The role of Green Majors in the energy transition

The increasingly evident impacts of global warming have been a cause of concern for many decades. Since the Paris Agreement, there's been a global effort to reach net zero by 2050, yet the commitments made by governments still fall short of achieving the determined goals.

With the help of world players, several actions have been implemented to address the issue. Green electricity companies in emerging economies, which are those responsible for championing the development of new technologies and maturing the green energy market by mobilizing investments, can play a critical role in attaining these goals.

According to the World Economic Forum, critical measures to accelerate the energy transition include decoupling economic growth from energy consumption, mainstreaming breakthrough technological innovations and addressing equity.

In parallel, the IEA claims that attaining net zero by 2050 requires a massive investment expansion in clean energy technologies and efficiency measures - particularly in emerging and developing economies, where population and economic growth rates could increase carbon dioxide levels by 20% until 2045. Furthermore, under the IEA's pathway to net zero, electricity replaces fossil fuels across key sectors. In this scenario, electricity would account for around 50% of final energy use by 2050, compared to about 20% today.

Fortunately, the demand for new clean energy and green tech investments coincides with the growing modernization of the electricity sector. DDD [decarbonization, decentralization, and digitalization] energy solutions will play a crucial role in enhancing clean energy access and inclusive economic growth within transitioning economies. By creating linkages amongst various renewable energy sources and storage options, affordable and clean energy supplies as per the customers' needs will be possible.

The incongruity between places with high energy consumption and those with more abundant resources is a recognized barrier to the greater use of renewable sources. In the view of the Global Energy Interconnection Development and Cooperation Organization (GEIDCO), in addition to expanding the supply of renewable energy generation, a platform for cooperation between countries and regions should be developed, advancing from continental scales to a global system. Furthermore, ultra-high voltage transmission (UHV) infrastructure should expand by dynamic exchange, commercialization and optimization between centres, consumers, and resource-rich areas to gain systemic advantages.

According to a recent study in the Nature Journal, international electricity trade through interconnection (UHV) could increase the production of green electricity by up to 12.3% by 2050 and reduce carbon emissions by up to 9.8% between 2020-2100.

In line with the UN initiative "Sustainable Energy for all", GEIDCO is currently working towards a global energy interconnection system to meet the growing global demand for greener electricity. In the long-term, financial investments in high voltage (UHV) lines would be compensated by reduced investments in other electricity generation options, including nuclear, fossil thermal and storage.

As stated by the International Energy Agency, expanding this interconnection beyond the borders of countries will favour decarbonization goals with greater security of supply, less use of fossil sources, and a better balance of climate impacts between regions and their natural variability of renewable sources. The maturity of transmission technologies, such as UHV, presents new possibilities for intercontinental corridors, submarine cable transmission, and even an interconnected global system. The Continental Europe synchronous grid is already the world’s largest interconnected grid in terms of hosting power capacity, with over 1 TW by 2015.

The advent of the green hydrogen economy brings the new challenge of coupling this route with a global electricity network, whilst feasibly balancing consumption centres and supply areas with the best natural conditions. On the one hand, the conversion and reconversion of hydrogen into electricity presents the possibility of developing international trade via maritime transport.

According to a Bloomberg NEF report, maritime logistics should gain economic insertion in the coming decades. Green H² transactions by ships tend to get established before gas pipelines or global energy super grids, presenting ammonia's well-established transport logistics to fulfil this role.

On another front, the new gas pipelines would be modernized, with networks designed especially for hydrogen. They could also be developed for the international trade of green hydrogen and integrated into a GEI system, as promoted by GEIDCO. This macro vision of global systems encounters numerous natural and geopolitical obstacles and tends to advance with other relevant energy systems, such as local and distributed generation, hybrid plants, self-production models or dedicated plants linked to industrial activities.

Clean energy has a highly strategic role in decarbonizing the global economy, and a significant part of its potential lies in emerging countries. In addition to the prospect of onshore wind and solar generation worldwide, especially in emerging countries with abundant resources, new technologies like green hydrogen further leverage the contribution of these countries in the global decarbonization challenge.

The potential for floating photovoltaic (FPV) power plants using 10% of the world's reservoirs is 4,044 GW, of which approximately 65% is in South America, Asia, and Africa. India plans to add 10 GW of production from FPV plants until the end of 2022, while the potential for offshore wind generation on the Brazilian coast is 687 GW – four times the country’s entire installed generation capacity.

In the fight against climate change, green hydrogen is a highly relevant disruptive technology. Emerging countries like China, Colombia, Morocco, and Brazil are known for having the lowest cost for their green hydrogen production. This technology enables the storage and transport of clean energy without transmission lines by merging the clean energy sector with other sectors. It also allows the abundant wind and solar resources in emerging countries to contribute to global decarbonization by being sent in the form of green hydrogen and its vectors in tanks, pipelines, and ships.

The versatility of hydrogen and by-products such as green ammonia, green methanol, and other synthetic fuels will likely drive the international energy exchange. Possibilities in seasonal storage, shipping, and sectoral coupling will also be key contributors. According to IRENA, this low-cost input energy can help reduce the current cost of green hydrogen from $6/kg to about $2/kg by the 2030s.

The renewable energy and electricity generating companies in Latin America and Brazil, with their vast portfolios of plants and new projects, should be well-positioned to participate in this new market, either by supplying low-cost entry-level electricity in auto production models, PPA supply contracts with renewable energy certificates of origin, or through new business partnerships and consortiums. Some of the most effective movements for potential green hydrogen leaders are the current design and configuration of logistics hubs, next-to-port areas, and production clusters. These leaders can take advantage of different sectors such as chemical, metallurgical, steel, ceramic, fertilizer, food, heating and cooling, or transportation.

Emerging economies could potentially become the great supplier of clean and renewable energy for the world but lack the necessary market and financing capabilities for expansion. No institution can address our modern world's environmental, economic, and technological challenges alone. Strong collaboration among different sectors contributes to the discussion of innovative policies, technologies, financial instruments, and business models to accelerate the goal of clean, reliable, sustainable, and modern energy for all.

As leaders of companies committed to this transformation, we are proud to participate in such a relevant shift and invite other institutions, governments, and companies to join this effort.