Global Net Zero Transition Plan (GNZTP) is a strategy for reducing fossil fuel use. It aims to achieve net zero energy use by 2050. By that time, fossil fuels will represent less than one-fifth of the world’s energy supply. This goal will require a massive reduction in fossil fuel use, especially for goods that have carbon embodied in them. It will also require a significant investment in technology, especially in sectors where low-emissions technology options are limited.
Resources
There are a number of resources available to support the development of a global net zero transition plan. Many of these resources are designed to be used by financial institutions, and others can serve as a guide to the process. Those seeking to create their own global net zero transition plan can find guidance in the Framework for a Global Net Zero Transition Plan.
The path to net zero emissions is relatively narrow, and staying on it will require massive deployment of clean energy technologies. The world economy in 2030 will be 40% larger than it is today, but use about 7% less energy. As such, an aggressive worldwide effort to improve energy efficiency will be essential to achieving net zero emissions. Specifically, annual improvements in energy intensity should average 4% per year until 2030.
The first step toward net zero is to significantly reduce fossil fuel use. By 2050, fossil fuels will account for less than a fifth of global energy production. However, many fossil fuels still are used in goods where carbon is embodied in the product. Many of these goods are also used in industries where low-emissions alternatives are limited.
A global coalition led by the Glasgow Financial Alliance for Net Zero is gathering public comments on a draft Net Zero Transition Plan. This plan will help financial institutions build credibility by establishing a common framework for the transition to net zero emissions by 2050. This framework will make it easier for financial institutions to adopt new technologies and scale up clean energy.
To be successful, the global net zero transition plan needs sustained support and participation from citizens. It will affect multiple aspects of people’s lives, from jobs to urban planning. It is estimated that 55% of the cumulative reductions in emissions will be due to consumer choice, such as buying an electric vehicle or retrofitting a home with energy-efficient technologies. The other 4% of emission reductions will be provided by behaviour changes, such as reducing consumption of carbon-based fuels.
The global pathway to net zero emissions by 2050 requires governments to adopt broad-ranging policies and measures. They must also integrate energy into all areas of government policy. For a net zero pathway to be successful, governments and business must work together across sectors.
Investments required
To achieve net zero emissions by the end of the century, significant new investments will be required to meet global emission reduction targets. However, these investments are both risky and capital intensive. Hence, a global financing gap is expected that must be bridged. The key to achieving net zero emissions is a coordinated approach that involves investments in R&D and commercial-scale deployment of clean energy technologies.
Implementing a clean energy transition requires a combination of public and private funding. The transition should be inclusive and transparent. In order to be successful, countries must ensure that the transition is affordable for the general public, including the poorest households. Further, government support for developing economies is needed to enable them to meet the higher costs associated with the transition. Developing economies will likely have to rely on public funding to finance industrial and energy projects. Moreover, they will need to reform their policy and regulatory structures to attract more private financing. In addition to private finance, international flows of long-term capital will be necessary to support the development of existing clean energy technologies.
The transition will require massive investments in physical assets. Between 2020 and 2050, global expenditure on physical assets would amount to nearly $275 trillion. This would represent about seven percent of the global economy. The largest part of this spending would come between 2026 and 2030. Within this timeframe, the manufacturing of internal combustion engine cars would cease, with battery-electric cars accounting for up to five percent of new car sales by 2050. At the same time, power demand would rise tenfold, and the production of biofuels and hydrogen would double.
The need for global investment is evident in the global energy crisis. The International Renewable Energy Agency estimates that investments required for the transition will total $5.7 trillion per year until 2030. Afterwards, the investments will be smaller, decreasing to as low as $3.1 trillion per year. By 2030, the investment in renewable energy will account for between 10 percent and 30 percent of global GDP.
While green finance investments can have positive impacts, it is important to remember that these investments require significant adjustments to the world economy. Failure to consider the wider impact of these investments can result in negative consequences for the environment. Batteries are an essential part of a net-zero society and will be required for many uses, including electric vehicles. By 2050, electric vehicles are estimated to represent a US$46 trillion market. This huge growth will accelerate the demand for raw materials, including batteries.
Geopolitics
The geopolitics of a net zero world are difficult to predict, but it will require unprecedented global cooperation. In addition to requiring new technologies and efficiencies, the transition to net zero will create winners and losers. While some of the great powers are well positioned to benefit from a net zero global economy, others are likely to end up being worse off. Regardless of who wins, the transition will bring profound changes to the relationship between the great powers.
The geopolitics of fossil-fuel energy have dominated international affairs for over two centuries. In 1839, Britain’s deployment of coal-fired steam ships in the First Opium War transformed western Europe-China relations. Similarly, in the twentieth century, the US rejected the Kyoto Protocol, which it deemed to be detrimental to its economy. Meanwhile, Germany’s coalition government, formed in 1998, shifted its economy away from fossil-fuel-based energy and into renewable energy, deepening its dependence on Russian gas.
The geopolitics of global climate change are complicated. Rich countries have pledged $100 billion to developing countries for clean energy investment, but that amount is a rounding error compared to what these countries need to reach net zero by 2050. The failure of rich countries to meet their obligations will exacerbate geopolitical tensions in the near future.
The transition to clean energy will transform geopolitics. In addition to mitigating climate change, it will also reduce tensions over energy resources. Ultimately, the winners of the clean energy revolution will be determined by their ability to innovate. There are four ways that countries with innovative technologies will dominate the global clean energy transition.
The transition to net zero is a major challenge, but it presents boundless opportunities. By 2050, it will require US$60 trillion in capital investments. These investments will be in low-carbon technologies, infrastructure, and mining commodities. It will also require a shift in capital allocation.
Changing geopolitical dynamics will require policymakers to address the global decarbonization challenges. They must ensure that this transition goes hand in hand with robust bilateral relations. A robust, climate-informed foreign policy should recognize shifting flows of power and money, as well as the changing landscape of diplomatic relations and strategic resources. By working together, countries can develop a stable net zero transition process.
Carbon offsets as last resort
Many people are beginning to question the role of carbon offsets in a plan to achieve a net-zero carbon footprint. While offsets are a valuable part of any net-zero strategy, they can also have detrimental unintended impacts. For this reason, it is vital to choose offsets wisely. First of all, companies should prioritize reducing their own emissions before they consider offsets. Then they should ensure the integrity of the carbon offsets they use. Additionally, they should support the development of nature-based offsets.
Voluntary markets require more legwork, but they offer a wide range of possibilities. A Washington-based nonprofit, Verra, offers offset certifications. These credits are unique and issued to specific projects. They include renewable energy, forest conservation, and transportation efficiency improvements.
While some critics argue that offsets are nothing more than “greenwashing,” the process allows buyers to pay others to take climate-friendly actions. The downside is that offsets often do not represent additional GHG reductions and do not consider other important environmental goals. To truly become net-zero, offsets must not only reduce emissions, but also address other important issues like access to water, waste management, and biodiversity management. However, the use of “high-quality” carbon offsets is essential to the long-term transition to net-zero.
Another downside to using carbon offsets is that they are not as obvious as they once were. Older projects aren’t always as obvious as newer ones, and there is always a risk of purchasing offsets that are no longer available. Fortunately, there are initiatives to guide companies in choosing offsets that are truly worthwhile for them.
Carbon offsets are an important part of the global net-zero movement, but there are many concerns and questions about them. Some companies are even beginning to question whether or not they should include offsets as a part of their long-term targets. For others, offsets are a legitimate piece of the net-zero puzzle.
Some companies are hesitant to use carbon offsets, as they can be costly. But others are willing to invest in the market. For example, the Cool Effect offsets company, which sells voluntary carbon credits for $3 to $13, restores peat bogs in Indonesia and provides microfinance to 400 local residents. This offset project has a detailed validation report, which is 67 pages long. The company also coordinates site visits for prospective buyers.
