- The economic setback from COVID-19 reset the baseline for power sector emissions by about 2.5 years, according to a new report from BloombergNEF unveiled on Friday.
- "One very small silver lining, maybe coronavirus buys us a couple of extra years to reduce emissions," Seb Henbest, BNEF chief economist and lead author of the New Energy Outlook, said during a webinar sponsored by the Center for Strategic & International Studies. "Even as we return to growth ... we never go back to the levels of emissions that we had before," according to the report's modeling based on the costs and advancements in available technology.
- BNEF sees a $14 trillion global investment in distribution and transmission through 2050 in an economic transition scenario, a model that does not take into account long-term commitments and policies for decarbonization. As part of that scenario, BNEF sees a total investment of $15 trillion for power generation, including an increasing amount in energy storage technology.
New clean energy technologies with increasingly cheaper costs will replace an aggregate of the residual fleet of technology which has different operating characteristics, Henbest said, paving the way for a different demand shape.
As the world transitions away from coal energy and other large baseload power plants to smaller generators and more distributed models, the demand curve will become "more choppy," and volatile, he added. This distinction will not be addressed by energy storage alone, Henbest said, but will require coal and natural gas for ramping.
The gas sector is not expected to fully recover from the COVID shock to the economy, although the resource continues to play an important role. The generators most affected by COVID are the "coal and gas plants that have to pay for their fuel in a declining demand environment," Henbest said. However, gas capacity will continue "to rise across the world and it does so because gas is the cheapest way of meeting those seasonal requirements of backing up wind and PV and batteries."
Beyond 2030, fossil fuel generation will consist of mostly peaker gas plants, running very low capacity factors for a few, highly variable hours of the year, he said. The cheap gas, at that point, "actually blocks deeper transition to renewables, and gas gets sort of stuck in the system."
Per BNEF's economic transition scenario, 56% of electricity generation by 2050 will be made up of wind and solar, and about 20% will be hydropower, nuclear and other clean energy, with fossil fuels dropping from over 60% of generation today to about 24% in 30 years.
BNEF's outlook report is "just one input" on the future of emissions, showing reductions on a gradual slope that keeps the world below two degrees of global warming by 2100, Henbest added.