Four (potential) Net Zero breakthroughs in two days

Nina Foster , Communications and Research Manager of our Net Zero Intelligence Unit provides insights on four recent breakthroughs that could accelerate global progress towards Net Zero.?

EU moves to penalise carbon-intensive imports through border tariffs

In the early hours of Tuesday 13 December, EU negotiators secured a world-first agreement to place carbon tariffs on imported goods from high-emitting industries. The Carbon Border Adjustment Mechanism (CBAM), which would cover goods such as steel, cement and fertilisers, will create a level playing field to nudge exporters to the EU to use lower-carbon productions processes. The CBAM is expected to have a big impact on China, which currently produces over 50% of the world’s steel, primarily through reliance on coking coal. The disincentive to use high-emitting processes comes just days after the UK authorised the planning of a new coking coal mine in Cumbria, with 80% of production set for export. The CBAM signals that international markets are closing off for polluting industries. This is a crucial step towards pushing industrial processes closer to Net Zero.

Net Zero via nuclear fusion – too good to be true?

In California on Tuesday 13 December, scientists announced that, for the first time, an energy net gain had been achieved through nuclear fusion. Though the scale of this breakthrough cannot be understated from a scientific perspective, its potential to accelerate progress towards Net Zero is questionable. The amount of energy produced through the experiment was minimal and so to scale it up is expected to cost billions and take decades. The promise of a limitless amount of emission-free energy, in time to reduce global greenhouse gas emissions to Net Zero by 2050, might just be too good to be true. The global priority should remain scaling up of tried and tested renewable alternatives, such as wind and solar, while scientists continue to ramp up nuclear fusion.

Europe’s largest bank, HSBC, ends funding for new oil and gas ?

On Wednesday 14 December, HSBC announced that it would cease all financing for new oil and gas fields, and for new metallurgical coal projects. Under pressure from its investors and campaigners, the bank issued a new energy policy detailing its new approach to oil and gas. This is a welcome move from a major financial player, that has set the bar for the global financial system. The COP27 Sharm El-Sheikh Implementation Plan recognised the need for reform of financial systems to deliver Net Zero. While commitment to ending financing for fossil fuels seemed to wane in recent weeks, with Vanguard pulling out of the Glasgow Financial Alliance for Net Zero, this move from HSBC puts pressure on its competitors to follow suit.

A new Just Energy Transition Partnership for Vietnam

Following on from the announcements of a Just Energy Transition Partnership (JTEP) for Indonesia at the G20 in November this year and for South Africa at COP26 in Glasgow in 2021, Vietnam secured a similar package to support the delivery of its own 2050 Net Zero target on Wednesday 14 December. The JTEP will provide $15.5bn of public and private finance via the G7 over the next 3 to 5 years to help decouple Vietnam’s economic growth from fossil fuel consumption. JTEPs are a vital mechanism for providing climate finance to countries in the global South to transition away from fossil fuels towards clean energy to achieve Net Zero. More JTEPs should be secured ahead of COP28 to accelerate the transition.

The Net Zero transition requires ambitious action across five essential enabling conditions. The introduction of carbon borders, ceasing investment in new fossil fuels and securing Vietnam’s energy transition are all welcome leaps forward that will accelerate the pace of change. Nuclear fusion, though a huge scientific breakthrough, holds less immediate promise for Net Zero. Tried and tested renewable energy generation should remain the global priority.