IEA: NARROW BUT CLEAR PATH TO NET ZERO
Spotlight on the energy sector
In a groundbreaking report, the International Energy Agency (IEA) presented the world’s first comprehensive study of how to decarbonize the global economy while ensuring stable and affordable energy supplies, providing universal energy access, and enabling robust economic growth.
The report begins: “As the major source of global emissions, the energy sector holds the key to responding to the world’s climate challenge.” In light of this, the goal of the study was to set out a cost-effective and economically productive pathway to net-zero carbon emissions by 2050, “resulting in a clean, dynamic and resilient energy economy dominated by renewables like solar and wind instead of fossil fuels.”
“The path to net-zero emissions is narrow,” the authors assert. “Staying on it requires the massive deployment of all available clean energy technologies – such as renewables, EVs and energy efficient building retrofits – between now and 2030.”
While the report addresses opportunities and imperatives across every sector of the economy, its emphasis is on the electricity sector, which is today the single largest source of CO2 emissions worldwide. While renewable energy technologies like solar and wind are the key to reducing emissions in electricity generation, the report makes clear that there is a long way to go.
The era of marginal change must end
For example, today, solar and wind account for almost 10% of total electricity generation, while unabated coal, natural gas & oil account for over 60%. In the EIA’s pathway to net zero, almost 90% of global electricity generation in 2050 must come from renewable sources, with solar and wind contributing nearly 70% alone. This will require 1.02GW in annual additions of solar and wind by 2030, or the equivalent to installing the world’s current largest solar park roughly every day.
The call to action is clear, for massive new investment and aggressive moves away from fossil fuels and fossil-fuel dependent downstream applications. For example, starting today, the IEA roadmap requires that no new unabated coal plants be approved for development at all.
To reach net zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around $4 trillion. While the authors acknowledge there will be inevitable displacement in fossil-fuel related industries, they argue that such investment has the potential to “create millions of new jobs, significantly lift global economic growth, and achieve universal access to electricity and clean cooking worldwide by the end of the decade.”
Ultimately, the report projects that electricity will become the core of the energy system across all sectors, from transport and buildings to industry. “Electricity generation will need to reach net-zero emissions globally in 2040 and be well on its way to supplying almost half of total energy consumption. This will require huge increases in electricity system flexibility – such as batteries, demand response, hydrogen-based fuels, hydropower and more – to ensure reliable supplies.”
In summation, the authors envision a global energy sector in 2050 is based largely on renewables, with solar the single largest source of supply. Achieving net-zero emissions by 2050, they realize, will require nothing short of the complete transformation of the global energy system. The pathway they outline is narrow but achievable, and very clearly defined.
Read the full report here.
THE WEEK EVERYTHING CHANGED
The week of 17 May is likely to be remembered as a turning point in the global transition from fossil fuels to renewable sources of energy. First was the release of the IEA’s watershed report presenting a clear but narrow pathway to net zero by 2050 (see following page). Then, three separate instances where fossil fuel companies received clear direction, from either their boards of directors or courts of law to redouble efforts to decarbonize their activities (next article). Finally, a spate of articles in Bloomberg and elsewhere describing a clear shift in the mindset of banks and major investors toward fossil fuel vs. renewable projects.
The week’s developments are neatly summarized in an article by Joel Makower of GreenBiz, who says it’s “about markets, plain and simple … from here, there’s simply no turning back.” Read Joel’s piece here.
STUNNING REBUKES FOR BIG OIL
Kevin Crowley of Bloomberg writes: “Just five years ago, environmental activists were limited to waving placards outside of annual meetings and to the odd shareholder proposal, inevitably rebuffed by the boards and management teams. On Wednesday by contrast, stock investors ousted two Exxon Mobil Corp. directors seen as insufficiently attuned to the threat of climate change, while Chevron Corp. shareholders voted for a proposal to compel the company to reduce pollution by its customers. Royal Dutch Shell Plc was ordered to slash emissions harder and faster than planned by a Dutch court.”
The article quotes Fred Krupp, president of the Environmental Defense Fund. “It’s a big deal for Exxon, but it’s a watershed moment for the oil and gas industry.” Read more.