When it comes to climate change, here is some really good news: although 2023 was the hottest year on record, according to the International Energy Agency it may well be the year that global energy-related carbon dioxide emissions peaked.
The agency estimates that carbon dioxide emissions reached a record 37.4 billion tonnes but increased by 410 million tonnes (or 1.1 per cent). This increase is lower when compared to the 490 million tonnes recorded in 2022. It has taken place despite the accelerated growth in total energy demand and the exceptional shortfall in hydropower due to extreme droughts, particularly in China and the US – the world’s largest carbon emitters, which together account for nearly half of global carbon dioxide emissions.
The 2023 peak is earlier than what many institutions foresaw, including the IEA itself. In December last year, it expected global energy-related carbon dioxide emissions to peak by 2025, subject to governments delivering on their “national energy and climate pledges on time and in full”. The peak has also aligned with the desirable pathway the UN’s Intergovernmental Panel on Climate Change projected, whereby global greenhouse-gas emissions peak before 2025 at the latest.
The expansion of renewable energy in power generation, particularly solar and wind, have contributed to this positive outcome by largely displacing coal – the “dirtiest” fossil fuel, given its notorious greenhouse-gas emissions footprint. In addition, the rapidly growing popularity of electric vehicles is increasingly crowding out the oil-burning internal combustion engine in major economies. Without these clean energy technologies, the global increase in carbon dioxide emissions in the past five years would have been three times larger, the IEA stated.
Last year, the world experienced an increase of renewable energy capacity by 50 per cent, while one in five new car sales globally was of electric vehicles. These trends are expected to continue, especially as one of the main pledges of the consensus reached at Cop28 in the UAE last year called for a tripling of renewable energy capacity by 2030. Meanwhile, Goldman Sachs expects electric vehicles to account for half of global car sales by 2035. However, inter-fossil fuels substitution, primarily from coal to natural gas, which emits almost 50 per cent less carbon dioxide than coal, also played a role in curbing emissions, as did improvements in energy efficiency and softer industrial production as a result of a slower economic growth as major economies battle inflation, among other issues.
In advanced economies, carbon emissions peaked in 2007, but last year they experienced a record decline (outside a recessionary period) of 4.5 per cent. Any increase in global emissions is coming primarily from developing countries, particularly China and India, where coal remains king in terms of power generation, accounting for 61 per cent and 74 per cent respectively. However, some are hopeful that even there a peak is in sight. One study from the Helsinki-based Centre for Research on Energy and Clean Air found that China's greenhouse-gas emissions could start going into "structural decline" as soon as this year, due to record growth in the installation of new low-carbon energy sources. Last year alone, China added more solar panels than the US did in its entire history.
The above trends confirm that the energy transition is progressing and the world can remain hopeful that ambitious climate change targets can be reached.
However, a peak in emissions is far from being enough to limit global warming to an increase of 1.5°C above pre-industrial levels as per the 2015 Paris Agreement. To keep within the 1.5°C limit, the IPCC calls for emissions to be reduced by at least 43 per cent by 2030 – which is less than six years away – compared to 2019 levels, and at least 60 per cent by 2035. The UN warns that even if emissions are no longer increasing after 2030, they are still not demonstrating the rapid downward trend science says is necessary this decade.
Since fossil fuels – that is coal, oil and natural gas – are the main culprits behind climate change, the IPCC calls for a substantial reduction in their use as well as the minimal use of unabated fossil fuels, that is those without carbon capture and storage. Some, such as UN Secretary General Antonio Guterres have gone further and called for a halt to all investment, licensing or funding of new oil and gas.
However, whatever the world has been doing, it must do it much faster. Despite its rapid expansion, green energy still has a long way to go to displace fossil fuels, which account for more than 80 per cent of the world’s primary energy mix. Besides, given the variability in power generation from renewable energy, back-up plants – primarily fossil-fuel powered – will be needed.
Meanwhile, global energy demand continues to grow. The IEA, which in May 2021, argued that if the world is to achieve net zero by 2050, there would be no need for investment in new fossil fuel supply, beyond projects committed in 2021, stated in October last year that investment in oil and gas supply will still be needed to meet continuing demand, even if the market for fossil fuels starts to shrink.
Although China has expanded its green energy capacity, its fossil-fuel use has increased in tandem. A report from CREA and the Global Energy Monitor claims that in 2023 the Asian powerhouse increased coal use and investment, building on the “frantic pace” of approving two new coal power plants and starting construction on a new one each week in 2022. To meet growing demand in the light of growing concerns about energy security, India – the world’s third-largest emitter of carbon dioxide – plans to increase coal-fired capacity in 2024 by the most in at least six years and more than four times the annual average in the past five years. Meanwhile, the IPCC found that public and private finance flows for fossil fuels are still greater than those for climate adaptation and mitigation, despite the strong government support green energy is getting particularly in the developed world.
Last year may well be the major and eagerly awaited milestone for global carbon emissions. However, hitting the peak does not mean the battle against climate change is finally won. The path after this moment remains highly uncertain and largely depends on governments strengthening their climate pledges and delivering on them.
