No place for further oil and gas investments in IEA net-zero roadmap
The International Energy Agency’s (IEA) has announced the world’s first comprehensive study on how to transition to a net-zero energy system by 2050.
According to the IEA, climate pledges by governments to date – even if fully achieved – would fall well short of what is required to bring global energy-related carbon dioxide (CO2) emissions to net-zero by 2050 and give the world a chance of limiting the global temperature rise to 1.5 °C.
The Net Zero by 2050: a Roadmap for the Global Energy Sector report is the world’s first comprehensive study of how to transition to a net-zero energy system by 2050 while ensuring stable and affordable energy supplies, providing universal energy access, and enabling robust economic growth.
It sets out a cost-effective and economically productive pathway, resulting in a clean energy economy dominated by renewables like solar and wind instead of fossil fuels and examines the roles of bioenergy, carbon capture, and behavioural changes in reaching net zero.
Fatih Birol, the IEA executive director, said: “Our Roadmap shows the priority actions that are needed today to ensure the opportunity of net-zero emissions by 2050 – narrow but still achievable – is not lost.
“The scale and speed of the efforts demanded by this critical and formidable goal – our best chance of tackling climate change and limiting global warming to 1.5 °C – make this perhaps the greatest challenge humankind has ever faced.
“The IEA’s pathway to this brighter future brings a historic surge in clean energy investment that creates millions of new jobs and lifts global economic growth. Moving the world onto that pathway requires strong and credible policy actions from governments, underpinned by much greater international cooperation”.
The Roadmap sets out more than 400 milestones to guide the global journey to net-zero by 2050. These include, from today, no investment in new fossil fuel supply projects, and no further final investment decisions for new unabated coal plants.
By 2035, there are no sales of new internal combustion engine passenger cars, and by 2040, the global electricity sector has already reached net-zero emissions.
The pathway calls for annual additions of solar PV to reach 630 gigawatts by 2030, and those of wind power to reach 390 gigawatts. Together, this is four times the record level set in 2020.
IEA stated that most of the global reductions in CO2 emissions between now and 2030 in the net-zero pathway came from technologies readily available today. But in 2050, almost half the reductions come from technologies that are currently only at the demonstration or prototype phase. This demands an increase in spending on research and development.
Progress in the areas of advanced batteries, electrolysers for hydrogen, and direct air capture and storage could be particularly impactful.
“The transition must be fair and inclusive, leaving nobody behind. We have to ensure that developing economies receive the financing and technological know-how they need to build out their energy systems to meet the needs of their expanding populations and economies sustainably”, Birol added.
The pathway foresees a total annual energy investment surge to $5 trillion by 2030, adding an extra 0.4 percentage points a year to global GDP growth, based on a joint analysis with the International Monetary Fund. The jump spending creates millions of jobs in clean energy, including energy efficiency, as well as in the engineering, manufacturing, and construction industries. All of this puts global GDP 4 per cent higher in 2030 than it would reach based on current trends.
By 2050, the energy world looks completely different. Global energy demand is around 8 per cent smaller than today, but it serves an economy more than twice as big and a population with 2 billion more people.
Almost 90 per cent of electricity generation comes from renewable sources, with wind and solar PV together accounting for almost 70 per cent. Most of the remainder comes from nuclear power.
Fossil fuels fall from almost four-fifths of total energy supply today to slightly over one-fifth. Fossil fuels will remain used in goods where the carbon is embodied in the product such as plastics, in facilities fitted with carbon capture, and in sectors where low-emissions technology options are scarce.
“The pathway laid out in our Roadmap is global in scope, but each country will need to design its own strategy, taking into account its own specific circumstances. The IEA stands ready to support governments in preparing their own national and regional roadmaps, to provide guidance and assistance in implementing them, and to promote international cooperation on accelerating the energy transition worldwide”, Birol stated.
IEA also said that the contraction of oil and natural gas production would have far-reaching implications for all the countries and companies that produce these fuels. No new oil and natural gas fields are needed in the net-zero pathway, and supplies become increasingly concentrated in a small number of low-cost producers.
OPEC’s share of a much-reduced global oil supply grows from around 37 per cent in recent years to 52 per cent in 2050, a level higher than at any point in the history of oil markets.
“Governments need to create markets for investments in batteries, digital solutions, and electricity grids that reward flexibility and enable adequate and reliable supplies of electricity. The rapidly growing role of critical minerals calls for new international mechanisms to ensure both the timely availability of supplies and sustainable production”, Birol concluded.