The delays in decarbonisation will make us exceed 1.5 degrees already in 2027

From Wood MacKenzie, scenario analysis on the risks of delays in decarbonisation

Slowing the pace of transition for the next five years can take us straight to a global temperature rise of 3 degrees and cut by 55% the investment needed to stay on the right path for the 1,5°C. A scenario that can become more and more real this year, between the rising tide of climate skepticism and elections with an uncertain outcome in countries that contribute more to greenhouse gas emissions, including Europe and the United States. This is supported by an analysis by Wood MacKenzie on the risks associated with delays in decarbonisation.

“With half the world’s population going to the polls in 2024, the political reality and climate scepticism in major emitting countries, such as the United States and Europe, could reduce support for transition while voters seek economic security and price stability,” says Prakash Sharma, author of the energy transition consulting firm’s analysis.

How much do delays in decarbonisation cost us?

Curbing now, even for the next electoral cycle alone, can have significant consequences for the coming decades. According to Wood MacKenzie, a delay in decarbonisation for the next 5 years can bring down average investment levels to $1.7 trillion a year. That is less than half the volume that should be mobilized in the scenario that allows to reach zero net emissions by mid-century. Overall, investments could be limited to just $48 trillion instead of the $75 trillion needed.

The first Global Stocktake – the assessment of progress to comply with the Paris Agreement approved at the Cop28 in Dubai last year – has clarified that no country, for the moment, is on the right path to net zero. In addition, some countries are already weakening the 2030 targets. Including the EU, where opposition to some key Green Deal measures has become stronger and stronger over the past 2 years. While on the other side of the Atlantic, the possible return of Donald Trump to the White House could bring new delays in decarbonisation, re-proposing the breaking already seen in 2016-2020.

Carbon budget for 1.5°C spent already in 2027

In this scenario, Wood MacKenzie calculates, global greenhouse gas emissions would peak only in 2032, while already in 2027 we will have consumed all the carbon budget that we have left to not exceed 1.5 degrees. A forecast in line with many independent studies published in the last year.

The peak of oil would arrive only in 2033 and 6 million barrels per day more than in the net zero scenario, mainly due to a slowdown in the spread of EVs outside China. The peak of gas would be in 2045 with 100 billion m3 more. While coal would drop very slowly, with a trajectory 3% higher than in a transition scenario reaching zero net emissions in 2050.

Delays in decarbonisation would have the greatest impact on the penetration of renewables. Even if in the long term they would remain the first source of energy, less investment would now result in new bottlenecks due to a power grid that is not flexible enough. Cascading would also slow down renewable hydrogen and CO2 capture and storage technology would play an increasingly central role. With the result of leaving wider margins for gas growth in the world energy mix.