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Only ‘faster structural changes’ can buck emissions trend – IEA
Without a significant shift in government policies, a global economic rebound could soon push oil demand back to pre-COVID levels. In its annual World Energy Outlook publication, the International Energy Agency (IEA) notes that the world is still a long way from a sustainable pandemic recovery – even though global emissions will likely bounce back more slowly than after the 2008 financial crisis.
IEA analysis predicts that global energy demand will drop by 5% in 2020 and energy-related CO2 emissions will fall by 7%. The report sets out four pathways for the energy sector’s development in the wake of the ongoing COVID-19 crisis. In the ‘Stated Policies’ Scenario – which reflects existing policies and targets – energy demand bounces back to pre-pandemic levels in early 2023.
Such a rebound doesn’t happen until 2025 in the ‘Delayed Recovery’ Scenario, in which a prolonged pandemic leads to a deeper economic slump. Slower demand growth lowers the outlook for oil and gas prices compared with pre-crisis trends. However, large falls in investment increase the risk of future market volatility.
Renewables constitute a lone bright spot in the IEA’s forecasts, with solar looking particularly prosperous. While hydropower remains the largest source of renewable energy in the Stated Policies Scenario, solar is the main source of growth, followed by onshore and offshore wind. Under this pathway, renewables would meet 80% of global electricity demand growth over the next 10 years.
According to the IEA, solar PV is now reliably cheaper than new coal or gas-fired power plants in most countries around the world – and solar projects boast the lowest electricity costs ever recorded.
‘I see solar becoming the new king of the world’s electricity markets,’ said Dr Fatih Birol, the IEA’s Executive Director. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022. If governments and investors step up their clean energy efforts in line with our Sustainable Development Scenario, the growth of both solar and wind would be even more spectacular.’
The agency’s ‘Sustainable Development’ Scenario assumes that countries and corporations achieve their net zero targets on time – bringing the planet to carbon neutrality by 2070. To reach that point two decades earlier – as the UK and several others have promised to do – necessitates significant action in the next 10 years.
To bring about a 40% decline in emissions by 2030, for instance, would require that low-emissions sources provide almost three quarters of global electricity (up from under 40% last year). Over half of passenger cars sold would also need to be electric to meet this scenario – up from just 2.5% in 2019.
Solar, wind and energy efficiency technologies would have to expand rapidly to achieve global net zero by mid-century – and the IEA says nascent hydrogen and carbon capture technologies would have to be scaled up accordingly. The agency also calls for ‘fresh momentum’ behind nuclear in this pathway.
Ultimately, Birol says the pandemic will not lead to significant decline in fossil fuel emissions unless governments instigate vast policy actions in the next few years.
‘Only faster structural changes to the way we produce and consume energy can break the emissions trend for good,’ he says. ‘Governments have the capacity and the responsibility to take decisive actions to accelerate clean energy transitions and put the world on a path to reaching our climate goals, including net-zero emissions.’