Policy Briefing, published 01.12.2023
In this policy briefing, Stiftung KlimaWirtschaft and CDP put a spotlight on the rising clean energy demand for business in Europe and its ramifications for a global energy transition.
The expansion of renewable energy sources stands as a pivotal element in the ongoing worldwide efforts to combat climate change. The economic case for renewable energy rollout is clear. Renewable energy generation in the 2020s is by far the cheapest on a levelized cost comparison (Lazard, 2023). As the IEA showed this year in its report “Net Zero Roadmap: A Global Pathway to Keep the 1.5 °C Goal in Reach” (2023), the rollout of renewable energy generation capacities is essential to keep the Paris goals in reach. On a global scale, the share of renewable energy in the global electricity mix is poised to exceed 50 % by 2030, representing a significant increase from the current 30 %.
However, in the same report, the IEA raises substantial concerns that this will be enough to limit global warming to 1.5 °C and even 2 °C. The IEA’s Net Zero Emissions by 2050 scenario3 entails that electricity output from unabated fossil fuels will fall 40 % by 2030 and virtually disappear by 2050. In line with science, it is essential that renewable energy capacity is tripled to achieve the Paris Agreement goals. Rapid decarbonization in this decade is crucial to reach 1.5 °C.
At the same time, the report highlighted a silver lining: 65 % of global emissions can be mitigated by technologies that are already firmly placed in the market today. As such, the transition to net-zero is turning into a race for future markets and competitiveness at a faster pace than many anticipated.