Global carbon emission growth is expected to only begin slowing down in the 2030s, international energy consultancy Wood Mackenzie has said.
In its latest energy transition outlook report, Wood Mackenzie said that decarbonisation is only slowly taking hold and reducing emissions to below 2 degrees poses "a huge global challenge".
"Achieving it requires urgent policy and regulatory initiatives in both laggard OECD but also non-OECD countries. These must include tax policy and subsidies that incentivise R&D and capital allocation into the zero-carbon technologies," it said.
"It will need continued support for investment in renewables, as well as transforming existing technologies - carbon capture, utilisation and storage; batteries and long-duration energy storage; hydrogen and alternatives in non-power - into commercial propositions. That is the scalability challenge we see," Wood Mackenzie said.
The report said zero-carbon needs to be on a pathway to 40% of the total energy mix by 2040, but is only likely to make up 20% by then. Wood Mackenzie also said the world's energy mix is only gradually changing and reliance on fossil fuels is likely to continue for decades.
On decarbonisation, the report said outside of the power sector action is "only slowly taking hold".
"The obstacles presented in industry, manufacturing, housing, aviation, shipping, agriculture and heat dwarf those in power and road transport.
"Little to no progress has been made in commercialising technologies in those segments and hopes are turning to hydrogen and carbon capture and storage as the panacea," it said.
"But those large industrial segments also face geopolitical problems. Take decarbonisation of an industry like steel, which is highly competitive and has 'national champions' in China, South Korea and Japan. Steel has also been at the core of trade disputes since 2014. Who will be willing to create 'green steel' first when the returns are not visible?"
"Policy is becoming supportive in some markets, but other markets represent large, energy-dense segments with little-to-no progress," Wood Mackenzie said.
In the past week both the International Energy Agency and the US Energy Information Administration have cut their forecasts for oil demand this year. However, Wood Mackenzie sees healthy increases in both oil and gas demand in the coming five years.
However, it also views renewables as being the fastest growing source of energy, with wind and solar power increasing from 7% this year to 24% in 2040.