Sunday, June 23, 2024

‘Phenomenal’ Renewables Growth Still Allows Too Much Fossil Demand, 2.4°C Future: IEA

“The combination of growing momentum behind clean energy technologies and structural economic shifts around the world has major implications for fossil fuels, with peaks in global demand for coal, oil, and natural gas all visible this decade,” the IEA says in a release. It’s the earliest peak in fossil fuel consumption ever to show up in the Paris-based agency’s modelling of current government policies.

Based on those stated policies, global energy demand grows by only 0.7% per year through 2030, around half the rate for the last decade, though consumption continues to rise through 2050.

But those shifts are still only enough to drive oil, gas, and coal down from about 80% of global energy supply today to 73% in 2030, the analysis concludes.

“Bending the emissions curve onto a path consistent with 1.5°C remains possible but very difficult,” the IEA release states. “As things stand, demand for fossil fuels is set to remain far too high to keep within reach the Paris Agreement goal.”

Missing that target “risks not only worsening climate impacts after a year of record-breaking heat, but also undermines the security of the energy system, which was built for a cooler world with less extreme weather events.”

Which means that, even though the shift off carbon “is happening worldwide and it’s unstoppable,” governments, companies, and investors “need to get behind clean energy transitions rather than hindering them,” IEA Executive Director Fatih Birol said in the release. “There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access, and a safer climate for everyone. Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”

‘Striking Examples of Change’

The WEO says global clean energy investment has increased 40% since 2020, and only partly in a bid to reduce climate pollution.

“The economic case for mature clean energy technologies is strong,” the report states. “Energy security is also an important factor, particularly in fuel-importing countries, as are industrial strategies and the desire to create clean energy jobs.”

While some clean energy technologies and supply chains, particularly wind, are having hard times, the WEO cites “striking examples of an accelerating pace of change”:

• Electric car sales increasing from one in 25 in 2020 to one in five today;

• Countries on track to bring more than 500 gigawatts of new renewable energy capacity online this year;

• More than US$1 billion per day being spent on solar deployment;

• Expanding clean energy manufacturing capacity, particularly for solar-electric modules and electric vehicle batteries.

Largely echoing past IEA reports and pronouncements, the WEO lays out five pillars that would deliver far greater emission reductions by 2030, while setting the stage for successful negotiations at this year’s United Nations climate summit, COP 28, in Dubai:

• Tripling global renewable energy capacity;

• Doubling the rate of energy efficiency improvements;

• Cutting methane pollution from the world’s fossil fuel operations by 75%;

• Financing sufficient to triple clean energy investment in developing countries; and

• An “orderly decline in the use of fossil fuels”, including no new approvals for “unabated” coal plants without carbon capture technology bolted on.

The first three of those measures would “provide more than 80% of the emissions reductions needed by 2030 to put the energy sector on a pathway to limit warming to 1.5°C,” the report says. But it warns that global oil and gas investment today is almost double the level that would be consistent with a future of net-zero emissions, “signalling a clear risk of protracted fossil fuel use that would put the 1.5°C goal out of reach.”

Beginning of the End for Fossil Fuels

The WEO credits the recent global energy crisis with delivering the momentum to “usher in the beginning of the end of the fossil fuel era”. And while recent years have seen strong demand and record profits for fossil fuels, “there are signs of a change in direction,” the report says. “The rate at which new assets that use fossil fuels are being added to the energy system has slowed. Sales of cars and two/three-wheel vehicles with internal combustion engines are well below where they were before the COVID-19 pandemic. In the electricity sector, worldwide additions of coal- and natural gas-fired power plants have halved, at least, from earlier peaks. Sales of residential gas boilers have been trending downwards and are now outnumbered by sales of heat pumps in many countries in Europe and in the United States.”

The IEA also sees China’s economy “reaching an inflection point”—a crucial moment for global energy trends in the country that accounted for nearly two-thirds of new oil demand and one-third of rising gas demand over the last decade, in addition to dominating global coal markets.

A saturation point in the country’s economic growth and construction activity “points to lower future demand in many energy-intensive sectors like cement and steel,” the report says. And China “is also a clean energy powerhouse,” with about half of the world’s new wind and solar installations and more than half of electric vehicle sales last year.

Those trends indicate that China’s energy demand will peak toward the middle of this decade, “with robust expansion of clean energy putting overall fossil fuel demand and emissions into decline,” the IEA says. And if China’s annual economic growth, now anticipated at just under 4% through 2030, slowed down by a single percentage point, the reduction in coal demand would be nearly equal to Europe’s current consumption.

“Oil import volumes would decline by 5% and LNG imports by more than 20%, with major implications for global balances.”

Picking Up the Pace

But an end to fossil industry growth won’t stop all fossil investment, and reduced spending on oil and gas won’t be enough on its own to deliver a net-zero future, the IEA warns.

“The development of a clean energy system and its effect on emissions can be reinforced by policies that ease the exit of inefficient, polluting assets” and restrict the introduction of new ones, the WEO states. “But the urgent challenge is to increase the pace of new clean energy projects, especially in many emerging and developing economies outside China, where investment in energy transitions needs to rise by more than five times by 2030” to match up with the IEA’s net-zero scenario.

“The drivers for growth in demand for energy services in most emerging and developing economies remain very strong,” with urbanization rates, built space per capita, and ownership of air conditioning and vehicles still “far lower than in advanced economies,” the report says. “Finding and financing low-emissions ways to meet rising energy demand in these economies is a vital determinant of the speed at which global fossil fuel use eventually falls,” with clean electrification, energy efficiency, and lower- and zero-carbon fuels the most promising options.

While some of the “tensions” that have swept global energy markets in recent years have begun to ease, “the situation remains fragile,” the IEA cautions. “The frailties of the fossil fuel age and the hazards that it has created for the planet are plain to see, and opportunities in the emerging clean energy economy are growing fast. But many uncertainties remain about the resilience of energy supply chains old and new, about risks to the security and affordability of transitions, and about whether the process of change will be sufficiently rapid to avoid very severe impacts from a changing climate.”

This article first appeared in The Energy Mix, and is republished under a Creative Commons License.

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