COP26 – what does it mean for the energy industry

The COP26 Glasgow Climate Pact saw nearly 200 countries make an unprecedented and historic pledge to reduce the use of coal, although India pushed through an 11th hour intervention to weaken the language on coal, changing it to phase down rather than phase out. In this blog we look at what this pact means for the energy industry.

Fossil fuel subsidies

Until this year’s summit, coal and fossil fuel subsidies have not been tackled in 26 years of  treaties and decisions at UN climate talks. This is despite coal being unilaterally agreed as a key driver of global warming. Coal, oil, and gas received subsidies totaling $5.9 trillion in 2020, 8% of these subsidies were to reduce the sale price of the fuel, while 6% provided tax breaks.

The COP26 Glasgow Climate Pact states that the member nations will endeavour to speed up the end of these fossil fuel subsidies. If subsidies are to be reduced and the use of coal is to be phased down, what does that mean for businesses which rely on coal for their power?

Mike Coffin, senior analyst at the thinktank Carbon Tracker believes that: “To stabilise global temperatures we must urgently move away from fossil fuels instead of adding fuel to the fire. It’s critical that governments stop propping up an industry that is in decline and look to accelerate the low-carbon energy transition, and our future, instead.”

If not coal, then what?

If the subsidies on coal were removed then it would force the hand of electricity generators. To ensure their survival they would need to switch from coal to renewable energy. However there needs to be the options available for renewable energy sources before coal is phased out.

Renewable energy is the term used for power generated from sources that are constantly being replenished. These renewable energy resources won’t run out, unlike fossil fuels and gas, and include wind and solar energy.

However, not all renewable energy sources are equal. For example, hydropower is a renewable resource, but some would argue that it is not green, since the deforestation and industrialisation related to the building of hydro dams can damage the environment.

It is also worth mentioning natural gas, which emits almost 50% less CO2 than coal. Gas is also the primary fuel used with Energy Technology and Control products.

The benefits of renewable energy

Clean, renewable energy offers extensive environmental and economic benefits. A reduction in air pollution is an obvious benefit, however, a move to renewable energy would also reduce the UK’s dependence on imported fuels and the associated financial and environmental costs this incurs. Renewable energy doesn’t need to be extracted, or transported, or treated in any way to enjoy its benefits, and the resources will not run out as they naturally replenish themselves.

While renewable is the ultimate goal, switching to fuels that emit less CO2 will form part of meeting the obligations of current and future climate change targets, especially for energy-intensive applications where suitable alternatives are still being developed for example steel production.

However, the UK has a long way to go before it can sustain itself using renewable energy. There first needs to be intense and sustained investment in renewable energy production.

So, what is holding us back?

The switch from coal to renewable energy sounds straightforward – in theory at least – but the UK’s investment in renewables is still in its infancy. Total renewable capacity grew by just 1.4 per cent between the end of Quarter 2 2020 and Quarter 2 2021.

Source – energy trends 2021

Sadly, the UK struggled to fulfill the capacity it has as a result of much less favourable weather conditions for renewable generation with lower wind speeds and reduced hours of sunlight. This illustrates the hurdles surrounding a reliance on renewables.

The Government pledges

In the days since the completion of the COP26 summit, the UK Government has pledged that all new homes and buildings in England must install electric vehicle charging points from 2022. The move will see more than 145,000 charging points installed in homes, new-build supermarkets, workplaces and buildings undergoing major renovations. This supports the plans to manage a switch to electric cars, as sales of new petrol and diesel cars will be phased out by 2030.

This follows announcements in October of £5,000 grants to help 90,000 households install home low-carbon heating systems to cut Britain’s reliance on fossil fuel heating. Yet the transition to electric will only have meaning if the electricity comes from renewable sources.

Recent months have seen lots of pledges and the launch of encouraging new initiatives, both nationally and internationally, but as yet there is still a gap between pledges and detailed, short- and long-term planning.

There is no denying that COP26 marks a turning point for action on fossil fuels but there is much still to be done. Speak to a member of our team about how Energy Technology and Control products can help you improve your energy usage.