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“Peak emissions” prove elusive

23/03/2018
Climate change
Oil & Gas
Energy

Key Takeaways

  • After three flat years, CO2 emissions from energy hit new peak
  • Demand for fossil-fuel is increasing
  • Non-government parties will set agenda for action

Energy-based carbon-dioxide emissions reached a new high in 2017, according to the International Energy Association’s ‘Global Energy & CO2 Status Report’. Energy discharges, which account for around three-fifths of global greenhouse-gas emissions, had remained broadly flat since 2014 but rose 1.4% last year.

So the hope that ‘peak emissions’ had been achieved in recent years has proved false.

In our view, as the impacts of climate-change become clearer and the jaws of the ‘emissions gap’ widen slightly, the tension will only increase between the adequacy of countries’ policies and pledges, and those required to limit warming to 2°C, as demanded by the Paris Agreement on climate change.

According to the International Energy Association, demand for fossil fuels increased, driven by coal-fired power generation, oil in transport and petrochemicals, plus demand for gas resulting from coal to gas switching.

Renewable power grew fastest of all energy sources, comprising a quarter of energy demand growth as well as a quarter of electricity generation. However, the resultant emissions rise outweighed efforts from decarbonisation and energy efficiency, where annual gains were the weakest since 2011 because of slower interventions from new policy.

Many countries are in the midst of preparing the ‘mid-century, long-term low greenhouse-gas emissions development strategies’ that are due by 2020. However the task of balancing appropriate levels of climate ambition over increasingly urgent timeframes is not easy.

We think governments will face even stronger calls to raise ambition levels and enact tougher policies more quickly as more non-state actors, including cities, provinces, business and civil society, step up their climate action.

Meanwhile, the “global peaking of greenhouse-gas emissions as soon as possible” demanded by the 197 parties that adopted the agreement negotiated in Paris in December 2015 remains elusive, even as renewables penetration accelerates.

 

By Wai-Shin Chan

Head Climate Change Centre of Excellence

HSBC Global Research