The green energy economy is here - but it needs to grow bigger quicker, says the IEA

How fast is the world really moving towards net-zero carbon? Not fast enough according to the International Energy Agency (IEA), although there are signs that a new green energy economy is starting to emerge.

The problem, says the IEA in a landmark report, is that it’s proving harder than expected to ditch fossil fuels as economies recover from COVID-19, prompting the agency to warn that governments must move faster to implement the climate pledges they’ve already made.

But even if all the pledges were implemented in full, they would only go one-fifth of the way needed to limit emissions enough to peg the rise in global temperatures at 1.5C, the level targeted in the Paris Climate Accord of 2015.

The IEA’s World Energy Outlook 2021 report says there are encouraging signs that change is starting to happen, prompted partly by the COVID-19 pandemic which dampened energy demand and saw electric vehicles claim a bigger market share.

“The new energy economy will be more electrified, efficient, interconnected and clean,” says the IEA. “Its emergence is the product of a virtuous circle of policy action and technology innovation, and its momentum is now sustained by lower costs.”

In most countries, solar and wind energy are already the cheapest sources of electricity generation. Clean technology is generating employment and investment and spurring international collaboration, says the report.

Analyzing the actual policies countries are pursuing, as opposed to their pledges, the report says that even though global electricity demand is forecast to double to 2050, a gradual decline in energy emissions is still possible.

But this would fall far short of what is needed to get to net-zero carbon by 2050 – and is in danger of being offset by rises in emissions from other sources, particularly from industries like cement and steel and transport, as emerging markets develop their infrastructure.

Governments have only invested around one-third of the money needed to “jolt the energy system onto a new set of rails,” says the report, with the biggest shortfalls in developing countries.

The energy sector is central to the fight against climate change, having contributed almost three-quarters of the emissions responsible for the increase in global average temperatures of 1.1C since the pre-industrial age, the report says.

Although lockdowns in the first half of 2020 depressed demand for coal, by the fourth quarter of the year, the economic recovery in some nations meant coal consumption grew 3.5% above the level for 2019 contributing to a resurgence in CO2 emissions. The trend continues in 2021.

“For all the advances being made by renewables and electric mobility, 2021 is seeing a large rebound in coal and oil use. Largely for this reason, it is also seeing the second-largest annual increase in CO2 emissions in history,” says the IEA.

Speaking at the report launch, IEA Executive Director, Dr Fatih Birol, said: “The world’s hugely encouraging clean energy momentum is running up against the stubborn incumbency of fossil fuels in our energy systems.”

The focus was now on the COP26 climate summit in Glasgow in November, he added. “Governments need to resolve this at COP26 by giving a clear and unmistakable signal that they are committed to rapidly scaling up the clean and resilient technologies of the future.

Calling for a boost to investment in clean energy, he added, “this needs to happen quickly”. Two-fifths of the emission cuts needed to get to net zero would come from measures which can pay for themselves – by improving efficiency or using wind or solar where it is the cheapest energy source – he said.

The World Economic Forum warned that the transition to clean energy must be rooted in economic, political and social practices, including changes to the way we live, work, produce and consume materials if we are to make progress irreversible.