Even as deployments of solar and wind go from strength to strength, the world’s consumption of coal is growing strongly this year, said the latest report of World Energy Outlook (WEO-2021).
It said the trend is pushing carbon dioxide (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,” said IEA executive director Fatih Birol.
“Governments need to resolve this at COP26 by giving a clear and unmistakeable 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,” said Birol.
A new energy economy is emerging around the world as solar, wind, electric vehicles and other low-carbon technologies flourish.
But as the pivotal moment of COP26 approaches, the IEA’s new WEO makes it clear that this clean energy progress is still far too slow to put global emissions into sustained decline towards net zero.
It highlighted the need for an unmistakeable signal of ambition and action from governments in Glasgow.
As well as the Net Zero Emissions by 2050 Scenario, the WEO explores two other scenarios to gain insights into how the global energy sector may develop over the next three decades – and what the implications would be.
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 be around 2.1 °C. 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.
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.
“Today’s climate pledges would result in only 20 percent of the emissions reductions by 2030 that are necessary to put the world on a path towards net zero by 2050,” Dr Birol said.
“Reaching that path requires investment in clean energy projects and infrastructure to more than triple over the next decade.”
“Some 70 percent 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.”
Insufficient investment is contributing to uncertainty over the future. Spending on oil and natural gas has been depressed by price collapses in 2014-15 and again in 2020.
As a result, it is geared towards a world of stagnant or even falling demand.
At the same time, spending on clean energy transitions is far below what would be required to meet future needs in a sustainable way.
The report stresses that the extra investment to reach net zero by 2050 is less burdensome than it might appear.
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.
Successfully pursuing net zero would create a market for wind turbines, solar panels, lithium-ion batteries, electrolysers and fuel cells of well over $1 trillion a year by 2050, comparable in size to the current oil market.
Even in a much more electrified energy system, major opportunities remain for fuel suppliers to produce and deliver low-carbon gases.
Just in the Announced Pledges Scenario, an additional 13 million workers would be employed in clean energy and related sectors by 2030, while that number doubles in the Net Zero Emissions by 2050 Scenario.