IEA downbeat on pace of energy transition

The world's progress on low-carbon energy is "far too slow to put global emissions into sustained decline towards net zero", the IEA said today to mark the launch of its World Energy Outlook 2021 (WEO).

Although the report recognises that "a new energy economy" is emerging "as solar, wind, electric vehicles and other low-carbon technologies flourish", it also notes that strong growth in global coal demand this year is pushing CO2 emissions towards their second-largest annual increase in history.

"The world's hugely encouraging clean energy momentum is running up against the stubborn incumbency of fossil fuels in our energy systems," IEA executive director Fatih Birol said. Birol calls on governments to resolve the problem at next month's UN Cop 26 climate conference by giving a clear signal that they are committed to rapidly scaling up the clean technologies of the future.

The WEO examines three scenarios, each outlining potential paths for energy supply and demand over the next 30 years. In addition to the Net Zero Emissions by 2050 (NZE) scenario, which was published in May, the report explores the Stated Policies Scenario (STEPS), which is based on existing energy and climate measures as well as policy initiatives under development, and the Announced Pledges Scenario (APS), which assumes all of the net zero emissions pledges announced by governments so far are fully implemented on time.

In all three, peak oil demand arrives at various points before 2050. "For the first time in a WEO, oil demand goes into eventual decline in all the scenarios examined, although the timing and speed of the drop vary widely," the IEA said. In the STEPS, oil demand peaks at 104mn b/d in the mid-2030s and then declines very gradually to 2050. In the APS, consumption peaks soon after 2025 at 97mn b/d and falls to 77mn b/d in 2050. In the NZE, demand has already peaked and drops to 72mn b/d in 2030 and just 24mn b/d by 2050.

Demand for natural gas increases in all three scenarios over the next five years. "But there are sharp divergences after this," the WEO said. "The share of natural gas in the global energy mix remains around 25pc to 2050 in the STEPS, while it falls to 20pc in the APS and to 11pc in the NZE. Around 70pc of natural gas use in 2050 in the NZE is equipped with carbon capture, utilisation and storage (CCUS)."

The IEA reiterates that in the NZE, no new oil and gas fields are needed beyond those already approved for development. One of the key reasons is a rapid rise in the use of low-emissions fuels, such as green hydrogen, alongside greater efficiency and electrification. But it warns that actual deployment of low-emissions fuels "is well off track". The current pipeline of planned low-carbon hydrogen projects falls short of the levels of use in 2030 assumed in the APS and even further short of the amounts required in the NZE, it said.

Clean path

To put the world on a path towards net zero emissions by 2050, the IEA says investment in clean energy projects and infrastructure needs to more than triple over this decade, to nearly $4 trillion/yr by 2030. And according to Birol, "some 70pc 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".

The IEA suggests that there are four solutions available to close the gap over the next 10 years between today's climate pledges and the emissions reductions required to limit the increase in global temperatures to 1.5°C compared with pre-industrial levels. These include a "relentless focus on energy efficiency", a broad drive to cut methane emissions from fossil fuel operations, and a major boost to clean energy innovation.

The WEO also calls for "a massive additional push for clean electrification". This would involve, among other things, a doubling of solar and wind power capacity compared with what has already been pledged, a major expansion of other low-emissions power generation, and a rapid phase out of coal.

By Konstantin Rozhnov