Since 1850, global CO2 emissions have increased 186 times, reaching over 36,500 megatons in 2019… the global atmospheric CO2 concentration reached an all-time high…and the last five years have been the hottest on record.

There’s a gap between today’s path and the changes that need to happen to limit the increase in global temperatures. Reducing the amount of fossil fuels used is critical to closing this gap.

This is Energy Transition, Unpacked.

With more urgency around climate change, conversations are turning to Energy Transition. This happens by rapidly increasing the use of renewable energy to replace or offset the use of fossil fuels.

In 2015, the impact of carbon emissions prompted governments to join the Paris Agreement. Since then, it has driven countries to embed sustainability into their economies. The overall goal of the Agreement is to limit the increase of the average global temperature to less than two degrees Celsius above pre-industrial levels… ideally 1.5 degrees Celsius. To do it, the world needs to achieve net-zero carbon emissions by 2050.

And in 2021, business leaders and policymakers came together at the United Nations Climate Change Conference to advance the transition to a low-carbon economy. Here, forty countries and the EU agreed on a plan to speed up affordable and clean technology. The goal is to achieve breakthrough innovation across power, transportation, steel, hydrogen, and agriculture – all by 2030.

Rapid decarbonization also requires changing how energy is produced and consumed. While the oil and gas industry receives a lot of negative public sentiment, many companies are making changes like building new divisions that develop wind and solar energy.

And more than 100 city and state governments and major car companies signed the “Glasgow Declaration on Zero-Emission Cars and Vans” pledging to end the sale of internal combustion engines by 2035 in leading markets – and by 2040 worldwide.

Industries are also convening to accelerate decarbonization. For example, the Net-Zero Banking Alliance, formed in 2021, is the commitment of banks worldwide to align their lending and investment portfolio with net-zero emissions by 2050.

Energy Transition is about all industries adopting low carbon solutions. These include renewable energy, clean transportation vehicles, battery storage to hold energy from the sun or wind, biofuel, and more.

There are, however, challenges to Energy Transition. Supply of clean fuels is low. And solar and wind power aren’t available 24 hours a day. There’s also a lack of battery storage. And we’re currently unable to produce enough clean energy to make an impact on carbon neutrality. Plus, clean energy production and storage can be very costly.

Another common misperception is that Energy Transition means eliminating fossil fuels. But today’s technology can’t support that, it’s likely that the world will still use fossil fuels in 2050. That’s why the key to addressing climate change is about the dramatic reduction of fossil fuels, and Carbon Capture & Storage has an important role to play in this. CCS involves taking C02 from power stations or industrial sites and turning it into liquid that’s injected underground to avoid entering the atmosphere.

And all of these solutions require capital for further research and development. To reach net-zero by 2050, about 45% of emissions savings would come from technology that isn’t available yet.

The path to net-zero may have some roadblocks, but with the right policies in place, we can get there.