The global energy crisis triggered by Russia’s invasion of Ukraine could “hasten” the transition to renewable energy, the International Energy Agency said on Thursday.
Investment in renewable energy needs to double to more than $4 trillion by the end of the decade to meet net-zero emissions targets by 2050, the agency said in its World Energy Outlook.
The IEA’s stated policies scenario (Steps), which is based on the latest policy settings worldwide, expects clean energy investment to rise to slightly more than $2 trillion by 2030.
The energy industry is shifting “dramatically” and government responses around the world “promise to make this a historic and definitive turning point towards a cleaner, more affordable and more secure energy system”, said IEA executive director Fatih Birol.
In August, US President Joe Biden signed into law the Inflation Reduction Act, which aims to reduce carbon emissions by about 40 per cent by 2030.
The law has offered a series of tax incentives on wind, solar, hydroelectric and other renewable sources of power, as well as a push towards electric vehicle ownership.
A proposed EU climate law makes the bloc’s target of reducing emissions by at least 55 per cent by 2030 a legal obligation.
Currently, Europe is experiencing its worst energy crisis after Russia, the region’s biggest natural gas supplier, reduced its exports in response to the EU’s wide-ranging economic sanctions.
To prepare for the peak winter season, countries are restarting coal plants and boosting liquefied natural gas (LNG) imports from the US and Qatar.
The IEA expects fossil fuel demand to peak or reach a plateau in all its scenarios for the first time, it said.
Based on current policies, natural gas demand will reach a plateau by the end of the decade while oil demand will “level-off” in the mid-2030s amid rising sales of electric vehicles, the agency said.
Russian fossil fuel exports are not expected to return to pre-war levels in any of the agency's scenarios.
The country’s share of internationally traded energy falls to 13 per cent in 2030 from 20 per cent in 2021 in the Steps forecast, while the US and the Middle East gain market share.
The agency expects the share of fossil fuels in the global energy to fall to more than 60 per cent by 2050, from 80 per cent currently, if the world stays on the current track outlined by the Steps scenario.
Stronger policies will be essential to drive a “huge” increase in energy investment that is needed to reduce the risks of future price increases and volatility, the IEA said.
“Major international efforts are still urgently required to narrow the worrying divide in clean energy investment levels between advanced economies and emerging and developing economies,” it said.
Global carbon dioxide emissions will fall back slowly to 32 billion tonnes by 2050, from a high point of 37 billion tonnes a year.
“Full achievement of all climate pledges would move the world towards safer ground, but there is still a large gap between today’s pledges and a stabilisation of the rise in global temperatures around 1.5 °C [above pre-industrial levels],” the agency said.
Fossil fuel combustion will grow by less than 1 per cent in 2022, supported by a “strong” expansion of renewables and rising adoption of electric vehicles, IEA said in a separate report last week.
Emissions jumped by nearly two billion tonnes in 2021, as the world economy rebounded from the effects of the first year of the Covid-19 pandemic, which had brought travel to a standstill.