$4 trillion needed by 2030 for net zero goals – World Energy Outlook
The energy landscape is in a period of major turmoil and, while there is positive evidence of clean energy progress, for our net zero and climate targets to be reached, policy action and doubling of global investment to $4 trillion by 2030 will be needed. So states the latest IEA World Energy Outlook.
“The global energy system is going through major turmoil, which I consider to be the first true global energy crisis. At the same time, our world is entering a period of major geopolitical upheaval,” stated IEA executive director Fatih Birol in a press conference for the report’s launch.
“In our World Energy Outlook, we tried to look at what kind of responses governments and businesses can give to this crisis…our numbers and analysis on government responses around the world to the energy crisis [indicate] that we are seeing a turning point in the history of energy and that the crisis is accelerating clean energy transitions.
“Clean energy investments today [total] $1.3 trillion and will, with current policies, reach $2 trillion…But if we want to reach our net zero [and 1.5°C] goals, our investment target needs to double and reach $4 trillion.”
Policy response
According to the IEA’s report, new policies in major energy markets will help propel annual clean energy investment to more than $2 trillion by 2030 in the STEPS (Stated Policy Scenario), a rise of more than 50% from today.
By 2030, thanks in large part to the US Inflation Reduction Act, electric vehicle (EV) sales will be seven times larger and annual solar and wind capacity additions in the US will grow two‐and‐a‐half‐times over today’s levels.
And these types of policies, according to Birol, are to be lauded: “The Inflation Reduction Act from the US…in Europe we have REPowerEU…in Japan we have the Green Transformation for Japan…in China and India renewable and clean energy targets [have been increased].
“There are three reasons [governments are responding with these policies]: energy security, climate commitments and, third, governments want to be part of the new industrial era based on clean energy manufacturing.
“These three drivers…are a very powerful combination and is the reason I am optimistic that we are going to see an acceleration of clean energy technologies.”
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According to the World Energy Outlook, investments in clean electricity and electrification, along with expanded and modernised grids, offer clear and cost‐effective opportunities to cut emissions more rapidly while bringing electricity costs down from their current highs.
Today’s growth rates for the deployment of EVs and batteries, if maintained, would lead to a much faster transformation than projected in the STEPS, although this would require supportive policies not just in the leading markets for these technologies but across the world.
By 2030, if countries deliver on their climate pledges, every second car sold in the EU, China and the US will be electric.
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Supply chain expansion and energy prices
Supply chains for some key technologies, including batteries, are expanding at rates that support higher global ambition.
In the EV sector, the expansion of battery manufacturing capacity reflects the shift underway in the automotive industry, which at times has moved faster than governments in setting targets for electrified mobility.
Today’s high energy prices underscore the benefits of greater energy efficiency and are prompting behavioural and technology changes in some countries to reduce energy use.
Efficiency measures can have dramatic effects – today’s light bulbs are at least four times more efficient than those on sale two decades ago – but much more remains to be done.
Demand for cooling needs to be a focus for policy makers, as it makes the second‐largest contribution to the overall rise in global electricity demand over the coming decades, after EVs.
Many air conditioners used today are subject only to weak efficiency standards and one‐fifth of electricity demand for cooling in emerging and developing economies is not covered by any standards at all.
“The environmental case for clean energy needed no reinforcement, but the economic arguments in favour of cost-competitive and affordable clean technologies are now stronger – and so too is the energy security case,” added Birol.
“Today’s alignment of economic, climate and security priorities has already started to move the dial towards a better outcome for the world’s people and for the planet.”
