COP26: Clean energy investments must triple by 2030 says IEA

IEA’s Fatih Birol.

By Anders Lorenzen

The International Energy Agency (IEA) has yet again warned that the energy transition to meet net-zero targets is not happening fast enough. 

In its newest World Energy Outlook report, and weeks before the start of COP26, the conservative energy analysts stated that, even though it is evident that a new energy economy is emerging around the world with the rapid adoption of renewable energy technologies and electric vehicles and other emerging low-carbon technologies, it is clear the transition is not happening fast enough. They suggest the only thing that will lead to enough of a change of direction would be an unmistakable signal of ambition and action when governments meet in Glasgow in a few weeks time. A task made slightly more difficult by the fact that Xi Jinping, the President of China – the world’s largest emitter – has announced that he will not be attending COP26.

IEA says its report is designed to be used as a handbook for policy-makers at the COP26 summit and offers a critical opportunity to accelerate both climate action as well as the clean energy transition. It also offers stark warnings about the direction of travel policy-makers are currently taking, but offers an analysis of how to move towards a pathway that would have a good chance of achieving a 1.5 degree C world.

Heading for above 2 degrees C

The IEA says that its report shows that even though the deployments of solar and wind worldwide continue to go from strength to strength, the world’s consumption of coal also continues to grow strongly which is pushing CO2 emissions towards their second-largest annual increase in history. It further explores what the pledges to reduce emissions made by governments so far mean for the energy sector and the climate. And it sets out what needs to be done to move beyond these announced pledges towards a trajectory that would reach net-zero emissions globally by mid-century.

Furthermore, it explores two other scenarios which deliver insights into how the global energy sector may develop over the next three decades – and what the implications would be:

Stated Policies Scenario

The Stated Policies Scenario represents a path based on the energy and climate measures governments have actually put in place to date, as well as specific policy initiatives that are under development. In this scenario, almost all of the net growth in energy demand through 2050 is met by low emissions sources, but that leaves annual emissions still around today’s levels. As a result, global average temperatures will still be rising when they hit 2.6 °C above pre-industrial levels in 2100. 

Announced Pledges Scenario

The Announced Pledges Scenario maps out a path in which the net-zero emissions pledges announced by governments so far are implemented in time and in full. In this scenario, demand for fossil fuels peaks by 2025, and global CO2 emissions fall by 40% by 2050. All sectors see a decline, with the electricity sector delivering by far the largest. The global average temperature rise in 2100 is held to around 2.1 °C.

Oil in decline

And for the first time in any of its reports, the IEA predicts oil demand will go into eventual decline in all the scenarios examined, although the timing and speed of the drop vary widely. If all today’s announced climate pledges are met, the world would still be consuming 75 million oil barrels per day by 2050 – down from around 100 million today – but that plummets to 25 million in the Net Zero Emissions by 2050 Scenario. Natural gas demand increases in all scenarios over the next five years, but there are sharp divergences after this. After decades of growth, the prospects for coal power go downhill in the Announced Pledges Scenario – a decline that could be accelerated further by China’s recent announcement of an end to its support for building coal plants abroad. That move may result in the cancellation of planned projects that would save some 20 billion tonnes in cumulative CO2 emissions through 2050 – an amount similar to the total emissions savings from the European Union reaching net zero by 2050.

Commenting on the report, Fatih Birol, the IEA’s Executive Director states: “The world’s hugely encouraging clean energy-momentum is running up against the stubborn incumbency of fossil fuels in our energy systems. 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.”

However, the differences between the outcomes in the Announced Pledges Scenario and the Net Zero Emissions by 2050 Scenario are stark and IEA says this highlights the need for more ambitious commitments if the world is to reach net-zero by mid-century.

More ambition needed

Birol added: “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 over the next decade.” He also said that we could expect 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 all markets. But this needs to happen quickly.”

In order to reach net-zero by 2050, the report stresses that the extra investment needed is not as burdensome as it appears. More than 40% of the required emissions reductions would come from measures that pay for themselves, such as improving efficiency, limiting gas leakage, or installing wind or solar in places where they are now the most competitive electricity generation technologies. In addition, they argue that these investments also create huge economic opportunities.

The IEA’s outlook report is free online and can be accessed here.

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