By James Newcomb
May 26, 2021 at 5:00 am ET
The International Energy Agency’s much-anticipated new report, describing a roadmap for the energy sector to limit global warming to 1.5°C, is the latest indication that world leaders are aligning around what was once considered an impossible goal. The analysis confirms not only that the pathway to 1.5°C is achievable, but that realizing it would deliver sizeable benefits to the global economy, including 4 percent higher gross domestic product and 25 million net additional jobs by 2030. At the same time, air quality improvements would result in 2 million fewer premature deaths, while universal energy access in developing economies by 2030 would open new and faster pathways for economic growth and well-being.
To accomplish these goals, the IEA points out that we must quickly stop burning fossil fuels for electricity, cars and trucks, and deploy clean technologies at an unprecedented rate. The changes needed are truly transformational — but they are within reach, especially if we take into consideration additional positive forces for change likely to come into play as the transition takes shape. These forces could help the energy system shift even more quickly and affordably than described and in ways that rely less on uncertain or costly solutions like biomass, nuclear, and carbon capture.
First, while the IEA focuses on national policies as the main driver of change, stakeholders from all corners of civil society, levels of government and business are already significantly contributing to the energy transition in ways that are rapidly gaining momentum. In the run-up to a major convening of global climate leaders in November, civil society organizations are marshalling climate action commitments from corporations and cities with steadily increasing specificity and actionability under the umbrella of the United Nations-led Race to Zero campaign. Collectively, these bottom-up commitments, and the “positive rivalry” that they induce among diverse organizations, have the potential to accelerate change well beyond what government policies alone will require.
Second, economic early retirement of many coal and gas plants could proceed even faster than IEA estimates if appropriate support and encouragement for these transitions were provided by governments and financial institutions. We estimate that replacing the entire fleet of global coal plants with clean energy plus battery storage could be done at a net annual savings within just a few years, even before quantifying the additional benefits to health, climate and the environment from these retirements.
Third, critical clean energy technologies continue to accelerate faster than analyst expectations can catch up. While the IEA has substantially raised its forecast of solar and wind deployments over the next decade, it projects a slowdown in growth after 2030 and again after 2040 despite expected continued cost decreases. In the area of energy storage, Tesla projects that some of its batteries could provide the same energy density by 2025 that IEA forecasts will be occurring several years later. The combination of such rapidly improving clean energy technologies with parallel advances in artificial intelligence, internet of things, automation and advanced manufacturing will continue to reveal new and unexpected decarbonization pathways and cost reductions across sectors.
Fourth, better application of efficient design in vehicles, buildings, industrial processes and other devices could significantly reduce materials and energy demand. IEA foresees strong improvements of about 4 percent per year in energy intensity through 2030, but even greater gains could be available. For example, a recent design competition elicited super-efficient residential cooling solutions that have five times less climate impact than standard air conditioning units available in the market today. By 2050, the IEA’s roadmap projects energy demand 15-40 percent higher than other scenarios that tap such efficiency opportunities more fully.
Finally, fundamental shifts in the financial sector could help to accelerate the energy transition broadly. As of April 2021, there are 165 financial institutions with $71 trillion of capital committed to emissions mitigation through various financial sector initiatives. And since the start of 2021, the IMF, the World Bank and the European Central Bank have all made commitments to responsible climate policy, none of which is explicitly considered by the IEA.
With the addition of the IEA’s influential voice to the many others already championing the benefits of achieving net-zero carbon dioxide emissions by 2030, the conversation among global leaders and policy makers is increasingly about how, not whether, to deliver on this ambitious goal. Now that we can see the potential benefits with increasing clarity, it’s time for the IEA and other institutions to launch a vibrant and diverse conversation about possible pathways, supported by highly transparent analysis and with the benefit of broad engagement from civil society organizations.
James Newcomb is managing director for strategic analysis and engagement at RMI and formerly managed market and policy analysis at the National Renewable Energy Laboratory.
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