For the first time the International Energy Agency (IEA) has accepted the need for the world’s economy to align with a global warming target of 1.5°C and acknowledged that this means “no need for investment in new fossil fuel supply”. The IEA’s new 1.5°C scenario is a turning point: the international organization that has long served as a protector of the fossil fuel industry comes in agreement with NGOs who have argued for years that the remaining carbon budget is incompatible with any further expansion of fossil fuels. However, the IEA has not cured all its bad habits. It continues to over rely on fossil fuels and bets on large scale carbon capture and storage (CCS) and bioenergy production, thus putting the 1.5°C target at risk.

With this first 1.5°C scenario (NZE 2050), the IEA makes a decisive step toward acknowledging the climate emergency and proposing a path that would limit global warming:

  • First and foremost, the IEA stresses that alignment on a 1.5°C pathway implies the end of investments in new fossil fuel supply. The IEA writes that “beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required”. It stresses that its 1.5°C pathway “results in a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output – and emissions – reductions from the operation of existing assets”. Contrary to what many gas companies are arguing, it also states that “many of the liquefied natural gas (LNG) liquefaction facilities currently under construction or at the planning stage” are not needed.
  • While putting the brakes on fossil fuel growth, the IEA indicates that the power sector should be at the forefront of climate action and reach carbon neutrality globally by 2040. Least efficient coal power plants would be shut down by 2030, followed by all “unabated” coal and oil plants by 2040. If unabated natural gas‐fired generation peaks by 2030, it is 90% lower by 2040 compared with 2020. Concretely, this means that unabated fossil fuel power plants should be closed by 2040, thus suggesting a short lifetime expectancy that would render such new power plants uneconomic and dangerous.
  • The IEA notably recognizes the need for richer or more “developed” countries to support the poorer ones and to take stronger climate actions. Its report implies that two thirds of GHG reductions efforts by 2030 should take place in so-called developed countries. Their electricity systems should be net-zero by 2035 and they should introduce much higher carbon prices.
  • Finally, the IEA stresses that the transition will allow massive job development. According to the IEA, the clean energy transformation will create about 30 million new jobs by 2030, while about 5 million jobs will be lost, mainly in the fossil fuel industry.

Fatih Birol, the IEA’s Executive Director, underlined that the 1.5°C scenario will become part of the IEA’s annual World Energy Outlook (WEO) that had previously relied on non-Paris aligned scenarios. In future, the 1.5°C scenario should be placed at the center of the WEO and be considered as the only IEA climate scenario.

However, with its first 1.5°C scenario, the IEA falls short of providing a truly sustainable pathway and serious problems remain with the IEA’s assumptions:

  1. The IEA allows for continued high levels of fossil fuel consumption, largely based on a belief in the viability of massive deployment of carbon capture and storage 

On the short term, the IEA allows for substantially more coal and gas use than the 2020 UN Production Gap Report:

  • In the NZE scenario, coal use declines by only 53% from 2020 to a level of 72 EJ in 2030; in the Production Gap Report it drops 11% a year to reach less than 50 EJ in 2030.
  • In the NZE, fossil gas supply declines by a total of 5% from 2019 to 2030; the Production Gap Report states that gas needs to decline by 3% each year up to 2030. The accelerating decline of gas after 2030 never makes up for the gap accumulated from 2020 to 2030: in 2050 gas demands remains higher than IPCC P2 scenarios and more than twice the level of IPCC P1.

Fossil fuels continue to account for a significant portion of the energy mix in 2050, making up for 119 EJ in 2050, the equivalent of 60% of the energy provided by wind and solar power. Despite the end to new fossil supply projects, fossil fuels benefit from decreasing but significant investments to maintain current infrastructures and reserves. Capital spending on oil and gas supply still amounts to $350 billion per year from 2021 to 2030 – a level only 30% below that of recent years and equivalent to expenditure in 2020 -. After 2030 oil and gas supply expenditure falls to $170 billion per year.

To allow continued reliance on fossil fuels, the IEA forecasts large-scale deployment of carbon capture and storage (CCS / CCUS) and the use of negative emissions such as biomass energy with carbon capture and storage (BECCS) and direct air capture (DAC). The use of unabated fossil fuels still generates 1.7 Gt CO2 emissions in 2050, which are supposed to be entirely offset by BECCS and DAC. A total of $650 billion is predicted to be spent exclusively on fossil fuels with CCUS from 2020 to 2050.

The projection for CCS deployment seems particularly unrealistic. Of a total 7.6 Gt CO2 captured and stored by 2050, 70% comes from CCS (rising from close to zero today) and 30% from BECCS and DAC (1). CCS captures 1.6 GtCO2 by 2030, more than three times the level of the IPCC’s P2 pathway and an increase of 4,000% compared to current levels (2). The IEA decides to largely rely on technologies that are still at the demonstration or prototype phase: 55% of CCS emission reductions comes from such unproven technologies.

As 50% of total CO2 captured is devoted to absorbing emissions from fossil fuel combustion, the massive deployment of CCS benefits mainly coal and gas power plants and industries. The NZE projects a huge buildup of so-called “low carbon” hydrogen production, much of it produced from coal and gas: 46% of the hydrogen output in 2030, and 38% in 2050 (3).

The IEA itself implicitly recognizes that this level of CCS deployment is unrealistic as it presents a “low CCS” case where CCS capacity does not expand beyond current and already planned infrastructure (4). In this case, a much-faster build-up of renewable energy capacity and renewable hydrogen production is needed, at a higher overall cost. As the NZE has been designed to “minimize stranded assets”, the IEA notes that limited CCS deployment could in return lead to $90 billion of coal and gas plants becoming stranded in 2030 and up to $400 billion in 2050.

Of course, it is worth noting as dangerously reliant on CCS as it is, the IEA’s 1.5°C scenario already requires a drastic change of strategy from the fossil fuel industry. If fossil gas reduction is slowed down by “abated” uses, the IEA still forecast a drop of gas demand by 55% by 2050 that should be compared to a 38% rise in BP’s energy outlook.

2. Biomass becomes a major energy source, despite competition for land and negative sustainability impacts

 

In the NZE, biomass becomes a major energy source by 2050, rising from 65 EJ in 2020 (5) to 102 EJ in 2050 (6), thus making up for about 20% of total energy needs and almost as much as solar energy (109 EJ). “Modern biomass” swiftly replaces traditional uses that are phased-out by 2030. The total land area dedicated to bioenergy production in the NZE increases from 330 million hectares (Mha) in 2020 to 410 Mha in 2050, the size of India and Pakistan combined and more than a fourth of total available cropland (7).

The NZE relies on BECCS to capture 1.3 Gt CO2. While this amount falls within the sustainability range cited in the IPCC’s SR1.5 (0.5-5 Gt CO2), it still raises questions regarding its impact on land-use and its feasibility in a context of overall massive carbon capture development.

Furthermore, biomass use can emit large quantities of CO2, a fact that does not seem to be accounted for in the NZE. Notably, the use of wood and forest biomass could generate greater emissions per unit than coal and contribute to deforestation worldwide. However, more than half of the IEA’s bioenergy comes from forest and wood (55 EJ)(8).

The IEA integrates a “low biomass” case, where land use for dedicated bioenergy crops and forestry plantations remains at today’s level (330 Mha) in 2050 and biomass produces 90 EJ of energy in 2050. It admits that it is possible to achieve net-zero without expanding land use for bioenergy but indicates that it would require additional investments – notably in solar, wind and energy networks – come at an overall significantly higher cost. The IEA’s preference for massive – and seemingly unsustainable and unviable – biomass use seems to emanate from the fact that it allows for the continued use of existing fossil infrastructure (9), and therefore minimizes the risk of stranded assets and limits the need for new investments.

3. Renewable energy potential remains underestimated

 

The IEA has a long track-record of underestimating renewable energy development.

While the IEA projects an annual growth of solar power of 21% from 2020 to 2030, this then slows down so that overall average growth from 2020 to 2050 is only 11%. Similarly for wind energy, NZE shows annual growth of 17% in the current decade but only 9.6% annual growth over the period to 2050. This slowdown in renewable energy buildup after 2030 appears totally unjustified. It could be explained by the relatively limited place of electricity – which makes up 49% of total energy consumption in 2050 compared to 70% in the Energy Transition Commission work -, the aforementioned bets on CCS and biomass, and the development of nuclear energy (10). Together these limit renewable development for electricity generation, heat generation and the production of “green” gases.

The IEA has repeatedly been criticized over many years for repeatedly underestimating the rate at which renewable costs have declined. It seems to have repeated this error in NZE with cost assumptions that undermine renewable energy development: the costs of solar and batteries fall at only 5% a year from 2020 to 2030, and then 1-2% a year after 2030, whereas these costs have fallen by much more in recent years (11). These unrealistically high assumptions of future solar and battery costs contribute to raising the projected cost of the low CCS, low nuclear or low biomass cases.

In spite of the problems highlighted above, this first 1.5°C scenario marks a historic breakthrough for the IEA in acknowledging the importance of the 1.5° threshold, the reality that it is possible to stay under this limit, and that there is no room for new oil and gas production. This NZE scenario also clearly shows that other IEA scenarios cannot pretend to be “climate” scenarios. The IEA can no longer credibly brand its “Sustainable Development Scenario” (SDS) as a “Paris-aligned” scenario when its own NZE 2050 scenario requires CO2 emissions to be 6 Gt lower in 2030 (22.5%) and to reach carbon neutrality 20 years earlier (2050 instead of 2070).

Is the NZE more ambitious than IPCC scenarios? A false question

In the NZE and a dedicated blog post, the IEA compares the NZE to IPCC scenarios and tries to show that it is more ambitious and realistic than most.

Comparing the NZE with IPCC scenarios raises several issues:

  • Like all modelling work, the IPCC’s scenarios provide a wide range of scenarios that all reflect a possible computable pathway but not all these scenarios are realistic or sustainable. In fact, several IPCC scenarios are not realistic according to the IPCC’s own assessment. For example, most of the low/no overshoot 1.5°C scenarios in the IPCC dataset exceed the sustainability limits the IPCC define for BECCS and/or afforestation. The choice of a scenario is never neutral and must also account for sustainability issues that have notably been raised by the IPCC and other environmental bodies.
  • The IPCC’s work dates from 2018 and is based on data from 2016, which creates a comparability problem, notably in light of the significant fall in renewable energy costs.

Furthermore, the comparison made by the IEA is misleading:

  • The IEA compares the NZE with IPCC scenarios that do not have the same stated outcome: while the NZE is a 1.5°C no/limited overshot scenario, the IPCC scenarios include higher overshoot scenarios;
  • The IEA excludes the most ambitious and cautious IPCC scenarios from its comparison: as the IEA’s comparison focuses on 18 IPCC scenarios that reach “net-zero” energy and industrial process emissions, it excludes IPCC Pathway 1 (P1) scenarios that do not rely on negative emissions and therefore have some level of energy and industrial residual emissions and/or rely on land sequestration to reach zero emission globally.

To conclude, the IEA’s comparison with IPCC scenarios merely shows that many pathways are possible to arrive to “net-zero” and limit global warming. Integrated assessment models (IAM) have limitations that should not be ignored and when modelling the NZE the IEA makes political choices. It chooses to highlight a specific path over others. Unfortunately, this path largely relies on carbon capture and bioenergy thus increasing the risk of failure.

Notes :

  1. A total 2.4 Gt CO2 are captured from BECCS and DAC by 2050.
  2. 0.04 GT CO2 captured through CCS in 2020.
  3. Hydrogen production rises from 9 Mt in 2020 to 149 in 2030 and 520 Mt in 2050.
  4. Reaching a total of 150 Mt captured from fossil fuels by 2050 compared to 3 600 Mt in the NZE.
  5. About 40 EJ coming from modern biomass.
  6. Including 35 EJ for electricity generation.
  7. 26,4% using a conservative estimate of about 1550 Mha of available cropland, close to current use.
  8. Including 10 EJ from forestry planting, 25 EJ from short rotations of woody-crops and 20 EJ from forest and wood residue.
  9. See pages 80 and 92 of the IEA’s 1.5°C scenario.
  10. Nuclear energy supply rise from 2.4% on average from 2020 to 2050, from 29 to 61 EJ.
  11. Renewable energy have undercome a real cost revolution in recent years. According to the IRENA, Solar PV module prices have fallen by around 90% since the end of 2009, while wind turbine prices have fallen by 55-60% since 2010. Similarly, Lazard shows a sharp decline in renewable energy cost, with cost decline for solar panel over 10% a year in recent years. In the US, utility-scale battery storage costs decreased nearly 70% between 2015 and 2018.