“The possibility of a zero-carbon economy is within our grasp but we must have the determination to achieve it,” said Lord Adair Turner, chair of the Energy Transitions Commission (ETC).

Lord Adair Turner, a sustainability champion, shared his vision for how the transition to a low-carbon world can be achieved, at our Senior Management Conference in Geneva. He gave us compelling insights on how the future will develop.

“It is absolutely possible to build a zero-carbon economy at minimal cost to the global economy and create numerous opportunities as a result,” he said. “But making the transition will require real urgency from policy-makers, from business leaders and from investors and financiers.”

At present, energy consumption per capita varies significantly around the world. In order to have a reasonable standard of living, people possibly need to consume about 80 gigajoules of energy per annum, the equivalent to 13 barrel of oil. However, America's average usage per capita stands at about 290 gigajoules per year while the European Union's is about 130. On the other hand, each year India only consumes about 28 gigajoules per capita.

In the last decade, the price of renewable energy from solar photovoltaics and wind has dropped dramatically. Favoured geographies such as northern Chile, western China, or parts of Mexico have created very low solar energy prices. This is a game-changer for the transition to a low carbon economy. “The full cost of zero carbon electricity will fall below the cost of fossil fuel generation in most locations within 10 to 15 years,” declared Lord Turner.

Every day, the sun radiates about 8,000 times more energy than the entire human race consumes. “Thanks to cost reductions in lithium-ion batteries and other forms of energy storage, we can make far more effective use of this abundant source of energy, solving the problems of intermittency,” he predicted.

Heavy industries such as cement, steel, trucking, chemicals and aviation are among prime contributors to climate change. These sectors collectively contribute to almost a third of global CO₂ emissions. “The ETC estimates that recycling and regeneration could cut emissions from these sectors by 40% by 2050”, revealed Lord Turner. He also set out the new production technologies which could eliminate the remaining 60%.
 

“One of the things that we should be looking at in the industrial industry is how we can recycle much more so that we don't need to produce so much new raw steel, for instance,” he mused. The ETC indicates that full decarbonisation is feasible with existing technologies such as electricity, biomass, carbon capture and hydrogen. This transition would cost the global economy less than 0.5% of GDP by 2050.

How would this affect consumers? It would mean, for instance, that the cost of a new car would only go up by 1% if we switch to green steel; low-carbon plastics would add one penny to the price of a fizzy drink and replacing jet fuel with biofuels would add approximately 20% to the cost of air travel.

There are significant opportunities for investors as a result - from green electricity consumption right through to battery and hydrogen technology, concluded Lord Turner. Nevertheless, this will need to be balanced with divesting from fossil fuel sectors where coal is expected to go into a rapid decline, particularly in developed economies, by around 2030.