COP27: The transition challenge
The shift from fossil fuels towards a new low-carbon economy
The Paris agreement at COP21 was a landmark agreement in the fight against climate change, with countries agreeing to limit global warming to well below 2 degrees, with a further ambition to limit to 1.5 degrees. Now six COPs and seven years later, the urgency to transition the global economy, and the rate of decarbonisation required has increased. The challenge and goal remain.
Recent challenges, such as the war in Ukraine, and the subsequent impact this has had on energy supply chains within Europe, have impeded collective efforts towards net zero. With access to gas limited and possible power cuts this winter, some countries have had to contemplate alternatives for energy such as turning on old coal powerplants. A clear step in the wrong direction on our climate journey.
However, during this period we have also seen falling costs for renewable energy generation and greater businesses cases for energy efficiency investment. Here in the UK, renewable energy (especially wind generation) offers not just cheaper and cleaner energy sources but offers security of supply and greater energy reliance on domestic sources.
Recent comments from the UN warn the world’s climate pledges are still not sufficient enough to meet the 1.5-degree goal, and with the host country of COP27, Egypt’s foreign minister saying the goal is ‘more fragile’ than ever, its clear urgent action is required.
The Glasgow Climate Pact, announced last year, was an unprecedented move towards a more ambitious response to our climate challenge. The Pact called on countries to revisit and strengthen the climate pledges by the end of 2022, including the phasing out of coal. While some felt that the language around emission cuts was not strong enough, this document was largely welcomed by delegates and others alike. Unfortunately, since COP26 in Glasgow last year, only 29 out of 194 countries have come forward with tightened national plans.
It is with this in mind that world leaders will meet this week to discuss how we can shift the dial and transition towards renewable energy. As 2022 draws to a close, we can hope countries will continue to revisit and reaffirm their commitments to keep the 1.5-degree target alive and possible.
What does this transition look like here in the UK?
A just transition into renewable energy and a low-carbon economy means greening the UK economy in a way that is fair and inclusive, creating work opportunities and leaving no-one behind.
The UK government has set legally binding carbon reduction targets. The Climate Change Act commits the UK government by law to reducing greenhouse gas emissions by 100% of 1990 levels (net zero) by 2050. Furthermore, the act also requires the setting of five-year carbon budgets – the latest being to achieve a reduction of 78% (compared to 1990 levels) by 2037.
To achieve these targets, a move to low carbon and renewable energy sources will be required. This is already well under way. The UK has established itself as a world leader in offshore wind, with more installed capacity than any other country- and more on its way. Onshore and offshore wind generated 23% of UK electricity in 20211, with capacity having grown by two thirds in the last five years. The UK’s government has strong ambitions for its deployment of wind power, with a target of 50GW peak of offshore installed capacity by 2030, supporting 90,000 jobs. 5GW of this is planned to be floating offshore wind – a technology that allows much greater deployment of wind generation here in the UK and globally.
The UK is fortunate that we have a huge amount of talent and specialised skills to support the transition, and these businesses have substantial opportunity for growth going forwards, training and upskilling their employees to meet this challenge. Many of these companies are also supporting other countries to develop their own wind energy assets.
Recently, Close Brothers supported High Speed Transfers who operate innovative crew transfer vessels, deploying engineering and maintenance crews safely on to offshore wind farms in the North Sea, often in challenging weather conditions. With the ability to transfer 26 personnel and equipment at one time, these modern vessels were developed in cooperation with the offshore wind industry and provide an efficient and timely service to ensure offshore wind farms can be constructed and then remain online and reliably providing low-carbon electricity to the UK grid.
And what could/ should SMEs be looking out for during COP27?
SMEs in all sectors are facing high energy costs, at a time when many others costs to operate are rising too. The solutions identified as necessary for a low carbon economy offer attractive opportunities for many SMEs – from implementing energy efficiency projects through to investment in their own generation systems such as roof-top solar installations.
In our next articles during COP27 fortnight, we will explore some of the implications of this move to renewable energy in the UK – how it is changing our surface transport, heating solutions and our electricity grid infrastructure.