IEA’s Net Zero Report is a Blow to the Fossil Fuel Industry
Overview
This week the International Energy Agency (IEA) - an intergovernmental organization that provides analysis, data, and policy recommendations related to global energy issues - launched a report titled Net Zero by 2050, which sent shockwaves through the the fossil fuel industry and fossil fuel producing countries for its assertion that there is “no need for investment in new fossil fuel supply” in this scenario. Let’s have a look at what Net Zero means and the key findings behind this IEA scenario to get there by 2050.
Net Zero
Net Zero refers to a commitment to completely negate the CO2 emissions caused by humans by balancing the emissions of carbon dioxide produced with their removal or elimination. There are two crucial components to achieving Net Zero:
Mitigating or lowering the number of emissions produced globally
Deploying solutions that offset or balance the emissions that are still produced, through things like tree planting, carbon capture, utilization and storage (CCUS) or direct air capture and storage (DACS)
32 countries, making up 70% of global emissions, have made a commitment to achieving net zero some as early as 2035 (Finland) and some as late as 2060 (China and Kazakhstan) but the vast majority of countries have pledged “Net Zero by 2050.” Only six countries have legislated their commitment to Net Zero - Sweden, the UK, France, Denmark, New Zealand and Hungary (Net Zero Tracker).
Criticism of Net Zero
While the general consensus in the climate community is that country’s commitments to Net Zero are a positive and necessary development in the fight against climate change, there is also some very valid criticism of the principle. The “net” dimension of the word implies both reducing and offsetting, and many scholars, activists, and thought leaders believe that governments and industry are putting too much emphasis on the offsetting dimension, giving the world a carte blanche to continue producing emissions at a nearly unchecked rate while believing that future technologies (ex. Direct Air Capture) will save us. Authors in a recent piece in The Conversation went so far as to call the concept a “dangerous trap” because of its focus on technological salvation and its potential to reduce the sense of urgency needed to take immediate action.
The IEA’s Net Zero by 2050 Roadmap
The IEA, being an intergovernmental organization made up of countries, has always been known for rigorous analysis and has not really been seen as radical or brash (in my opinion). This is why their new Net Zero by 2050 report was a bit of a shock to the system, it is much more ambitious than some of their recent scenarios and it lays to bare the reality of the massive challenge we face as a global society and the extreme systemic transformation that is needed to limit global warming to 1.5-2°C. So let’s dive into some of the details in the report.
Energy production is responsible for 72% of all global emissions.
First and foremost, it is important to note that this report is a scenario. The basic premise of a scenario is to take an end goal (in this case Net Zero by 2050) and chart one or more paths to achieving it. Scenarios have been popular in the energy space for a very long time and are referenced frequently. This stems back to the 1970s when the energy industry was blindsided by the rise of environmentalism as well as the OPEC cartel. This spurred Shell to create a scenarios department that analyzed and built possible visions of the future to aid in business decision making. There are a number of scenarios that exist related to the energy system and climate change from a range of organizations including the IPCC, Shell, the World Energy Council and many more.
It is estimated that to achieve a 1.5°C level of warming the “carbon budget” of the planet is 500 Gigatonnes (Gt) of CO2. This scenario would use up 450Gt of CO2, leaving an additional 50Gt for other emitters like land use and forestry.
All scenarios are based on assumptions and parameters, and the IEA’s Net Zero by 2050 Roadmap is no exception. It is built on three fundamental principles:
Technology neutrality, with adoption driven by costs, technological readiness, country and market conditions, and trade-offs with wider societal goals;
Universal international cooperation, in which all countries contribute to net-zero, with an eye to a “just transition” and where advanced economies lead;
An “orderly transition” that seeks to minimize stranded assets where possible, while ensuring energy security and minimizing volatility in energy markets. (Carbon Brief)
Building the scenario based on these principles ensures that it is addressing other societal concerns like jobs, economic activity and energy access for all. In fact, the IEA states that their roadmap would “boost global GDP, create millions of jobs, provide universal energy access by 2030 and avoid millions of premature deaths due to air pollution.” They state that this scenario would support an economy 40% larger and a planet with nearly 2B more people living on it.
This pathway is designed to maximize technical feasibility, cost-effectiveness and social acceptance while ensuring continued economic growth and secure energy supplies. - IEA
The roadmap is structured around 400 milestones, in 5-year increments, that need to be achieved between now and 2050 to achieve the Net Zero pathway. Here are some key elements of the strategy:
Electrify everything and phase out the internal combustion engine
Suspend investment in new fossil fuel production and add carbon mitigation technologies or energy efficiency to existing assets
Massively scale up renewables so that they make up 90% of electricity generation, and specifically increase wind and solar to be almost 70% of global electricity generation by 2050 (currently they make up 10%). Nuclear energy would also grow.
Enhance energy efficiency starting with new sales or development of buildings, vehicles, appliances and industry and gradually retrofit or replace older versions
Transition to sustainable bioenergy by moving off of traditional solid fuels and by using biofuel for low-emissions fuels for planes, ships and other forms of transport
Deploy CCUS to existing energy assets and industries where emissions are hardest to reduce (i.e. cement), and to support the scaling up of low‐emissions hydrogen production, and enable some CO2 to be removed from the atmosphere
Use hydrogen to fill the gaps where electricity cannot easily or economically replace fossil fuels Including hydrogen-based fuels for ships and planes, as well as hydrogen in heavy industries like steel and chemicals
Encourage behavioural changes, particularly in advanced economies such as replacing car trips with walking, cycling or public transport, or foregoing long-haul flights
In the world according to this scenario, renewables would make up 2/3 of the global energy supply, nuclear would make up 10% and fossil fuels would be only approximately 20%. The IEA sees employment in clean energy increasing by 14M jobs and falling by 5M jobs in the fossil fuel industry.
Backlash
As expected, the IEA Net Zero by 2050 Roadmap has received a lot of backlash by fossil fuel producing countries, companies and industry groups. Japan and Australia have said that they will continue fossil fuel investment (FT). Norway, which is usually seen as quite a climate progressive state despite its fossil fuel production, defended its oil production as the lowest emission fossil fuel for Europe. OPEC said the report will cause further oil price volatility (Reuters). The International Gas Union claimed the scenario would lead to massive energy insecurity. The World Coal and Nuclear Associations both called the report impractical and unrealistic.
Additional commentary pointed to the potential implications that this Roadmap could have on financing the energy industry. Big banks are increasingly seeing fossil fuel investments as risky given the transition that is under way and some feel this could be a tipping point. (Oil Price)
What would Net Zero Skeptics think of the IEA Roadmap?
Finally, because I spent some time talking about the skepticism of the Net Zero concept, I wanted to come back to it to close. Remember that criticism of the concept stems from the belief that it leads to inaction because of its reliance on future technologies to save us. The IEA’s Roadmap may be an antidote to this doubt because of its huge focus on emissions reductions NOW, utilizing technologies that already exist. Some more nascent technologies are included like CCUS, direct air capture and hydrogen to write a large degree but Dr. Simon Evans compared the IEA’s scenario with the IPCC 1.5°C pathway and found that it called for much lower fossil fuel use, higher renewable energy deployment (specifically wind and solar), less CCUS, less BECCS, and less bioenergy.
Keep Learning
Here are a few great resources for further reading and learning:
Net Zero by 2050 Roadmap (IEA, 2021)
IEA: Renewables should overtake coal ‘within five years’ to secure 1.5C goal (Carbon Brief, 2021)
Net Zero Tracker (ECIU, 2021)
A New Climate Report Challenges Exxon and BlackRock (Bloomberg, 2021)
Climate scientists: concept of net zero is a dangerous trap (The Conversation, 2021)
Carbon removal experts support splitting “net zero” into twin targets (Climate Home News, 2021)
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