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Oil

Ditch new fossil fuel spending to reach net zero emissions by 2050, says IEA

Published: Updated:

Investors should not fund new oil, gas and coal supply projects if the world wants to reach net zero emissions by mid-century, the International Energy
Agency (IEA) said on Tuesday, calling instead for a large expansion of renewable energy technologies.

A global climate pact agreed in 2015 to cap the rise in temperatures to as close as possible to 1.5 degrees Celsius to avoid the most devastating impacts of climate change, which requires achieving net zero greenhouse gas emissions by 2050.

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The number of countries which have pledged to reach net zero has grown, but even if their commitments are fully achieved, there will still be 22 billion tonnes of carbon dioxide worldwide in 2050 which would lead to temperature rise of around 2.1C by 2100, the IEA said in its “Net Zero by 2050” report.

It sets out more than 400 milestones to achieving net zero in the report, intended to guide the next round of global climate talks which will take place in November in Scotland.

“The pathway to net zero is narrow but still achievable. If we want to reach net zero by 2050 we do not need any more investments in new oil, gas and coal projects,” Fatih Birol, the IEA’s executive director, told Reuters.

“It is up to investors to chose whatever portfolio they prefer but there are risks and rewards,” he added.

Beyond projects already committed to, the report said there should be no new oil and gas plants approved for development and no new coal mines or extensions required under its pathway to net zero.

There should also be no further final investment decisions on new coal plants which don’t have carbon capture technology.

“(This is) a massive blow to the fossil fuel industry. This is a complete turnaround of the fossil-led IEA from five years ago,” said Dave Jones, global program lead at Ember thinktank.

Oil major Shell is holding a virtual annual general meeting on Tuesday after some investors ramped up pressure on the energy company to set more ambitious targets to reduce greenhouse gas emissions.

Renewables

To achieve net zero, global investment in fossil fuel supply should fall from $575 billion on average over the past five years to $110 billion in 2050, with upstream fossil fuel investment restricted to maintaining production at existing oil and natural gas fields, the IEA said.

There should be no sales of new internal combustion engine passenger cars and the global electricity sector must reach net zero emissions by 2040, it added.

Massive deployment of renewable energy will be needed.

Almost 90 percent of electricity generation should come from renewables by 2050 and most of the rest from nuclear power.

Solar photovoltaic additions should reach 630 gigawatts (GW) a year by 2030 and wind power needs to rise to 390 GW. Together, this is four times the annual record set last year for new capacity additions.

New technologies which aren’t yet at commercial scale, such as carbon capture and storage (CCS) and green hydrogen, will also need to be brought to market, the report said.

Every month from 2030, ten industrial plants will need to be fitted with CCS, three new hydrogen-based industrial plants will need to be built and 2 GW of electrolyzer capacity for green hydrogen production needs to be added at industrial sites, the report said.

Annual energy investment will need to rise to $5 trillion a year by 2030 to achieve net zero from $2 trillion today, adding an extra 0.4 percentage points a year to global GDP growth, according to a joint analysis by the IEA and the International Monetary Fund.

Read more: Global CO2 emissions set to surge nearly 5 pct, IEA warns