24 Oct IEA report highlights the momentum of the global energy transition
According to the International Energy Agency (IEA), global annual investment in clean energy is 40% higher this year compared to 2020, as it highlights the continued momentum for the energy transition.
The IEA recently released its annual World Energy Outlook report highlighting the progress over the last few years and has forecasted the likely future of the global energy transition through to 2030 based on the current policy commitments. The report indicates a positive outlook, highlighting several examples of accelerated change, like the rise of electric vehicles sold this year (1 in 5 compared to 1 in 25 in 2020). Another example is that over $1 billion a day is invested in solar development. The IEA forecasts that over 500 GW of renewable energy capacity will be installed this year, with solar representing the highest sector. Worldwide investment in clean energy technologies is due to be 40% higher this year compared to 2020. The transition to clean energy is happening worldwide and has gained accelerated momentum. Fatih Birol, the executive director of IEA, emphasises it isn’t a question now of if, it’s more about ‘how soon’, and stresses the sooner the better for all of us.
All scenarios explored by the IEA include a peak demand for coal, oil and gas before the end of 2030. To determine the timing, the outlook report concludes that current global energy commitments from policymakers meet a temperature increase of 2.4C above pre-industrial levels by 2100, which doesn’t meet the Paris Agreement trajectory of 1.5C.
The outlook comes with several warnings associated with meeting our existing commitments. Supply chain disruption in industries like the challenges of energy security and global economic issues, are causing many countries to reconsider their fossil fuel strategies.
Birol explains that considering the ongoing economic pressures and volatility in traditional energy markets, the view that oil and gas is a safe and secure option for our global energy and climate future is diminishing. The outlook concludes that without the necessary policy changes, the share of fossil fuels within global energy supplies will stand at 73% in 2030, a decline from current figures of 80%. In comparison, the IEA 2050 net zero scenario aligned with the 1.5C temperature increase includes a decline of fossil fuels to 60% by 2030.
The proposed model for policymakers
The World Energy Outlook report includes five priorities to align the global energy transition within net zero by 2050. These measures are to be incorporated within the COP28 negotiations later this year. The first measure is tripling global renewable energy capacity, which has gained the support of G20 leaders. This requires systematic changes, expanding and modernising electricity grids and increasing energy storage systems. Associated with this is the need for large-scale financing plans to strengthen clean energy investments within emerging and developing nations, which only attract a small segment of global clean energy financing.
Birol explains that the rate at which emissions decline will depend on our ability to support sustainable solutions that meet the rising energy demands from developing economies. This all relates to the importance of focusing on collaboration and support.
The next measure is doubling the global annual rate of energy efficiency improvements. Global energy intensity declined by over 2% last year, mainly due to response to the energy price crisis. The IEA believes the big challenge is prioritising energy efficiency as a permanent change rather than a temporary measure.
Reducing methane emissions from fossil fuels by 75% by 2030 is another focus measure. This commitment goes well beyond the Global Methane Pledge supported by 149 countries, which targets a 30% reduction against 2020 figures. Energy represents the largest source of methane emissions, with agriculture just behind. The IEA has emphasised that all oil and gas businesses must invest in reducing methane.
The final measure is urging global leaders to implement a structured plan to support a decline in the use of fossil fuels. A critical step before 2030 will focus on eliminating approvals for coal-powered facilities. Recent studies from this year confirmed that China added more new coal facilities in 2022 than it had since 2015, equating to two new coal sites every week. China also quadrupled the amount of new coal facilities approved in 2022 compared to 2021 figures.
The IEA predicts that global coal consumption will increase to a record high in 2022, with notable increases in China, India and Indonesia, offsetting the decline in other markets, like the US. There is the potential that a new record will be set this year, with decreases in power generation but increases experienced within heavy industry.
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