Posted on November, 23 2020

The International Energy Agency (IEA) is no cabal of radical climate activists. Born out of the first oil crisis of the 1970s, this intergovernmental body plays a critical role in advising governments and influencing investment flows regarding energy policy and planning – and has rightly attracted criticism over the years for its conservatism and biases towards incumbent fossil fuel technologies.

So the inclusion in its latest 2020 World Energy Outlook of analysis of what is needed to reach net zero emissions by 2050 is hugely significant, very welcome and broadly encouraging. It represents acknowledgement by one of the central institutions of the global energy establishment of a decisive shift in energy policy towards climate objectives.

Crucially, it also demonstrates that, while ambitious and challenging, achieving net-zero emissions does not depend on reversing course, but instead upon the reinforcement and acceleration of existing trends.

Environmental and investor groups have long called for the IEA to align its scenarios with a 1.5˚C world as set out in the Paris climate accord.  They argued that the agency needed to add to its existing business-as-usual and sustainable development scenarios to explain to policymakers what will be required to put global emissions on track for net-zero by 2050. However, the IEA has not yet undertaken the modelling needed to produce a detailed scenario, instead publishing what the IEA calls its Net Zero Emissions by 2050 case (NZE2050).

The risk in an essentially conservative institution such as the IEA carrying out this work is that its conclusions could have been deeply pessimistic. Given the IEA’s historical treatment of existing energy infrastructure and emphasis on energy security through fossil fuels, it might have struggled to present a case for constructive action that could prevent more than 1.5 degrees of warming.

Instead, many of the changes it describes as needed to meet net-zero targets are in line with what has already been achieved in parts of the world. For example, it states that emissions from the power sector will need to fall around 60 per cent over the next decade. This is broadly in line with the decline in UK power sector emissions over the previous decade – a process that has occurred without unacceptable increases in prices or in system instability.

Much of this reduction will be driven by the rapid phase-out of coal-fired generation and its replacement with renewable sources – particularly solar, which the IEA’s head Fatih Birol described as the “new king of the world’s electricity markets”. Solar growth rates needed are aggressive – at 20 per cent each year – but this compares with global growth rates of 34% per year over the last decade.  

Of course, as the installed based becomes larger, more investment is required to achieve that rate of growth. But, compared with just a few years ago, it is now more economic to build new solar than new coal-fired plants in many countries. Crucially, in some places it is also becoming cheaper to build new solar projects than to generate power from operational coal plants, creating the case for their early retirement.

The net-zero case breaks with the IEA’s traditional conservatism regarding the potential to shutter operational plants around the world. We believe this case is closer to becoming a reality than many realize. It has tended to discount the likelihood of operators voluntarily shutting operational plants, instead assuming that the capacity – and the associated emissions – are locked in. However, as we’ve seen in both North America and Europe, coal plants are being closed early in response to tighter environmental regulation and unfavourable market forces. We expect a growing volume of new coal-fired capacity in Asia to similarly find itself stranded.

Meanwhile, the required growth in electric vehicle sales and battery manufacturing can likewise be described as a scaling up of already visible market trends, rather than a fundamental break from the past. The IEA is possibly aggressive on the proportion of the building stock that can feasibly be retrofitted to improve its energy efficiency by 2030 (50 per cent in advanced economies and one-third elsewhere), and it makes some assumptions for behavioural change that might prove to be a stretch.

Overall, however, the report is positive, constructive and instructive. But the IEA doesn’t sugar the pill. “Realizing the pace and scale of emissions reductions in the NZE2050 would require a far-reaching set of actions going above and beyond the already ambitious measures in the [Sustainable Development Scenario],” it states.

Decarbonizing the power system “requires careful long-term and integrated planning”. There is “an urgent need to boost support for technology innovation”. It will be “critical to engage with consumers” to ensure public acceptance.

But all this is achievable, with the tools we have at our disposal, and without imposing swingeing costs or making unacceptable demands on the public.

It’s time to get to work.

Jesse Fahnestock is WWF’s global energy transition lead

Alexander Farsan is WWF’s global science-based targets lead.

For more information, contact Mandy Jean Woods mwoods@wwfint.org