The International Energy Agency’s new World Energy Outlook says global clean energy progress is too slow to put global emissions into a sustained decline towards net zero.
This highlights the need for an unmistakable signal of ambition and action from governments who will gather in Glasgow at the beginning of November for COP26.
The World Energy Outlook 2021 (WEO-2021) has been designed as a handbook for the COP26 Climate Change Conference. The new analysis, freely available online from today, delivers stark warnings about the direction policy setting is taking the world.
But, it also provides a clear analysis of how to move in a well-managed way towards a path that would have a good chance of limiting global warming to 1.5°C and avoid the worst effects of climate change.
The IEA’s annual flagship publication, the WEO-2021 shows that even as the deployment of solar and wind projects grows, the world’s consumption of coal is growing strongly. This is pushing CO2 emissions towards their second-largest annual increase in history this year.
Fatih Birol, IEA executive director, said: “Governments need to resolve this at COP26 by giving a clear and unmistakable signal that they are committed to rapidly scaling up the clean and resilient technologies of the future. The social and economic benefits of accelerating clean energy transitions are huge and the costs of inaction are immense.”
Mapping out different scenarios
The report shows what pledges to reduce emissions made by the government so far actually mean for the energy sector and the world’s climate. It also sets out what needs to be done to move beyond these announced pledges onto a pathway that would reach net-zero emissions globally by 2050. This is from the Net Zero Emissions by 2050 Scenario from the landmark IEA report published in May.
As well as the Net Zero Emissions by 2050 Scenario, the WEO-20221 also explores two other scenarios to show how the global energy sector could develop over the next three decades. More importantly, it shows the implications of these scenarios.
The Stated Policies scenarios represent a path based on the energy and climate measures government have actually put in place to date. It incorporates the specific policy initiatives currently under development. In this scenario, almost all of the net growth in energy demand until 2050 is met by low emissions sources. But, that leaves annual emissions at the same level as today. As a result, the global average temperature would still rise and hit 2.6°C above pre-industrial levels by 2100.
The Announced Pledges Scenario maps out what would happen if the net-zero emissions governments announced so far are implemented in time and completely. In this scenario, the demand for fossil fuel would peak around 2025 and global CO2 emissions would fall by 40% by 2050. All sectors would see a decline, with the electricity sector delivering by far the largest drop in carbon emissions. This would keep the global average temperature rise in 2100 to around 2.1°C.
Effect of fossil fuel demand and supply
For the first time in a World Energy Outlook, oil demand goes into eventual decline in all posited scenarios. Still, the timing and speed of the drop vary widely. If all today’s announced climate pledges are met, the world would still consume 75 million barrels of oil daily by 2050. This would be down from 100 million today. But, that plummets to 25 million in the Net Zero Emissions by 2050 Scenario.
Natural gas demand increases over the next five years in all scenarios discussed. But, figures diverge widely beyond 2030.
After decades of growth, the prospects of coal power go downhill in the Announced Pledges Scenario. This decline could be accelerated further by China’s recent announcement of an end to its support for building coal projects abroad. That move could result in the cancellation of planned projects that would save up to 20 billion tonnes in cumulative CO2 emissions through until 2050. This amount equals the total emissions savings from the European union reaching net zero by 2050.
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The differences between the outcomes discussed in the Announced Pledges Scenario and the Net Zero Emissions by 2050 Scenario are stark. This highlights the need for more ambitious commitments if the world is to reach net-zero by 2050.
“Today’s climate pledges would result in only 20% of the emissions reductions by 2030 that are necessary to put the world on a path towards net-zero by 2050. Reaching that path requires investment in clean energy projects and infrastructure to more than triple of the next decade.
“Some 70% of that additional spending needs to happen in emerging and developing economies, where financing is scarce and capital remains up to seven times more expensive than in advanced economies,” said Birol.
Insufficient investment into clean energy is contributing to an uncertain future
Spending on oil and natural has been depressed by the price collapse in 2014/5 and 2020. Thus, the price is geared towards a world of stagnant falling demand. At the same time, spending on the clean energy transition is well below what is necessary to meet future needs in a sustainable way.
“There is a looming risk of more turbulence for global energy markets. We are not investing enough to meet future energy needs and the uncertainties are setting the stage for a volatile period ahead. The way to address this mismatch is clear – a major boost in clean energy investment, across all technologies and markets. But, this needs to happen quickly,” said Birol.
The report does stress that extra investment to reach net-zero by 2050 is not as onerous as it might appear. More than 40% of the required emissions reductions could come from measures that pay for themselves. These include improving efficiency, limiting gas leakage or installing wind and solar projects in places where they are now the most competitive electricity generation technologies.
These investments would also create huge economic opportunities. Successfully pursuing a net-zero path would create a market for wind turbines, solar panels, lithium-ion batteries, electrolysers and fuel cells of more than $1 trillion a year by 2050.
This is comparable in sizer to the world’s current oil market. Even in a much more electrified energy system, major opportunities remain for fuel suppliers to produce and deliver low-carbon gases.
Even in just the Announced Pledges Scenario, an additional 13 million workers could be employed in clean energy and related sectors by 2030. That number doubles in the Net Zero Emissions by 2050 Scenario.
The World Energy Outlook 2021 is available online.