An original deep-dive article by Longrun Capital
As the saying goes, the Stone Age did not end because we ran out of stones; we transitioned to better solutions. The same opportunity lies before us with energy efficiency and clean energy. - Steven Chu, Nobel Laureate in Physics, 1997
Greenhouse gas (GHG) emissions are the driver of the climate crisis, responsible for changes in water balance, biodiversity loss, and negative impacts on human health. The past few years have provided many examples of how climate risks are increasing along with global temperatures, floods, heatwaves, and storms, leading to billions of dollars in damages and countless lives lost around the world [1]. Societal development, improved living standards, and achieving Sustainable Development Goal (SDG) 7 all depend on access to a sustainable, stable, and affordable electricity supply. With the electrification of industry and more nations experiencing prosperity, it is expected that the global demand for electricity will continue to grow. Different scenarios suggest that by 2050 we will be using between 75% and 150% more than the 25 000 TW used today [2, 3]. To meet the targets required for limiting global warming as much as possible, this increase in capacity must come from carbon- and GHG-neutral solutions, while existing capacity must be rapidly transitioned away from fossil-fuel sources. (Fig. 1)
Figure 1: Global CO2 emissions by source and other milestones in the electricity sector from the IEA Net-Zero Scenario for 2020-2050. By 2040 the progress to net-zero will enable other sectors to cut emissions through electrification. TWh = terawatt‐hour; CCUS = carbon capture, utilization, and storage. Figure and text from IEA WEO Report 2022, used under CC license BY 4.0.
Globally, over 60% of electricity is produced through the consumption of coal, oil, and fossil gas [2]. By contrast, the EU's average amount of electricity produced from fossil sources comes in at >35%, though the range of EU countries (excluding Sweden) falls between 8 and 88%.
Figure 2: Global electricity production by source. From Our World in Data, CC BY 4.0.