Our key takeaway: To avoid the worst effects of climate change, dramatic shifts are needed: ending all new investment in fossil fuels, driving clean energy tech and innovation at lightspeed—and ensuring that the world’s most vulnerable people are not left behind in the race to net zero
The International Energy Agency (IEA) has launched its flagship report for 2021 laying out scenarios for a path to net zero emissions by 2050 … and it is stirring up major conversations in policy circles, the private sector, and among investors and activists. Three of the most striking statements from the report are below:
“There is no need for investment in new fossil fuel supply in our net zero pathway”. To reach global net zero by 2050, the IEA calls for a halt to investments in new fossil fuel projects (“beyond projects already committed as of 2021”)—meaning no new oil and gas fields and no new coal mines or coal mine extensions should be approved for development. At the same time, asset stranding has to be done in consideration of the significant economic impacts that extractives-dependent countries—and especially those in the developing world—are likely to face, from a loss of government revenues undermining the provision of public goods and services to decreased employment opportunities and economic downturns.
“Net zero by 2050 hinges on an unprecedented clean technology push to 2030”. As part of the solution to the challenges posed by halting fossil fuel development, IEA calls for “an unparalleled clean energy investment boom [that] lifts global growth” to the tune of USD 5 trillion in energy investment by 2030, “adding an extra 0.4 percentage point a year to annual global GDP growth.” This relies heavily on quickly scaling and bringing to market technologies that are still under development and will require “substantial quantities” of the critical minerals needed for new tech. In light of geographical imbalances between those who benefit from technological innovation, governments and multilateral institutions must ensure that the benefits of this investment-led growth “are shared by all.”
“The transition to net zero is for and about people”. The IEA calls on “sustained support and participation from citizens” to meet the “scale and speed” required by the proposed net zero energy pathway. The report predicts that the energy transition will have wide-reaching impacts on peoples’ lives, ranging from changes in transportation to the use of energy for cooking and heating, to urban planning, to employment. IEA estimates that “around 55% of the cumulative emissions reductions in the pathway are linked to consumer choices such as purchasing an EV [electric vehicle], retrofitting a house with energy-efficient technologies or installing a heat pump.” But supports will be needed for vast swaths of the global population who cannot easily make these types of behavioural changes and investments. Per IEA, “providing electricity to around 785 million people that have no access and clean cooking solutions to 2.6 billion people that lack those options in an integral part of our pathway.” This also means that the clean energy transition will likely hit vulnerable groups harder in terms of clean energy access, employment opportunities, and the impacts of land and natural resources use for clean technology—so “decisions [taken by governments] must be transparent, just and cost-effective.”
You can also read an analysis of the report and its key themes in the Financial Times: Derek Brower, Justin Jacobs and Myles McCormick, Six Takeaways from the IEA’s Net-Zero Scenario, Financial Times (20 May 2021)
