Net zero is still possible, but clean energy spending must move faster

Reaching net zero emissions globally by 2050 is still possible, but significant investments in clean energy technologies and a reduction in the use of fossil fuels will be necessary for this to become a reality, according to the International Energy Agency.

In a new report, the Paris-based energy watchdog said clean energy investments are expected to reach a record $1.8 trillion in 2023, but will need to be increased to at least $4.5 trillion per year by the start of the next decade if the world is to meet the goal of keeping global temperature rise to 1.5 degrees Celsius by 2050.

“We have the tools to move much faster,” the report says. It estimates that 80% of the emissions reduction needed by 2030 can come from increasing renewable energy production, energy efficiency and electrification, as well as reducing methane emissions.

In particular, the report said the largest emissions reductions in its net zero scenario came from tripling renewable energy generation capacity and doubling savings from switching to more efficient technology, such as switching to electric vehicles, the design of more efficient air conditioners and the renovation of buildings. He also said that “the key actions needed to sharply lower the emissions curve by 2030 are well understood, mostly cost-effective, and are being implemented at an accelerated pace.”

The report includes two global energy scenarios – net zero emissions by 2050 and current stated policies – which are widely used as a reference point by businesses and policymakers grappling with the transition. Tuesday’s report updates its 2021 scenarios for the pandemic response, the energy crisis caused by the war in Ukraine and governments’ green energy policies, including the Inflation Reduction Act and the European RePower EU plan.

Despite the report’s optimism about the potential of green energy, it warns that, with carbon emissions hitting a new high of 37 billion tonnes last year, the use of fossil fuels will need to fall by a quarter by 2030 to reach net zero emissions by 2050. It predicts a peak in carbon emissions this decade, thanks to the rapid deployment of clean energy technologies – particularly solar panels and electric vehicles – but says the Deployment of new technologies must be in line with the decline in the use of fossil fuels to avoid energy shortages.

The new report comes as global green energy policies find themselves at a crossroads, with politicians balancing green ambitions, energy security and lowering the cost of living. For example, the British government said last week it would delay a planned ban on the sale of new diesel and gasoline cars from 2030 to 2035, and recently indicated it was open to new oil and gas drilling.

The IEA said adoption of clean technologies has been strong in developed countries and China, and these countries are on track to achieve 85% of their contribution to the tripling of global renewable energy capacity. But more support is needed to help developing countries, he says.

However, all countries must modernize their electricity networks to enable this change: electricity transmission and distribution networks will need to expand by around two million kilometers (1.24 million miles) each year by 2030 to achieve net zero emissions by 2050.

The IEA said accelerating electrification is key, with technologies such as heat pumps and electric vehicles expected to cut emissions by a fifth by the end of the decade in its net zero emissions scenario. The agency also said that by 2030, two-thirds of cars sold will likely be electric, with production commitments from automakers ensuring that this target can be achieved.

Methane emissions were of particular concern, but were highlighted as one of the cheapest ways to decarbonize. “Without efforts to reduce methane emissions from fossil fuel supplies, global CO2 emissions from the energy sector are expected to reach zero by around 2045,” the report said. Removing 75% of methane emissions from natural gas and oil operations would cost just $75 billion, or the equivalent of 2% of the net revenue received by the oil and gas industry in 2022, it says .

The IEA said concerns over security of supply of critical minerals were worrying, with announced projects for nickel and lithium falling short of what is needed in 2030 to reach its net zero scenario by 2050.

Write to Yusuf Khan at yusuf.khan@wsj.com