A Global Pathway to Keep the 1.5 °C Goal in Reach

Outline:

By 2030, accelerate renewable energy, improve energy efficiency, promote electrification, reduce methane emissions, and use existing technologies to achieve significant emissions reductions. Key factors include: tripling global installed renewable energy capacity and strengthening policy support; Improve energy efficiency, save energy and enhance energy security; Electric vehicles and heat pumps drive electrification; Reducing methane emissions from the energy sector. At the same time, more smart infrastructure, low-emission fuels and carbon capture technologies will need to be built to achieve zero emissions.

In addition, 1: to meet the zero emissions goal, there is a need for grid expansion; 2: Policy and cooperation: policymakers, industry and private sector need to work together to accelerate the construction of energy infrastructure such as power grids; 3: key technologies: CCUS, hydrogen and hydrogen-based fuels, and bioenergy are critical to zero emissions and need rapid progress. 4: Declining demand for fossil fuels: Expansion of clean energy leads to reduced demand for fossil fuels without new investment. 5: Mineral supply and demand and recovery: It is necessary to pay attention to the supply and demand gap of key minerals, strengthen recycling and efficient material design. 6. Supply chain risks: Clean energy technology supply chains are geographically concentrated and need to be more diverse and resilient.

With electricity at the heart of zero emissions, flexibility and security are needed. Household energy bills will fall and policies will need to support clean energy. The world needs rapid cooperation to reduce emissions. Current commitments are inadequate. Countries ahead of the zero emissions target, the path is global but differentiated. Invest to ensure universal access to modern energy by 2030.

Delaying action increases climate risk and relies on expensive carbon removal technologies. Carbon emissions need to be reduced. Change in the energy sector needs to accelerate and governments need to work together to meet the challenges. Oil and gas consumption is large, and demand is not falling fast enough. Net zero emissions require accelerating clean energy and reducing the use of oil and gas. The proportion of large international companies is relatively small. China faces infrastructure challenges and short-term growth in LNG trade. The development results of new oil and gas projects are different. Under the net-zero scenario, no new projects will be approved and some of them will be closed early. Producers see advantages in their resources, but new development needs to match reduced production. Excessive or insufficient investment is a risk, and it is necessary to arrange the investment order reasonably.

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Ramping up renewables, improving energy efficiency, cutting methane emissions and increasing electrification with technologies available today deliver more than 80% of the emissions reductions needed by 2030. The key actions required to bend the emissions curve sharply downwards by 2030 are well understood, most often cost effective and are taking place at an accelerating rate. The scaling up of clean energy is the main factor behind a decline of fossil fuel demand of over 25% this decade in the NZE Scenario. But well-designed policies, such as the early retirement or repurposing of coal-fired power plants, are key to facilitate declines in fossil fuel demand and create additional room for clean energy to expand.

Renewables and efficiency are key to drive fossil fuel demand down

Tripling global installed renewables capacity to 11 000 gigawatts by 2030 provides the largest emissions reductions to 2030 in the NZE Scenario. Renewable electricity sources, in particular solar PV and wind, are widely available, well understood, and often rapidly deployable and cost effective. Current policy settings already put advanced economies and China on track to achieve 85% of their contribution to this global goal, but stronger policies and international support are required in other emerging market and developing economies. For all countries, speeding up permitting, extending and modernising electricity grids, addressing supply chain bottlenecks, and securely integrating variable renewables are critical.

Doubling the annual rate of energy intensity improvement by 2030 in the NZE Scenario saves the energy equivalent of all oil consumption in road transport today, reduces emissions, boosts energy security and improves affordability. Although the mix of priorities will differ by country, at the global level energy intensity improvements stem from three equally important actions: improving the technical efficiency of equipment such as electric motors and air conditioners; switching to more efficient fuels, in particular electricity, and clean cooking solutions in low-income countries; and using energy and materials more efficiently.

These two actions reduce fossil fuel demand, enabling continued adherence to a key milestone of our 2021 report: an immediate end to new approvals of unabated coal plants.

Accelerating electrification and cutting methane are also essential

Booming technologies like electric vehicles and heat pumps drive electrification across the energy system, providing nearly one-fifth of the emissions reductions to 2030 in the NZE Scenario. 

Recent growth puts electric car sales on track to account for two-thirds of new car sales by 2030 – a critical milestone in the NZE Scenario. Announced production targets from car makers underscore that this high share is achievable. Heat pump sales increased by 11% globally in 2022, and many markets, notably in the European Union, are already tracking ahead of the roughly 20% annual growth rate needed to 2030 in the NZE Scenario. China remains the world’s largest market for heat pumps.

Cutting methane emissions from the energy sector by 75% by 2030 is one of the least cost opportunities to limit global warming in the near term.

Strong reductions in both energy sector CO₂ and methane emissions are essential to meeting the 1.5 °C goal. Without efforts to reduce methane emissions from fossil fuel supply, global energy sector CO₂ emissions would need to reach net zero by around 2045, with important implications for equitable pathways. Reducing methane emissions from oil and natural gas operations by 75% costs around USD 75 billion in cumulative spending to 2030, equivalent to just 2% of the net income received by the oil and gas industry in 2022. Much of this would be accompanied by net cost savings through the sale of captured methane.

But we still need to do much more, notably on infrastructure

Today much of the momentum is in small, modular clean energy technologies like solar PV and batteries, but these alone are not sufficient to deliver net zero emissions. It will also require: large new, smarter and repurposed infrastructure networks; large quantities of low- emissions fuels; technologies to capture CO2 from smokestacks and the atmosphere; more nuclear power; and large land areas for renewables.

Electricity transmission and distribution grids need to expand by around 2 million kilometres each year to 2030 to meet the needs of the NZE Scenario.

Carbon capture, utilisation and storage (CCUS), hydrogen and hydrogen-based fuels, and sustainable bioenergy are critical to achieve net zero emissions; rapid progress is needed by 2030. The history of CCUS has largely been one of underperformance.

As clean energy expands and fossil fuel demand declines in the NZE Scenario, there is no need for investment in new coal, oil and natural gas

Stringent and effective policies in the NZE Scenario spur clean energy deployment and cut fossil fuel demand by more than 25% by 2030 and 80% in 2050. Coal demand falls from around 5 800 million tonnes of coal equivalent (Mtce) in 2022 to 3 250 Mtce by 2030 and around 500 Mtce by 2050. Oil declines from around 100 million barrels per day (mb/d) to 77 mb/d by 2030 and 24 mb/d by 2050. Natural gas demand drops from 4 150 billion cubic metres (bcm) in 2022 to 3 400 bcm in 2030 and 900 bcm in 2050.

Extraordinary advances in clean energy technology supply chains have kept the door to net zero emissions open, but have been accompanied by a high degree of geographical concentration. The mining and refining of critical minerals are similarly highly concentrated.

As electricity becomes the “new oil” of the global energy system in the NZE Scenario, secure electricity supplies become even more important. The hugely increased need for electricity system flexibility requires massive growth of battery energy storage and demand response; expanded, modernised and cybersecure transmission and distribution grids, and more dispatchable low-emissions capacity, including fossil fuel capacity with CCUS, hydropower, biomass, nuclear, and hydrogen and ammonia-based plants.

By 2030 in the NZE Scenario, total household energy expenditure in emerging market and developing economies decreases by 12% from today’s level, and even more in advanced economies. The decrease reflects large energy and cost savings from energy efficiency and electrification. However, policy makers need to support households, particularly low-income ones, to meet the often higher upfront costs of clean energy technologies.

By 2035, emissions need to decline by 80% in advanced economies and 60% in emerging market and developing economies compared to the 2022 level. Current Nationally Determined Contributions are not in line with countries’ own net zero emissions pledges, and those pledges are not sufficient to put the world on a pathway to net zero emissions by 2050. COP28 and the first Global Stocktake under the Paris Agreement provide a key opportunity to enhance ambition and implementation.

The fierce urgency of now

As part of an equitable pathway to the global goal of net zero emissions by 2050, almost all countries need to bring forward their targeted net zero dates. In the NZE Scenario, advanced economies take the lead and reach net zero emissions by around 2045 in aggregate; China achieves net zero emissions around 2050; and other emerging market and developing economies do so only well after 2050. The NZE Scenario is a global but differentiated pathway: each country will follow its own route based on its resources and circumstances. However, all must act much more strongly than they are today. The net zero pathway achieves full access to modern forms of energy for all by 2030 through annual investment of nearly USD 45 billion per year — just over 1% of energy sector investment.

Our Delayed Action Case shows that failure to increase ambition to 2030 would create additional climate risks and make achieving the 1.5 °C goal dependant on the massive deployment of carbon removal technologies which are expensive and unproven at scale. Nearly 5 Gt CO₂ would have to be removed from the atmosphere every year during the second half of this century. If carbon removal technologies fail to deliver at such scale, returning the temperature to 1.5 °C would not be possible. Removing carbon from the atmosphere is costly and uncertain. We must do everything possible to stop putting it there in the first place.

The energy sector is changing faster than many people think, but much more needs to be done and time is short. Momentum is coming not just from the push to meet climate targets but also from the increasingly strong economic case for clean energy, energy security imperatives, and the jobs and industrial opportunities that accompany the new energy economy. Yet, momentum must be accelerated to be in line with the 1.5 °C goal and to ensure that the process of change works for everyone. Above all, this needs to be a unified effort in which governments put tensions aside and find ways to work together on what is the defining challenge of our time.

Outline: How to facilitate net zero transitions

Oil and gas in net zero transitions

• Recent momentum in deploying clean energy technologies means that oil and gas demand peak before 2030 in the Stated Policies Scenario (STEPS), but the declines after these peaks are not steep enough to achieve the world’s climate goals.
• Net zero transitions require a huge acceleration in clean energy technology deployment and faster reductions in oil and gas use. In the Announced Pledges Scenario (APS), oil and gas demand decline by around 2% each year on average to 2050 (to 55 mb/d and 2 400 bcm) and in the Net Zero Emissions by 2050 (NZE) Scenario they fall by more than 5% each year on average to 2050 (to 24 mb/d and 920 bcm).
• Attention on the oil and gas industry often focuses on the large international oil and gas companies (the “majors”), but they own less than 13% of global oil and gas production and reserves. By comparison, national oil companies own more than half of production and close to 60% of reserves.
• Major challenges lie ahead for midstream infrastructure in net zero transitions. Global liquefied natural gas (LNG) trade sees strong near-term growth, but trade peaks in the APS before 2035 and the utilisation of export terminals drops; in the NZE Scenario, demand for LNG can be met in aggregate by plants already in operation.
• Many producers have set out why they think their resources should be preferred for development in net zero transitions. Some say that they have the lowest production costs or emission intensities; others claim that they are a better option for energy security; and some indicate that new oil and gas developments are needed to improve welfare.
• Both over- and underinvestment in fossil fuels carry risks for secure and affordable transitions. Sequencing the decline in oil and gas investment and the increase in clean energy investment is vital to avoid damaging price spikes or supply gluts. At present, risks appear to be weighted more towards overinvestment than the opposite.
• These include: reducing the emissions intensity of oil and gas operations; securing additional value from traditional supplies by reducing flaring and methane emissions and increasing non-combustion uses of oil and gas; phasing out inefficient fossil fuel subsidies; boosting clean energy deployment to reduce domestic oil and gas use; stepping up low-emissions fuel production; and expanding into new clean energy supply chains.
• Net zero transitions can only occur smoothly if producer and consumer countries provide clear signals on their direction of travel, work together in a mutually beneficial manner, and implement coherent cross-border measures.

The news comes from: https://www.iea.org/reports/net-zero-roadmap-a-global-pathway-to-keep-the-15-0c-goal-in-reach/executive-summary