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Rystad Energy: Fossil Fuel Emissions Will Peak Within Two Years

Over the past few years, there's been plenty of buzz around the time when global oil demand will hit its highest before entering terminal decline. Some bearish energy agencies like the IEA have predicted that the zenith is nigh while other more bullish ones like the EIA say that point is decades away. Indeed, peak oil demand is expected to be the bone of contention when COP28 is held in the United Arab Emirates from 30 November until 12 December 2023. However, not much has been said about the real elephant in the room: whether or not the global energy transition is bearing fruit in the effort to cut greenhouse gas emissions to avert dire climate change scenarios.

Well, several energy and climate experts have weighed in, and the prognosis is good for clean energy buffs. Norwegian energy consultancy Rystad Energy says the world is very close to the inflection point for fossil fuel carbon dioxide (CO2) emissions, with the firm predicting emissions will peak in just two years. According to Rystad, global CO2 emissions are poised to hit about 39 gigatonnes per year (Gtpa) in 2025 before settling into a steady annual decline going by the current global trajectory of announced policies, projects, industry trends, and expected technological advancementsThe firm notes that emissions hit a record high in 2022 after many countries ditched their climate goals and turned to more carbon-intensive fuels as a short-term solution to their energy security crises following Russia's invasion in Ukraine.

For a time, limiting greenhouse gas emissions was hardly a top priority for energy-starved Europe. According to a report by the Observer Research Foundation, energy supply disruptions triggered by Russia's war on Ukraine took LNG prices even higher, leaving coal as the only option for dispatchable and affordable power in much of Europe, including the tough markets of Western Europe and North America that have explicit policies to phase out coal. Suddenly, mothballed coal mines and power plants that closed 10 years ago came back alive in what industry observers dubbed a "spring" for Germany's coal-fired power plants. That was a big U-turn considering that Germany's goal had been to phase out all coal-generated electricity by 2038.

Other European countries such as Austria, Poland, the Netherlands and Greece also restarted their coal plants.

Thankfully, the broader push towards clean energy remains alive and well even as fossil fuels are poised to remain the world's leading source of primary energy for decades. According to an analysis by Rystad, direct CO2 emissions from power and heat generation will peak in the current year. Although the decline will be minimal at first, it's expected to gather momentum in the coming years and become a significant driver of the decrease in total CO2 emissions from all sectors by 2025.

''Peak fossil fuel CO2 emissions within the next two years is an outstanding global achievement, exceptional when considering the current supply chain roadblocks and the high focus on energy security. If the industry can maintain this momentum, global warming of less than 2.0 degrees Celsius is within reach,'' Artem Abramov, head of cleantech research at Rystad Energy, has said.

China's Emissions Set To Enter Terminal Decline

Rystad's bullishness on climate change is not unique. Carbon Brief has reported that Chinese cities are not likely to enjoy the clean air they did during the country's covid-related lockdowns any time soon with emissions growing from the covid lows. However, Carbon Brief says China's CO2 emissions are poised to start declining as early as 2024 and could be facing structural decline thanks to growth in the installation of new low-carbon energy sources. The  UK-based website says that low-carbon energy growth will be sufficient to cover China's rising electricity demand beyond 2024 if coal interests fail to stall the expansion of the country's wind and solar capacity.

Meanwhile, climate think tank Ember has predicted that emissions from the global electricity sector may peak this year thanks in large part to a surge in wind and solar power. But here's the main kicker: Ember says the growth of renewables has been so rapid that it's close to meeting the high bar set for the planet to attain the 1.5C pathway. Ember has revealed that wind and solar power had climbed to a combined total of 14.3% of the world's electricity, up from 12.8% last year.

But not everybody is that bullish. According to the UN, global emissions are set to fall by a mere 2% below 2019 levels by 2030, a level nowhere near enough to avert the worst impacts of global warming. The UN says global emissions ought to fall 43% against 2019 levels for the world to stay within the 1.5 degrees Celsius target envisioned by the Paris Agreement.

"Global ambition stagnated over the past year and national climate plans are strikingly misaligned with the science," said U.N. secretary-general Antonio Guterres. "The chasm between need and action is more menacing than ever."

By Alex Kimani for Oilprice.com

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Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.  More