By Noah Browning

LONDON (Reuters), IF the world wants to fight climate change and control volatile energy markets, then investment in renewable energy should triple by the year 2010, according to the International Energy Agency.

“The world is not investing enough to meet its future energy needs … transition‐related spending is gradually picking up, but remains far short of what is required to meet rising demand for energy services in a sustainable way,” the IEA said.

Policy makers must provide clear signals and guidance. “If the road ahead is not paved only by good intentions it will be bumpy indeed,” it said.

Paris-based monitor The World Energy Outlook was released early in the year by Paris to assist UN COP26 climate conference. This is less than a month away.

According to the UN, the Glasgow, Scotland meeting was the “first assessment of whether countries are ready to accept new and higher-level commitments under the 2015 Paris Agreement.” It also called it “an oportunity to give an ‘unmistakeable message’ to accelerate the global transition to clean energy.”

Power prices have risen to new records in recent weeks as prices for oil rose to multi-year highs, and energy scarcity erupted across America, Europe, and Asia. As governments relax curbs on COVID-19, fossil fuel demand is rising.

The IEA stated that after the pandemic, renewables including solar, wind, and hydropower must make up a larger portion of the recovery in energy investments.

Here’s a graph on oil, natural gas, and coal demand

https://fingfx.thomsonreuters.com/gfx/mkt/akpezaqjdvr/demandforecast.PNG

According to the IEA, renewables account for over two-thirds the new power capacity investment this year. Yet, a large increase in the use of coal and oil has led to the second highest annual rise in climate-changing CO2 emissions.

The IEA stated that a more rapid energy transition would be better for consumers. This is because a shock to commodity prices could drive up household costs by 30% in its Net Zero Emissions scenario (2050), which is the most ambitious, as opposed to its less conservative Stated Policy Scenario (STEPS).

Here’s a graph on the CO2 emissions

https://fingfx.thomsonreuters.com/gfx/mkt/zgvomrbyovd/co2emissions2.PNG

STATUS QUO VERSUS NET ZERO

Despite this, it is still a huge leap to keep up with the Paris Agreement 2015 pledges to reduce temperature increases to 1.5 degrees Celsius more than preindustrial times.

Click here for a graphic about the Global Median Surface Temperature Rise

https://fingfx.thomsonreuters.com/gfx/mkt/jnpwewyknpw/temprise.PNG

In 2020, nearly 80 percent of the world’s energy supply was made from fossil fuels like oil, coal and natural gas. Renewables only 12%.

The IEA’s NZE prediction for the future sees fossil fuels declining to less than 25% of mid-century supplies, while renewables rising to nearly two-thirds. This is to keep the rise at 1.5 degrees.

Temperatures will rise by 2.6° Celsius if the world continues on the STEPS track.

The IEA foresees a peak to oil demand in all its scenarios for the first time, in the mid‐2030s in the STEPS forecast with a very gradual decline but in the NZE forecast plateauing within a decade and dropping further by nearly three-quarters by 2050.

Doubling down upon the agency’s most severe warnings yet about the future of fossil fuels, made in a May Report, the IEA stated that its NZE image envisioned lower oil demand and a rise for low-emission fuels rendering new oil fields beyond 2021 unavoidable.

Click here for a graphic about Emissions Reductions in 2050

https://fingfx.thomsonreuters.com/gfx/mkt/gdpzywqjlvw/dirtyearly.PNG

It did however state that new oil fields are required for its most conservative scenario and offered tips to mitigate their impact on the climate, such as reducing methane flaring.

The IEA warns that “every data point showing energy change can be countered with another showing stubbornness”

The energy system of today is not equipped to meet these needs; it is time for a revolution in low-emissions.

Here’s a graph showing Fossil fuel usage by scenario

https://fingfx.thomsonreuters.com/gfx/mkt/znvnezbqgpl/fossilfueluse.PNG