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In the reference scenario, global emissions are expected to peak during this decade, then decline to 2017 levels by 2030, and temperatures rise by 3°C by 2100. According to the JRC’s modeling exercise, large-scale investments in decarbonization will be needed during this decade if we are to continue to meet the 1.5°C target.
As a result, investment in the energy sector will need to increase by 70% over this decade, reaching more than $3 trillion by 2030, energy efficiency will double, and renewable energy deployment will decline in a 1.5°C scenario. It is shown that it will reach 11TW by 2030. Expanding investment in clean technologies will offset declines in fossil fuel investment and increase demand for investment across different sectors of the economy, such as the construction and manufacturing sectors. This requires a larger workforce, both in direct jobs and across the value chain.
The findings, published in the report World Energy and Climate Outlook 2023, show that the energy sector’s investment share of global GDP in the future will be about the same as it is today, and the global economy will bear the burden of decarbonization. It shows that you can handle it.
The report explores how investments in energy production, conversion, supply and demand and how they need to pick up the pace over this decade to align the global emissions trajectory with a path compatible with 1.5°C. is being considered. The impact on employment is also becoming clearer.
Energy supply: rapid growth in investment remains manageable
Although the upfront investment for many low-emission technologies is higher than their high-emission technology competitors, the total lifetime cost, including running costs, is often lower due to lower operating costs.
According to the report, annual spending on energy production and supply equipment has increased by 70% over the past decade, nearly doubling from $2 trillion in 2022 to $3.8 trillion by 2045, with a particular focus on clean energy. Investment in power generation has increased rapidly over the past 10 years. .
However, investment as a share of global GDP remains at the historical average of 1.4% over the projection period of the 1.5°C scenario, suggesting that fiscal burdens are manageable. Reflecting the rapid growth in investment over the past decade, the share of global GDP spent on energy supply will increase through 2030, but then stabilize, decline, and be lower than today by 2050 .
clean energy technology
Annual global investment in clean energy technologies will increase sixfold from 2022 to 2030 under a 1.5°C scenario, rising from $1 trillion today to $5.7 trillion in 2030. Annual investment in electric vehicle batteries will grow 14 times by 2030, making it the single largest investment. in clean technology. This is due to the fact that by 2030 deployment will increase 29 times and the cost of batteries will decrease by 60% by 2030.
Annual investments in clean technologies for electricity production will double from 2022 to 2030. Annual new generation of offshore and onshore wind power will increase by a factor of 8 and 2, while unit costs will decrease by 16% and 20%, respectively. Total installed solar capacity will increase by 270%, but this will be offset by a 35% decrease in unit costs.
Investments in hydrogen and hydrogen-derived fuels (e-fuels and ammonia) will account for around a quarter of total clean technology investments by 2050. Despite their small role in total final energy consumption, they are crucial for the decarbonization of certain sectors such as aviation and shipping. , replacement of gray hydrogen in steel production, and fertilizer production.
Impact on supply chain and employment
Increased investment will go beyond realizing the energy transition and its environmental and climate benefits. Increased investment in clean technologies will offset declines in fossil fuel investment and boost investment demand across various sectors of the economy, including the construction and manufacturing sectors.
Changes in investments in different power technologies affect the jobs required to deliver the investments, known as indirect employment. Overall, the number of indirect jobs created by investments in power technology through renewable energy expansion is increasing, although these indirect jobs in the fossil fuel sector will decline over time. From 2020 to 2050, there will be a clear shift of indirect employment from the fossil fuel sector to the renewable energy sector.
Investments made by the power generation sector indirectly lead to employment, mainly in the sectors related to electrical products, other equipment products, construction, market services and land transport. When it comes to investments by the power sector, construction and other equipment products are the largest sector serving investment needs.
In the 1.5°C scenario, a total of 590,000 jobs will be created worldwide in the construction of the power sector by 2050. In addition, there are over 800,000 jobs in the “Other Equipment” sector, which produces power generation equipment.
Related Links
Global Energy and Climate Outlook 2023 – Investment needs in a decarbonized world
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