By putting its \u00ab\u00a0Net Zero by 2050\u00a0\u00bb (NZE) scenario at the <\/span>center of its eagerly awaited World Energy Outlook (WEO) 2021, the International Energy Agency (IEA) sets the new normal for states, companies and financial institutions: \u00a0<\/span><\/span>a swift shift from fossil fuels to renewable energies, with an immediate end to new fossil fuel supply projects and a power system speeding up toward carbon neutrality<\/span><\/span>. <\/span>Our in-depth analysis of the WEO 2021<\/a><\/u> shows that, despite still relying on several problematic assumptions and allowing significant reliance on fossil fuels in the coming years, the IEA NZE sets minimum requirements to follow in order not to sink the transition and abandon the 1.5\u00b0C and carbon neutrality objectives.<\/span><\/strong><\/span><\/p>\n<\/div><\/div><\/div> The WEO 2021 is the IEA\u2019s \u201cguidebook to COP\u201d. Published just weeks before the climate gathering, it centers<\/strong> the IEA\u2019s \u201cNet Zero emission by 2050\u201d (NZE) scenario and highlights the gaps between this 1.5\u00b0C trajectory and the current international and national pledges and policies<\/strong>. This new scenario is already wielding considerable influence in the financial sector: it is being mentioned and used by financial institutions – like La Banque Postale, Standard Chartered or AXA – financial initiatives – such as the Net-Zero Asset Owner Alliance (NZAOA) – and financial regulators and advisory bodies – like the French supervisors ACPR and AMF and the scientific committee of the French Sustainable Finance Observatory. However, the major private financial institutions that refer to this scenario overwhelmingly fail to uphold its key findings in relation to fossil fuels. Furthermore, other institutions have simply tried to discredit the scenario accusing it of being unrealistic.<\/p>\n<\/div> Halting the development of fossil fuel projects<\/strong><\/p>\n \u00a0<\/b><\/p><\/h2><\/span> With its WEO 2021, the IEA sets what must become the new normal for the energy sector: a swift shift from fossil fuels to renewable energies, with an immediate end to new fossil fuel supply projects and a power system speeding up towards carbon neutrality.<\/strong> New exploration, drilling or mining projects are explicitly prohibited in the IEA\u2019s 1.5\u00b0C scenario, while current liquefied natural gas (LNG) development should be drastically limited and fossil fuel power plants face a rapid demise, making new plants a hazardous and risky gamble. Coal, oil and gas production must significantly diminish by 2030 and drop by 2040. Even gas production, relatively preserved by the IEA NZE, must be halved by 2040.<\/p>\n<\/div> Dividing methane emissions by four<\/strong><\/p>\n \u00a0<\/b><\/p><\/h2><\/span> With this new normal, methane emissions from fossil fuel operations are cut by 75% by 2030<\/strong>. This major improvement relies on limiting flaring and leaks with an important political mobilization and major changes to be enacted by fossil fuel companies. The reduction of fossil fuel production makes up for a significant share of methane reduction efforts, even though this share could grow if the NZE ambitions were to be increased by prioritizing the closure of unconventional oil and gas reserves or by aligning the fossil fuel production trends with the UN Production Gap Report<\/em><\/a><\/u>.<\/a><\/p>\n<\/div> Closing the fossil fuel investment tap<\/strong><\/p>\n \u00a0<\/b><\/p><\/h2><\/span> The IE<\/span><\/span><\/span>A wrote that \u201cprojected investment in oil and gas was now aligned with the changes needed to reach net zero emissions of greenhouse gases by 2050<\/span><\/span><\/span>\u201d<\/span><\/span><\/span>. Used in an interview by Fatih Birol afterwards, this sentence can be misleading. <\/span><\/span><\/span>The NZE requires <\/span><\/span><\/span>\u201ca surge in global energy investment to $5 trillion by 2030, with 85% of spending directed to clean energy\u201d<\/span><\/span><\/span>. <\/span><\/span><\/span>Concomitantly, t<\/strong><\/span><\/span><\/span>he level of fossil fuel investment in the NZE represents only a fraction of the investment in the sector made in the last decade<\/strong>.<\/span><\/span><\/span> While the NZE requires <\/strong><\/span><\/span><\/span>a halt in the development of new oil and gas supply projects<\/span><\/span><\/span>, <\/span><\/span><\/span>oil and gas companies are still heavily investing in <\/span><\/span><\/span><\/strong>such projects<\/strong>. If oil and gas investments are relatively aligned <\/span><\/span><\/span>with the ones in the NZE 2050 in 2020 and 2021, it is only because they massively dropped because<\/span><\/span><\/span> of the covid <\/span><\/span><\/span>crisis, a reduction that is already fading and that has noting to do with a change in investment practices. <\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/div> Building a healthier and fairer society<\/strong><\/p>\n \u00a0<\/b><\/p><\/h2><\/span> The IEA also clearly highlights the social and economic benefits of the NZE compared to its other non 1.5\u00b0C scenarios: 1.9 million fewer premature deaths from household air pollution per year than in 2020,<\/strong> about 23 million \u201cnet\u201d jobs by 2030,<\/strong> electricity delivered to all and access to clean cooking by 2030, a limited increase of energy bills and better resilience against fossil fuel price shocks.<\/p>\n<\/div> The IEA NZE may mark a turning point in the way the agency addresses the climate emergency, it does not yet provide a truly sustainable and low-risk pathway to limiting global warming to 1.5\u00b0C. The IEA is betting big on the development of technologies that are not yet mature, or that have already shown major limitations, and on solutions that can have major environmental impacts.<\/p>\n<\/div> Betting big on carbon capture<\/strong><\/p>\n \u00a0<\/b><\/p><\/h2><\/span> High reliance on carbon capture and storage (CCS\/CCUS) and carbon dioxide removals (CDR) allows the IEA to enable higher production and consumption of fossil fuels and to prolong their usage up to 2050 and beyond. Despite major uncertainties, acknowledged by the IEA itself, the volume of carbon captured is multiplied by 41 from 2021 to 2030<\/strong>, notably enabling the use of \u201cabated\u201d coal and gas power plants. Carbon removal being almost nonexistent today, the volumes removed are multiplied by more than 300 times by then. Together, CCUS and CDR allow the NZE to feature a slower reduction of coal, oil and gas production levels than highlighted by the UN Production Gap Report 2021<\/em><\/strong>. Worryingly, in the NZE CCUS plays an essential role in the scale up of hydrogen production, used to decarbonize the industry and transport sectors. Hydrogen from natural gas with CCS \u2013 so called \u201cblue hydrogen\u201d \u2013 has a high global warming impact but makes up for as much as half of \u201clow carbon\u201d hydrogen production in 2030<\/strong> and almost 40% in 2050.<\/p>\n<\/div> Disregarding the real impact of biomass use <\/strong><\/p>\n \u00a0<\/b><\/p><\/h2><\/span> The IEA classifies biomass as \u201crenewable\u201d, sidelining major concerns around its overall carbon footprint and impact on global land-use<\/strong>. Biomass is used to both capture a significant amount of emissions and to generate a great deal of energy. Well-above a sustainable biomass potential, biomass becomes a major energy source in the NZE, rising from 62 EJ in 2020 to 102 EJ in 2050 (19% of total energy supply). The total land area dedicated to bioenergy production increases from 330 million hectares (Mha) in 2020 to 410 Mha in 2050, the size of India and Pakistan combined <\/strong>and more than a quarter of total available cropland.<\/p>\n<\/div> Underestimating the renewable energy potential<\/strong><\/p>\n \u00a0<\/b><\/p><\/h2><\/span> The IEA logically puts renewable energies at the forefront of transition, making their development one of the key milestones of the NZE. Solar and wind power supply rises from 10.4 EJ in 2020 to 60.5 EJ in 2030 and 190 EJ in 2050. Solar power capacity is multiplied by almost 6 from 2020 to 2030 and wind power capacity by 5<\/strong>. Hydro power progressively rises and geothermal or marine energy triples from 2020 to 2030 and reaches 31.8 EJ in 2050. However, this massive development may still be an underestimate: the IEA assumes limited cost reductions for wind and solar compared to the cost reduction trends of recent years and has a long track record of underestimating renewable energy development.<\/p>\n<\/div> Maintaining nuclear development<\/strong><\/p>\n \u00a0<\/b><\/p><\/h2><\/span> The NZE features a significant increase in nuclear power capacity<\/strong>, especially in emerging markets and developing economies. Nuclear provides 41.4 EJ in 2030 \u2013 a 41% increase compared to current levels \u2013 and reach 60,6 EJ in 2050. Much of the increase up to 2030 is due to projects that have already entered the construction phase. If the IEA mentions that nuclear development will not always be acceptable, it fails to underline the various sustainability concerns it brings. Nuclear energy poses major issues around the disposal of radioactive waste and potential incidents and could also be harmful for the overall transition. Indeed, building new reactors takes several years \u2013 currently usually more than a decade \u2013 and can impair the development of renewable energy. Most of the reactors that are currently being built face delays.<\/p>\n<\/div><\/div><\/div><\/div><\/div> Taking stock of the WEO 2021, financial institutions, companies and political leaders must immediately end their support to new fossil fuel supply, unabated coal and gas power plants and LNG projects and to those that develop them. They must ensure the swift and significant reduction of fossil fuel production and a drastic cut in methane emissions, while redirecting their investments to support clean energy alternatives. For the IEA, too, the work is far from over. The agency should quickly provide all the regional data for its NZE and work on making this scenario more sustainable and less risky by limiting its reliance on CCUS\/CDR, biomass and nuclear energy.<\/strong><\/span><\/p>\n<\/div>THE NEW NORMAL<\/b><\/h4><\/h1><\/span>
FROM BETTER TO SUSTAINABLE<\/b><\/h4><\/h1><\/span>