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Energy Transition

A cornerstone of the circular economy is that it needs to be underpinned by a shift to renewable energy. Energy transition is an issue that permeates all sectors and asset classes.

To limit global warming to a maximum rise of 1.5°C, carbon dioxide emissions must be contained to defined levels over a period of time—this is known as the world’s carbon budget. Assuming a two in three probability of staying within the 1.5°C scenario and with greenhouse gas emissions at 2021 levels, the world’s carbon budget will be exhausted in just six years. The figure jumps to 16 years assuming a one in three probability.

The finite nature of the carbon budget emphasizes the urgency for the energy transition effort and the need to bend the emissions curve quickly. The upshot is that, to stay within a 1.5°C global temperature rise, the world needs to reduce greenhouse gas emissions by 50% by 2030 and achieve net zero emissions by 2050.¹

^{1 Net zero means achieving a balance between the greenhouse gases put into the atmosphere and those taken out. This state is also referred to as carbon neutral.} 

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