Key enablers for fossil detox and NDC recommendations

The identified enablers can function as a checklist for countries in their quest to identify the necessary measures to put in place in their National Determined Contributions (NDCs). NDCs are climate action plans aimed at cutting emissions and adapting to climate impacts. Each Party to the Paris Agreement is required to establish NDCs and update them every five years. The identified enablers can also function as a guidance for other stakeholders such as companies.

The world has relatively recently experienced unprecedented additions of capacity from renewable technologies, such as solar and wind. However, annual growth rates must further increase, and one of the key enablers for that is to lower the average cost.

Our report reveals that to ensure competitiveness, for example for offshore wind, significant cost reductions are essential. We project that the average cost for wind and solar over its lifetime must fall by roughly 20% by 2030. We can also conclude that, since much of the required technology and knowledge is available, decarbonisation of 80% of the global energy system is already possible today using existing technologies. However, the real challenge lies in scaling and deploying these solutions fast enough. The questions are then, how do we secure the necessary investments? What are the key enablers for scaling the solutions at hand?

While the transition is heavily dependent upon technology, finance and robust policymaking, it also bears socio-economic implications to our societies. Climate finance will need to increase 3-6 times to achieve the goals stated in the Paris Agreement, where the gap is widest in developing economies.

Built on the conviction that the private sector remains a pivotal force in the sustainability transition, this report underscores that those companies at the forefront need robust policy frameworks and access to capital to expedite their journey towards a fossil-free future. On that background, we would like to highlight the following enablers for a fossil detox.

Policy to set direction

The primary role of policy makers is to stick to the commitment to transition away from fossil fuels, which entails adding a clear timeframe to the commitment in line with the Paris Agreement. Secondly, policy makers should facilitate implementation of the long-term target by establishing sector specific targets and strategies as well as overall energy supply strategies. Thirdly, policy should support the implementation of such strategies through regulations that enable and support infrastructure investments and ensure expedited permitting processes. Finally, it is critical to build the right conditions to secure a successful transition, which include public acceptance and involvement. This means that securing energy stability and affordability through the appropriate mix of energy sources is critical for maintaining a stable and equitable energy landscape.

Finance to enable the change

According to IPCC’s Synthesis Report: Climate Change 2023, current funding levels are insufficient to achieve the 2050 net-zero targets, making it critical to promote cost-efficient fossil-free technologies. To address this, it is necessary to ensure long-term stability of incentives and regulations to provide businesses with a predictable investment landscape and implement technology neutral incentives. Secondly, financial incentives need to be aligned with the desired transition strategies, such as removing fossil fuels subsidies. Thirdly, pricing mechanisms for CO2 emissions, such as the EU Emissions Trading System, will be essential to direct funds towards fossil-free technologies.

Innovation to scale solutions and solve hard-to-abate sectors

Although much of the necessary technology exists, further progress and innovation is needed to allow implementation at scale. In addition to further cost reductions, the importance of continuous optimisation of existing energy assets, both through available technology and new innovations, will be key. Businesses need to adopt business models and value chains that contribute to the development and production of fossil-free technologies. Secondly, there are hard-to-abate sectors where further innovation is needed before scaling is possible, such as cement and aviation. Addressing this complexity will require close alignment of innovation goals with established transition strategies and objectives. Thirdly, in order to be in the forefront, we need to invest in education, science and research.

This is a race where everyone needs to cross the finish line, if we are to declare victory. Not just some. Implementing these elements would enable us to catalyse the needed investments to expedite the transition.