Clean energy investment may hit $2 trillion a year by 2030: IEA

Wind turbines photographed off the coast of Wales. Clean energy investment could be on course to exceed $2 trillion per year by 2030, according to the International Energy Agency.

Ben Birchall | PA Images | Getty Images

Clean energy investment could be on course to exceed $2 trillion per year by 2030, an increase of over 50% compared to today, according to analysis from the International Energy Agency.

The projection is found within the Paris-based organization’s World Energy Outlook 2022, which was published on Thursday morning.

It’s based on the IEA’s Stated Policies Scenario, which factors in what it calls “the latest policy settings worldwide.”

Despite this increase, the IEA repeated its assertion that clean energy investment would still need to hit over $4 trillion by 2030 in its Net Zero Emissions by 2050 Scenario.

This, the IEA’s report said, highlighted “the need to attract new investors to the energy sector.”

The shadow of 2015’s Paris Agreement looms large over the IEA’s report.

The landmark accord aims to “limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.”

Cutting human-made carbon dioxide emissions to net-zero by 2050 is seen as crucial when it comes to meeting the 1.5 degrees Celsius target.

The newest edition of the World Energy Outlook comes at a time of significant uncertainty and volatility in global energy markets.

Read more about energy from CNBC Pro

According to Fatih Birol, the IEA’s executive director, the changes taking place appear to be seismic ones.

“Energy markets and policies have changed as a result of Russia’s invasion of Ukraine, not just for the time being, but for decades to come,” he said. “Even with today’s policy settings, the energy world is shifting dramatically before our eyes.”

Birol added, “Government responses around the world promise to make this a historic and definitive turning point towards a cleaner, more affordable and more secure energy system.”

Peak demand for coal, gas and oil?

In a statement accompanying the report’s release, the IEA said its Stated Policies Scenario had “global demand for every fossil fuel exhibiting a peak or plateau.”

Under this outlook, “coal use falls back within the next few years, natural gas demand reaches a plateau by the end of the decade, and rising sales of electric vehicles … mean that oil demand levels off in the mid-2030s before ebbing slightly to mid-century.”

The IEA’s statement also noted, however, that there was a huge amount of work to be done in order to keep global warming to 1.5 degrees Celsius.

Under its Stated Policies Scenario, fossil fuels’ share in the planet’s energy mix would be a little over 60% by the middle of this century.

“Global CO2 emissions fall back slowly from a high point of 37 billion tonnes per year to 32 billion tonnes by 2050,” it added.

“This would be associated with a rise of around 2.5 °C in global average temperatures by 2100, far from enough to avoid severe climate change impacts.”

The above echoes a separate report published by U.N. Climate Change this week.

In an announcement Wednesday, the U.N. said that “the combined climate pledges of 193 Parties under the Paris Agreement could put the world on track for around 2.5 degrees Celsius of warming by the end of the century.” 

U.N. Climate Change said its new report also showed that countries’ pledges, as they stand now, would see emissions jump by 10.6% by the year 2030, compared to levels in 2010.

The U.N.’s analysis comes ahead of next month’s COP27 climate change summit in Sharm el-Sheikh, Egypt.

Orsted to use more fossil fuels as energy crisis continues

Jens Auer | Moment | Getty Images

Energy firm Orsted is to continue or restart operations at three fossil fuel facilities after being ordered by Danish authorities to do so, as governments around Europe ready themselves for winter amid the energy crisis.

In a statement over the weekend, Orsted — whose biggest stakeholder is the Danish state — said the direction had been made “to ensure the security of the electricity supply in Denmark.”

Orsted said the order applied to “unit 3 at Esbjerg Power Station and unit 4 at Studstrup Power Station, which both use coal as their primary source of fuel, and unit 21 at Kyndby Peak Load Plant, which uses oil as fuel.”

Esbjerg Power Station had been slated for decommissioning on March 31, 2023, it added, while the other two units were already decommissioned.

Read more about energy from CNBC Pro

“In order to ensure the security of the electricity supply, the Danish authorities have today ordered us to continue as well as resume operations at some of our oil- and coal-fired power stations,” Mads Nipper, the Orsted CEO, said.

“We will, of course, comply with the Danish authorities’ order, and we’ll now begin preparing and maintaining the units as well as securing the staffing necessary to operate them,” Nipper added.

Orsted said all of the units concerned would need maintenance in order to get them ready for operation, while “highly specialised workers” would also have to be trained to operate the sites.

The company said it had been ordered to keep the three units running until June 30, 2024. Orsted, which is a major player in wind power, has set itself a target of being carbon neutral by the year 2025.

The news will dismay those opposed to the continued use of fossil fuels. Coal has a substantial effect on the environment, with Greenpeace describing it as “the dirtiest, most polluting way of producing energy.”

Elsewhere, the U.S. Energy Information Administration lists a range of emissions from coal combustion, including carbon dioxide, sulfur dioxide, particulates and nitrogen oxides.

“We still believe that we, as a society, must phase out the use of gas, oil, and coal as soon as possible, but we’re in the middle of a European energy crisis, and we will, of course, contribute to ensuring the electricity supply to the best of our ability,” Orsted’s Nipper said.

A few days before Orsted’s announcement, another big European energy firm, Germany’s RWE, said three of its lignite, or brown coal, units would “temporarily return to [the] electricity market to strengthen security of supply and save gas in power generation.”

RWE said each of the units had a 300 megawatt capacity. “Their deployment is initially limited until 30 June 2023,” it added.

The news about RWE and Orsted comes at a time when Europe is scrambling to shore up energy supplies as the war in Ukraine continues. Russia was the biggest supplier of both petroleum oils and natural gas to the EU last year, according to Eurostat.

It has significantly reduced flows of natural gas to Europe after Western nations imposed sanctions on the Kremlin as a result of its unprovoked invasion of Ukraine.

Last week, unexplained leaks affected both the Nord Stream 1 and 2 pipelines, major pieces of infrastructure built to funnel natural gas from Russia to Europe via the Baltic Sea.

—CNBC’s Holly Ellyatt contributed to this report

Electric vehicle (EV) sales set to hit an all-time high in 2022, IEA says

Tesla electric cars photographed in Germany on March 21, 2022. According to the International Energy Agency, electric vehicle sales are on course to hit an “all-time high” this year.

Sean Gallup | Getty Images News | Getty Images

Electric vehicle sales are on course to hit an all-time high this year, but more work is needed in other sectors to put the planet on course for net-zero emissions by 2050, according to the International Energy Agency.

In an announcement accompanying its Tracking Clean Energy Progress update, the IEA said there had been “encouraging signs of progress across a number of sectors” but cautioned that “stronger efforts” were required to put the world “on track to reach net zero emissions” by the middle of this century.

The TCEP, which is published yearly, looked at 55 parts of the energy system. Focusing on 2021, it analyzed these components’ progression when it came to hitting “key medium-term milestones by the end of this decade,” as laid out in the Paris-based organization’s net-zero pathway.

On the EV front, the IEA said global sales had doubled in 2021 to represent nearly 9% of the car market. Looking forward, 2022 was “expected to see another all-time high for electric vehicle sales, lifting them to 13% of total light duty vehicle sales globally.”

The IEA has previously stated that electric vehicle sales hit 6.6 million in 2021. In the first quarter of 2022, EV sales came to 2 million, a 75% increase compared to the first three months of 2021.

Read more about electric vehicles from CNBC Pro

The IEA said both EVs and lighting — where more than 50% of the worldwide market is now using LED tech — were “fully on track for their 2030 milestones” in its net-zero by 2050 scenario.

Despite the outlook for EVs, the IEA separately noted that they were “not yet a global phenomenon. Sales in developing and emerging countries have been slow due to higher purchase costs and a lack of charging infrastructure availability.”

Overall, the rest of the picture is a more challenging one. The IEA noted that 23 areas were “not on track” with a further 30 deemed as needing more effort.

“Areas not on track include improving the energy efficiency of building designs, developing clean and efficient district heating, phasing out coal-fired power generation, eliminating methane flaring, shifting aviation and shipping to cleaner fuels, and making cement, chemical and steel production cleaner,” the IEA said.

The shadow of 2015’s Paris Agreement looms large over the IEA’s report. Described by the United Nations as a “legally binding international treaty on climate change,” the accord aims to “limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.”

Cutting human-made carbon dioxide emissions to net-zero by 2050 is seen as crucial when it comes to meeting the 1.5 degrees Celsius target.

Read more about energy from CNBC Pro

In a statement issued Thursday the IEA’s executive director, Fatih Birol, appeared cautiously optimistic. “There are more signs than ever that the new global energy economy is advancing strongly,” he said.

“This reaffirms my belief that today’s global energy crisis can be a turning point towards a cleaner, more affordable and more secure energy system,” he added.

“But this new IEA analysis shows the need for greater and sustained efforts across a range of technologies and sectors to ensure the world can meet its energy and climate goals.”

The IEA’s report comes at a time when the debate and discussion about climate goals and the future of energy has become increasingly fierce.

This week, the U.N. secretary general said developed economies should impose an extra tax on the profits of fossil fuel firms, with the funds diverted to countries affected by climate change and households struggling with the cost-of-living crisis.

In a wide-ranging address to the U.N. General Assembly in New York, Antonio Guterres described the fossil fuel industry as “feasting on hundreds of billions of dollars in subsidies and windfall profits while households’ budgets shrink and our planet burns.”

Australian bank to scrap loans for new diesel and gasoline cars

Cars and buses in Sydney, Australia, on Monday, May 25, 2020. Authorities in the country are looking to set up a National Electric Vehicle Strategy.

Brendon Thorne | Bloomberg | Getty Images

An Australian bank plans to stop giving loans for new diesel and gasoline cars as the country tries to encourage the use of electric vehicles and catch up with other developed countries.

In a statement Friday, Bank Australia said it would scrap loans for new fossil fuel vehicles from 2025. Sasha Courville, its chief impact officer, said that date had been picked “because the change to electric vehicles needs to happen quickly.”

The bank, Courville added, believed this could happen “with the right supporting policies in place to bring a greater range of more affordable electric vehicles to Australia.”

While there will be no more loans for new combustion engine vehicles — including hybrids — from 2025, Bank Australia will continue to provide them for used ones.

“We’ll continue to offer loans for second-hand fossil fuel vehicles until there is a viable and thriving market for electric vehicles,” it said.

On that front, Friday also saw the Australian government provide information about plans to set up a National Electric Vehicle Strategy for the country, with a discussion paper on the matter due to be released for consultation.

Read more about electric vehicles from CNBC Pro

In an announcement, the government said Australia was “significantly behind the pack when it comes to electric vehicles.”

It added that, at just 2%, the country’s uptake of new low-emission vehicles was “nearly five times lower than the global average — national leadership is needed to ensure we don’t continue to be left behind.”

“In this context, we believe that now is the time to have an orderly and sensible discussion about whether vehicle fuel efficiency standards could help improve the supply of electric vehicles into the Australian market, to address the cost-of-living impacts of inefficient cars, and to reduce emissions from the transport sector.”

Customer-owned Bank Australia traces its roots back to 1957. According to its Statutory Financial Report for 2021, it said total assets had grown to 8.5 billion Australian dollars ($5.9 billion), with profit after tax coming in at 40.7 million Australian dollars.

It is not unique in its strategy toward vehicles powered using fossil fuels. In 2020, Denmark’s Merkur Cooperative Bank said it would halt financing for new diesel and gasoline cars.

All of this comes as major European economies are laying out plans to move away from road-based vehicles that use diesel and gasoline.

The U.K. wants to stop the sale of new diesel and gasoline cars and vans by 2030. It will require, from 2035, all new cars and vans to have zero-tailpipe emissions. The European Union — which the U.K. left on Jan. 31, 2020 — is pursuing similar targets.

According to the International Energy Agency, electric vehicle sales hit 6.6 million in 2021. In the first quarter of 2022, EV sales came to 2 million, a 75% increase compared to the first three months of 2021.

We’ll have to burn additional coal in the short term, CFO of RWE says

An excavator photographed at a lignite mine operated by RWE on April 8, 2022. RWE says it wants to be carbon neutral by 2040.

Alex Kraus | Bloomberg | Getty Images

The chief financial officer of German energy firm RWE told CNBC Thursday that it will burn more coal in the short term — but insists its plans to be carbon neutral in the future remain in place.

Michael Muller’s comments come as European countries scramble to shore up energy supplies, as the war in Ukraine continues.

Russia was the biggest supplier of both petroleum oils and natural gas to the EU last year, according to Eurostat. It has significantly reduced flows of natural gas to Europe after Western nations imposed sanctions on the Kremlin as a result of its unprovoked invasion of Ukraine.

Germany — Europe’s largest economy — has decided to recommission some of its coal-fired power plants in order to compensate for its lack of Russian gas.

“RWE is actively supporting the German government, or European governments, in managing the energy crisis,” Muller told CNBC’s Joumanna Bercetche. “So we’re also bringing back additional coal capacity to manage that situation.”

This plan will involve three of RWE’s lignite-fired power stations being brought back to the grid from the start of October.

Read more about energy from CNBC Pro

RWE says lignite, also known as brown coal and considered particularly bad for the environment, “remains a reliable partner to this day.” It adds that RWE Power — which focuses on lignite and nuclear power generation — extracts millions of metric tons of coal each year.

All of the above represents a hurdle for the Essen-headquartered business, which has said it wants to be carbon-neutral by the year 2040.

A fossil fuel, coal has a substantial effect on the environment and Greenpeace has described it as “the dirtiest, most polluting way of producing energy.” Coal combustion produces a slew of potentially dangerous emissions, including carbon dioxide, sulfur dioxide, particulates and nitrogen oxides.

“What is currently happening is … hopefully a short term issue where we need to find the security of supply,” RWE’s Müller said.

“And that’s why, just from a corporate citizen’s perspective, we feel it is our duty to support the German government in bringing back capacity in the short term — but to be very clear, it doesn’t change our strategy,” he added.

“So while [in the] short term we have to burn additional coal, it needs to be clear that there needs to be an acceleration of building out renewables so that we still meet … targets in the medium and long-term.”

On Thursday, RWE reported earnings for the first half of 2022, with adjusted net income coming in at 1.6 billion euros (around $1.66 billion), compared to 870 million euros in the first half of 2021.

The company said it had invested approximately 2 billion euros in expanding its green portfolio in the first half of 2022. “Total investments will come to more than 5 billion [euros] by the end of 2022,” it added.

Electricity generation from renewables was around 20% higher in this period compared to the first half of 2021, it said, citing improved wind conditions and increased capacity.

Norwegian oil giant Equinor to buy U.S.-based energy storage firm

Although it is involved in renewable energy projects, Equinor is a major producer of fossil fuels. The Norwegian state has a 67% holding in the company.

Hakon Mosvold Larsen | Afp | Getty Images

Norway’s Equinor is to acquire U.S.-based battery storage developer East Point Energy after signing an agreement to take a 100% stake in the company.

Equinor, a major producer of oil and gas, said Tuesday that Charlottesville-headquartered East Point Energy had a 4.1-gigawatt pipeline of “early to mid-stage battery storage projects focused on the US East Coast.”

According to Equinor, the transaction is slated for completion in the third quarter of 2022.

“Battery storage will play an important role in the energy transition as the world increases its share of intermittent renewable power,” Equinor said.

“Battery storage is key to enabling further penetration of renewables, can contribute to stabilizing power markets and improve the security of supply,” it added.

In Dec. 2021, the International Energy Agency said the world’s installed storage capacity was projected to jump by 56% over the next five years, hitting 270 GW by 2026.

Read more about energy from CNBC Pro

According to the IEA, the chief driver of this growth is “the increasing need for system flexibility and storage around the world to fully utilise and integrate larger shares of variable renewable energy … into power systems.”

The IEA says investment in battery storage grew by nearly 40% in 2020, reaching $5.5 billion.

Formerly known as Statoil, Equinor’s chief shareholder is the Norwegian state, which has a 67% holding in the company.

Its plans to acquire East Point Energy represent the company’s latest foray into the U.S. It already has substantial oil and gas operations in the country and is working on large-scale offshore wind projects.

In 2021, the IEA said there should be “no investment in new fossil fuel supply projects, and no further final investment decisions for new unabated coal plants.”

What’s more, a recent report from the United Nations’ Intergovernmental Panel on Climate Change also weighed in on the subject of fossil fuels.

“Limiting global warming will require major transitions in the energy sector,” the IPCC said in a news release accompanying its publication.

“This will involve a substantial reduction in fossil fuel use, widespread electrification, improved energy efficiency, and use of alternative fuels (such as hydrogen),” the IPCC said.

Shell to build ‘Europe’s largest renewable hydrogen plant’

On Wednesday, Shell said the Holland Hydrogen I facility would be “Europe’s largest renewable hydrogen plant” when operations start in 2025. Shell is one of several big firms looking to lay down a marker in the sector.

Ina Fassbender | AFP | Getty Images

Plans to build a major hydrogen plant in the Netherlands will go ahead following a final investment decision by subsidiaries of oil and gas giant Shell.

In an announcement Wednesday, Shell said the Holland Hydrogen I facility would be “Europe’s largest renewable hydrogen plant” when operations start in 2025.

According to Shell, the 200 megawatt electrolyzer will be located in the Port of Rotterdam, Europe’s largest seaport, generating as much as 60,000 kilograms of renewable hydrogen every day.

Hydrogen has a diverse range of applications and can be deployed in a wide range of industries. It can be produced in a number of ways. One method includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.

If the electricity used in this process comes from a renewable source such as wind or solar then some call it “green” or “renewable” hydrogen.

Shell said the electrolyzer in the Netherlands would use renewable power from the Hollandse Kust (noord) offshore wind farm, a 759 MW project set to be operational in 2023. Shell is a part-owner of the wind farm.

The hydrogen generated by the plant will be funneled to the Shell Energy and Chemicals Park Rotterdam using a new hydrogen pipeline called HyTransPort.

The idea is that this renewable hydrogen “will replace some of the grey hydrogen” — which is produced using fossil fuels — used at the site. “This will partially decarbonise the facility’s production of energy products like petrol and diesel and jet fuel,” Shell said.

In a statement, Anna Mascolo, who is executive vice president for emerging energy solutions at Shell, said renewable hydrogen would, “play a pivotal role in the energy system of the future and this project is an important step in helping hydrogen fulfil that potential.”

Read more about energy from CNBC Pro

UN chief slams new fossil fuel funding

In remarks delivered to the Austrian World Summit in Vienna via video, Antonio Guterres issued a sobering assessment of the planet’s prospects. “Most national climate pledges are simply not good enough,” he said.

Michael M. Santiago | Getty Images News | Getty Images

The U.N. Secretary General has slammed new funding for fossil fuel exploration, describing it as “delusional” and calling for an abandonment of fossil fuel finance.

In remarks delivered via video to the Austrian World Summit in Vienna, Antonio Guterres issued a sobering assessment of the planet’s prospects.

“The energy crisis exacerbated by the war in Ukraine has seen a perilous doubling down on fossil fuels by the major economies,” he said on Tuesday.

“The war has reinforced an abject lesson: our energy mix is broken,” Guterres said. “Had we invested massively in renewable energy in the past, we should not be so dramatically at the mercy of the instability of fossil fuel markets now.”

Concerns related to both the energy transition and energy security have been thrown into sharp relief by Russia’s invasion of Ukraine, with the price of both oil and gas continuing to surge in recent months.

Russia is a significant supplier of both, and a number of major economies have formulated plans to reduce their reliance on its hydrocarbons in recent months. This desire to move away from Russian imports has led to some challenging situations.  

Read more about energy from CNBC Pro

In May, the European Commission fleshed out details of a plan to ramp up the EU’s renewable energy capacity and reduce its reliance on Russian fossil fuels. It simultaneously acknowledged that existing coal facilities may have to be used for “longer than initially expected.”

Coal has a substantial effect on the environment and the U.S. Energy Information Administration lists a range of emissions from its combustion. These include carbon dioxide, sulfur dioxide, particulates and nitrogen oxides.

Elsewhere, Greenpeace has described coal as “the dirtiest, most polluting way of producing energy.”

In his speech to the summit in Vienna, the U.N.’s Guterres highlighted the “crippling prices” currently being experienced by businesses and households. “Our world faces climate chaos,” he added.

“New funding for fossil fuel exploration and production infrastructure is delusional,” he said. “It will only further feed the scourge of war, pollution and climate catastrophe.”

The former prime minister of Portugal also called on “all financial actors to abandon fossil fuel finance” and invest in renewables instead.

“The only true path to energy security, stable power prices, prosperity and a livable planet lies in abandoning polluting fossil fuels — especially coal — and accelerating the renewables-based energy transition,” he said.

Renewable energy sources, Guterres argued, were “the peace plan of the 21st century.” He outlined a strategy that would, he claimed, “jumpstart the renewable energy transition.”

This included a tripling of investments in renewables, moving energy subsidies away from fossil fuels to renewables, and fast-tracking approvals for wind and solar projects.

‘Not good enough’

On the planet’s future, Guterres delivered an urgent rallying call.

“The window to prevent the worst impacts of the climate crisis is closing fast,” he said. “Our planet has already warmed by as much as 1.2 degrees.”

“To keep the 1.5-degree goal within reach,” he said, “we must reduce emissions by 45% by 2030 and reach net zero emissions by mid-century. But current national commitments will lead to an increase by almost 14% this decade.”

How hackers and geopolitics could derail the planned energy transition

This image shows an onshore wind turbine in the Netherlands.

Mischa Keijser | Image Source | Getty Images

Discussions about the energy transition, what it means and whether it’s actually underway at all, have become major talking points in recent years.  

How the transition — which can be seen as a shift away from fossil fuels to a system dominated by renewables — pans out remains to be seen.

It depends on a multitude of factors, from technology and finance to international cooperation. While crucial, all are bedeviled by a great deal of uncertainty and risk.

The above topics were considered in detail during a panel moderated by CNBC’s Dan Murphy at the Atlantic Council’s Global Energy Forum in Dubai on Tuesday.

“At the heart of the energy transition is digitalization,” Leo Simonovich, who is vice president and global head of industrial cyber and digital security at Siemens Energy, said.

“In the energy sector, 2 billion devices are going to be added over the next couple of years,” he said.

“Every one of those devices could be a potential source of vulnerability that could be exploited by bad actors.”

Read more about clean energy from CNBC Pro

Expanding on his point, Simonovich explained the potential consequences of the above happening. “In a system that is increasingly connected and digitized, that includes legacy assets in need of digital assets, this could have cascading effects,” he said.

“And what we’re talking about is not just loss of data, what we’re really talking about is a safety issue, one that could bring down major parts of the grid or, as we saw with the Colonial Pipeline attack in the United States, parts of [the] gas network.”

Cybersecurity, Simonovich argued, was important both as “an opportunity to accelerate the energy transition if we can get it right because it builds trust, but also as a major source of risk that we need to address pretty urgently.”

Geopolitics

Alongside cybersecurity, geopolitics will also have a role to play if the planet is to shift to a low-carbon energy system, a point forcefully made by Abdurrahman Khalidi, chief technology officer of GE Gas Power, EMEA.

“It took the world several decades, until 2015, to arrive at almost a consensus in Paris, that global warming is happening and it’s due to greenhouse gases and the commitments started flowing,” Khalidi said. “It took us a lot of debate.”

Khalidi’s mention of Paris refers to the Paris Agreement, which aims to limit global warming “to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels” and was adopted in Dec. 2015.

“For decarbonization to happen — as we saw in COP26 — you need … cooperative and collaborative world governments,” he said. “The risk I see right now [is that] the world is sharply polarized and the world is being divided along ‘with’ and ‘against’.”

Khalidi’s comments come at a time when Russia’s invasion of Ukraine has highlighted just how reliant some economies are on Russian oil and gas.

While the war in Ukraine has created geopolitical tension and division, it has also resulted in a number of initiatives defined by cooperation and shared aims.  

Last week, for example, the U.S. and European Commission issued a statement on energy security in which they announced the creation of a joint task force on the subject.

The parties said the U.S. would “strive to ensure” at least 15 billion cubic meters of extra liquefied natural gas volumes for the EU this year. They added this would be expected to increase in the future.

President Joe Biden said the U.S. and EU would also “work together to take concrete measures to reduce dependence on natural gas — period — and to maximize … the availability and use of renewable energy.”

Investing wisely

Given that fossil fuels play such a major role in modern life, any transition to an energy system and economy centered around renewables and low-carbon technologies will require a vast amount of money.

During Tuesday’s panel, the question of where this cash should be invested was tackled by Kara Mangone, who is global head of climate strategy at Goldman Sachs. Among other things, she stressed the importance of integration and commercial viability.

“Our research estimates that it’s going to take anywhere from 100 to 150 trillion [dollars] in capital, about 3 to 5 trillion a year — just an astronomical amount, we’re nowhere near that today — to deliver on the goals that were set forth in the Paris Agreement,” she said.

Around half of this capital would need to be focused on renewables and technologies that were already at a commercial scale, Mangone explained.

“But the other half, very importantly, will need to go into carbon capture, into hydrogen, into direct air capture, into sustainable aviation fuel, e-fuels — technologies that are not yet being adopted at commercial scale because they have not hit the price point where that can happen for a lot of companies.”

The trillion-dollar figures Mangone refers to are found within a report entitled “Climate Finance Markets and the Real Economy” which was published in late 2020. Goldman Sachs says it joined the Global Financial Markets Association Climate Finance Working Group to help inform the report.

Mangone went on to lay out how goals could be achieved in a commercially viable way.

“We cannot pull out financing from … the oil and gas sector, metals and mining, real estate, agriculture — these sectors that are really crucial to transition, that actually need the capital, that need the support to be able to execute on that.”

The above viewpoint follows on from comments made Monday by Anna Shpitsberg, deputy assistant secretary for energy transformation at the U.S. Department of State.

“We have always come out and said [the] oil and gas industry is critical to the transition,” Shpitsberg, who was speaking during a panel moderated by CNBC’s Hadley Gamble, said.  

“They are players in the energy system, they are key players,” she said. “They are the ones that will be pushing abatement options, they’re the ones that will be pushing hydrogen options.”

“And to be quite honest, they’re some of the ones that are putting significant investment into clean energy, including renewables.”

If these “critical stakeholders” were not engaged, Shpitsberg argued that goals relating to methane reduction and efficiency would not be reached.

“The messaging has been oil and gas companies have to be a part of the conversation. But we want them also to be a part of the conversation on the transition.”

Work to be done

Game-changing hydrogen could play a big role in the energy transition

Ships sailing into the port of Rotterdam in February 2022.

Federico Gambarini | Picture Alliance | Getty Images

Concerns related to both the energy transition and energy security have been thrown into sharp relief by Russia’s invasion of Ukraine.

Russia is a major supplier of oil and gas, and over the past few weeks a number of major economies have laid out plans to reduce their reliance on its hydrocarbons.

On Friday, the U.S. and the European Commission issued a statement on energy security in which they announced the creation of a joint task force on the subject. 

The parties said the U.S. would “strive to ensure” at least 15 billion cubic meters of extra liquefied natural gas volumes for the EU this year. They added this would be expected to increase in the future.

Commenting on the agreement, President Joe Biden said the U.S. and EU would also “work together to take concrete measures to reduce dependence on natural gas — period — and to maximize … the availability and use of renewable energy.”

All of the above speaks to the huge task facing governments around the world who say they want to reduce their reliance on fossil fuels, prevent the worst effects of climate change and simultaneously safeguard energy security.

The challenges and opportunities facing the energy sector were addressed on Monday during a panel discussion at the Atlantic Council’s Global Energy Forum in Dubai, United Arab Emirates.

During the panel, which was moderated by CNBC’s Hadley Gamble, the CEO of Italian oil and gas firm Eni sought to highlight the current tensions facing his sector.

Claudio Descalzi said, historically, a wide variety of resources had been harnessed. “We know very well that in the last 200 years, all the different energy vectors [have] … been added,” he said. “So coal, plus oil, plus gas and plus renewables.”

“We never found a source, or energy source, that replaced everything. It’s crazy to think that there is something that can replace everything.”

Others speaking on Monday included Anna Shpitsberg, deputy assistant secretary for energy transformation at the U.S. Department of State.

Shpitsberg said that while the U.S.-EU task force would focus on areas like securing LNG supply, it would also look to provide “some certainty to U.S. producers that will be amping up and surging supply into Europe over the long term and up to 2030.” Permitting and infrastructure would also be areas of focus, she explained.  

It was also important not to compromise the energy transition, she acknowledged, before going on to reference the argument put forward by Eni’s Descalzi.

“To the comments that were made that we cannot rely on one technology, just like we cannot rely too heavily on one supply route, it is the reason that we’re putting so much money into hydrogen.”

Shpitsberg called hydrogen “a game-changing technology that speaks to a variety of other sources … because it can underpin nuclear, it can underpin gas, it can underpin renewables, it can clean a good portion of it and so can CCUS [carbon capture utilization and storage].”

“So for us, it’s making sure that the market has enough signals, it knows the regulatory environment will support the signals for current energy security,” she said.

“But we are sending, also, all the resources we can toward the transition. It’s why we’re putting billions of dollars into hydrogen R&D.”

‘Versatile energy carrier’

Described by the International Energy Agency as a “versatile energy carrier,” hydrogen has a diverse range of applications and can be deployed in sectors such as industry and transport.

It can be produced in a number of ways. One method includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.

If the electricity used in this process comes from a renewable source such as wind or solar then some call it green or renewable hydrogen.

While there is excitement in some quarters about hydrogen’s potential, the vast majority of its generation is currently based on fossil fuels.

Read more about clean energy from CNBC Pro

Others speaking on Monday included Majid Jafar, CEO of Crescent Petroleum.

Again, Jafar made the case for gas’ importance in the years ahead, calling it “a fundamental enabler of renewables” because it backed up their intermittent supply. It was also, he claimed, “the path to future technologies like hydrogen.”

Monday’s panel bookends a month in which the International Energy Agency reported that 2021 saw energy-related carbon dioxide emissions rise to their highest level in history. The IEA found energy-related global CO2 emissions increased by 6% in 2021 to reach a record high of 36.3 billion metric tons.

In its analysis, the world’s leading energy authority pinpointed coal use as being the main driver behind the growth. It said coal was responsible for more than 40% of overall growth in worldwide CO2 emissions last year, hitting a record of 15.3 billion metric tons.

“CO2 emissions from natural gas rebounded well above their 2019 levels to 7.5 billion tonnes,” the IEA said, adding that CO2 emissions from oil came in at 10.7 billion metric tons.