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IEA: Net Zero Would Mean No New Oil and Gas

Copyright © 2021 Energy Intelligence Group

The International Energy Agency (IEA) says there is a credible path for the world to attain net-zero emissions by midcentury but that it would require "unprecedented" changes in the way we produce and use energy. Under the scenario outlined in a special report published Tuesday, the Paris-based agency said there would be no need to find and produce any more oil, gas or coal. It argues that there are already enough fossil fuel supplies available for its net-zero emissions pathway, which projects that global energy demand would be 8% lower in 2050 and that fossil fuels would account for just over 20% of energy consumed by then. The IEA said it had published the report ahead of the COP26 climate talks to be held in Glasgow in November because current pledges fall short of the reductions in carbon emissions needed to limit global warming to 1.5°C (IOD Jan.11'21). Shockwaves The report -- Net Zero by 2050: A Roadmap for the Global Energy Sector -- is the first in which the agency sets out a net-zero scenario, and it sent shockwaves through the global energy industry. Some saw it as proof that an organization that was slow to recognize the rise of renewables had finally acknowledged the acceleration of the energy transition. Others pointed to the strong recovery in oil demand from last year's slump and Brent oil prices briefly touching $70 per barrel on Tuesday as indications that the report's projections were flawed. Under the net-zero emissions scenario, oil demand would fall by about 75% to 24 million barrels per day by 2050 from around 90 million b/d in 2020, with the price of oil falling to $35/bbl by 2030 and $25 in 2050. Natural gas demand would drop 55% to roughly 1,750 billion cubic meters a year, while coal demand would fall to just 1% of total energy use in 2050. Starting now, there would have to be no new final investment decisions to build coal-fired power stations anywhere in the world, the report said. The IEA notes that the sharp contraction of oil and natural gas production under the net-zero emissions scenario would have "far-reaching implications" for producing countries and companies. Ultimately "supplies become increasingly concentrated in a small number of low-cost producers" such as Qatar or Saudi Arabia, it adds. Opec's share of a shrinking global oil market would grow from around 37% in recent years to 52% in 2050, "a level higher than at any point in the history of oil markets." Fossil fuels of all kinds would go from supplying roughly 81% of global energy today to slightly more than 20% in 2050. Going Electric By 2035, there would be no sales of new gasoline or diesel passenger cars, and by 2040, the global electricity sector would have already reached net-zero emissions, the report finds. Sales of electric cars would increase eighteenfold between 2020 and 2030 to hit an annual rate of more than 55 million units (IOD Apr.29'21). Last year the world set a renewable power record, with some 280 gigawatts of generation capacity added, up 45% from 2019. But the IEA said there would need to be a fourfold increase in the pace of capacity expansions, with solar photovoltaic (PV) additions of 630 GW per year by 2030 and wind additions of 390 GW per year by the same year (IOD May11'21). By 2050, almost 90% of electricity generation would need to come from renewable sources, with wind and solar PV together accounting for almost 70%, and nuclear plants for the remaining 10%. "The scale and speed of the efforts demanded by this critical and formidable goal -- our best chance of tackling climate change and limiting global warming to 1.5°C -- make this perhaps the greatest challenge humankind has ever faced," said IEA Executive Director Fatih Birol. A worldwide push to increase energy efficiency would also be needed, with efficiency gains of 4% a year through 2030, a pace that is roughly three times higher than achieved over the last two decades. New Technologies The heavy-lifting needed to reduce emissions would be done with existing technologies out to 2030. From there, almost half of the greenhouse gas reductions would be realized with technologies that are currently at the demonstration or prototype phase, such as advanced batteries, green hydrogen electrolyzers and direct air capture. By 2030, some 150 million tons a year of low-carbon hydrogen would have to be produced, which would require 850 GW of installed electrolyzer capacity. By 2035, some 4 gigatons of carbon dioxide would need to be captured and stored, up from roughly 40 million tons/yr now, the report said. The world's total annual energy investments would surge to $5 trillion by 2030 under the IEA's net-zero emissions pathway. Jay Eden, London

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