The International Energy Agency (IEA) last week published an update to its 2021 Net Zero Roadmap, the influential organization’s vision for how the global energy system could feasibly decarbonize in line with climate goals.
The report’s headline conclusion is stark. Achieving the Paris Agreement’s goal of capping global temperature increases at 1.5 degrees Celsius is harder than ever, after 2022 saw emissions rise yet again as countries recovered from the COVID-19 pandemic and Russia’s war against Ukraine threw energy markets into chaos.
But the report is clear that the world’s climate targets remain just about within reach, thanks to the “staggering” growth in clean energy technology adoption. In the two years since the first edition of the report, the cost of wind power, solar PV, heat pump and battery technologies has continued to fall, and manufacturing capacity has ramped up. As IEA Executive Director Fatih Birol noted: “The pathway to 1.5C has narrowed in the past two years, but clean energy technologies are keeping it open.”
Here, BusinessGreen rounds up the 10 main takeaways from the report.
1. Policymakers need to deliver on 4 headline asks
The updated Net Zero Roadmap runs to 224 pages, but the IEA has helpfully set out four headline goals for governments to meet this decade to chart an energy system decarbonization pathway aligned with capping temperatures at 1.5C. These are a tripling of renewables capacity, a doubling of energy efficiency improvement rates, a 75 percent reduction in methane emissions and an increase in the electrification of home heating and transport through the rapid roll-out of electric vehicles (EVs) and heat pumps.
When it comes to ramping up renewables, the IEA notes that advanced economies and China are already on track to achieve 85 percent of their contribution to a global goal of tripling renewables. But it notes that stronger policies and international support are needed to scale up clean energy deployment in other emerging markets and developing economies.
A new global target for tripling renewables by 2030 and a phase out of “unabated” fossil fuels are both proposals on the table for the upcoming CO28 Climate Summit in Dubai. The proposed renewables target has been heavily promoted by COP28 host nation UAE and hopes are high it could be adopted, while the proposal to phase out unabated fossil fuels is expected to be a major flashpoint at the talks given co-ordinated resistance from oil producing nations.
Advanced economies and China are already on track to achieve 85% of their contribution to a global goal of tripling renewables.
The IEA also points out that ramping up renewables and improving energy efficiency intensity go hand in hand, given the significant energy savings offered by swapping fossil fuel-powered technologies with electrified alternatives. Improving the technical efficiency of equipment, such as electric motors and air conditioners, and using energy and materials more efficiently are also singled out as key levers that can improve energy efficiency around the world.
2. New fossil fuel production projects have to end
The 2021 Net Zero Roadmap made headlines the world over for its warning that fossil fuel expansion is incompatible with global climate goals. The 2023 update doubles down on this message, warning that governments must limit fossil fuel investment to existing assets and already approved projects if they want to avoid damaging energy price spikes and lumbering their economies with expensive stranded assets.
The world already has too many fossil fuel production assets online to stay within the 1.5C threshold, the report notes, calculating that $4.39 billion has already been committed to infrastructure and projects likely to result in net zero targets being breached. It stresses that to reach net zero, demand for oil, gas, and coal must fall by more than 25 percent by 2030 and 80 percent in 2050.
As such, the IEA again warned the pursuit of domestic oil and gas expansion by governments is both economically and environmentally reckless. “Attempts by governments to prioritise domestic production must recognize the risk of locking in emissions that could push the world over the 1.5C threshold, and that, if the world is successful in bringing down fossil demand quickly enough to reach net zero emissions by 2050, new projects would face major commercial risks,” the roadmap notes.
The U.K. government, in the midst of licensing more than 100 oil and gas licenses in the North Sea, had not responded to BusinessGreen’s request for comment on the IEA’s warning at press time. Ministers have maintained that its plans for oil and gas projects will help deliver energy security by reducing the country’s dependence on imported fossil fuels, which often have a higher carbon footprint. But campaigners have rejected this argument, noting the approved North Sea projects could end up being stranded if demand for oil and gas falls as anticipated and will do nothing to shield Britons from expensive and volatile fossil fuel prices, set internationally.
The IEA’s roadmap argues that reducing fossil fuel demand and supply should help reduce “traditional risks to energy security” for governments around the world. However, it does warn that governments will continue to face geopolitical challenges as coal, oil and gas supplies start to concentrate in nations where production is cheapest.
Carbon Tracker’s head of oil and gas, Mike Coffin, welcomed the IEA’s warning that oil and gas expansion did not advance energy security. “It’s important to see the IEA report stress that the shift away from oil and gas ‘reduces traditional risks to energy security’, effectively in contrast to incumbent fossil fuel industry narratives,” he said. “Similarly, the report highlights how countries’ drive for increased domestic production is contrary to supporting global Paris goals.”
Moreover, it remains unclear whether demand really will fall in line with a 1.5C scenario. In the two years since the IEA’s initial warning, investments in new fossil fuels have increased, as has fossil fuel demand and energy sector CO2 emissions, which reached an all-time high in 2022. As such, it remains to be seen whether governments will heed the IEA’s call this time around and start developing credible strategies for winding down fossil fuel assets.
3. Calls for climate to be prioritized over geopolitics
As the report was released, Birol urged national governments to “separate climate from geopolitics,” arguing that the collective effort required to tackle the “significant challenges” presented by climate change meant nations had to find ways to work together in a fraught geopolitical arena.
The total amount of natural resources needed to deliver a net zero economy is significantly less than those currently needed to run the fossil fuel economy.
With the IEA predicting that clean energy spend must rise from $1.8 trillion in 2023 to reach $4.5 trillion annually by the early 2030s, much of this collaboration needs to be focused on mobilizing climate finance, especially in developing countries where investment is most needed. Economic rivals and petrostates betting on continued demand from emerging markets will need to find a way to jointly mobilize investment in clean energy transitions that may damage their economic prospects in the near term, even as they serve to enhance global climate and energy security.
4. There are grounds for cautious optimism
Despite the headline warning that the path to delivering net zero emissions by 2050 is “narrowing,” surging clean energy technology adoption provides room for optimism, the IEA argued.
Solar PV installations and electric car sales are tracking in line with milestones set out in the net zero scenario published in 2021, and the pipeline for manufacturing capacity for solar PV and battery technologies is on track to meet demand projected for 2030.
Meanwhile, the list of technologies that need to be commercialized to reach net zero is shrinking. In 2021, the IEA calculated the world had 50 percent of the technologies required to deliver net zero by 2050. In the new report, that percentage has increased to 65 percent, thanks to rapid advancement in clean energy innovation.
More broadly, analysts have noted that the 2023 roadmap forecasts a future with more electrification and less fossil fuels and carbon capture and storage than its predecessor. In 2021’s report, the IEA predicted that 68 percent of primary energy demand to be met by electrification. In the update, this figure has been amended to 73 percent, eating into predictions for carbon capture and storage capacity and fossil fuel demand.
5. But significant challenges lie ahead
A less generous reading of the IEA’s data, however, is that the world is in a worse state that it was in 2021. As economies rebounded from the pandemic, global emissions reached an all-time high in 2022. And while progress on certain clean technologies are indeed outpacing expectations, climate policymaking continues to be out of step with pace of decarbonization required. As a result, a number of key green technologies are lagging far behind the deployment rate recommended under the IEA’s net zero scenario.
Postponing stronger action would cost the world an additional $1.3 billion annually.
The report warns that carbon capture use and storage (CCUS) has a history of “underperformance”; that building electricity grids can take decades, largely due to permitting bottlenecks; and that the majority of CCUS and hydrogen projects announced today urgently need policy support to deliver the “enabling infrastructure” that would allow them to proceed.
In a notable change to the 2021 version of the report, the IEA has updated its modelling to acknowledge it now predicts the energy system to produce more emissions in 2030. It said it was necessary to make this change to “reflect the rebound in economic activity and emissions in the wake of the pandemic,” as well as governments’ collective “failure to act in recent years at the speed envisaged in our original report.”
6. The economic case for net zero is more compelling than ever
On the jobs front, the report notes that a clean energy system can deliver more jobs than the fossil fuel economy it replaces. The IEA notes that under its net zero pathway, 13 million jobs in fossil-related industries would disappear by 2030. But 30 million would be created — meaning that around two new jobs will open up for every job lost. Roughly half of the 65 million people who work in energy or energy-related sectors today such as energy efficiency and vehicle manufacturing are already focused on clean energy, it said.
The report also stresses that investment in the transition will generate net economic gains, largely due to a huge reduction in spending on fossil fuels. The net zero transition will need “very high level of investment,” it acknowledges, predicting investment will hit $4.5 trillion in the early 2030s and peak at $4.8 trillion a year in the second half of the decade. But while these clean energy technologies are capital-intensive to install, they will generate savings for the energy system over time due to much lower running costs and their relative efficiency over incumbent technologies.
Decarbonization means a major reduction in the overall materials intensity of the energy system.
Under the IEA’s net zero scenario modeling, the share of total GDP swallowed up by fuel and investment spending will fall from 11.2 percent to 6.4 percent in 2050. Overall, it notes there are $12 trillion in savings to be made between now and 2050 from cutting down fuel spending in line with the IEA’s 1.5C scenario. And those financial gains come before the impact of improved air quality and reduced climate risks are considered.
7. The costs of ‘not’ zero are staking up
As debates rage in the U.K. about the so-called “costs of net zero” — inflamed by British Prime Minister Rishi Sunak’s highly contested warnings that households are facing excessive costs as a result of climate policies — the IEA’s report offers an important counterweight.
The report is crystal clear that the costs of not achieving net zero will be far more than those of delivering climate goals. A “delayed action case included in the report indicates that postponing stronger action would cost the world an additional $1.3 billion annually. This is largely because the build up of more emissions in the near-term will require more emissions removal from the air using carbon removal and storage technologies in the long-term. In other words, it is much cheaper to cut emissions today than it is to remove them in the future.
And on an individual household level, the IEA has forecast that under its net zero pathway, household spending will fall dramatically due to the “large” energy and cost savings generated by energy efficiency and electrification. It predicts that if energy goals are met, household expenditure in emerging market and developing economies will decline by 12 percent from today’s levels, with richer nations set to benefit from even steeper cost reductions.
As such, the IEA has urged policymakers to step up their support in the short-term to assist households, particularly low-income ones, so they can meet the higher sticker price of clean energy technologies and then benefit from the long-term savings on offer.
8. A more equitable transition is urgently needed
The IEA also stressed the drive to achieve climate goals must take into account different countries’ economic circumstances and historic role in driving the climate crisis. This means that richer nations need to go further, faster in cutting emissions, so as to create space for less developed countries to adopt a slightly slower decarbonization trajectory.
The IEA has therefore advocated for developed nations to achieve net zero emissions collectively by around 2045; China by around 2050, 10 years ahead of its current target; and other emerging market and developing economies to reach the same goal “well after 2050.” In the nearer term, the IEA has warned advanced economies need to slash their emissions by 80 percent on 2022 levels and emerging market and developing economies by a less extreme 60 percent by 2035.
The share of total GDP swallowed up by fuel and investment spending will fall from 11.2% to 6.4% in 2050.
The recommendations come as questions mount about the U.K.’s ability to meet its own climate targets in the wake of the prime minister’s green policy rollback, including both its long-term net zero by 2050 goal and its 2035 target to slash emissions by 78 percent on 1991 levels. The government had not responded to BusinessGreen’s request for comment on the IEA’s call for advanced economies to bring forward their net zero target dates to 2045 at press time.
Another key pillar of an equitable transition is the delivery of clean energy access for all by 2030, the IEA said, stressing that $45 billion or the $4.5 trillion annual clean energy investment budget would need to go towards this mission. Expect further calls at the upcoming COP28 Climate Summit for flows of climate finance into developing countries to increase.
9. Critical mineral supply chains are lagging
As net zero delayers are at frequent pains to point out, the net zero transition will require a lot of minerals and metals. Electric car batteries, energy storage systems, electricity transmission cables, solar panels and wind turbines may help reduce the energy system’s emissions, but their manufacturing will lead to significant demand for natural resources.
Not for the first time, the IEA has warned governments need to plan carefully to ensure they can deliver the raw materials required to deploy the technologies needed for its net zero scenario. In particular, it warns that supplies of nickel and lithium are heading for a shortage. As such, more investment in the extraction of critical metals and minerals, the development of recycling infrastructure and improvements to the resource efficiency of clean technologies is urgently needed.
The roadmap also highlights the importance of diversifying supply chains, noting that extraction and refining of critical minerals remains concentrated in a handful of countries and regions. The IEA warns that diversifying these supply chains will not only reduce the energy system’s entanglement in geopolitics, but also its vulnerability to extreme weather events and supply chain disruptions.
The net zero transition is going to require a lot of minerals and metals.
The imperative to reduce critical mineral reliance on China and other dominant refining and mining players is an issue European governments are well aware of, with the lessons of over-dependence on one country for fossil gas still being felt in real-time.
But overall, the IEA stressed the total amount of natural resources needed to deliver a net zero economy is significantly less than those currently needed to run the fossil fuel economy. “Decarbonization means a major reduction in the overall materials intensity of the energy system, given that increased demand for critical minerals is accompanied by a massive decrease in extraction of fossil fuels,” the report states. “The net result is that for every unit of energy delivered in 2050, the energy system consumes two-thirds less in materials than it does today.”
10. An IEA transformed?
The IEA, founded to advise countries on how to secure OECD member states’ access to fossil fuels in the aftermath of the 1970s energy crisis, has undergone something of a transformation in recent years under Birol’s leadership. Once the purveyor of notoriously conservative energy transition scenarios used by fossil fuel companies to justify underpowered climate pledges and plans, it has become a major champion of the net zero transition. The 2021 Net Zero Roadmap mainstreamed the argument that new coal, oil and gas expansion is fundamentally incompatible with climate goals, and its 2023 update is even more punchy in its conclusions.
As Kingsmill Bond and Sam Butler-Sloss at the RMI think tank noted, the tone of the updated Net Zero Roadmap indicates an organization confident the net zero transition will be achieved. “[The 2021] report was all about ‘should’ while this report is all about ‘will,'” they said. “As the result of the continued rapid growth in renewable deployment, the IEA has moved from a theoretical exercise in 2021 to embracing the prospect of a net zero future with enthusiasm.”
In the foreword to the report, Fatih Birol describes the publication of the IEA’s first Net Zero Roadmap in May 2021 as a “landmark moment for the energy and climate world.” He also stresses that it marked a milestone for the IEA itself, becoming the organization’s “most viewed and downloaded publication ever.” Clearly, the organization’s focus on delivering a net zero economy is starting to pay off.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : GreenBiz – https://www.greenbiz.com/article/10-key-takeaways-ieas-updated-net-zero-roadmap
