World Energy Outlook: IEA forecasts boom for solar in wake of Covid-19
Even if nations do not bolster their climate targets, renewables will meet 80% of the global growth in electricity demand by 2030, with solar leading the way, according to the International Energy Agency's (IEA) new World Energy Outlook.
The Outlook forecasts that, in a scenario in which national governments deliver on climate and clean energy policies already enshrined in law, solar capacity installations will return to pre-pandemic levels more rapidly than any other renewable energy sub-sector. Record levels of deployment will be recorded in 2023 and then every subsequent year through to the end of the decade.
Highlighted in the document is the way in which solar prices have fallen in recent years. The IEA admits that solar power is between 20% and 50% cheaper than it forecast in 2018, with the discrepancy varying based on geographical markets. “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,” the IEA states.
While this is welcome news for the green economy, the IEA’s ‘Stated Policies Scenario’ is “a long way from a sustainable recovery” from Covid-19. This assertation is made both in reference to the need to tackle climate change by transitioning to net-zero, and the need to create good jobs in low-carbon sectors to address the economic fallout of the pandemic.
In this scenario, coal demand has already peaked and will never return to pre-pandemic levels – but oil demand will rebound by 2023 and peak oil is unlikely to happen until the early 2030s. Should the world undergo a slower economic recovery from the pandemic – dubbed a ‘Delayed Recovery Scenario’ – oil use will be lower, but large falls in investment will affect both the fossil fuel and renewable sub-sectors of the energy industry. Energy investment in 2020 is already likely to be 18% lower than in 2019, the IEA has forecast.
Moreover, in both the Stated Policies scenario and Delayed Recovery scenario, the global demand for natural gas will grow rapidly through to 2030 and perhaps beyond, with Asia leading the way.
To bring about a better scenario for the climate and for the economy, nations should ensure their energy policies are aligned with the Paris Agreement and the facets of the Sustainable Development Goals (SDGs) relating to energy access, employment and air quality, the Outlook recommends. It describes this context as the ‘Sustainable Development Scenario’.
In this Scenario, every major government implements the IEA’s ‘Sustainable Recovery Plan’ – its green recovery roadmap, published earlier this year – in full. The Plan would result in emissions from energy never surpassing 2019 levels again. Rapid growth would be seen across the solar, wind and energy efficiency sectors, while technologies like green hydrogen and carbon capture, utilisation and storage (CCS) would mature and scale-up.
The IEA believes that the EU, UK, Canada, South Korea and New Zealand are already operating largely in line with this scenario. Nonetheless, global net emissions will not reach zero until 2070 – two decades later than the IPCC’s recommended deadline – on this trajectory.
A net-zero by 2050 scenario is, therefore, included in the Outlook. This is a first for the IEA and follows criticism from climate campaigners and investors.
Under this scenario, low-carbon generation accounts for 75% of the global total – up from less than 40% in 2019 – and more than half of passenger cars sold worldwide are electric. The IEA warns that “dramatic” action is needed if the world is to align with this pathway, in terms of policy changes, business action, investment and behaviour change.
“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,” it states.