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Path to Decarbonisation

        To achieve deep decarbonisation of the global
        economy, it has become imperative to look for alternate
        energy sources, transitioning to greener sources.

        The transportation sector is a significant contributor
        (16%) towards GHG emissions. These emissions are
        primarily due to burning fossil fuel for cars, ships, trucks,
        planes, trains, etc. Conventionally, over 90% of the
        transportation fuel is derived from petroleum resources            Fig. 4: Projected CO  emissions
        – mainly Kerosene, Gasoline and Diesel. The energy
        transition must prioritise decarbonising transportation   Another large share of GHG emissions is attributed to
        sector. Electric battery vehicles or Hydrogen fuel cell-  the industry (24%). Industrial GHG emissions primarily
        based vehicles are the hot alternatives being actively   arise due to fossil fuels’ combustion used as an energy
        considered by world economies.                        source and greenhouse gas emissions from specific
                                                              chemical reactions necessary to produce goods from
        Electricity production is another large (28.2% per    raw materials. The industry sector is mainly considered
        cent of 2018 GHG emissions) contributor to the GHG    ‘hard sector’ to decarbonise because several large
        emissions. Approximately 63% of the electricity is    GHG contributors in the industrial (Eg. Steel, Cement,
        obtained by burning fossil fuels, mostly natural gas   Petrochemicals, etc.) need a high temperature. Further,
        or coal. Study shows that the electricity demand is   specific process requirements must be satisfied, making
        increasing seven times faster than demand growth of   the switch to renewables difficult; moreover, a fifth of
        other fuels and in 2050 the total demand is expected to   the industrial sector’s carbon dioxide emissions are
        be double that of all other fuels put together1. Figure 3   solely from the processes itself rather than the type of
        depicts the rising electricity demand.                energy used. Slow progress in research and innovation
                                                              on alternate approaches towards decarbonising the
                                                              industrial sector also hamper progress.

                                                              Technological innovations provide a rational approach
                                                              to achieving a low carbon economy. Technical solutions
                                                              are always leading part of the puzzle in energy
                                                              transition approaches. These could include use of zero-
                                                              carbon or renewable energy sources, Adopting to the
                                                              new alternate pathway, CO  capture from significant
                                                              industries such as power, steel, cement, etc. in addition
                                                              to efficiency improvements. However, technological
                                                              advancements must be supplemented by proper
                                                              policy support from the states, which can accelerate
                                                              deployment of the emerging technology. Strategically
                     Fig. 3: Rise in Electricity demand
                                                              designed policies incentivise faster adoption of
        The growth of electricity demand will be driven by fuel   emerging low carbon technologies and make more
        mix changes in transport, industry and construction   investments in such cleaner technologies more feasible
        sectors, with renewables replacing oil and gas.       or profitable.
        Digitisation of industries would further increase electric
        power demand for handling increased demand from       The present policies for decarbonisation would only
        data capture, storage and processing. With the current   be able to keep emissions stable till 2050. Reductions
        efficiency improvement of energy generation, it is    in developed economies would be offset by industry
        unlikely that the goal of 1.5°C temperature reduction   growth in developing economies leading to increased
        looks achievable; GHG emissions are likely to reduce   use of coal, oil and gas-based power for transport and
        from current levels by 25% till 2050 reaching a 3.5°C   power generation .
        pathway, refer Figure 4.

                                                              6   The 1.5-degree challenge | McKinsey
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