Global carbon dioxide emissions in 2021 were the highest on record. Do you think it is still possible to hit 2030 green targets?
It is possible using existing renewable energy technologies, and innovation in some of the harder to decarbonize sectors. The IEA, IRENA and others sketch a plausible pathway to achieve net zero by 2050, using the existing technology. Five years ago, when we reached the point where wind was cheaper than fossil fuels, we thought that price would be the decisive factor. Five years later, we can see that the political will needs to change to get this done.
Businesses will always want to make money, which is still the primary investment signal given out by markets and governments. We have enormous windfall profits for oil and gas companies, and not really the same kind of financial opportunities for renewables. Investment signals are clearly not strong enough to incentivize companies to take the right decisions yet. There is clearly something wrong in terms of the ‘big picture’ investment climate that is being created. Another hurdle is that many companies developing new kinds of values with their shareholders are unable to move as fast as they would like to. There is a really strong push from pension funds, sovereign wealth and other types of investors, but there are not enough projects.
How can governments and markets increase pressure to decarbonize?
There is a push-factor in terms of taking carbon off the system with things like carbon tax, and the carbon price floor (CPF). The UK took coal off the system much faster than anybody imagined through the carbon price floor. They sent a strong price signal that it was not worth investing in coal anymore and then the market moved in with other solutions like offshore wind. We also need to make sure that investment can flow in the private sector because it is no use having competitive prices if you cannot move forward and build due to permitting issues, for example. We must remove the red tape, that is the fog of war that impedes us from moving forward.
How are supply chains shifting in the aftermath of Covid-19 and what is needed in order to hit net zero targets?
Certainly there are some heavy components that only China produces. They dominate the steel industry, metals processing, cotton exports, solar panel production, transition metals, and many others. Critical minerals and metals have become like the new oil. They create the new bottlenecks and are the fuel of the Green Revolution. One thing that we really learned with Covid-19 is that we need to have healthy, diversified supply chains to avoid such bottlenecks and slowdowns. However, when it comes to the wind industry, European companies are still ahead when it comes to technology and assembly. Over 90% of the turbines sold in Europe come from European companies plus the Americas.
We still think the best way to reach Net Zero is for countries, communities, and companies to collaborate.
Asia, which has the largest need to, still faces no real regional cooperation, which does not help.
As GWEC, we are not representing Europe, we are representing the global industry and we do not want to go into regional blocks.
Do you have a final message for our international Newsweek readership?
You still get people talking about a technological or innovative bullet kind of approach that will emerge and help us solve everything, like with direct air capture, or small nuclear reactors. I'm not saying those things do not work, but I will say that none of that will work in the timeframe that we have. It cannot.
I think we have a window now. Hitting targets is still doable, but it requires a very laser focused approach over the next year, and then keeping on that focus for another 20 years. It means reaching into all those sectors that need to be decarbonized, as opposed to having governments push back to the next political cycle and up-targets. If we wait until 2030 and then go: ‘oh, actually, we need a gazillion gigawatts now’, we will fail. We need peace and the whole world needs to focus really intensely on climate change now, otherwise, we are not going to make it.
