How the IEA points the path to “Net Zero by 2050” in its latest report

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Introduction

Adopted by 196 parties in 2015, the Paris Agreement set the landmark for the multilateral climate change process by aiming to limit global warming to well below 2 ºC, preferably to 1.5 ºC, compared to pre-industrial levels. When addressing the actions needed to reduce the risks of extreme weather events such as droughts, floods and heatwaves, scientific consortia such as the Intergovernmental Panel on Climate Change (IPCC) stress the importance of reaching the global peak of greenhouse gas emissions and moving towards a climate-neutral world by mid-century or sooner.

According to the latest report by the International Energy Agency (IEA), an intergovernmental policy advisor, achieving “Net Zero by 2050” requires some extensive changes and immediate action. As the world’s energy watchdog claims, transforming energy systems worldwide, including massive declines in the use of coal, oil, and gas, is inevitable in order to drive towards carbon-emission neutrality. However, the roadmap outlined by the IEA with its more than 400 milestones calls for nothing less than such a total transformation of the global energy system. The report therefore has received a mixed reception from producers and member states.
To understand why the 224-pages report created such a stir in the energy world, we have condensed some of the key takeaways.

As the world's energy watchdog claims, transforming energy systems worldwide, including massive declines in the use of coal, oil, and gas, is inevitable in order to drive towards carbon-emission neutrality.

Net Zero by 2050 is a crucial step in the fight against climate change

Around three-quarters of greenhouse gas emissions today are caused directly or indirectly by the energy industry which therefore holds the key to preventing the worst effects of climate change – by rethinking how to produce, transport and consume energy from a global perspective.
Compared to previous recommendations by the IEA, the “Net Zero by 2050” report now emphasizes much more drastically how narrow a realistically achievable path is to avert the worst effects of climate change and towards a clean energy world.

Achieving Net Zero by 2050 demands immediate action and redoubled efforts

The overarching message: The target set is more than ambitious, but still achievable if appropriate action is taken now. The pathway to this laid out by the IEA is global in scope but demands from all countries to design their own strategy accounting for their specific circumstances and different stages in terms of economic development. However, achieving net zero by 2050 and therefore a “cleaner, healthier future will rely on a singular, unwavering focus from all governments – working together with one another, and with businesses, investors and citizens” the report declares.
While decarbonization commitments from governments around the world are increasing, including e.g., the United States’ pledges to cut carbon emissions in half by 2030, climate pledges to date would fall far short of what is needed to reduce global warming as intended, the IEA finds. Accordingly far-reaching are the milestones presented. Particularly much debated was the call to cease new coal, oil or gas supply investments by end of this year. On top, by midcentury, oil consumption will need to fall by about 75 % and natural-gas use by about 55 %.  According to the IEA, a sharp decline in fossil fuel demand will be the result of a strengthened policy focus on climate change implying that the focus of oil and gas producers switches entirely to output (and emissions reduction) from the operation of existing assets.

Net Zero by 2050 requires an unprecedented push in clean energy technology and huge leaps in innovation

According to the IEA, an efficiency drive, i.e. a rapid change in the way technology is used in the building sector, transport, industry and elsewhere, is needed to reduce overall global energy demand by 2050 while serving a population with 2 billion more people.
Technologies that are already in place today will be able to account for all the carbon reductions needed until 2030 to put the global energy system on track for the 2050 goal. Thereafter, however, widespread use of technologies that are still in development today will be required. Therefore, large-scale innovation efforts in areas such as carbon capture, utilization and storage (CCUS) or ammonia fuels for bunkering (shipping) are needed in the next decade to achieve full application readiness. To accelerate these innovation leaps in clean energy technologies, government R&D spending needs to be reprioritized and increased in critical areas such as hydrogen, electrification, bioenergy and CCUS.

IEA’s Net Zero pathway points to an energy sector dominated by renewables

As indicated, key shifts on this path must be met within the next decade. This will only be possible with a massive ramp-up in renewables. Not surprisingly, solar PV will play a major role in this transition. Yet, the scale-ups required over the next years illustrate how great the challenges are that lie ahead. For example, to achieve the targeted solar boom, the generation capacity of the world’s current largest solar park needs to be installed every day until 2030. To reduce emissions in the power sector immediately, 630 gigawatts (GW) of solar PV and 390 gigawatts of wind power will need to be added annually by 2030.
In total, renewable electricity installations will need to triple by 2030 and electricity will need to play a key role across all sectors accounting for almost 50% of total energy consumption by 2050. To achieve this, an increase in total electricity generation of 2.5 times between now and 2050 is required. To make better use of these renewable energy sources as well, demand-side efficiency improvements must average at roughly three times the rate achieved over the past two decades.

Source: IEA – Net Zero by 2050 (2021)

Some final thoughts

In accordance with the net zero target, the IEA projects an energy mix in 2050 consisting of 20% fossil fuels, 66% renewables (split between wind, solar, hydroelectricity, bioenergy and geothermal), and about 15% nuclear.
As such, this report is a big step forward and a strong signal to the global energy system that action must be taken now to move away from fossil fuels towards a more diverse energy mix in order to reach net zero carbon emissions by mid-century. A total transition of such scale and speed can and will not be achieved with certain countries and sectors falling short of expectations as differences will prove to be impossible to make up elsewhere.
Accordingly, it is not very surprising that much has been written about the report since its publication in May 2021. Considering the history of the IEA, more traditional industry voices described the assumptions, projections, and recommendations as “not realistic” or even “bizarre”.

This report is a big step forward and a strong signal to the global energy system that action must be taken now to move away from fossil fuels towards a more diverse energy mix.

Realistically, it can be expected that only a few governments, if any, are likely to follow the script as closely as necessary. However, if every country actually followed the script, according to a study by the IEA and the International Monetary Fund, massive energy-sector investments would boost global GDP by 0.4% per year, while people’s total energy costs would increase only slightly, as efficiency gains would reduce the energy needed to maintain living standards.

In this way, the presented roadmap stimulates a critical dialogue around the required speed, scale and support needed to transition towards a more sustainable global energy system. The report illustrates the extent and scope of measures required to turn this ambitious pathway into reality, requiring governments to strengthen their climate policies and the private sector to mobilize finance, investment, and technology. While the number of countries and private actors that have committed to net zero targets by mid-century is impressive to see, only a fraction has laid out concrete strategies that show how they plan to achieve this. Thus, the solutions outlined in this roadmap should be high on the agenda of energy leaders for a detailed review. While it is citizens and companies that will need to modify their behavior, changes will be driven by government investment and policy, and in some cases new laws. However, driving this transition to low-emission technologies also offers numerous opportunities for private actors to become a leader in an operationally reliable, economically viable, and environmentally sustainable energy system.

Our conclusion is that the world must not shy back from this challenge. As consistency’s Team Future Energy, we strive to accelerate the transition to a sustainable future by supporting you, our partners, on this journey ahead.

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