Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
10 November 1942
01 Year in Focus
For decades, countries have set climate goals that were not matched by policies even remotely adequate to the task. Now, under the impetus of war and of a newfound enthusiasm for industrial policy, the era of serious climate action appears to be at hand.
Some countries have made marked progress in weaning themselves off fossil fuels. In Europe, emissions from the electricity sector are expected to fall sharply this year. Worldwide, renewable energy is meeting 80 percent of new power demand, and we may be nearing a global peak in power emissions. A new bottleneck has cropped up, though: years-long delays for renewable projects trying to connect to the grid.
Electric vehicles are now climbing a rapid adoption curve in the world’s largest automotive markets. The looming problem will be producing enough vehicles to meet the demand. Shortages and high prices for critical battery minerals like lithium and cobalt raise big questions about securing additional supplies. Can we produce the new green minerals in a more ethical way than the old dirty minerals?
Sales of heat pumps, the critical technology for cutting emissions in buildings, have jumped by double digits for two years running. They are up as much as 50 percent in some European markets, and heat pumps are now outselling gas furnaces in the United States. But governments have made less headway encouraging other types of retrofits, and we are still a long way from a package of policies that will eliminate emissions in buildings.
At long last, we are seeing investment beginning to move into the transformation of industry. Hydrogen announcements are now coming fast and furious; indeed, far more projects have been announced for 2030 than the anticipated market for hydrogen would seem able to support. Even abundant, low-cost hydrogen will be limited in its potential uses. How much of the hydrogen hype actually makes sense, and where does the developing hydrogen economy leave us in decarbonising the rest of industry?
06 Land & Food
Big new commitments were made over the past year to saving the natural world. On the international stage, the most important was a global agreement to halt biodiversity loss and stop deforestation by 2030. Even more important, in the long run, might be binding law adopted in the European Union that seeks to put teeth into such efforts, prohibiting the importation of products of deforestation starting in 2025. The good news, however, was matched by a surfeit of bad: events over the past year created turmoil in the market for ‘offsets,’ projects designed to sequester carbon in forests or elsewhere.
07 Financing the Transition
Investment in the energy transition is rising rapidly. The flow of funds into clean energy is now 70 percent larger than investment in fossil fuels. But much of the increase has been driven by rising enthusiasm for electric cars, and in other sectors, particularly the clean-up of industry, investment is still lagging. We are far from the levels of investment we will need by 2030 to meet the goals of the Paris climate agreement.
08 Looking Ahead
The fate of the planet will be decided in developing countries, where most of the world’s emissions growth is occurring. They are at risk of being left behind in the energy transition. Interest rates for clean-energy projects in these countries are still two to three times higher than in developed economies, and urgent efforts are needed to correct the imbalance.