IEA sees emissions bounce after COVID

IEA’s World Energy Outlook 2020 (WEO-2020) focuses on the pivotal period of the next decade and provides the latest IEA analysis of the COVID-19 pandemic’s impact.

The Outlook provides several ‘scenarios’ for the future, with the Stated Policies Scenario (based on current policies) creating a global energy demand rebound in early 2023, or later in 2025 in the event of a prolonged pandemic and deeper slump.

Renewables figure highly in all scenarios, with solar the biggest winner. Solar PV is now consistently cheaper than new coal- or gas-fired power plants in most countries, and solar projects now offer some of the lowest cost electricity ever seen. In the Stated Policies Scenario, renewables meet 80 per cent of global electricity demand growth over the next decade. Hydropower remains the largest renewable source, but solar is the main source of growth, followed by onshore and offshore wind.

However, without enough investment, grids will prove to be a weak link in the transformation of the power sector, with implications for the reliability and security of electricity supply.

Coal demand does not return to pre-crisis levels in the Stated Policies Scenario, with its share in the 2040 energy mix falling below 20 per cent for the first time since the Industrial Revolution. But demand for natural gas grows significantly, mainly in Asia, while oil remains vulnerable to the major economic uncertainties resulting from the pandemic.

Global emissions will also bounce back more slowly than after the financial crisis of 2008-2009, but the IEA believes that a step-change in clean energy investment could boost economic growth, create jobs and reduce emissions. This approach has not yet featured prominently in plans proposed to date, except in the EU, the United Kingdom, Canada, Korea, New Zealand and a handful of other countries.

In the Sustainable Development Scenario, countries and companies hit their announced net-zero emissions targets on time and in full, bringing the entire world to net-zero by 2070. As well as rapid growth of solar, wind and energy efficiency technologies, the next 10 years would see a major scaling up of hydrogen and carbon capture, utilisation and storage, and new momentum behind nuclear power.

A significant part of efforts to put the world on a sustainable path would have to focus on reducing emissions from existing energy infrastructure – such as coal plants, steel mills and cement factories. Otherwise, international climate goals will be pushed out of reach, regardless of actions in other areas. Detailed new analysis in the WEO-2020 shows that if today’s energy infrastructure continues to operate in the same way as it has done so far, it would already lock in a temperature rise of 1.65 C.

To achieve net-zero emissions by 2050 WEO-2020 modelling shows that dramatic additional actions will be needed, over and above those in the Sustainable Development Scenario. Bringing about a 40 per cent reduction in emissions by 2030 requires, for example, that low-emissions sources provide nearly 75 per cent of global electricity generation in 2030, up from less than 40 per cent in 2019 – and that more than 50 per cent of passenger cars sold worldwide in 2030 are electric, up from 2.5 per cent in 2019.

Electrification, innovation, behaviour changes and massive efficiency gains would all play roles. No part of the energy economy could lag behind, as it is unlikely that another would be able to move fast enough to make up the difference.

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