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The transition towards low-carbon economies has gained a strong momentum in recent energy debates, particularly with the announcements by several countries, including the EU Member States, the UK, Japan and South Korea, to shift their energy systems towards net-zero emissions by 2050 and China by 2060. This dynamic has raised the opportunity for developing scenario-based analyses to enable a better understanding of the potential decarbonisation pathways and their impact on future energy systems.
Investigating carbon mitigation
trajectories
We begin by distinguishing between two main approaches adopted by forecasting organisations for defining and analysing alternative scenarios for carbon mitigation. A first approach can be categorised as a future-backward (or future-back) analysis (1)(2), generally used in scenarios considering net-zero emissions (e.g., IEA NZE2050, BP net-zero) (3)(4). These scenarios define the future targets such as, reaching net-zero emissions by 2050 and the prospects for possible energy pathways that might drive the world towards these targets.
Nevertheless, many of these target-seeking scenarios rely on options and disruptive technologies, which are yet to be proven. The large-scale deployment of these technologies is hampered by economic and technical issues, especially in developing countries. It is estimated that around half of the reductions required to achieve net-zero targets will come from technologies that are not currently available in the market.
Besides the future-backward scenarios, another set of scenarios, can be categorised as using a future-forward approach. These scenarios rely on assessing feasible and conceivable futures for energy and carbon emissions, based on the present forces that drive an accelerated energy transition. Their assumptions are primarily built by taking into account policy pledges and orientations, the concrete actions and instruments implemented in the framework of these policies, the technology trends, and the barriers that countries might face in deploying different types of carbon mitigation options and technologies.
The GECF CMS is part of this future-forward category, focusing its attention on certain key options and technologies that could substantially reduce emissions.
GECF Carbon Mitigation Scenario
The GECF CMS analyses four major shifts that will shape an accelerated energy transition compared to the Reference case (8), and reflect key uncertainties affecting future emissions and energy prospects. These changes are:
1) Low carbon-intensive power generation: To reduce power intensity compared to the Reference case, the CMS assumes a larger expansion of gas-fired capacities, further substituting coal and oil-based ones. It also considers further penetration of intermittent renewables, solar and wind in particular. This deployment of gas and renewables is encouraged by the implementation of higher carbon prices, strengthened emissions standards, and renewable support schemes. Gas also benefits from the emergence of small-scale LNG for power projects and its flexibility advantage as a complement to renewables.
2) Electrification and fuels switching: It captures greater electrification in residential and commercial buildings and industrial activities. It also considers more fuel switching, prompting a bigger share of gas at the expense of coal and oil products.
3) Energy efficiency improvements: The CMS factors in larger efficiency improvements in residential and commercial buildings and industries. This improved efficiency is supported by policy actions to retrofit buildings and enhance the energy performance of motors and heating services in industrial activities. Recycling of materials is also assumed to play a broader role in the CMS, such as in the steel industry.
4) Clean road mobility: It considers more uptake of green vehicles, focusing particularly on the electric vehicles (EVs), in addition to natural gas vehicles (NGVs) and hydrogen fuel cells in the road transport sector. NGVs are also assumed to achieve progress mainly in heavy goods transport. They will benefit from the economic and environmental advantages in the context of strengthened clean air policies adopted by countries. Moreover, the development of gas infrastructure will lend vital support to the NGVs.
Overall, the CMS particularly focuses on existing and well-established technologies, which are assumed to be largely disseminated with the implementation of strengthened carbon mitigation policies. It also assesses the positioning of natural gas in the context of the four shifts previousely highlighted.
Emissions abatement and the role of natural gas in different sectors
The sectoral breakdown of the emissions abatement in the GECF CMS indicates that power generation represents almost 60% of the reduction potential in 2050 (Figure 1.2 left). The uptake of intermittent renewables and gas-fired capacities, on the back of significant decline of coal for power is instrumental in causing this decrease. By 2050, renewables-led power generation will rise by around one-third in the CMS, while coal generation will shrink by almost 60%. Gas demand will add almost 50 bcm. This relatively slight increase of gas in power demand reflects the lower utilisation rates of the gas-fired capacities, due to their growing role as complements to the rising share of renewables in the sector.
The industrial sector offers the second highest potential of emissions reduction, driven by the significant improvements in energy efficiency, recycling of materials; especially in the steel industry, and larger electrification of processes, including in the non-energy intensive manufacturing industries. Although the CMS considers larger switching from coal to gas in industrial sectors, this upside effect on gas demand is counterbalanced by efficiency improvements and electrification. Indeed, they will contribute to a decrease of demand by around 50 bcm globally.
Emissions in the transport sector are set to shrink by almost 710 MtCO2, which is due to the larger uptake of cleaner road vehicles. The transport sector supports the highest increase of gas demand - estimated at 110 bcm - in the CMS, which is due to the expansion of NGVs, including in the heavy goods transportation mode.
The potential of additional gas in residential and commercial sectors is estimated at around 10 bcm. This increase results from the interplay between two opposing effects on gas demand: an upside effect due to the switching from coal and oil products in cooking and heating services and a downside effect due to electrification and efficiency improvements in buildings and appliances.
Finally, the transformation and other sectors, including the own use of the energy sector, will reduce their emissions by almost 460 MtCO2. This reduction is mainly due to the decrease in oil and coal outputs, underpinned by the decreasing demand for these fuels. The gas self-consumption of the transformation and energy industries will be globally reduced by 30 bcm in the CMS. Within the transformation industries, the gas-based hydrogen conversion will add almost 12 bcm to the Reference case, which is driven by the uptake of hydrogen utilisation in the transport sector. In order to achieve bigger progress, hydrogen technologies need to overcome several technical and economic barriers, for enabling their deployment at a large scale.
(The author is energy, environment and policy analyst at Energy Economics and Forecasting Department of GECF Secretariat)
Investigating carbon mitigation
trajectories
We begin by distinguishing between two main approaches adopted by forecasting organisations for defining and analysing alternative scenarios for carbon mitigation. A first approach can be categorised as a future-backward (or future-back) analysis (1)(2), generally used in scenarios considering net-zero emissions (e.g., IEA NZE2050, BP net-zero) (3)(4). These scenarios define the future targets such as, reaching net-zero emissions by 2050 and the prospects for possible energy pathways that might drive the world towards these targets.
Nevertheless, many of these target-seeking scenarios rely on options and disruptive technologies, which are yet to be proven. The large-scale deployment of these technologies is hampered by economic and technical issues, especially in developing countries. It is estimated that around half of the reductions required to achieve net-zero targets will come from technologies that are not currently available in the market.
Besides the future-backward scenarios, another set of scenarios, can be categorised as using a future-forward approach. These scenarios rely on assessing feasible and conceivable futures for energy and carbon emissions, based on the present forces that drive an accelerated energy transition. Their assumptions are primarily built by taking into account policy pledges and orientations, the concrete actions and instruments implemented in the framework of these policies, the technology trends, and the barriers that countries might face in deploying different types of carbon mitigation options and technologies.
The GECF CMS is part of this future-forward category, focusing its attention on certain key options and technologies that could substantially reduce emissions.
GECF Carbon Mitigation Scenario
The GECF CMS analyses four major shifts that will shape an accelerated energy transition compared to the Reference case (8), and reflect key uncertainties affecting future emissions and energy prospects. These changes are:
1) Low carbon-intensive power generation: To reduce power intensity compared to the Reference case, the CMS assumes a larger expansion of gas-fired capacities, further substituting coal and oil-based ones. It also considers further penetration of intermittent renewables, solar and wind in particular. This deployment of gas and renewables is encouraged by the implementation of higher carbon prices, strengthened emissions standards, and renewable support schemes. Gas also benefits from the emergence of small-scale LNG for power projects and its flexibility advantage as a complement to renewables.
2) Electrification and fuels switching: It captures greater electrification in residential and commercial buildings and industrial activities. It also considers more fuel switching, prompting a bigger share of gas at the expense of coal and oil products.
3) Energy efficiency improvements: The CMS factors in larger efficiency improvements in residential and commercial buildings and industries. This improved efficiency is supported by policy actions to retrofit buildings and enhance the energy performance of motors and heating services in industrial activities. Recycling of materials is also assumed to play a broader role in the CMS, such as in the steel industry.
4) Clean road mobility: It considers more uptake of green vehicles, focusing particularly on the electric vehicles (EVs), in addition to natural gas vehicles (NGVs) and hydrogen fuel cells in the road transport sector. NGVs are also assumed to achieve progress mainly in heavy goods transport. They will benefit from the economic and environmental advantages in the context of strengthened clean air policies adopted by countries. Moreover, the development of gas infrastructure will lend vital support to the NGVs.
Overall, the CMS particularly focuses on existing and well-established technologies, which are assumed to be largely disseminated with the implementation of strengthened carbon mitigation policies. It also assesses the positioning of natural gas in the context of the four shifts previousely highlighted.
Emissions abatement and the role of natural gas in different sectors
The sectoral breakdown of the emissions abatement in the GECF CMS indicates that power generation represents almost 60% of the reduction potential in 2050 (Figure 1.2 left). The uptake of intermittent renewables and gas-fired capacities, on the back of significant decline of coal for power is instrumental in causing this decrease. By 2050, renewables-led power generation will rise by around one-third in the CMS, while coal generation will shrink by almost 60%. Gas demand will add almost 50 bcm. This relatively slight increase of gas in power demand reflects the lower utilisation rates of the gas-fired capacities, due to their growing role as complements to the rising share of renewables in the sector.
The industrial sector offers the second highest potential of emissions reduction, driven by the significant improvements in energy efficiency, recycling of materials; especially in the steel industry, and larger electrification of processes, including in the non-energy intensive manufacturing industries. Although the CMS considers larger switching from coal to gas in industrial sectors, this upside effect on gas demand is counterbalanced by efficiency improvements and electrification. Indeed, they will contribute to a decrease of demand by around 50 bcm globally.
Emissions in the transport sector are set to shrink by almost 710 MtCO2, which is due to the larger uptake of cleaner road vehicles. The transport sector supports the highest increase of gas demand - estimated at 110 bcm - in the CMS, which is due to the expansion of NGVs, including in the heavy goods transportation mode.
The potential of additional gas in residential and commercial sectors is estimated at around 10 bcm. This increase results from the interplay between two opposing effects on gas demand: an upside effect due to the switching from coal and oil products in cooking and heating services and a downside effect due to electrification and efficiency improvements in buildings and appliances.
Finally, the transformation and other sectors, including the own use of the energy sector, will reduce their emissions by almost 460 MtCO2. This reduction is mainly due to the decrease in oil and coal outputs, underpinned by the decreasing demand for these fuels. The gas self-consumption of the transformation and energy industries will be globally reduced by 30 bcm in the CMS. Within the transformation industries, the gas-based hydrogen conversion will add almost 12 bcm to the Reference case, which is driven by the uptake of hydrogen utilisation in the transport sector. In order to achieve bigger progress, hydrogen technologies need to overcome several technical and economic barriers, for enabling their deployment at a large scale.
(The author is energy, environment and policy analyst at Energy Economics and Forecasting Department of GECF Secretariat)
