In a message released ahead of the United Nation’s COP26 climate conference Oct. 31-Nov. 12 in Glasgow, the Paris-based International Energy Agency (IEA) said the world’s push to recover from the past year’s COVID-19-induced economic recession has given rise to coal consumption, driving carbon dioxide emissions toward its second-largest increase in history, even as solar and wind power gain momentum.
“The world’s hugely encouraging clean energy momentum is running up against the stubborn incumbency of fossil fuels in our energy systems,” IEA Executive Director Fatih Birol said in a statement announcing the World Energy Outlook 2021.
“Governments need to resolve this at COP26 by giving a clear and unmistakable signal that they are committed to rapidly scaling up the clean and resilient technologies of the future. The social and economic benefits of accelerating clean energy transitions are huge, and the costs of inaction are immense.”
The IEA’s annual report, released Wednesday, aims to show what’s necessary to reach net-zero emissions globally by 2050, aligning with the Paris Agreement on climate change, which aims to contain global warming to 1.5 C.
Wind and solar grow
Despite the economic pressures brought by the pandemic and subsequent lockdowns, renewable energy sources such as wind and solar continue to grow rapidly, and electric vehicles set new sales records in 2020.
“The new energy economy will be more electrified, efficient, interconnected and clean,” the report stated. “At the moment, however, every data point showing the speed of change in energy can be countered by another showing the stubbornness of the status quo.”
The economic recovery from the pandemic-induced recession has been “rapid but uneven,” the IEA said, resulting in sharp price rises in natural gas, coal and electricity markets, as well as a large rebound in coal and oil use.
Oil demand set to peak
The IEA expects oil demand to decline for the first time in the agency’s reports.
If all existing climate pledges are met, global oil demand will slip to about 75 million barrels per day by 2050, down from approximately 100 million barrels per day today. However, consumption could drop to as little as 25 million barrels per day under net zero emission in 2050.
In contrast, natural gas demand is expected to increase in all scenarios over the next five years, followed by sharp divergences thereafter.
Coal consumption is expected to decline, due in large part to China’s recent announcement it will no longer support building coal plants abroad. IEA estimates this could save as much as 20 billion tonnes in cumulative CO2 emissions through 2050 — an amount similar to the total emissions savings from the European Union reaching net zero by 2050.
Existing climate pledges would result in only 20% of the emissions reductions by 2030 that are necessary to put the world on a path toward net zero by 2050, according to the IEA.
“Reaching that path requires investment in clean energy projects and infrastructure to more than triple over the next decade,” Birol said.
Birol noted that approximately 70% of that additional spending needs to happen in emerging and developing economies where financing is scarce, and capital remains up to seven times more expensive than in advanced economies.
The required investments would bring massive opportunities, the IEA said, noting that the successful pursuit of net zero would create a market for wind turbines, solar panels, lithium-ion batteries, hydrogen electrolyzers and fuel cells worth more than $1 trillion a year by 2050, comparable in size to the existing oil market.