There’s a growing divergence between EU targets and national plans, and electrification is not happening quickly. Are voters turning their backs on the EU’s 2030 climate objectives? Year-to-date natural gas consumption is 3.1% down, to 195.6 bcm from 201.9 bcm in 2023. Milder weather has reduced household consumption. In general, the trend is downwards.
Europe needs to sharpen its geopolitical chess game. It risks being outplayed by the US and China on energy and innovation. Following rising voter discontent in Europe over the economic impact of the shift to ‘net zero’, the OECD urges governments to cushion the green shift for low-skilled workers.
The FT says Europe needs a bolder plan for capital markets. The green transition requires an additional €620 bln each year to 2030, with another €125 bln a year needed for digital transformation, and even more for defense. The EU needs to double investment to meet its climate goals. But with a swing to the right following the June elections, that will be a challenge.
US
In the US, a new document “GOP Platform”, describing a likely Trump policy, calls for the US to be energy “dominant” and to “drill, baby, drill” and end “crippling restrictions” on oil and gas production. There is no mention of climate change and it calls for “terminating the Socialist Green New Deal”. Depending on the outcome of the US presidential elections in November, the greatest problem could be uncertainty deterring long-term climate change planning and investments.
In a major change, a ruling by the US Supreme Court limits the power of federal government to regulate environmental, energy issues.
China
China is the world’s second-largest economy in nominal terms. But global ranking puts it at 69th by GDP per person. So, imagine what China’s energy demand would be should its GDP per person double. And for that matter what would India’s be? China is rolling out huge investments, over $800 bln, to upgrade its transmission system to support transition to green energy as the shift from coal piles pressure on its creaking grid.
Climate
With the 1.5C limit breached for 12 months in a row, the world is in line for the hottest year so far. Climate change is pushing up food prices and is worrying central banks. The latest Energy Institute (EI) report from the 2023 ‘Statistical Review of World Energy’ shows global primary energy demand increased by 2% in 2023, higher than the 1.4% average during the previous ten years. Even though renewables provided 44% of this growth, fossil fuels provided the remainder.
But the contrast between developed and developing countries is stark. In 2023, primary energy demand actually declined by more than 1.5% in OECD countries, but increased by a staggering 4.3% in non-OECD countries, with fossil fuels providing close to 80% of this growth.
Clean tech investment is set to hit $2 trln in 2024, but this is not enough to keep pace with rising energy demand. Spending is still at less than half of level needed by the early 2030s to achieve net zero targets.
In the U.K., the new government wants to make the country a ‘clean energy superpower’, but can it? Can it restore private sector confidence in clean energy policy? And can it meet its 2030 goal to decarbonise power? We should expect U-turns.
According to the IEA, countries’ current Nationally Determined Contributions, or NDCS, under the Paris Agreement deliver only 12% of what’s needed by 2030 to triple renewables capacity. Germany, Italy and ten other EU countries, including Cyprus, are not on track to meet their 2030 climate targets, costing them billions of euros in carbon credits.
In a first, Germany has bought more than 250,000 tons of “green” ammonia from Egypt, to be produced in the coming years using wind and solar energy. But Germany’s transition from coal to renewables has some ambiguous aspects, including the construction of new mines to produce lignite and hard coal.
Germany’s de-industrialisation continues unabated. Industrial production fell by 2.5% in May to a level last seen in 2010. Hydropower represents nearly half the world’s renewable energy generation. Electricity interconnections between countries become absolutely necessary as the uptake of renewables increases, to help with intermittency and energy demand fluctuations.
According to the IEA, electric vehicles are only expected to account for 7% of light vehicles by 2030, 12% by 2035 and 17% by 2040. AI will affect almost 40% of jobs around the world, replacing some and complementing others, according to the IMF’s new AI Preparedness Index.
In Greece, Energean has applied for a $530 mln carbon storage licence, to develop a 3 mln tonne per annum storage facility at Prinos. Carbon Pricing annual receipts are almost $100 bln globally and rising. But where is it going? Most of it is not funding a fair transition and redistribution of costs from polluters to lower-carbon energy or to more vulnerable households.
World CO2 emissions have increased at twice the rate so far in 2024 as in 2022 or 2023. The EIA expects world CO2 emissions to increase 5.3 bln metric tons (14%) by 2050, with Africa-Middle East to increase 40%, Europe and Eurasia 7%, Americas to decrease 5% and Asia-Pacific to increase 20% and to account for 55% of total emissions by 2050.
With low-emissions sources now providing over half of their electricity generation, advanced economies saw a record decline in their CO2 emissions in 2023 even as their GDP grew. But even though that is positive, unfortunately they are not representative of the rest of the world, where energy demand is growing and needs all the energy it can get, leading to increasing emissions.
And some conclusions from the Athens Energy Forum 2024: Climate policies have social and economic impacts that must be addressed seriously. Such policies must demonstrate clearly that they will lead to social and economic benefits, as the results of June’s European elections have shown.
Dr Charles Ellinas is Senior Fellow at the Global Energy Center, Atlantic Council
