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    IEA Plots Net-Zero Roadmap

    Stockholm (NordSIP) – Despite recent private and public pledges to fight climate change, a new report by the International Energy Agency (IEA) argues the commitments still fall short of the measures needed to achieve net-zero CO2 emissions by 2050 and stop global temperatures from rising to 1.5 °C above pre-industrial levels.

    Given this failure, the report provides a roadmap to a net-zero energy system by 2050 that ensures stable and affordable energy supplies while examining key uncertainties, such as the roles of bioenergy, carbon capture and behavioural changes in reaching net zero.

    “Our Roadmap shows the priority actions that are needed today to ensure the opportunity of net-zero emissions by 2050 – narrow but still achievable – is not lost. The scale and speed of the efforts demanded by this critical and formidable goal – our best chance of tackling climate change and limiting global warming to 1.5 °C – make this perhaps the greatest challenge humankind has ever faced,” said Fatih Birol, the IEA Executive Director. “The IEA’s pathway to this brighter future brings a historic surge in clean energy investment that creates millions of new jobs and lifts global economic growth. Moving the world onto that pathway requires strong and credible policy actions from governments, underpinned by much greater international cooperation.”

    The Net‐Zero Emissions Scenario

    The Net‐Zero Emissions (NZE) by 2050 Scenario builds on the IEA’s energy modelling tools and expertise and sets out more than 400 milestones to guide the global journey to 2050 net-zero emissions. These include the end of new internal combustion engine passenger cars sales by 2035 and a net-zero emissions global electricity sector by 2040. According to the NZE, by 2050, global energy demand is around 8% smaller than today, but it serves an economy more than twice as big and a population with 2 billion more people. Almost 90% of electricity generation comes from renewable sources, with wind and solar PV together accounting for almost 70%. Most of the remainder comes from nuclear power. Solar is the world’s single largest source of total energy supply.

    “The pathway laid out in our Roadmap is global in scope, but each country will need to design its own strategy, taking into account its own specific circumstances,” Birol adds. “Plans need to reflect countries’ differing stages of economic development: in our pathway, advanced economies reach net zero before developing economies. The IEA stands ready to support governments in preparing their own national and regional roadmaps, to provide guidance and assistance in implementing them, and to promote international cooperation on accelerating the energy transition worldwide.”

    “I welcome this report, which sets out a clear roadmap to net-zero emissions and shares many of the priorities we have set as the incoming COP Presidency – that we must act now to scale up clean technologies in all sectors and phase out both coal power and polluting vehicles in the coming decade,” said COP26 President-Designate Alok Sharma. “I am encouraged that it underlines the great value of international collaboration, without which the transition to global net zero could be delayed by decades. Our first goal for the UK as COP26 Presidency is to put the world on a path to driving down emissions, until they reach net zero by the middle of this century.”

    Disruption and the Reform

    The IEA report also highlights the significant reduction in oil and natural gas production consistent with the NZE scenario also has the potential to be disruptive. With the decrease in energy demand, the global share of fossil fuels in the energy mix is expected to fall from almost 80% of the total energy supply today to 20% by 2050. The dominance of renewable energy and the climate mitigation policy commitments will lead to the exploitation of no new oil and natural gas fields. Consequently, supply will become increasingly concentrated in a small number of low-cost producers.

    These changes in the energy market will have significant implications for the countries and companies dependent on fossil fuels. Although OPEC’s share of a much-reduced global oil supply grows from around 37% in recent years to 52% in 2050, annual per capita income from oil and natural gas in producer economies falls by about 75% by the 2030s. The report notes that this “could have knock‐on societal effects. Structural reforms and new sources of revenue are needed, even though these are unlikely to compensate fully for the drop in oil and gas income.”

     

    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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