Accelerating the shift to 100% renewable electricity
To limit global warming to as close to 1.5°C as possible, the global electricity supply must quickly become carbon-neutral. In the International Energy Agency’s (IEA) “Net Zero Emissions” (NZE) scenario, electricity generation is decarbonized by 2040. The countries designated by the IEA as “advanced economies”—that is, OECD and European countries—have a responsibility to lead the way by achieving carbon neutrality as early as 2035.
This carbon neutrality relies on replacing—not adding to—fossil-fired power plants with sustainable alternatives. This dual approach therefore requires, on the one hand, a gradual reduction in fossil fuel capacity—and thus an end to their expansion—as well as the widespread adoption of renewable energy—primarily solar and wind—along with transmission, distribution, and storage infrastructure.
Unfortunately, the current pace of renewable energy deployment is insufficient; it is notably slowed by aging power grids, and fossil fuel power plants continue to be developed in parallel.
Financial actors have a central role to play in decarbonizing electricity generation. To fully meet their climate commitments and limit global warming to as close to 1.5°C as possible, they must urgently stop perpetuating an electricity model dependent on fossil fuels and fully embrace the renewable energy revolution by supporting its full-scale development.
Electricity, a blind spot for financial players
A fully decarbonized power sector is the essential foundation for a net zero energy system.
International Energy Agency, 2022
From US$1.3 trillion in 2022 to US$4.2 trillion in 2030, funding to support the transformation of power systems must skyrocket. In its Net Zero Emissions by 2050 (NZE) scenario, for every dollar allocated to fossil fuels in 2030, six dollars must be allocated to what the IEA defines as “clean energy” (renewable energy, energy storage systems and power grids, nuclear and fossil-fuel power plants equipped with carbon capture and storage systems).
But the commitments made by banks, insurers and investors to support renewable energy are too weak and too disparate to develop a decarbonized electricity sector. Moreover, while great progress has been made on coal, particularly in Europe, most financial players have no policy in place to stop fueling the development of new gas-fired power plants. Instead they push companies to plan and commit to closing existing coal and gas infrastructure.
The need for financial actors to act is all the more urgent as many new gas-fired power plant projects could be built, locking in several billion tons of greenhouse gas (GHG) emissions by 2035. While electricity generation from renewables is setting new records every year, those gains are being wiped out by plans for new gas-fired power plants. In 2025, between 1,000 and 1,200 new gas-fired power plants were planned or under development. This could represent more than 1,000 GW of additional capacity worldwide, on top of the 2,000 GW already in operation.
Accelerating the shift from fossil gas to renewables
The IEA’s NZE scenario indicates that global gas consumption for power generation must fall by 25% in 2030 compared to 2021 and that the world must completely decarbonize its electricity by 2040 at the latest. In Europe, as in other developed regions, the transformation needs to be faster in order to achieve decarbonized electricity by 2035. Conversely, the IEA indicates that the share of solar PV and wind in global electricity generation needs to increase from 10% in 2021 to 40% in 2030 and 70% in 2050.
Global renewable energy production by technology in the IEA
NZE scenario between 2010 and 2030
It should be noted that the IEA’s NZE scenario is gambling on the significant development of technologies that are not yet mature, and/or that have already shown significant limitations, such as carbon capture, storage and recovery (CCSR) systems, and on “solutions” that may have major environmental impacts, notably biomass. The renewable energy deployment targets in the NZE scenario should therefore be understood as a minimum target to be achieved.
The good news is that full decarbonization of the power sector is not only possible, but would generate climate, health, socio-economic and financial benefits.
Fossil gas: a dangerous source of energy
Gas-fired power plants were the main source of emissions from the European electricity sector in 2020
2800 premature deaths and 15,000 cases of respiratory disorders were linked to pollution generated by gas power plants in Europe in 2019.
Renewables: a green, reliable, and sustainable source of energy
Renewable energy sources are available in all countries, and their potential has simply not yet been fully exploited.
In 2022, wind and solar energy generated one-fifth of the EU’s electricity (22%), surpassing fossil gas (20%) for the first time and remaining above coal power (16%).
The transition of the current European electricity system to a system based mainly on wind and solar energy would allow Europe to save more than €1000 billion by 2035.
ENGIE, a lack of ambition in the face of climate change
Since the Paris Agreement, ENGIE has sold 16 of its coal-fired power plants, representing 60% of the total reduction in its coal-fired generation capacity. The latest sale was the Brazilian Pampa Sul plant in September 2022. At the same time, the French group has also converted several coal assets to biomass or fossil gas.
Now ENGIE must begin an orderly closure or at least a mothballing of its gas assets by 2035 in Europe and 2040 in the rest of the world. The company is still a long way from that, with more than 2.2 GW of additional capacity planned
If ENGIE justifies these gas developments by saying they will be converted to green hydrogen or biomethane in the future, it should be noted that these technologies are currently not yet mature enough, and their development potential is much more hazardous compared to renewables. In 2021, biogas and biomethane represented only 1% of the world’s gas production, while green hydrogen represented just 0.5% of hydrogen production, or about 0.03% of the world’s gas production.
Despite the highly hypothetical potential of renewable gases, ENGIE expects to rely on them to fully decarbonize its gas assets by 2045, as well as relying on CO2 capture and storage devices. With just 31 GW of renewable capacity (wind, solar and hydro) in 2020, the group must increase its renewable projects to reach its target of 80 GW in 2030. As it stands, ENGIE is only aligned with a trajectory well below 2°C …
Financial players must support the development of 100% renewable electricity
The primary responsibility of financial institutions is to stop providing support for the construction of new fossil-fired power plants.
In addition, they must adopt ambitious commitments to support sustainable power supply.
But looking beyond projects, financial actors and in particular investors have a key role to play in order to demand detailed, credible and transparent transition plans from utilities.
To maintain credibility in their dialogue with power utilities, financial institutions must commit themselves to phasing out gas—and coal, for those that have not already done so—and demand that these companies do the same. To this end, financial institutions must, in particular, immediately suspend their support for companies that continue to develop new gas-fired power plants.
Next, they must demand that power utilities set ambitious targets for the deployment of sustainable alternatives, as well as the publication of a comprehensive climate plan that allows for the evaluation of decarbonization targets and the measures taken to achieve them against the backdrop of a credible 1.5°C scenario.
