International Energy Agency gives COP a warning

By Charlie Wilson

The IEA World Energy Outlook 2021 sets out in very clear terms and stark figures what the world needs to do to keep below an average temperature rise of 1.5C; and how far short we are falling. Not all of what they say is unproblematic, but it is very useful to have this laid out so clearly; so that the blizzard of figures and claims that will be made at the Glasgow COP can be measured against a relatively reliable benchmark for what needs to be done.

Underlying this is the imperative for a growing global population – projected to peak at around 11 billion people by the end of the century – to enjoy a decent quality of life, which requires a significantly improved quality of life for the global majority; rather than suffer the horrific consequences of ecological and civilisational collapse.

The IEA contrasts three scenarios as we go into this crucial decade.

  • The Announced Pledges Scenario (APS) – what governments say they are going to achieve.
  • The Stated Policies Scenario (STEPS) – what the plans actually put in place by governments so far would achieve.
  • The Net Zero Emissions scenario (NZE) – what the IEA believes is necessary to achieve Net Zero by 2050.

These diverge.

In the APS, if all governments meet their pledges

  • 500GW of solar and wind power would be installed by 2030.
  • There would be a 20% cut in coal power.
  • Oil demand would peak in 2025.
  • Global energy demand would plateau in the 2030s, assuming a significant increase in energy efficiency.

As a result, C02 emissions would be down 40% by 2050, but average temperatures would rise by 2.1C by 2100. So, even on the basis of the pledges made so far, and even with significant investment going on, we are way off target and heading for trouble.

In the STEPS – what is actually planned rather than hoped for – we are even further off.

While there has been a welcome enhancement of targets from the initial Paris Pledges, Global electricity demand is expected to double by 2050 with progress in renewable energy sources balanced out by increased demand from heavy industries like steel, cement, heavy freight. Even with the increase in demand met entirely by renewable sources, annual emissions are projected to remain at current levels. This would lead to an average temperature increase of 2.6C by 2100, and rising.

The APS envisages doubling investment in clean energy up to 2030. This needs to be doubled again to get to Net Zero.

The IEA is quite clear that this needs unprecedented levels of global co-operation to get agreements on issues like, regulating trade in energy intensive goods, the management and control of international investment and finance and the need to align these and strengthen them in a collaborative manner “with no one left behind”.

There is clearly no place in this scenario for the destructive self-indulgence of a New Cold War.

Closing the gap

The IEA projects that 33% of the gap between the APS and Net Zero Scenario could be met by doubling investment in solar, wind and hydro power, investing in grid infrastructure, and closing down coal as quickly as possible. 50% of this would impose no cost on consumers because wind and solar are now so cheap.

80% of efficiency gains will save costs to consumers. At the moment, the energy intensity of the global economy declines by 2% a year, as new inventions and innovations make systems more efficient. This needs to double to 4% by 2030. This requires new materials, improved practices and behaviour/social changes. Without this, global energy demand will be 30% higher in 2030 than in 2020.

While the technology currently in place could meet the NZE targets for 2030 if deployed at scale and fast enough, technological innovations and scaling up technology currently at prototype stage would be need to close about half of the remaining gap to NZE by 2050.

  • That includes Carbon Capture and Storage (CCS) and Hydrogen. At present the world’s largest CCS plant is only capable of sucking 4,000 tones of CO2 out of the air every year. With the world currently emitting over 6 billion tonnes of CO2 every year, this is trying to stop a Tsunami with a tea spoon. Nevertheless, some use of CCS will be needed for heavy industrial processes, alongside measures to replace inputs and energy sources.
  • Most forms of Hydrogen production emit more greenhouse gases – including methane – than just using natural gas in the first place. In fact, closing down methane emissions from ongoing fossil fuel production could cut 15% of the gap between APS and NZE by 2030. Hydrogen at present is developing very slowly; below levels required by the APS and would need to be 9 times higher to meet NZE. This would have to be produced at scale from water with renewable energy sources to make a positive impact.
  • The IEA also envisage an enhanced role for “nuclear, where acceptable”. This is odd, because nuclear is significantly more expensive than renewables, carries significant issues with waste and, on the timescale envisaged, wouldn’t make a dent in the problem; given how long they take to build. Redeployment of the investment earmarked for them into cheaper renewable options, including regular. reliable sources like tidal power, would make a lot more sense and get a bigger return in all respects

70% of the investment needed will have to be in developing countries. Not what is happening at the moment. Under the current (market) system of international finance, capital is seven times more expensive to deploy in the Global South than in developed economies.

  • Under the impact of the pandemic, there has been a 2% increase in the number of people without affordable access to electricity, mostly in sub–Saharan Africa – leading to a reversion to cooking and heating with open fires, coal and dung; which is bad news in all respects.
  • So, the £100 billion every year pledged to the Global South and still not matched is therefore essential but insufficient to get this process under way. The IEA sees this is a private sector led process with “private investors and financiers responding to market signals and polices set by government”. The problem with this is that governments in the West themselves tend to set their signals and policies in accordance with the interests of the private investors and financiers in the first place, which is why Carbon pricing policies have had so little impact.
  • China’s shift away from financing coal fired power stations overseas and pledge to aid green transition instead has huge implications for Belt and Road and other initiatives and, in practice, is likely to have more of an impact than Western financial operations designed to suck value out of the developing world, not put it in.


The APS envisages a 10% decline in coal use by 2030. The NZE would need that to be 55%. The latest IEA electricity report shows a year-on-year increase in coal energy generation by 14.5% for the first six months of 2021 over the same period last year; as compared with an increase in solar generation by 17.6%. These figures will be abnormal to the degree that economies are cranking back up to a greater or lesser extent from the depths of pandemic slump.

At present coal amounts to 33% of global electricity generation. 140 GW worth of coal fired power stations are being built and a further 400 GW are being planned.

China’s decision to stop financing coal fired plants abroad cuts 190GW of planned expansion. This is an enormous deal. As the IEA put it “This could save some 20 gigatons in cumulative CO2 emissions if these plants are replaced with low emissions generation – an amount comparable to the total emissions savings from the European Union going to net zero by 2050.”

The IEAs projection for existing plants is that they will have to be retrofitted with CCS, co-fired with biomass, re-engineered to be more efficient and/or retired. Each of these has issues as well as possibilities.

  •  CCS is not yet at a scale capable of dealing with this, so would need to be developed very quickly to do so.
  • Biomass – wood pellets – emits CO2. The Drax power station in Yorkshire, which uses Biomass, is the largest single emitter of CO2 in the UK. The argument that while the wood is growing it is absorbing CO2 poses other questions about alternative land use, how much land you’d need, time scales and the optimum absorption of CO2 from woodlands at different stages of development and, centrally, whether the wood being used is being grown specifically for use in this way as, if it is not, this is just deforestation.
  • Retiring a plant early requires sufficient alternative power sources to keep the lights on. Which underlines the need to invest in renewables for the fastest possible transition. Under APS, retirements of existing coal plants are envisaged at double the historic rate. To meet NZE, this would have to double again to 100GW worth a year.


APS projects Oil demand to peak around 2025. In the STEPS this would be ten years later. The gap between plans and aspirations yawns very large here. In the APS oil production would still be 75million barrels a day, just 1 mbd down on current levels. To reach the NZE that would need to be down to 25mbd.

IEA stress that no new oil and gas fields are required to supply the shrinking use we will need to make of them. So, all the companies indulging in further exploration, or being given a nod and a wink to do so by governments, are wilfully putting our survival at risk. While oil and gas investment is stagnant, and coal declining, without a rapid increase in sustainable capacity there will be squeezes on supply with knock on effects on energy prices and political fallout of the sort we are currently seeing. The slower the transition, the bumpier it will be.

Transition issues

The IEA notes that the upfront costs to consumers will have to be met by government for this to work. That goes for home insulation, replacement of gas grids with heat pumps, installation of solar panels, replacing cars with EVs.

The deeper implication that these programmes will have to be planned, need driven and cost free for households should be consciously understood. Heat pumps are at present far more expensive than gas boilers. Without a mass conversion programme – on the scale of the transition from town to natural gas in the UK from 1967 -1977 – there will not be a fast enough drop in costs (as the more a technology is used the quicker it evolves and the cheaper it gets) to overcome consumer resistance – which is currently being happily generated by the fossil fuel industry and its supporters in the media, and even some unions.

Some aspects of the IEA’s NZE envisage a society in 2050 which is more like it is now than we can reasonably sustain. It projects 1.6 billion Electric Vehicles by 2050; even more than the 1.46 billion cars there are in the world now. Even factoring in a global levelling up in the use of personal vehicles, they are not factoring in the need to increase public transport and design towns and cities around 15-minute neighbourhoods to free people of the burden of car ownership. This quantity of cars – with all the carbon emissions built into their manufacture – is more of a nightmare than a target.

On a global level, the shrinking use of oil and gas will concentrate its production in fewer countries, and the revenue these countries get from them will decline.

There will be an increase in demand for a number of critical materials like lithium, cobalt, nickel, copper and rare earths. In the APS, these amount to 13% of global trade by 2050. In the NZE, 80%.

In the meantime,

  • 25% of global electricity production is at risk from cyclones.
  • 10% of dispatchable energy generation capacity and refinery storage, being on coastlines, is at risk from severe flooding.
  • 35% of freshwater cooled thermal plants are in areas of high-water stress.
  • In STEPS, extreme heat events are liable to double by 2050 and be twice as intense when they occur.

The IEA envisages a more than $1 trillion market by 2050 for manufacturers of wind turbines, solar panels, lithium-ion batteries, electrolysers and fuel cells; comparable to the current oil market. This is a fairly conservative way to put it, as to make the transition, every job will have to be a green job to some extent.

They conclude with the following;

“Governments are in the driving seat: everyone from local communities to companies and investors needs to be on board, but no one has the same capacity as governments to direct the energy system towards a safer destination.

The way ahead is difficult and narrow, especially if investment continues to fall short of what is required, but the core message from the WEO-2021 is nonetheless a hopeful one. The analysis clearly outlines what more needs to be done over the crucial next decade: a laser-like focus on driving clean electrification, improving efficiency, reducing methane emissions and turbocharging innovation – accompanied by strategies to unlock capital flows in support of clean energy transitions and ensure reliability and affordability. Many of the actions described are cost-effective, and the costs of the remainder are insignificant compared with the immense risks of inaction.

Realising the agenda laid out in this WEO represents a huge opportunity to change the global energy system in a way that improves people’s lives and livelihoods. A wave of investment in a sustainable future must be driven by an unmistakeable signal from Glasgow.”

They envisage that the total investment required will have to rise to $4 trillion a year by 2030 to get to NZE. The UKs proportion of this would work out at roughly $80 billion a year just to take account of its domestic share of the global economy (2%) with no account taken of its responsibility for 7% of total historic emissions. That is the benchmark to measure the sums committed by the government in its forthcoming net zero plan by. Labour’s proposal to commit £28 billion a year is a step forward, but would need to be increased two and a half times to meet what is necessary.

That’s how serious it is.