“The world’s hugely encouraging clean energy momentum is running up against the stubborn incumbency of fossil fuels in our energy systems,” said Fatih Birol, the IEA Executive Director.
“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.”
Birol was speaking at the launch of the IEA’s new World Energy Outlook 2021 report that explores in detail the world’s new energy economy at a time when energy markets are extremely volatile.
The report, designed as a policy guide for governments ahead of COP26, makes it clear that this clean energy progress is still far too slow to put global emissions into sustained decline towards net zero.
Birol explained that high coal, gas, and oil prices are not good news for the global economy and inflation or emissions and that three main factors are causing the situation:
- Huge economic growth – a rebound of 6% mainly fueled by fossil fuels. The recovery is causing the second largest emissions increase in history and is therefore not sustainable.
- Several extreme weather events at the same time, including doughts, floods and extreme winters.
- Planned and unplanned disruptions in supply caused by maintenance works that were postponed due to COVID.
Birol made it very clear that current market volatility is not caused by too much clean energy and even though governments are making pledges, there is still work to do. “More and more governments are making pledges – we are thankful, but, there is a big but, today’s climate pledges would result in only 20% of the emissions reduction by 2030 that are necessary to put the world on a path towards net zero by 2050. The pledges are far from satisfactory.”
The WEO-2021 report shows that even as deployments of solar and wind go from strength to strength, coal consumption is still growing strongly this year.
The analysis spells out what the government emissions pledges mean for the energy sector and the climate and sets out what needs to be done to move from mere pledges to a net-zero trajectory consistent with limiting global warming to 1.5 °C.
The report makes recommendations based on two scenarios; the Stated Policies Scenario and the Announced Pledges Scenario. The differences between the outcomes in the Announced Pledges Scenario and the Net Zero Emissions by 2050 Scenario are stark, highlighting the need for more ambitious commitments and greater investment if the world is to reach net zero by mid-century.
Insufficient investment is contributing to uncertainty over the future and spending on clean energy transitions is far below what would be required to meet future needs in a sustainable way.
“Reaching that path requires investment in clean energy projects and infrastructure to more than triple over the next decade. Some 70% 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,” stated Birol.
“There is a looming risk of more turbulence for global energy markets,” Dr Birol said. “We are not investing enough to meet future energy needs, and the uncertainties are setting the stage for a volatile period ahead. The way to address this mismatch is clear – a major boost in clean energy investment, across all technologies and all markets. But this needs to happen quickly.”
The briefing did however present some good news.
The report stresses that the extra investment to reach net zero by 2050 is less burdensome than it might appear.
Also, 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.
Laura Cozzi, Chief Energy Modeler, IEA applauded China’s announcement to cease funding new coal projects and added that emissions can be quickly reduced by using cost-effective technologies that are currently available.
These include wind and solar, nuclear expansion, methane abatement, energy efficiency and electrification. Said Cozzi: “We are entering the decade of the turning point, for emissions and energy markets. For the first time, the world is ensuring economic growth, while reducing emissions.”
Download the report.