The International Energy Agency (IEA) releases its annual World Energy Outlook (WEO), documenting progress over the last three years and forecasts what the future is likely to hold for the global energy transition.
The WEO includes several scenarios which reflect current real-world conditions and starting points toward net zero. The main focus is the Stated Policies Scenario (STEPS); this provides an overview of how things could take shape based on the latest policies, including energy, climate, and related industrial policies.
The Announced Pledges Scenario (APS) assumes that all national energy and climate targets made by governments are met in full and on time. The Net Zero Emissions by 2050 (NZE) Scenario details additional progress that is still required to meet net zero and limit global warming to 1.5 °C.
The overall message of the WEO is clear, “the pathway to net zero emissions by 2050 has narrowed since the first version published in 2021, but that it remains feasible.”
The decline of fossil fuels
The report suggests that, given current rates of progress, we are on track to see all fossil fuels peak before 2030, with their share in the energy mix dropping to 73%. However, this reduction is far from enough to reach global climate goals.
Under the current trajectory, we are on track for a warming of around 2.4 °C in 2100, which would lead to widespread and severe impacts from climate change.
To achieve global climate goals, we need to transition to a net zero emissions (NZE) economy, which would require fossil fuel use to drop to 62% by 2030. This would require significant changes in the way we generate and consume energy, as well as the way we transport ourselves and our goods.
The IEA estimates that global renewable energy capacity will increase by more than 500 gigawatts in 2023, with solar leading the way. This represents a 40% increase in global investment in all clean energy technologies compared to 2020.
“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us,” said IEA Executive Director Fatih Birol.
Coal, one of the most polluting fossil fuels in use today, increased slightly in 2022 to record highs, primarily due to the aftermath of Russia’s invasion of Ukraine. However, the IEA estimates that global coal demand must fall by around 45% by 2030 and 90% by 2050 to achieve net zero emissions (NZE) by 2050.
“Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever,” Birol says.
At COP26 in Glasgow in 2021, countries agreed to “phase down” unabated coal, the first time a fossil fuel was explicitly mentioned in a final text. However, this decision was seen as a watering down of the original text, which stated to, “phase out” the polluting fuel.
The IEA calls on world leaders to properly prepare for an orderly decline in the use of fossil fuels. A key step this decade will be ending approvals for new unabated coal-fired power plants, plus any new coal mines or mine extensions to serve them.
Driving the transition
Electric vehicles (EVs) are a key part of the transition to a clean energy economy. EVs are becoming increasingly popular, and they are on track to reach a share of 40% of car sales by 2030.
The report calls this the end of the “ICE age,” referring to internal combustion engines. However, the report also warns that there are risks on the road to a more electrified future, primarily the availability of critical minerals for power generation technologies, electricity networks, battery storage, and electric vehicles.
China has a significant part to play
China has an outsized role to play in shaping global energy trends. Over the past ten years, China has accounted for almost two-thirds of the rise in global oil use, nearly one-third of the increase in natural gas, and has been the dominant player in coal markets.
However, China has also become a clean energy powerhouse, accounting for around half of wind and solar additions and well over half of global EV sales in 2022.
The report suggests that if China’s near-term growth were to slow by another percentage point, this would reduce the demand for coal in 2030 by an amount almost equal to the volume currently consumed by the whole of Europe. Oil import volumes would decline by 5% and LNG imports by more than 20%, with major implications for global balances.
Coal remains a major source of electricity in China, accounting for 60% of generation in 2022. In the Ambitious Policy Scenario (APS), CO2 emissions from coal combustion in China decline from 8.6 Gt in 2022 to 1.1 Gt in 2050. This would cover 30% of the global CO2 emissions reductions that are needed in this scenario to meet the emissions reduction targets announced by countries around the world.
Steps to success
The WEO outlook lays out four essential priorities for aligning the global energy transition with net zero emissions by 2050. These will help inform discussions at COP28, which is scheduled to kick off in Dubai on November 30.
- Increase investments in clean energy across emerging markets and developing economies. A significant portion of this investment needs to target emerging economies outside of China.
- Maintain a balanced investment portfolio, particularly in infrastructure. Solar, wind power, and electric vehicles are key players, but they should be complemented by more extensive, smarter, and repurposed infrastructure networks. Substantial investments in low-emission fuels and carbon capture and storage or transformation technologies are also necessary to prevent potential bottlenecks.
- Ensure that the transition towards sustainability is resilient, inclusive, and economically viable. As fossil fuel usage declines, the demand for other materials and resources will rise. This requires continued investments in mining, processing, refining, recycling, and technological innovation. Strong and resilient supply chains will be necessary to ensure disruptions are at a minimum.
- Promote a unified, collaborative effort among nations. This collaboration is crucial to increasing financial support for developing economies, accelerating the development of clean energy technologies, ensuring equitable and cost-effective clean energy provision, and establishing effective safety nets in case of disruptions.
You can read the full report here.
