New IEA Report Crowns Renewables “New King” of World Electricity Markets

Yesterday, the International Energy Agency published its 2020 World Energy Outlook, which focuses on the next decade in the wake of the COVID-19 pandemic and makes a bold forecast: oil demand will hit a plateau in 2030 and decline from there, while solar energy could become the “new king of the world’s electricity markets.”

In fact, the report states that,

For projects with low-cost financing that tap high-quality resources, solar PV is now the cheapest source of electricity in history.”

The IEA sees renewables accounting for 80% of growth in global electricity generation under current conditions and if there’s more adoption of net-zero emissions targets by 2050, the growth of solar PV could be greater still.

Why This Matters: The World Energy Outlook report is, as Bloomberg Green explained, the IEA’s attempt to bring some order to chaotic energy markets through publishing detailed scenarios for upcoming decades. The IEA has been routinely criticized by renewable energy advocates for its previous underestimation of renewable energy, but this year there’s no denying the unstoppable potential of renewable energy. 

This is an ominous outlook for oil companies. And as for natural gas, Bloomberg’s Akshat Rathi tweeted that “The demand for “bridge fuel” fares better, but less so if we take climate seriously.”

The Takeaways: As UK-based Climate Change News explained, the IEA wrote that global emissions must fall by 40% by 2030 on the path to 2050 carbon neutrality.

  • This would involve large scale investment in renewables and electric cars, behaviour change and innovation in new technologies like hydrogen.

As Fatih Birol, Executive Director of the IEA stated,

“Despite a record drop in global emissions this year, the world is far from doing enough to put them into decisive decline. Only faster structural changes to the way we produce and consume energy can break the emissions trend for good.

Governments have the capacity and the responsibility to take decisive actions to accelerate clean energy transitions and put the world on a path to reaching our climate goals, including net-zero emissions.”

While global CO2 emissions have functionally peaked, they’re far from the point of decline needed to stave off the worst effects of climate change. As the Carbon Brief analysis made clear, the IEA outlook states that net-zero emissions will require “unprecedented” efforts from every part of the global economy, not just the power sector.

  • For the first time, the IEA includes detailed modeling of a 1.5C pathway that reaches global net-zero CO2 emissions by 2050.
  • It says individual behavior change, such as working from home “three days a week”, would play an “essential” role in reaching this new “net-zero emissions by 2050 case” (NZE2050).
  • The IEA has not previously set out a detailed pathway to staying below 1.5C with 50% probability, with last year’s outlook only offering background analysis and some broad paragraphs of narrative.

The Outlook: How quickly global energy demand will recover depends on how long the pandemic will last. Demand could normalize in the next 3-5 years but that’s not necessarily a good thing.

As Marketplace’s Jasmin Garsd explained in her breakdown of the report, if we’re going to move swiftly toward zero emissions, half of all cars sold in the next 10 years, have to be electric.

  • By 2030, 75% of global electricity will have to come from low-carbon sources.
  • And developing nations will have to cut down their dependence, too.

Business as usual in terms of our energy consumption and the sources from which energy is derived, cannot continue. The recovery from the COVID pandemic should entail a swift transition. to a clean energy economy that puts people back to work by building critical renewable energy infrastructure.

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