Wood Mackenzie’s latest analysis and preliminary outlook on energy demand shows the emissions goal implied by the current version of the Paris Agreement is likely to be missed.
The Paris Agreement comes into force on November 4 this year, imposing greenhouse gas emission limits on countries across the globe.
According to Wood Mackenzie’s study, developed countries have committed to emissions cuts they will be unable to make without additional efforts to decarbonise their economies. Such efforts include increased energy efficiency, greater focus on renewable energy and the trend towards electric vehicles.
Although developed economies have progressed in addressing greenhouse gases, a lot more needs to be done to boost renewable energy and increase efforts to lower emissions.
The Research Director for Global Trends at Wood Mackenzie, Paul McConnell argued that emerging markets should meet their Paris Agreement targets with relative ease, given the fact that these are not much of a constraint on development.
“Some emerging economies may choose to go further on emission constraints, particularly if there is any political ground to be gained by ‘climate leadership,” he added.
But NGOs and other external actors are certain to demand all parties do more to ensure the Paris Agreement meets its self-proclaimed goal of limiting global warming to 2 °C above pre-industrial levels.
“Whether more stringent targets emerge now or some years in the future, recent trends suggest continued pressure on emissions growth is a reliable bet,” McConnell said.
“Hydrocarbon fuel consumption is in the firing line, and energy sector impacts are being felt already, despite Paris Agreement targets not kicking in until the end of the decade,” he added.
Wood Mackenzie’s study shows a formalised global policy framework favouring low-carbon energy challenges the traditional business models in oil and gas production, coal extraction and power utilities in the longer run.
“Judging the pace of transition from old to new is among the big difficulties facing companies as they survey this emerging energy landscape,” McConnell said, adding that “companies will need to change, beginning with understanding their own carbon footprint, then developing strategies to adapt.”
The energy implications of China’s rapid evolution from an industrially-driven to consumer-led economy have been a defining feature of Wood Mackenzie’s analysis over recent years.
“Wood Mackenzie’s view is that coal consumption in China has peaked and is in terminal decline, as growth shifts to renewables, nuclear and gas. We expect China’s emission growth to increase slightly from the current sharp decline, but by 2030 GHG output will remain below peak levels of 2013. In intensity terms, China will deliver a 70 per cent cut versus the 2005 base year – significantly beyond its NDC commitment,” said the report.