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IEA says new fossil fuel investments need to end in 2021

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By 2050, two-thirds of the world's energy supply should come from renewables, the IEA says in a new road map for the energy sector.
Source: S&P Global Market Intelligence

In a major policy shift, the International Energy Agency is now saying the world's power producers must focus on an "immediate and massive deployment" of all renewable clean energy technologies on the market today while quickly shifting their electricity generation away from coal and halting all exploration of oil.

To reach net-zero emissions by 2050, annual clean energy investments will need to more than triple by 2030 to about $4 trillion, the energy policy organization said in a report released May 18. An international energy forum composed of 30 industrialized countries, the IEA said the good news is that such investments "will create millions of new jobs, significantly lift global economic growth, and achieve universal access to electricity and clean cooking by the end of the decade."

The 2015 Paris Agreement on climate change set a goal of limiting global warming to well below 2 degrees C, preferably to 1.5 degrees, compared to preindustrial levels to prevent the worst impacts from climate change. While global commitments and actions to meet the 1.5-degree goal are growing, including achieving net-zero emissions by 2050, the IEA said those actions will still fall short of what is actually needed.

The IEA therefore released what it claimed is a first-of-its-kind, comprehensive road map for actually achieving the goal of limiting global warming to 1.5 degrees. Closing the gap between the rhetoric and what actually is needed will require a complete transformation of today's energy systems on which economies depend, IEA Executive Director Fatih Birol told reporters.

Global emissions are expected to rise 5% this year as economies begin to recover from the pandemic-induced economic crisis, the second-largest jump in history, the IEA projected in April. About 80% of the world's energy is generated by plants burning fossil fuels.

"Given the decline in oil, gas and coal as of this year, there is no need for new fossil fuel supply investments," Birol said. "As of this year, no more unabated coal-fired power plants." The phase-out of fossil fuels should be followed by a switch to all-electric vehicles by 2035, Birol said.

World economy can double by 2050 and still cut emissions

The IEA has been criticized for supporting a build-out of coal and gas plants in poorer nations, where 785 million people still lack electricity. Among the IEA's members are large oil- and gas-producing nations such as Canada and the U.S.

Under the agency's new blueprint, the global demand for energy will be 8% lower by 2050 than it is today while serving an economy with 2 billion more people. The economic output by midcentury would be twice as large.

Aggressive energy efficiency investments coupled with less predictable "behavioral changes" in advanced economies can help offset the increase in energy demand, the IEA report said. Such behavioral and cultural changes, which the IEA admitted are difficult to achieve, would include replacing local car trips with public transport, encouraging more people to walk and bike, and lowering the usage of long-haul airline flights.

The IEA's blueprint also envisions about two-thirds of the world's energy supply being produced by solar, wind, bioenergy, geothermal and hydro energy, with solar alone accounting for about 20% of the total supply. The report said the world, and especially China, will also need to expand the use of nuclear energy by 15% between 2020 and 2030 to offset the loss of energy produced by baseload fossil-fired power plants.

The blueprint also foresees demand for gas-fired generation growing 18% this decade, mainly in emerging economies, before falling or getting met with plants equipped with carbon capture, utilization and sequestration technology. Fossil fuels would provide about 20% of the world's energy by 2050 and be used in goods for which oil is needed, such as plastic, and without releasing carbon into the atmosphere.

Carbon capture technologies "uncertain"

While carbon capture will play a growing role in the manufacturing sector and will help lower emissions from remaining natural gas plants, the IEA stressed that prospects for rapidly scaling up the technology in the fossil fuel industry remain elusive. It predicted that coal plants without carbon capture would still supply 14% of the world's energy in 2050.

Although carbon capture and storage for fossil fuel combustion account for 70% of the technology growth today, a large expansion remains "very uncertain for economic, political and technical reasons," the report said. That message will not resonate with some U.S. utilities and federal lawmakers that are banking on carbon capture to buy more time for coal-fired power plants and keep the mining industry going in states that struggle with job loss.

President Joe Biden also advocated for an expansion of tax credits and other incentives to boost carbon capture projects in the U.S. as part of his American Jobs Act infrastructure proposal. The Biden administration has set a goal to decarbonize the power sector by 2035.

Critics of such efforts say they risk detracting policymakers from the more pressing need of investing in renewable energy sources and electric vehicles that can displace fossil fuels.

"We're distracting ourselves with things like [carbon capture, utilization and sequestration], when actually in the next 10 years we really need to go hell for leather on wind and solar," said Rebecca Williams, head of COP26 engagement at the Global Wind Energy Council.

Others cautioned that all options, including carbon capture, should remain on the table.

While wind and solar should and will do most of the heavy lifting, other options such as carbon capture technologies should not be written off and deserve further research and development resources as a hedge, said Armond Cohen, executive director of the Clean Air Task Force. Cohen also noted that onshore wind and solar development in places such as California and Iowa also faces challenges from some locals.

"It's not a slam dunk," Cohen said. "Not everyone in the world is actively interested in climate and technology."