IEA: Power sector emissions set to peak in 2025 as price crisis sparks investments in renewables, nuclear and efficiency
Global low-carbon energy investment is likely to surpass $2trn annually by 2030, up from $1.3trn last year, with nations set to continue investing in renewables and nuclear beyond the energy price crisis, the International Energy Agency (IEA) is forecasting.
The prediction is a headline finding of the Agency’s latest World Energy Outlook – a 500+-page document that tells a story of an accelerated energy transition since Russia first began its war in Ukraine this February.
The report states that, while coal investments and coal-fired generation has increased in some parts of the world as nations clamber to wean themselves off Russian fossil fuel imports, this increase is likely to be minor and temporary. In contrast, the IEA is forecasting “sustained gains” for renewable energy to a major extent – and to nuclear to a lesser extent. This trend is observed in all scenarios mapped by the IEA.
According to the report, global clean energy investment will surpass $2trn annually by 2030. For the first time, a World Energy Outlook scenario based on existing policies results in a peaking of global demand for every kind of fossil fuel by 2040. Under the ‘Stated Policies’ scenario, coal demand peaks by the mid 2020s. Natural gas demand plateaus by the early 2030s, as does oil demand, as nations ramp up alternative electricity generation, heating and transport options.
The IEA notes that “much faster and more pronounced” reductions in fossil fuels will be needed to align the world with the Paris Agreement’s temperature trajectories. Like a key report from the UN earlier this week, the Agency is forecasting a 2.5C temperature increase between pre-industrial times and 2100.
It believes that, under the stated policies scenario, the share of fossil fuels in the energy mix in 2050 will be 60%, down from 80% in 2021. Bringing the proportion down in line with net-zero by 2050 would require annual global clean energy investment to ramp up significantly this decade, reaching $4trn by 2030. This is double what the IEA is expecting, as already noted above.
The report calls on nations to strive to maintain growth rates for accelerating the deployment of wind and solar energy generation. It also outlines opportunities to maintain the growth in electric vehicle (EV) sales and the advancement of energy storage technologies – primarily batteries.
It emphasizes that the shortfalls in clean energy investment are the largest in emerging and developing nations with the exception of China. Across these geographies, the IEA states, annual investment has remained flat since 2015.
“The environmental case for clean energy needed no reinforcement, but the economic arguments in favour of cost-competitive and affordable clean technologies are now stronger, and, so too, is the energy security case,” said IEA chief Dr Fatih Birol.
The body uses the report to refute claims that the net-zero transition contributed to the energy price crisis, reasserting that the primary cause is gas and that nations that moved early and quickly on energy efficiency and generating their own clean energy are reaping cost savings.
The report summarises that “the world is in a critical decade for delivering a more secure, sustainable and affordable energy system – the potential for faster progress is enormous if strong action is taken immediately”. It calls, in particular, for a “renewed international effort” to step up finance to developing nations and tackle deterrents to investors.
© Faversham House Ltd 2023 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.
Please login or Register to leave a comment.