced using variable clean sources, for use as hydrogen, as stored future electricity via a fuel cell or turbine, or as an industrial feedstock. Furthermore, electrification and hydrogen involve a symbiotic range of general-purpose technologies, such as electric motors, power electronics, heat pumps, batteries, electrolysis, fuel cells, and so on, that have different applications across sectors but cumulative economies of innovation and production scale benefits. Finally, neither electrification nor hydrogen produce local air pollutants at point of end-use.

For almost 140 years we have primarily produced electricity by burning coal, oil, and gas to drive steam turbines connected to electricity generators. When switching to low-carbon energy sources – renewable sources, nuclear power, and fossil or bioenergy with CCS – electricity is expected to become a more pervasive energy carrier. Electricity is a versatile energy carrier, with much higher end-use efficiencies than fuels, and it can be used directly to avoid conversion losses.

An increasing reliance on electricity from variable renewable sources, notably wind and solar power, disrupts old concepts and makes many existing guidelines obsolete for power system planning, for example, that specific generation types are needed for baseload, intermediate load, and peak load to follow and meet demand. In future power systems with high shares of variable electricity from renewable sources, system planning and markets will focus more on demand flexibility, grid infrastructure and interconnections, storage on various timelines (on the minute, hourly, overnight and seasonal scale), and increased coupling between the energy sector and the building, transport and industrial sectors. This shifts the focus to energy systems that can handle variable supply rather than always follow demand. Hydrogen may prove valuable to improve the resilience of electricity systems with high penetration of variable renewable electricity. Flexible hydrogen electrolysis, hydrogen power plants and long-duration hydrogen storage may all improve resilience. Electricity-to-hydrogen-to-electricity round-trip efficiencies are projected to reach up to 50% by 2030. {6.4.3}

Electrification is expected to be the dominant strategy in buildings as electricity is increasingly used for heating and for cooking. Electricity will help to integrate renewable energy into buildings and will also lead to more flexible demand for heating, cooling, and electricity. District heating and cooling offers potential for demand flexibility through energy storage and supply flexibility through cogeneration. Heat pumps are increasingly used in buildings and industry for heating and cooling {9.3.3, Box 9.3} . The ease of switching to electricity means that hydrogen is not expected to be a dominant pathway for buildings {Box 9.6} . Using electricity directly for heating, cooling and other building energy demand is more efficient than using hydrogen as a fuel, for example, in boilers or fuel cells. In addition, electricity distribution is already well developed in many regions compared to essentially non-existent hydrogen infrastructure, except for a few chemicals industry pipelines. At the same time, hydrogen could potentially be used for on-site storage should technology advance sufficiently.

Electrification is already occurring in several modes of personal and light-freight transport, and vehicle-to-grid solutions for flexibility have been extensively explored in the literature and small-scale pilots. The role of hydrogen in transport depends on how far technology develops. Batteries are currently a more attractive option than hydrogen and fuel cells for light-duty vehicles. Hydrogen and hydrogen-derived synthetic fuels, such as ammonia and methanol, may have a more important role in heavy vehicles, shipping, and aviation {10.3} . Current transport of fossil fuels may be replaced by future transport of hydrogen and hydrogen carriers such as ammonia and methanol, or energy-intensive basic materials processed with hydrogen (e.g., reduced iron) in regions with bountiful renewable resources. {Box 11.1}

Both light and heavy industry are potentially large and flexible users of electricity for both final energy use (e.g., directly and using heat pumps in light industry) and for feedstocks (e.g., hydrogen for steel-making and chemicals). For example, industrial process heat demand, ranging from below 100°C to above 1000°C, can be met through a wide range of electrically powered technologies instead of using fuels. Future demand for hydrogen (e.g., for nitrogen fertiliser or as a reduction agent in steel production) also offers electricity-demand flexibility for electrolysis through hydrogen storage and flexible production cycles {11.3.5} . The main use of hydrogen and hydrogen carriers in industry is expected to be as feedstock (e.g., for ammonia and organic chemicals) rather than for energy as industrial electrification increases.

'''Multiple energy supply options are available to reduce emissions over the next decade (''' '''''high confidence''''' ''').''' Nuclear power and hydropower are already established technologies. Solar PV and wind are now cheaper than fossil-generated electricity in many locations. Bioenergy accounts for about a tenth of global primary energy. Carbon capture is widely used in the oil and gas industry, with early applications in electricity production and biofuels. It will not be possible to widely deploy all of these and other options without efforts to address the geophysical, environmental-ecological, economic, technological, socio-cultural, and institutional factors that can facilitate or hinder their implementation ( ''high confidence'' ). (Figures TS.11 and TS.31) {6.4}

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'''Figure TS.11''' '''continued: Global energy flows within the 2019 global energy system (top panel) and within two illustrative future, net-zero CO''' 2 '''emissions global energy system (bottom panels).''' Source: IEA, AR6 Scenarios Database. Flows below 1 EJ are not represented. The illustrative net-zero scenarios correspond to the years in which net energy system CO 2 emissions reach zero – 2045 in IMP-Ren and 2060 in IMP-Neg-2.0. Source: data from IMP-Ren: Luderer et al.(2022); IMP-Neg-2.0: Riahi, K. et al. 2021.

'''Enhanced integration across energy system sectors and across scales will lower costs and facilitate low-carbon energy system transitions (''' '''''high confidence''''' ''').''' Greater integration between the electricity sector and end-use sectors can facilitate integration of variable renewable energy options. Energy systems can be integrated across district, regional, national, and international scales ( ''high confidence'' ) ''.'' {6.4, 6.6}

'''The viable speed and scope of a low-carbon energy system transition will depend on how well it can support SDGs and other societal objectives (''' '''''high confidence''''' ''').''' Energy systems are linked to a range of societal objectives, including energy access, air and water pollution, health, energy security, water security, food security, economic prosperity, international competitiveness, and employment. These linkages and their importance vary among regions. Energy-sector mitigation and efforts to achieve SDGs generally support one another, though there are important region-specific exceptions ( ''high confidence'' ) ''.'' (Figure TS.29) {6.1, 6.7}

'''The economic outcomes of low-carbon transitions in some sectors and regions may be on par with, or superior to those of an emissions-intensive future (''' '''''high confidence''''' ''').''' Cost reductions in key technologies, particularly in electricity and light-duty transport, have increased the economic attractiveness of near-term low-carbon transitions. Long-term mitigation costs are not well understood and depend on policy design and implementation, and the future costs and availability of technologies. Advances in low-carbon energy resources and carriers such as next-generation biofuels, hydrogen produced from electrolysis, synthetic fuels, and carbon-neutral ammonia would substantially improve the economics of net zero energy systems ( ''medium confidence'' ). {6.4, 6.7}

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