By Dominic Goncalves, Senior Associate – Decarbonisation Solutions, at Cresco Group
Can switching to renewable energy solve climate change? More than 90% of global greenhouse gas (GHG) emissions are now covered under targets set by countries and corporations, after COP26 last year, and more than 700 of the world’s largest corporations have set Net Zero targets. ‘Net Zero’ will require us to address the emissions in everything we produce and everything we consume. Since fossil fuels are the largest form of emissions and since renewable energy is an effective way to largely address these emissions, governments and corporations have focussed on this as a silver bullet, setting bold goals for ‘100% renewables’ and ‘carbon neutral operations.’
However, based on current technology, these targets are currently not achievable economically, and this is sending managers and executives into a tailspin as they try to comply with lofty goals for which financially viable solutions have yet to be invented. While a significant focus has been on decarbonising electricity generation by switching from fossil fuels to renewables, and from conventional to electric vehicles powered by renewables, this is but one portion and not the full picture of what needs to be done.
Technical and financial analyses have confirmed that we can get to around 25-50% renewable penetration of an energy system, which is in fact cheaper than relying on fossil fuels, and 60% is achievable with batteries. However, beyond this threshold it starts to get terribly expensive – such oversizing of solar, wind and energy storage facilities is needed to reach 90-100% renewables production that this is neither practical nor viable with current technology.
In some cases, natural resources may allow for hydroelectric dams or hybrid solar CSP-PV plants to achieve very high penetrations of renewables. But hydroelectric projects – while good for emissions reduction – can have a negative impact on the environment and climate change mitigation, and can have a negative impact on ESG, as they often require the resettlement of local communities, while damaging local ecosystems.
As such, many corporates and governments with net zero roadmaps are patchy and vague when it comes to real solutions that would achieve this target. It is possible that new types of batteries and ‘long duration’ energy storage may become commercially available and affordable enough to be deployed en masse, and green hydrogen costs may plummet, resulting in low carbon back-up power for renewables. However, there is scepticism around how long it will take for these new technologies to be commercially available at scale and economically viable, not least due to recent rising supply chain costs and inflation.
As a consequence, engineers and financiers alike are beginning to embrace the notion that there must be more effective ways of mitigating carbon – while the technology to fully store and dispatch solar and wind – when the sun isn’t shining, or the wind isn’t blowing – is still being made commercially available. From a decarbonisation point of view, or from an affordable low carbon solution point of view, we are likely reaching the end of the road for a certain grouping of technologies and solutions and seeing the emergence of another – a transition from clean energy to climate tech and ‘nature-based’ solutions.
Nature-based carbon sinks
Climate technology and climate solutions focus on a wider aspect, looking at reducing emissions by using nature-based carbon sinks, developing regenerative agricultural projects, using digital technology such as software and Artificial Intelligence to reduce emissions. This would enable us to improve our management, production, and processes in such a way that we are able to “tread more lightly” on the planet.
Simply put, we need to plant trees. Rewilding, afforestation, reforestation, regenerative agriculture, bamboo farms, mangroves, and multipurpose coral reef facilitation – such projects have the potential to yield highly efficient carbon mitigation. Ultimately, such solutions could prove cheaper with a higher impact than other options, while boosting Environmental, Social and Governance ratings, and often creating sustainable jobs for local communities.
To date, ‘carbon offsets’ have picked up flak, because there have been a number of sketchy projects that have been developed, and the technology and methodology for effectively monitoring and validating the carbon mitigation has been in some cases difficult to prove. But carbon offsets are a business model to create a currency or value for (typically) nature-based or agriculturally based carbon mitigation projects, not the solution in itself. Corporates and governments have the opportunity to develop their own projects, sometimes using their land, with the objective of rehabilitating or restoring it, in addition to switching from fossil fuels to renewables.
Some climate solutions can thus address social, environmental and emissions challenges for organisations and by value-stacking these benefits, they can solve several challenges at once by linking these solutions.
Renewable energy is the first phase of the net zero journey and has in most cases been the first phase of global corporate response to climate change. But there are many other ways to mitigate carbon, with new technologies and solutions becoming available. So, as we reach higher levels of renewable energy installation, we also need to look at newer opportunities, and integrate these together with renewables.