Net zero transition for $7 trillion

Source– The post is based on the article “Net zero transition for $7 trillion” published in the Business Standard on 9th December 2022.

Syllabus: GS3- Environment

Relevance– Issues related to climate change and global warming

News– The article explains the efforts put by various sectors to achieve the goal of net zero emissions by 2050.

What is contained in the BloombergNEF report?

BloombergNEF modelled a path to global net zero by 2050. It found that annual investments need to jump to $7 trillion to limit warming to 1.77 degrees Celsius above the pre-Industrial Revolution levels.

Electric vehicles and low-carbon power present the biggest investment opportunities, followed by power grids. Money is also needed to flow to carbon capture and storage, advanced nuclear technologies and hydrogen.

Demand for lithium in 2050 is predicted to be around 17.5 times the total demand in 2020.

What is the case of solar manufacturing?

India’s decarbonisation journey depends on solar power. Local panel manufacturing received another boost with the government’s recent approval for the second tranche of subsidies worth Rs 1,950 crore. BNEF sees the possibility of an oversupply of modules if all planned production facilities come online.

The US is on its own journey of incentivising local manufacturing of solar panels. Other countries such as Brazil are also in the same league.

The case for supporting a local supply chain of panels is stronger in countries that have high annual installations. Seven countries are in the 5,000 megawatts or above bracket this year. Another 10 are added if the cut-off is 2,000 MW.

What is the case of electric vehicles?

Electric vehicles are accelerating towards an era of super-charged growth. The world’s two largest car markets will be in the lead. These are China and the US.

Every fourth car sold in the US will be electric in the next three years. China and several European countries are already seeing EVs account for around 25% of new car sales.

As many as 66 national and regional governments are committed to selling only EVs and completely phasing out conventional internal combustion engine vehicles. Another set of countries has committed to accelerate the transition to 100 per cent clean cars by signing the Zero Emission Vehicles Declaration, including India and Kenya.

Two- and three-wheelers lead the vehicle electrification wave in India. In the first nine months of this year, 44 electric two-wheelers were launched with an average range of 117 kms. Start-ups continue to be the main players in this segment.

Passenger EV launches in 2022 have centred on premium segments. This is expected to continue in the near term until automakers can offer an affordable small electric car in the super-competitive market.

What is the case of electric aviation?

The electric aviation industry is still at an early stage. There has been a recent surge in orders from aircraft operators for small battery-electric or hybrid-electric machines. According to BNEF, close to 1,000 electric aircraft have been ordered from various manufacturers.

Developers aim to make their aircraft commercially available by 2030.However, the commercial launch of such aircraft needs to overcome technical hurdles and complete the lengthy and costly process of type certification.

Leading developers include Heart Aerospace and Aviation. No electric aircraft are currently commercially available except for Pipistrel’s Velis Electro.