The Industrial Adoption of Renewable Energy and its Sustainable Development

The growth of renewable energy production has been vital in the past decade, and a growing number of governments and companies are committing to meet net-zero targets. At the same time, energy demand continues to rise, and fossil fuel production has risen to meet that demand. The current share of primary energy from fossil fuels remains predominant and has dropped only slightly. For example, coal production in India and China alone has grown by 600 million tons since 2021, as growing energy needs in the two countries have led to an increase of 10 percent in China and nearly 30 percent in India. Indonesia, meanwhile, has produced an additional 260 million tons of coal in the past decade.

However, a major gap remains between renewables on one hand and fossil fuel production and consumption on the other—and the need for bold, decisive, and carefully considered climate action is stronger than ever. Despite the planned growth in renewables, the world is not on track to meet net-zero requirements. According to McKinsey’s Global Energy Perspective 2022, the current rate of renewable development would not be sufficient to maintain global warming with the worldwide targets set by the Paris Agreement adopted at COP21 in 2021.

Physical climate risk and its visible manifestations are also continuing to grow. Specifically, according to the sixth assessment report of the United Nations’ Intergovernmental Panel on Climate Change (IPCC), extrapolating current policies would lead to a median global warming of 2.4 C to 3.5 C by 2100 and limit global warming to 1.5 C beyond reach. To bridge this gap, annual solar and wind installed capacity would need to nearly triple, from approximately 180 gigawatts (GW) of average yearly installed capacity in 2016 – 2021 to more than 520 GW over the coming decade, with different accelerations required across global regions.

McKinsey research has defined five main archetypes of countries that face similar challenges and opportunities in the net-zero transition. While each country is different, these archetypes lend themselves to similar actions and priorities for a more orderly energy transition. This categorization of countries reveals that the burdens of the energy transition, and each region’s ability to meet the challenges of adaptation and mitigation, will not be evenly distributed. Moreover, global cooperation and coordinated collective action beyond current levels will be needed. For example, while significant progress has been made in mobilizing public and private financing for developing countries, OECD analysis indicates that the USD 100 billion target 2020 was likely not met. The five archetypes are classified according to key energy transition characteristics:

1. Affluent, energy-secure countries

2. Affluent, energy-exposed countries

3. Large, emissions-intensive economies

4. Developing, naturally endowed economies

5. Developing, at-risk economies

Wind and solar power potential vary across the globe. For example, Africa, Australia, and the Middle East have significant solar-generation opportunities, while North and South America and northern Europe have strong wind-power density. The shift toward renewables will likely favor naturally endowed countries that can build on their potential.

Net-Zero is building, and more than 90% 0f the global economy is covered by national net zero commitments.  Nevertheless, Accenture research indicates that the G2000 companies—an Accenture-developed list of the world’s top 2,000 public and private companies by revenue—with net zero commitments will miss their net zero targets based on current trends. The pace of emissions reduction needs to accelerate significantly. Accenture G2000 companies in every region appear to set clear and publicly visible net-zero targets. The overall sample saw a seven-percentage point increase. Almost all industries have seen the proportion of companies setting net-zero targets rise over the past year, and more carbon-intensive industries have seen these proportions grow the most.

Article by: Asst. Prof. Suwan Juntiwasarakij, Ph.D., Senior Editor & MEGA Tech