Can “deep electrification” of all sectors of the economy equate to deep decarbonization?

A transition to green energy is essential if we are to win the fight against climate change. The energy sector currently accounts for two-thirds of global carbon emissions, with more than 80% of the world's energy supply coming from non-renewable sources such as coal, oil, and natural gas.

Despite massive investments and innovation in clean technologies like solar and wind power, the overall trend shows no sign of abating. The share of fossil fuels in total energy supply has remained stable for the past three decades.

How can we move the needle? The answer may lie on the demand side. There is a growing trend globally toward “electrifying everything”, from cars, buses and trains to food production, heating and air conditioning – using electricity instead of fossil fuel to power their uses.

But can “deep electrification” of all sectors of the economy equate to deep decarbonization? The answer is not that simple: there will be an increased demand for electricity globally; however, for a while, at least, that increased demand is likely to be met by natural gas and coal. An effective reduction in carbon emissions associated with this deep electrification of the global economy will still require expedited progress on energy efficiency and low-carbon sources in the energy mix.

Energy efficiency has helped reduce the overall demand and supply of energy, and therefore CO2 emissions too. It is estimated that for every dollar spent on energy efficiency we avoid spending more than $2 on energy supply. Yet globally, progress on energy efficiency has been slow – on average, 2% annually. Moreover, this may have slowed down the transition toward cleaner sources by extending the operational lifetime of existing (fossil-fuel) power plants and network components.

Energy efficiency is needed, but alone will not bring about enough decarbonization; the remaining energy demand will need to be met by near-zero carbon options.

As the demand for electricity from end-use sectors increases, it is essential that we reduce the carbon footprint of the electricity grid for deep decarbonization. There is, unfortunately, a long way to go: coal and natural gas are still by far the most common electricity sources. At the same time, renewables currently account for less than a quarter of worldwide production and even though half of the G20 countries increased the share of renewables in electricity generation up to 2015, nine saw declines in 2015 or preceding years. The global community needs to double down on its efforts to make electricity generation cleaner.

Improvements on the storage side can also ease the pressure on the electricity grid and, ultimately, on the climate. Let's take the example of new digital platforms, such as smart-charging technology to manage both electricity generation and consumption. With these platforms, it has become technically possible to shift the charging of electric vehicles (EVs) to when the demand for electricity is low (during off-peak times) and low-cost (generated by wind and solar power). This kind of technology could provide a way for countries to optimize existing capacity and meet part of the new deep decarbonization demand without building additional power plants, translating into potential infrastructure savings of $100 to $280 billion between 2016 and 2040.

But how much additional electricity demand are we looking at? That could vary significantly based on how fast we embrace this trend of global electrification. Let's take the example of electric vehicles (EVs). Notwithstanding the hype, EV penetration remains pretty limited at the moment. The US has fewer than 1 million electric cars on the road; by comparison, the country's gasoline car fleet totals 260,000 units, with another 17 million vehicles sold every year. Even in China, the world's largest manufacturer and buyer of electric vehicles, EVs account for less than 5% of the domestic car market.

One thing is clear: energy and all other sectors like transport will need to tackle a reduction in carbon emissions from all angles to achieve deep decarbonization. Electricity can become the fuel of the future, but to make a lasting impact, we will need to look at the full picture. That means supporting green electricity production, optimizing storage and distribution, reducing the carbon footprint of battery manufacturing and pushing for more significant energy efficiency gains across all major industries.

This may all sound like a tough proposition, but working to power the global economy with green electricity is a promising avenue for reducing carbon emissions. Based on recent projections, electrification of energy services, combined with the increased use of renewables and improvements in energy efficiency, could deliver a whopping 90% of the reduction in energy emissions that we need to achieve to meet global climate targets.

This is why deep decarbonization can't happen soon enough.