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IEA outlines three-year plan for sustainable recovery

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IEA outlines three-year plan for sustainable recovery

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Government decisions to shape energy sector for decades to come

IEA sees role for renewables, hydrogen, CCS, clean transport

Support for oil, gas could be linked to cutting methane emissions

London — Governments can spur economic growth and jobs at the same time as cutting greenhouse gas emissions, the International Energy Agency said Thursday in a $1 trillion per year pandemic recovery plan.

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The plan seeks to show governments how they can help their economies recover from the coronavirus pandemic at the same time as putting energy and other sectors on a track for lower carbon growth.

"Our Sustainable Recovery Plan shows it is possible to simultaneously spur economic growth, create millions of jobs and put emissions into structural decline," the IEA said in the report released June 18.

As they design economic recovery plans, policymakers are having to make "enormously consequential" decisions in a very short space of time, the Paris-based agency said in its World Energy Outlook special report.

"These decisions will shape economic and energy infrastructure for decades to come and will almost certainly determine whether the world has any chance of meeting its long-term energy and climate goals," it said.

The plan would require investment of $1 trillion/year globally in the 2021-2023 period, and provides policymakers with a roadmap to recovery.

The plan outlines measures that governments can take across six key sectors: electricity, transport, industry, buildings, fuels and emerging low-carbon technologies.

The plan sets out policies and targeted investments for each key sector, including measures designed to accelerate the deployment of low-carbon electricity sources such as new wind and solar, and increase the spread of cleaner transportation such as more efficient and electric vehicles and high speed rail.

It also included measures to improve the efficiency of industrial equipment; make the production and use of fuels more sustainable; and boost innovation in technologies such as hydrogen, batteries, carbon capture utilization and storage and small modular nuclear reactors.

Energy demand takes huge hit

The coronavirus pandemic is expected to cut global energy demand by 6% overall in 2020 compared with 2019, the IEA said.

By sector, oil demand is likely to drop by 8% year on year in 2020, while natural gas demand was expected to fall 4% and coal demand slide 8%, it said.

Nuclear power output is expected to be down 2.5% in 2020, while electricity demand will likely fall 5% overall, and up to 10% in some areas, it said.

As a result, investment in the energy sector in 2020 will experience its largest decline on record with a reduction of 20% — almost $400 billion — in capital spending compared with 2019, the IEA said.

As economies recover from these massive demand impacts, governments can help steer the private sector to make investment choices that will support growth, jobs and long-term climate objectives, it said.

The IEA's recovery plan can add 1.1 percentage points to global economic growth each year, and save or create about 9 million jobs per year over the next three years, if governments choose to follow the non-governmental agency's advice, it said.

"It would also bring lasting benefits to the global economy because investment in new infrastructure, such as electricity grids and more energy efficient buildings and industries, would improve the overall productivity of both workers and capital," it said.

In addition, the IEA's plan would cut global energy-related GHG emissions by 4.5 billion mt of CO2 equivalent by 2023 compared with where they would otherwise be, it said.

The plan would also make 2019 the definitive peak in global emissions, and put them on a path toward achieving long-term climate goals, including the Paris Agreement, it said.

"The Sustainable Recovery Plan is not intended to tell governments what they must do. It seeks to show them what they can do," the IEA said.

The IEA's report — produced in collaboration with the International Monetary Fund — sets out how governments can deliver resilient and clean energy projects that are "shovel-ready," including a strong pipeline of new projects and tailored support for distressed industries such as the auto sector.

Strengthening power grids, boosting clean energy

The IEA's plan included recommended measures such as strengthening the resilience of electricity grids and integrating higher shares of renewables; accelerating wind and solar photovoltaic deployment; and modernizing and upgrading existing nuclear and hydropower plants.

It also recommended support for biofuel industries if they meet sustainability criteria; and support for the upstream oil and gas sector could be focused on reducing methane emissions, while reducing inefficient fossil fuel subsidies also creates an opportunity, it said.

Support for innovation and new technologies is unlikely to create a large increase in jobs or economic activity in the short-term, but could lead to the development of new sustainable industries over the long-term, including hydrogen, batteries, carbon capture, utilization and storage, and small modular nuclear reactors, the IEA said.