{"id":24479,"date":"2022-11-16T17:50:56","date_gmt":"2022-11-16T16:50:56","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=24479"},"modified":"2023-02-08T11:23:53","modified_gmt":"2023-02-08T10:23:53","slug":"weo-2022-from-the-fossil-fuel-age-to-the-clean-energy-era","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2022\/11\/16\/weo-2022-from-the-fossil-fuel-age-to-the-clean-energy-era\/","title":{"rendered":"WEO 2022 \u2013 From the fossil fuel age to the clean energy era"},"content":{"rendered":"

On October 27<\/span><\/b>th<\/span><\/b>, the International Energy Agency (IEA) published its <\/span><\/b>World Energy Outlook 2022<\/span><\/i><\/b> (WEO 2022) (1). This landmark report charts a path to exit the energy crisis by transforming the energy system to limit global warming to 1.5\u00b0C. To follow it, the age of fossil fuels must swiftly end and be replaced by a clean energy and efficiency era, thus requiring a total transformation of the energy investment landscape. For financial institutions, this notably means following two key complementary rules: 1) ending all financial services to fossil fuel development, and; 2) massively ramping up clean energy and efficiency investment, thus investing nine times more in it than in fossil fuels by 2030.<\/span><\/b>\u00a0<\/span><\/p>\n<\/div><\/div><\/div>

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The age of fossil fuels is coming to an end…<\/h1><\/span>
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According to the IEA, and for the first time,<\/span> f<\/span><\/b>ossil fuel demand and production will decline even if the world goes on with \u201cbusiness as usual\u201d. Merely <\/span>upholding current climate pledges – as in the IEA\u2019s Announced Pledges Scenario (APS) – significantly accelerates this movement, sending the demand for all and each fossil fuels into decline by 2030<\/span><\/b>.\u00a0<\/span>\u00a0<\/span><\/p>\n

Natural gas is not shielded from this movement, on the contrary t<\/span>he Russian war and energy crisis ended the \u201ctransition fuel\u201d narrative that the gas industry spent so long to advertise<\/span><\/b>.\u00a0<\/span>\u00a0<\/span><\/p>\n

Concretely, each and all<\/span> fossil fuels are the energy of the past, not the future, and no longer a sound investment for the sector<\/span><\/b>. However, this does not mean the energy and climate transition will happen at a pace sufficient to address the climate crisis and reach carbon neutrality by 2050.<\/span>\u00a0<\/span><\/p>\n<\/div>

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…And we must end it much faster if we are to avoid catastrophic global warming<\/h1><\/span>
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T<\/span>he use of each fossil fuel drops significantly by 2030 and drastically by 2050 <\/span><\/b>in the IEA\u2019s Net Zero by 2050 (NZE) scenario consistent with global warming above 1.5\u00b0C. <\/span>Coal, <\/span>gas and oil energy supply decline respectively by 47, 23 and 22% by 2030 already, and by as much as 69, 51 and 47% from 2030 to 2040. Globally, <\/span>the share of total final consumption for energy directly provided by unabated fossil fuels falls from nearly 60% in 2021, to around 45% in 2030, and to only 5% by 2050.<\/span>\u00a0<\/span><\/p>\n

The fast-reducing fossil fuel demand means that no new fossil fuel supply projects are needed in the NZE. The IEA underlines that <\/span>\u201c<\/span>No one should imagine that Russia\u2019s invasion can justify a wave of new oil and gas infrastructure in a world that wants to reach net zero emissions by 2050<\/span><\/b>.\u201d <\/span>Similarly, there is no further need for additional LNG capacity beyond what exists or is under construction.<\/span>\u00a0<\/span><\/p>\n<\/div>

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The new era is the one of renewable power generation and clean energy…<\/h1><\/span>
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E<\/span>lectricity \u201cbecomes the new linchpin of the global energy system\u201d in the NZE scenario, providing more than half of total final consumption and two-thirds of useful energy by 2050<\/span><\/b>.\u00a0 For this increased electricity use to be compatible with climate mitigation, <\/span>electricity sectors reach net zero emissions by 2035 in advanced economies, and by 2040 globally<\/span><\/b> in the NZE.\u00a0<\/span>\u00a0<\/span><\/p>\n

These milestones are achieved thanks to massive renewable energy deployment. <\/span>Annual renewable capacity additions quadruple from 290 GW in 2021 to nearly 1 200 GW in 2030, and averages above 1 050 GW from 2031 to 2050. These additions bring the share of renewables in electricity generation from 28% in 2021 to over 60% in 2030, and nearly 90% in 2050<\/span><\/b>. Wind and solar take the lion\u2019s share of this growth. Their integration is facilitated by capacity additions of hydropower and other dispatchable renewables tripling and global battery capacity reaching 15% of all dispatchable power capacity by 2030.\u00a0<\/span>\u00a0<\/span><\/p>\n

Displaced by renewables, the share of fossil fuels in power generation falls even faster than in the total energy supply:<\/span>\u00a0<\/span><\/p>\n