- IEA’s WEO 2021 report says current pledges for climate not enough for the world to achieve net zero emissions by 2050
- Oil demand would be still be there, but much less under NZE scenario, but the need of the hour is to invest in clean energy technologies
- At the COP26, governments must send a clear signal of their commitment to rapidly scale up clean and resilient technologies of the future
If all nations of the world meet their climate pledges as promised on time, the world can expect to bend the global emissions curve down. If this happens, the demand for fossil fuel will peak by 2025, and global emissions fall by 40% by 2050. The electricity sector would see the largest decline with annual additions of solar PV and wind approaching 500 GW by 2030.
Yet, this is not enough for the world to reach a net zero emissions status by 2050 since we would be entering 2100 with around 2.1 °C global average temperature rise, claims the International Energy Agency (IEA) as part of the Announced Pledges Scenario (APS) in its latest edition of the World Energy Outlook (WEO) 2021 report.
That’s because even if all the pledges made to date are met, the world would still be using 75 million oil barrels a day by 2050, down from 100 million today. Hence, the IEA argues that the world is going too slow, and it needs to pick up an accelerated pace to bring down global emissions. The trajectory we would need to follow—consistent with limiting global warming to 1.5 °C—is the Net Zero Emissions By 2050 Scenario (NZE), because then oil demand would be down to 25 million barrels per day.
One big way to reach the NZE is to create a market for wind turbines, solar panels, lithium-ion batteries, electrolyzers and fuel cells of over $1 trillion a year by 2050 ‘comparable in size to the current oil market’.
If the NZE 2050 scenario is reached, the cumulative market opportunity for manufacturers of wind turbines, solar panels, lithium-ion batteries, electrolyzers and fuel cells will amount to $27 trillion. The IEA authors believe these 5 elements alone in 2050 would be larger than today’s oil industry and its associated revenues.
“The differences between the outcomes in the APS and the NZE by 2050 Scenario are stark,” according to the report writers, and add that the extra investment to reach net zero by 2050 is ‘less burdensome’ than it might appear.
Analysts believe while the number of employees in the clean energy sector would double in the net zero scenario over announced pledges scenario, more than 40% of the requisite emission reduction would come from measures that pay for themselves, including installing wind or solar.
In the pursuit of a NZE world, the world remains highly vulnerable to trade patterns, producer policies, and geopolitical considerations. High prices of critical minerals as lithium, cobalt, nickel, copper and rare earth elements could slow the progress towards a clean energy future ‘or make it more costly’. Critical minerals, together with hydrogen-rich fuels such as ammonia, also become major elements in international energy-related trade; their combined share rises from 13% today to 25% in the APS and to over 80% in the NZE by 2050, as per the report.
IEA Executive Director Fatih Birol very clearly opined that the world is not investing enough to meet future energy needs, and the uncertainties are setting the stage for a volatile period ahead. To avoid it, there must be a major boost in clean energy investment, across all technologies and all markets, ‘needs to happen quickly’.
Released ahead of the Conference of the Parties (COP26) meeting scheduled for later this month, the report calls on policymakers to take stronger and clear action. “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,” stressed Birol.
Some of the other main highlights of the report include:
- Getting the world on track for 1.5 °C requires a surge in annual investment in clean energy projects and infrastructure to nearly $4 trillion by 2030.
- Coal demand declines in all our scenarios, but the difference between the 10% decline to 2030 in APS and the 55% decline in NZE is the speed at which coal needs to be phased out from the power sector.
- Oil demand, for the first time, goes into eventual decline in all the scenarios examined in the WEO-2021, although the timing and speed of the drop vary widely.
- Governments have to ensure that electricity markets are resilient by incentivizing investments in flexibility, efficiency and demand-side response.
The complete IEA report is available on the IEA’s website.