Introduction
The economic development of the world has had a paradigm shift on how to think about its relationship with the environment. Day by day our soils, our waters and the air we breathe become more difficult to enjoy due to pollution, and that pollution accelerates climate change with the known consequences in the affectation of seasons in each season.
Fortunately, we have witnessed how in recent decades the decarbonization of the economy has been gaining ground to become a global requirement, not only for environmental and public health reasons, but also for economic and energy security reasons.
What does it mean to decarbonize the economy?
Definition and key concepts
Decarbonization is the process of reducing emissions of carbon dioxide and other greenhouse gases in order to mitigate global climate change. This also means talking about the economy. So we should say that the decarbonization of the economy, in this case, is a process of structural transformation aimed at progressively reducing carbon emissions in all productive sectors.
The process implies, at the same time, the transition from an economic model whose productive substance is based on fossil fuels to one that is oriented towards the consolidation of clean and renewable energies in the medium term (Iberdrola, 2024a). But this transformation goes beyond a simple change in energy sources; it represents for future generations the way in which we produce, consume and conceive economic development.
If we want efficient decarbonization, it requires a holistic approach that contemplates the technical aspects of technological innovation with non-polluting materials, as well as absolutely feasible and stable economic factors. It is important to note that the most recent analyses envision that this process must balance three fundamental factors: emissions reduction, economic viability and security of energy supply (Iberdrola, 2024b).
Fundamental principles of decarbonization
Although decarbonization has been associated with emerging technologies for this purpose, the principles governing decarbonization are based on the need for a truly just and economically viable transition. These principles include: energy efficiency as a fundamental pillar, which makes it possible to reduce consumption while maintaining productivity levels.
The conversion of industrial processes and transportation to a self-generated electricity system, which directly allows the integration of renewable energies into production processes. And finally, the development of studies and continuous technological innovation, which makes it possible to reduce costs and increase efficiency exponentially in clean technologies for the service of humanity (Iberdrola, 2024a).
Global actions and strategies
It is interesting to note that decarbonization strategies vary according to the economic and social context of each region. However, there is an acceptance of how the need to establish clear and measurable targets sets the course towards a clear future intention to reduce CO2 emissions in the environment. These actions include:
- The establishment of regulatory frameworks that encourage investment in clean technologies.
- The implementation of carbon pricing mechanisms that internalize environmental costs.
- The development of research and development programs in low-carbon technologies.
One example that should be taken into consideration is the case of Iberdrola, which firmly believes that the transition to a carbon-neutral economy by 2050 is possible and makes economic sense. They assume that the decarbonization of the economy is a great opportunity to create wealth, generate employment and improve air quality.
For this reason, the group is committed to spearheading the energy transition, a path it embarked on 20 years ago and which has led it to invest 120 billion euros since then. In addition, it will continue to invest more than 41 billion euros by 2026 to remain at the forefront of the energy revolution, which will enable the company to exceed 100 GW of installed capacity, more than 80% of which is renewable, by the end of the decade.
Major clean and renewable energy sources for a decarbonized future
The energy sector in the quest to improve its production has experienced with renewable energies a boom of growth and ascent during the last decade, and perhaps it is thought that, certainly, it is an innovation engineering the manufacture of devices and equipment that have been installed in some countries with positive results.
But let us remember that since the times of their splendor, Ancient Greece and Rome took advantage of the natural resources of the sun and wind to improve the quality of life of the inhabitants of their great cities. Over the centuries, this alternative energy was displaced by the consumption of fossil fuels to generate energy. It is in the last 50 years that has been deepening in the classification and systematization of alternative processes for the production with renewable natural resources.
“The global energy transition has diversified the world’s energy matrix, which although still led by coal, a fossil fuel, the world’s energy relies entirely on a combination of various clean and other fossil sources. By 2023, according to data from Ember, electry data explorer, coal commanded the matrix, producing 35.4% of the world’s energy, generating 10,460 Terawatt-hours, TWh. The second most representative source is natural gas, generating 22.6% of the world’s energy, some 6,668 TWh, being considered the main clean energy alternative to fossil fuels”. (Salazar I, La República, February, 2025) By 2023, clean energies weighed 39.3% in the world energy matrix, and although more diverse, still not stronger than fossil sources
Solar and wind energy
Today, solar PV and wind have become the most cost-competitive technologies. “According to some recent data, solar generation costs have decreased by more than 80% since 2010, while those of wind power have decreased by more than 55%” (Enel Green Power, 2024). These technologies are economically viable and offer significant advantages in terms of flexibility and scalability.
Solar energy, in particular, has proven to be especially adaptable to different contexts and needs, from large plants to domestic installations. Similarly, wind energy has also made a quantum leap in both industrial and domestic use, making it one of the most widely used at the moment.
It is worth noting that, in 2024, the installed capacity of solar photovoltaic energy reached 345.5 GW, with a global investment that exceeded 500 billion dollars. According to the International Renewable Energy Agency (IRENA), solar PV accounts for 73% of total renewable energy growth.
In 2023, installed wind power capacity reached 117 GW, representing a 50% increase over 2022. The Global Wind Energy Council (GWEC) has projected that investment in wind power will continue to grow, with a forecast of 1210 GW from 2024-2030 (IEA World Energy Outlook 2024).
The European Commission has recently allocated almost €1.25 billion in grants under the Connecting Europe Facility (CEF). The grants will support 41 cross-border energy infrastructure projects, including three major wind energy-related projects. This is good news for the European wind industry and its energy transition in general.
Hydroelectric and geothermal energy
In addition to solar and wind energy, there are also other resources that allow us to generate energy. Hydroelectric power, for example, continues to be the most established renewable source, providing stability and capacity for storage, distribution and service to the electricity system. China is currently building the Motuo Dam on the Brahmaputra River, the largest dam in the world, promising to generate three times more energy than the Three Gorges Dam.
The estimated investment for the construction of the Motuo dam in Tibet is 34 billion dollars, similar to the cost of the Three Gorges dam. However, due to the technical challenges and complexity of the project, some experts believe that the final cost could be significantly higher.
Another type of generation is geothermal energy, which offers a steady and reliable alternative, although its development is limited by geographic factors. Geothermal energy harnesses the natural heat stored in the earth’s interior to generate electricity and provide heating. It is obtained by drilling deep wells to access reservoirs of hot water or steam. In some regions, the hot water is used directly for heating, while in others the steam drives turbines to generate electricity. Countries such as Iceland, New Zealand and the United States are leaders in its use.
Advantages include constant availability, low environmental impact and a reduced carbon footprint. However, initial installation costs are high and their feasibility depends on geographical location.
The United Nations points out that these energy sources are fundamental to achieving sustainable development goals and combating climate change (UN, 2024), but, it is important to recognize that their implementation must carefully consider environmental and social impacts.
Biomass and ocean energy
Biomass and ocean energy also represent emerging technologies with significant potential. Biomass, in particular, offers the advantage of being able to be stored and used according to demand. It is a sustainable alternative, but its scope is still limited. Its yield is lower compared to other types of energy sources, and its development requires large amounts of available land and logistical resources for production and storage.
On the other hand, ocean energy is perceived as an inexhaustible source of energy, in addition to being a renewable and clean source of energy. It does not consume fossil fuels. It does not produce greenhouse gases. It can be produced at any time of the year. The installations are silent and easy to maintain. However, ocean energy also has some disadvantages, such as: the construction of infrastructures that can alter the biodiversity of the sea, in addition to the fact that marine energy projects are usually very expensive and require highly trained personnel.
In fact, in 2024, the U.S. Department of Energy injected 112.5 million dollars alone for wave energy projects available in the country that equates to approximately 34% of all domestic power generation. This five-year investment will significantly accelerate the design, manufacturing and testing of multiple wave energy converters (WECs), which harness the energy of ocean waves. This investment is in line with the administration’s commitment to energy and domestically deployed technologies that will make U.S. energy reliable and independent.
Challenges and barriers to the decarbonization of the global economy
Technological and infrastructure barriers
From a technical perspective, the main challenges include the need to modernize and expand electricity transmission networks, develop more efficient storage technologies and overcome technical limitations in sectors that are difficult to decarbonize (BBVA Research, 2024). The existing infrastructure, designed for a fossil fuel-based system, requires significant transformation. This process involves substantial investments and poses considerable technical challenges, especially in developing regions.
Economic and political factors
Economic and political aspects represent some of the most significant barriers to decarbonization. Transition costs, although decreasing, remain considerable, and resistance from traditional economic sectors can slow the process. Political will and regulatory stability are critical factors for the success of the energy transition. Lack of international coordination and divergent national policies can create significant obstacles to global decarbonization.
Social and public acceptance barriers
“Today, about 80% of the energy we consume worldwide still comes from fossil fuels. In other words, the real economy is still largely based on polluting industries. For this reason, it is important to accompany companies in their transition towards sustainable models, identifying those activities in the value chain that are most intensive in emissions” (Flor, B. Revista Energía, 2024). Social acceptance of new technologies and changes in consumption patterns represent important challenges. Local resistance to renewable energy projects, known as the NIMBY (Not In My Back Yard) effect, can significantly delay their implementation.
However, education and effective communication are key to overcoming these obstacles. There is a need to develop community engagement strategies and demonstrate the tangible benefits of the energy transition for local communities. Decarbonization of the economy represents one of the greatest challenges and opportunities of our time.
Conclusions
It is undeniable that renewable energy sources have demonstrated their technical and economic viability to achieve decarbonization in the medium term, but their successful implementation requires a coordinated effort at the global level. The success of this transition will depend on our ability to comprehensively address aspects of this process.
Overcoming existing barriers will require continued innovation, political will and a sustained commitment to decarbonization goals, especially as new discoveries in soil and seabed studies now present scientific and technical evidence of significant oil deposits in Kuwait, Libya, Mexico, Guyana, Egypt, China and Vietnam.
The energy future we build today will determine the sustainability and prosperity of generations to come. The transition to a decarbonized economy is not only an environmental necessity, but also an opportunity to create a more equitable, resilient and sustainable energy system.
References
- https://www.larepublica.co/globoeconomia/las-fuentes-de-energia-mas-presentes-en-el-mundo-4058065
- BBVA Research. (2024). La descarbonización de la economía mundial: retos y oportunidades.
- Enel Green Power. (2024). Energías renovables: tipos, ventajas y desventajas.
- Iberdrola. (2024a). Descarbonización eficiente de la economía.
- Iberdrola. (2024b). Descarbonización de la economía: principios, acciones y regulación.
- Organización de las Naciones Unidas. (2024). Energía renovable.
- Flor, Belén. Revista Energía, El Economista, 2024
