'Stubbornness of the status quo' jeopardising Paris Agreement progress, IEA warns

The International Energy Agency (IEA) has published this year's World Energy Outlook, revealing that the world is seeing the second-largest year-on-year increase in CO2 emissions on record post-pandemic.

As much as $4trn of additional climate finance will be needed within a decade to deliver net-zero by 2050, the report states

As much as $4trn of additional climate finance will be needed within a decade to deliver net-zero by 2050, the report states

Published today (13 October), the Outlook charts how, in most markets, solar and wind energy have remained resilient amid a drop in global energy investment and use due to Covid-19. At the same time, electric vehicle (EV) uptake has accelerated and fossil fuel prices have risen sharply.

But, the Outlook warns, “for all the advances being made”, a “large rebound” in fossil fuel use has driven a steep year-on-year increase. Around two-thirds of the public spending announced as part of national Covid-19 recovery packages did not go to clean energy, and demand is beginning to reach pre-pandemic levels as lockdown restrictions lift across the globe.

The IEA had predicted this would be likely, without a step-change in policy and investment, in spring. Summer saw the Agency concluding that global emissions are likely to hit record highs in 2023 and continue rising thereafter, due to national and international failures to follow through on green recovery rhetoric.

This year’s World Energy Outlook details three future scenarios. In the first, ‘Stated Policies’, nations deliver the binding commitments they have already put in place to date, as well as the supporting initiatives revealed to be under development. The second, ‘Announced Pledges’, maps out a path in which net-zero pledges announced by governments so far are enshrined in law and delivered. He third follows the IEA’s own net-zero by 2050 trajectory, mapped out earlier this year.

In the ‘Stated Policies’ scenario, the Outlook states, the global temperature increase from pre-industrial levels will be 2.6C in 2100. In the ‘Announced Pledges’ scenario, the rise would be 2.1C. In either case, the world would fail to deliver the Paris Agreement’s less ambitious 2C pathway, let alone the 1.5C pathway. Rises above 1.5C would essentially be a death sentence to many low-lying states, and would have profound impacts on nature, people and the economy.

“Today’s climate pledges would result in only 20% of the emissions reductions by 2030 that are necessary to put the world on a path towards net zero by 2050,” said the IEA’s executive director Fatih Birol.

“The world’s hugely encouraging clean energy momentum is running up against the stubborn incumbency of fossil fuels in our energy systems.

“Governments need to resolve this at COP26 by giving a clear and unmistakeable signal that they are committed to rapidly scaling up the clean and resilient technologies of the future. The social and economic benefits of accelerating clean energy transitions are huge and the costs of inaction are immense.”

The IEA has badged this year’s Outlook as a guidebook, to be used by world leaders attending the summit in Glasgow to deliver outcomes that would, as COP26 president Alok Sharma has stated, “keep 1.5C alive”.

The Outlook states that, in order to close the gap between the ‘Stated Policies’ scenario and the net-zero by 2050 scenario, up to $4trn will need to be invested within a decade, with the bulk of this (70%) needed in developing nations.

But the report also emphasises that the transition would generate environmental, social and economic benefits far greater than the upfront cost, in a shorter timeframe than many world leaders probably expect. It states that, while existing pledges would create 13 million jobs, this could be doubled in a net-zero trajectory. Moreover, the $4trn investment could create and scale markets for low-carbon technologies that, by 2050, could represent more than $1trn annually in benefits.

Collectively, the markets for wind turbines, solar panels, lithium-ion batteries, hydrogen fuel cells and electrolysers could be larger than the current oil market by 2035.

Green economy reaction

Responding to the report, the Energy & Climate Change Intelligence Unit’s (ECIU) head of analysis Dr Simon Cran-McGreehin said:  “By showing that current policies fall well short of getting global warming in check by 2030 and providing a clear checklist of commitments that the UK – as host of COP26 – will need to secure to keep 1.5C of warming alive, the IEA are laying down a clear gauntlet for action on climate.

“Continuing global dependence on fossil fuels is exposing the UK and the rest of the world to ongoing energy price volatility, which could be avoided – along with destructive temperature rises – if bold decisions are taken over the next few weeks. The UK could continue to be in the vanguard here, by publishing the eagerly awaited Net Zero Strategy and filling gaps in policies in key areas, notably on home insulation to cut our heating bills and protect us from gas price spikes.”

Ashurst’s energy partner Michael Burns said: "What is really interesting about the report is the focus on action in relation to emerging and developing economies. Whilst the developed world looks to move forward with the regulatory regime change and support mechanisms that are required to incentivise the market to invest in impactful projects, a broader, multilateral approach is going to be needed to support emerging and developing economies with access to the capital and other support that is required to put them in a position where the required level of change can become a reality."

Christian Aid’s global climate change lead Dr Kat Kramer said the report “gives the world a failing ‘F’ grade in making the energy transition”.

She said: “While it rightly lauds progress on wind, solar, and electric vehicles, the grossly inadequate speed at which the energy transition is currently occurring means that governments, particularly those in richer nations, are failing to reduce their emissions in line with what the science calls for to limit temperature increases to 1.5ºC.

“Countries and communities around the world are already suffering deadly impacts of climate change. Yet, the fossil fuel industry continues to argue for a continued right to pollute and promotes false solutions, like hydrogen made from fossil fuels and unsustainable nature-based solutions like offsets to pretend that business-as-usual fossil fuel burning can continue.

“Governments and industries around the world need to rapidly end the use of all fossil fuels in a way that ensures a just transition for workers and communities, and that ensures that the 1.1 billion people globally that still do not have access to modern energy can leapfrog dirty development pathways.”

ENGIE Impact's chief executive Mathias Lelievre said: "TheWorld Energy Outlook underscores a troubling fact – bold climate targets are often not executed in a strategic and thoughtful manner, causing public perception of global climate action efforts to differ from reality.

"Corporations and governments continue to showcase their progress at events like COP26, but real progress can’t be made on a global stage. Too often, once the spotlight has faded, organisations can allow promises to slip, hindering progress towards Paris Agreement goals. Now is the time for organisations move from years of talk, to implementing those pledges using data and digital tools that manage and track their carbon emissions to translate public promise into tangible strategies, smart investments and clear execution plans.”

Sarah George



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