Ambitious clean energy goals hinge on global support

Renewables, hydrogen and efficiency goals are challenging, but less contentious than fossil fuels, write Georgia Gratton, Tatiana Serova and Stefan Krumpelmann

Sultan al-Jaber, president-designate of Cop 28, has set ambitious goals for the UN climate summit in Dubai later this year. His targets — to double energy efficiency and hydrogen output and to triple installed renewable energy capacity, all by 2030 — are broadly in line with OECD energy watchdog the IEA's net zero scenario.

But geopolitics will come into play at Cop 28, as the aims will need unanimous agreement to make it into the summit's final text — and even if they do, there are fiscal and practical barriers to implementation this decade.

The 198 parties to the UN Framework Convention on Climate Change have long clashed over the role of fossil fuels. But al-Jaber could find more support for calls to ramp up clean energy technologies, rather than to scale back conventional fuels, particularly from fellow oil producing countries. The EU has already backed the energy efficiency and renewables targets.

Al-Jaber's goal to triple renewable energy to 11,000GW by 2030 is optimistic. But renewable energy installations soared last year and the IEA has forecast that global renewable power capacity will reach 4,500GW in 2024 — equal to the total power generation capacity of China and the US combined.

In Europe, the need to move away from Russian gas has been a strong incentive for the uptick in renewable energy capacity. Brussels was quick to update legislation to allow faster deployment of wind and solar photovoltaic (PV) projects, streamlining permitting processes and upgrading clean energy targets. Renewable energy is now due to account for 42.5pc of overall energy consumption by 2030, up from 32pc previously. In response to the US' Inflation Reduction Act (IRA), Europe has also proposed the Net Zero Industry Act, aimed at boosting domestic manufacturing of renewable energy technologies.

And European developers do not lack ambition. French power utility Engie has a 85GW pipeline of renewables projects, 27GW of which are in Europe, while Swedish state-owned utility Vattenfall expects to commission at least 8GW of wind power capacity over 2023-30, Argus data show. But regulatory changes and financial incentives might not be enough to accelerate renewable energy additions. Inflation has driven up the cost of components and supply chains are struggling, pushing some developers to halt renewables projects, with wind more affected than solar.

Concentrated risk

The IEA has warned of "potentially risky levels of concentration in clean energy supply chains" for components and manufacturing. The majority of announced manufacturing capacity expansion plans for solar, onshore wind and electric vehicle batteries up to 2030 are in China, which is far ahead on renewables deployment. The country could meet its 2030 renewables target five years before the deadline, despite phasing out renewable energy subsidies, the IEA found.

Asia accounted for about 60pc of new renewable power capacity additions last year, led by China, according to renewable energy agency Irena. The Middle East commissioned 3.2GW of new renewable energy projects last year — an increase of 13pc on the year and its highest expansion to date, Irena data show. Saudi Arabia's state-owned Aramco is aiming for 12GW of installed solar and wind power by 2030.

In the US, solar and wind additions are expected to rise in 2023-24, according to the IEA. But the IRA will be a "game-changer" to drive expansion from 2025 onwards. And India's push to lift domestic manufacturing of solar PV components should allow the country to become "fully self-sufficient in terms of solar PV supply in the next 4-5 years", the IEA found.

Some of the projected renewables capacity is likely to be required to hit al-Jaber's hydrogen goal. His target of doubling hydrogen production to 180mn t/yr by 2030 should be reached through "a dramatic scale-up of new low-carbon hydrogen production and decarbonisation of existing hydrogen production", he wrote last month. Global hydrogen production, at around 90mn t in 2022, was nearly all from fossil fuels with unabated CO2 emissions.

Well over 90mn t/yr of low-carbon hydrogen would be needed to reach al-Jaber's stated target, but hitting this by 2030 would mean surpassing even the most ambitious projections. The IEA says low-carbon hydrogen production would have to reach 73mn t/yr by 2030 to put the world on track for net zero carbon emissions by 2030 — comprising 51mn t/yr of renewable hydrogen and 22mn t/yr produced from natural gas with carbon capture, utilisation and storage.

Hydrogen: Hopes vs reality?

And even this will be a stretch. Announced low-carbon hydrogen projects would provide a cumulative production capacity of 38mn t/yr by 2030, of which around two-thirds would be for renewable hydrogen, Belgium-based lobby group the Hydrogen Council said in May. While the pipeline of announced projects is growing rapidly, only a handful have reached a final investment decision. Slow permitting processes, regulatory uncertainties and strained supply chains have held back project developers. Potential buyers are hesitant to commit to long-term offtake agreements because low-carbon hydrogen is typically still much more costly than conventional alternatives, especially if it is made from renewable power.

Global hydrogen trade should be "fast-tracked" to help reach the production targets and countries should "support mutual recognition of hydrogen standards", al-Jaber says. Governments and other organisations have drawn up plans for certification schemes, but approaches differ widely and there has been little progress towards reaching uniform standards, which poses another potential barrier.

Environmental organisations often call for focus on energy efficiency as the "first fuel", but high upfront costs and a lack of return on investment are common obstacles. High energy prices last year, partly driven by the war in Ukraine, have provided economic motivation for energy savings. China and the US introduced new or strengthened policies and funding for energy efficiency last year, while the EU adapted legislation. Its energy efficiency directive now sets a binding target of an 11.7pc cut in final energy consumption by 2030, compared with the 2020 reference year.

The buildings sector presents the highest potential for energy intensity improvement, although the pace of renovation is still relatively slow in Europe. The cooling sector could also benefit from higher energy efficiency — a salient issue given recent heatwaves in Asia, the US and Europe.

Beyond the crisis, some countries have decided to make energy demand cuts a long-term policy in order to achieve their climate goals. But those advanced policies have not yet been implemented on a global scale. Progress on efficiency must double to reach net zero emissions, the IEA says.

Al-Jaber's targets, if well-received, could help supercharge a transition that is already well under way. The IEA expects global spending on clean energy to reach $1.7 trillion this year — compared with $1 trillion on fossil fuels. But a backslide on climate ambition at the recent G20 meeting, including around ramping up renewables deployment, could foreshadow problems reaching a consensus at Cop. And although a significant increase in renewables, hydrogen and energy efficiency is necessary to reach climate goals, it risks taking the emphasis off reducing emissions through cutting fossil fuel output and consumption.

Renewable electricity net additions

Global energy investment