The International Energy Agency recently published the World Energy Outlook, presenting a series of climate and energy scenarios and their respective greenhouse gas emissions.
The annual publication of the Energy Outlook was brought forward to October to provide guidance for governments ahead of the climate negotiations that will take place at the 26th Conference of the Parties on Climate Change (COP26) in Glasgow in November. The Outlook spotlights that energy consumption is responsible for three quarters of greenhouse gas emissions; thereby highlighting how essential it is to implement solutions in the energy field to fight climate change. The publication emphasizes that, despite the pandemic, renewable sources continued to grow, while the sale of electric cars reached unprecedented levels in 2020. Unfortunately, however, this year’s economic recovery has not only sharply increased energy products’ prices, but it is also responsible for generating the second largest increase in CO2 emissions in the history of mankind.
Before analyzing the scenarios, it is worth noting that a scenario is not a deterministic forecast of the future, but rather a potential evolution that will take place if a certain number of hypotheses occur. For instance, an increase in energy demand and emissions will take place against the backdrop of population growth, economic growth, the implementation of energy policies, and technological innovation.
Based on different hypotheses, the World Energy Outlook illustrates three main scenarios:
- The Stated Policies Scenario, which only considers the energy and climate policies already implemented or close to implementation. In this scenario, emissions in the electricity generation sector will decline by 2050, a drop that will be abundantly offset by increases in other sectors, such as cement and steel production and heavy-duty transport. The result that follows is a temperature increase of 2.6° above pre-industrial levels by 2100.
- The Announced Pledges Scenario, based on governments’ commitments announced ahead of COP26. Such announcements, the so-called "pledges", have not been implemented yet at the legislative level but represent governments’ commitment. The consumption of fossil fuels would peak in 2025 before declining. If all the policies announced ahead of COP26 were to be implemented, CO2 emissions would decrease by 40% by 2050.
By 2100, global temperatures would rise by 2.1 ° above the pre-industrial level. This is above the 2015 Paris Climate Agreement target, which envisioned “a decrease far below 2°”. However, it is important to underline that these pledges, albeit far from the Paris Agreement’s goals, represent a significant change of course compared to the pre-2015 situation.
- The Net-Zero Emission scenario — aimed at reaching carbon neutrality by 2050 and limiting the temperature increase to 1.5 above pre-industrial levels by 2100 — is even more ambitious than the Paris Agreement.
Four courses of action
The World Energy Outlook is a complex document of hundreds of pages wherein, however, four main areas of intervention are identifiable.
- The increase in the electrification of our energy mix using low CO2 emissions energy sources. Electricity currently contributes to about a quarter of our energy needs, but it is necessary to extend its use to other sectors, such as transport and heating, which are still largely reliant on fossil fuels. The scenario considers that the progressive electrification of our energy needs with clean sources will contribute to a third of the overall emissions reduction necessary to reach carbon neutrality by 2050. This would require a very rapid shift from coal to renewable sources for electricity production and, for countries wishing to use it, with nuclear energy, too. With 2030 on the horizon, coal consumption decreases across all scenarios though the report also notes that, paradoxically, 140 GW of new coal plants are currently under construction worldwide.
- Energy efficiency, which includes both performance improvements and behavioral changes, can help reduce consumption. The International Energy Agency’s document estimates that over three quarters of the interventions in the current decade can translate into cost saving for consumers.
- Technological innovation: it is estimated that half of the reductions necessary for carbon neutrality require the commercialization of technologies that are still in their prototype phase. The demonstration of such technologies on an industrial scale will be necessary in some so-called “hard to abate” sectors, such as the iron, steel, cement, and heavy-duty transport industries.
- Reduction of methane gas emissions which, if released into the atmosphere, have a worse effect than CO2 as their global warming potential is about 25 times higher. In other words, over 100 years, a ton of methane alone is responsible for the same emissions caused by 25 tons of CO2. The report shows there are ways to reduce methane emissions, in many cases without additional costs, which would in turn reduce the gap to carbon neutrality by 15%.
The commitments’ success in combating climate change will be determined by the “pledges” signed by the various countries participating at the COP26 in Glasgow.
Albeit far from the Paris Agreement’s goals, the commitments announced ahead of COP26 — and incorporated in the “Announced Pledges” scenario — represent a substantial change of course compared to climate policies that preceded these agreements.
The report also underlines that it is unthinkable to reach carbon neutrality by 2050 without China’s contribution and that Beijing’s substantial commitment at COP26 is necessary.
Finally, the Outlook underlines how the increase in gas and electricity prices in recent months is due to a series of interconnected factors, such as the rapid economic recovery and the consequent demand for energy. It would therefore be inappropriate to attribute such price increases to the energy transition that is necessary to combat climate change.
The views expressed in this article by the author are strictly personal and do not reflect the European Commission’s nor ISPI’s positions.