A Path to Zero
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Bibliographic details
- Authors: CHRISTOPH BERTRAM, OTTMAR EDENHOFER, GUNNAR LUDERER
- Published: September 2, 2021
Overview and key premises
- Reaching net zero emissions and limiting global warming to 1.5°C are achievable with comprehensive and rapid policy action.
- Breathtaking progress in crucial green technologies has improved prospects, but a full restructuring of global energy and land-use systems is required, supported by the right mix of policy incentives.
- Co-benefits of a 1.5°C pathway include improved air quality, modernization of infrastructure and economies, and increased energy sector employment and jobs with better long-term prospects.
- Because CO2 emissions remain in the atmosphere for hundreds of years, cumulative emissions largely determine warming; immediate near-term emissions reductions are therefore more important than the exact year of reaching zero.
Electricity decarbonization — central role and pathways
- The electricity sector currently contributes roughly a third of total CO2 emissions.
- Achieving the 1.5°C target with medium likelihood requires emissions to decline immediately; the cheapest way entails cutting emissions roughly in half by 2030 compared with 2020 levels.
- Electricity generation remains dominated by coal and gas, but additions of wind and solar capacity increasingly outweigh fossil-fuel-based capacity gains.
- The pandemic illustrated that reduced demand tends to make electricity systems cleaner as higher-cost coal and gas plants are switched off first while solar, wind, nuclear, and hydro continue generating.
- More efficient use of electricity can contribute significantly to swifter emission declines, especially in the next decade when much generation will still be carbon-intensive.
- Limited availability of clean power technology is no longer the impediment; the slow phaseout of fossil-fuel-based capacities is.
- Regulatory action, ideally via some form of carbon pricing, is necessary to:
- Shift new investments to green power technology.
- Create incentives for phasing out fossil-fuel power plants.
- If the global community seizes rapid power system decarbonization, the power sector can slash its emissions by more than two-thirds by 2030 (Net Zero 2050 scenario).
Land use, demand sectors, and CO2 removal
- The land sector currently includes both CO2 sinks (for example, establishing new forests) and CO2 sources (most notably deforestation and other land-use processes).
- Changes in land-use practices could achieve CO2 neutrality in that sector by 2030 (though agriculture will continue to emit methane and nitrous oxide).
- Energy demand from industry, buildings, and transportation would remain the primary contributors of fossil-fuel-based CO2 emissions in 2030 and beyond under 1.5°C scenarios.
- In 1.5°C-aligned scenarios:
- Combined emissions from industry, buildings, and transport must be more than halved by 2040.
- Those emissions must reach about a quarter of today’s levels by 2050 to achieve carbon neutrality around that date.
- Compensating for residual emissions requires very fast expansion of CO2 removal options, including:
- Planting new forests.
- Direct air capture and geological storage.
- Bioenergy with carbon capture and storage (BECCS).
Technology uncertainties and multiple pathways
- Many demand-sector decarbonization technologies involve direct or indirect electrification via hydrogen-based fuels, fuel cell technology, and synthetic fuels.
- These technologies are not yet deployed at scale and face institutional and environmental challenges; their future performance and costs are considerably more uncertain than technologies deployed today (for example, renewable energy and battery-electric vehicles).
- Various combinations of technology developments can still yield a net zero global energy system:
- If most options develop more favorably than expected, stronger net negative emissions may be achievable.
- If some options advance while others lag, the mix changes but net zero remains achievable.
- Only if all options develop more slowly than expected—or if unforeseen bottlenecks (for example, bioenergy-related sustainability issues) arise—would net zero become much more difficult.
Orderly and just transition — policy tools and social cohesion
- The transformation to limit warming to 1.5°C must be comprehensive and rapid, but with the right policy mix can be relatively orderly.
- An inclusive and just transition that leaves no one behind is a political prerequisite for sustained policy support.
- A central policy tool is carbon pricing, implemented as a permit market (for example, the European Union’s Emissions Trading System) or a carbon levy that rises over time.
- The Network for Greening the Financial System’s “Net Zero 2050” scenarios (NGFS 2021) estimate carbon prices of between $100 and $200 a ton of CO2 in 2030, rising sharply until 2050.
- The International Energy Agency’s “Net Zero by 2050” scenario (IEA 2021) features regulatory policies more prominently and sees carbon prices that do not exceed $250 until 2050.
- Advantages of carbon pricing:
- Coordinates effort across sectors and countries.
- Provides regulatory certainty and incentivizes long-term investment.
- Raises resources that enable governments to implement additional public-funding policies.
- Revenue recycling is important to ensure the transition does not leave anyone behind:
- Responsible revenue redistribution can render carbon pricing progressive rather than regressive.
- Revenue can support future-oriented infrastructure (for example, charging stations for electric vehicles) to prevent lock-in of obsolete infrastructure and support market emergence.
Vital international cooperation and differentiated responsibilities
- The global picture remains daunting; international cooperation must change to ensure countries can recover from the pandemic on similar paths.
- Analysis of 1.5°C scenarios (NGFS 2021) indicates the target does not allow for widely varying decarbonization timetables: all major countries must realize peak emissions very soon and decline thereafter.
- High-income countries have greater responsibility and should provide more support (technology access, financing, increased direct investment) to lower-income countries given historical responsibilities.
- A promising cooperative approach is establishing climate clubs with differentiated minimum carbon prices:
- Low- and medium-income countries would start with lower floor prices and benefit from some revenue generated by higher pricing in high-income countries.
- High-income countries would gain assurance that manufacturing, trade, and emissions would not shift to unregulated markets.
- Such clubs would aim to ensure mitigation efficacy and fair trading conditions while acknowledging political and implementation challenges.
Christoph Bertram, Ottmar Edenhofer, and Gunnar Luderer (with Stephen Bi, Jérôme Hilaire, and Elmar Kriegler) — F&D Magazine article summarizing research and scenarios for net zero and limiting warming to 1.5°C.
Content in this bundle
- El camino hacia emisiones cero● Finanzas y Desarrollo ● Septiembre de 2021
- Objectif zéro émission nette
- A Path to Zero - IMF F&D
- На пути к нулевым выбросам – Финансы и развитие – Нельзя терять время– сентябрь 2021 года
- 实现净零排放之路 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期