Making the leap to carbon neutrality from 2030 to 2050 will require achieving net-zero emissions across the power sector at an early stage, the second of our three key points. The speed at which this can be achieved will be crucial.
Our analysis suggests that even as progress is made in switching to renewable forms of energy, some thermal power stations will still be needed, simply from a grid-stability perspective. For the entire power generation sector to generate zero emissions, it is essential to move forward with decarbonizing the thermal power supply. We may need to start using other forms of thermal power such as hydrogen and ammonia, as well as carbon capture, utilization, and storage (CCUS) technology.
As more renewables are introduced, losses in energy due to renewable curtailment increases too—we cannot rely solely on the decarbonization of power generation. Multiple measures should be combined such as grid reinforcement, storage battery usage, and relocation of demand-side facilities. This is tangential to minimizing social costs.
The third of our key points is to foster strategic innovation. Like the net-zero power sector point, this is positioned as a requirement by 2050. Innovation in both technologies and systems will be essential if we are to become carbon neutral, and we expect materials industries like iron and steel, chemicals, and cement to prove particularly challenging.
These industries use the most energy of all the manufacturing sectors and in most cases CO2 emissions during the manufacturing processes are unavoidable. Examples include smelting iron ore using coke that is made from coal, oil refining to manufacture raw materials for chemical products, and producing clinker from coal as a cement intermediate.
To completely decarbonize these fields, radical technological innovation will be essential to transform the manufacturing processes. Strategic investment may then be needed to drive the implementation of these new processes in society.