No need for investment in new fossil fuel supply to reach net zero, says IEA
The shots have been fired! The International Energy Agency (IEA) stated clearly that there is no need for investment in new fossil fuel supply in its net zero pathway. In its latest report, IEA said, “Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required.”
According to the agency, net zero pathway results in a sharp decline in fossil fuel demand. For oil and gas producers, the focus switches entirely to output and emissions reductions. IEA forecasted that unabated coal demand declines by 90% to just 1% of energy use in 2050, while gas demand declines by 55% to 1,750bn cubic meters. Oil demand declines by 75% to 24 million barrels per day (mb/d) from 90 mb/d in 2020.
Renewable energy sources will be driving tomorrow’s energy needs. The report states that two-thirds of total energy supply in 2050 is from wind, solar, bioenergy, geothermal and hydro-energy. Solar energy accounts for one-fifth of energy supplies. Electricity accounts for 50% of the total energy consumption in 2050. “At the same time, no additional new final investment decisions should be taken for new unabated coal plants, the least efficient coal plants are phased out by 2030, and the remaining coal plants still in use by 2040 are retrofitted. By 2050, almost 90% of electricity generation comes from renewable sources, with wind and solar PV together accounting for nearly 70%. Most of the remainder comes from nuclear,” stated the report.
IEA identified that clean energy generation, network infrastructure and end-use sectors are key areas for increased investment. This includes increasing annual investment in transmission and distribution grids from $260bn today to $820bn by 2030. Additionally, the required roll-out of hydrogen after 2030 means laying the groundwork now, with annual investment in CO² pipelines and hydrogen enabling infrastructure increasing from $1bn today to $40bn in 2030. Achieving net zero targets will require governments to go beyond broad statements. Governments need to provide credible step-by-step plans to reach their net zero goals, added the report.
The IEA’s roadmap comes at a time when fossil fuel giants are facing pressure from shareholders to implement climate action plans. On 18 May, Royal Dutch Shell shareholders pressurised the oil giant to tackle climate change. The oil major’s climate transition plans were heavily criticised by investors and activists for setting intensity-based carbon reduction targets rather than absolute reduction targets. At the shareholder meeting, while Shell’s energy transition plan was backed by its shareholders, there was increased support for a second climate resolution filed by activist group Follow This.