Solar power is set to become the main engine of the transition toward a low-carbon global energy system but will need to be backed by a panoply of technologies including, wind, hydrogen, carbon capture, utilisation and storage (CCUS) and next-generation nuclear – as well as a “large shift” in government policies – if net-zero emissions are to be reached by 2050, according to the International Energy Agency (IEA).

The Paris-based agency cautioned that though renewables were heading toward meeting 80% of global electricity growth over the next decade, the Covid-19 pandemic had created an “upheaval [that could] ultimately help or hinder efforts to accelerate the energy transition” to hit international climate goals, with oil, gas and coal demand in radical flux in different regions of the world, with the coming decade ‘pivotal’.

“I see solar becoming the new king of the world’s electricity markets. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022,” said IEA executive director Fatih Birol, ahead of its annual World Energy Outlook report, which mapped out four courses that could be followed based on ‘stated policies’, ‘delayed recovery’ from the coronavirus crisis, ‘sustainable development’ and ‘net zero emissions by 2050’.

“If governments and investors step up their clean energy efforts in line with our sustainable development scenario, the growth of both solar and wind would be even more spectacular – and hugely encouraging for overcoming the world’s climate challenge.”

“It has been a tumultuous year for the global energy system. The Covid-19 crisis has caused more disruption than any other event in recent history, leaving scars that will last for years to come. But whether this upheaval … accelerates clean energy transitions [to] reach international energy and climate goals will depend on how governments respond to today’s challenges.”

The WEO 2020 report points to power generation from renewables being “the only major source of energy that has continued to grow in 2020”, with PV now “consistently cheaper” than new coal- or gas-fired power plants and offering “some of the lowest cost electricity ever seen”.

In the IEA’s stated policies scenario, hydropower remains the largest renewables-based power, but solar is the “main source of growth”, with the technology on a trajectory to set new records for deployment each year through to 2030 as its builds capacity by an average of 12% annually, followed by supporting contributions from onshore and offshore wind.

Fossils’ ‘varying challenges’

Fossil fuels, meanwhile, face “varying challenges”, with coal demand not forecast to return to pre-crisis levels – its share in the 2040 energy mix falling below 20% for the first time since the Industrial Revolution – and oil remaining “vulnerable to the major economic uncertainties” resulting from the pandemic, while gas demand is expected to grow “significantly”.

Though gas “fares better” than other fossils on the back of a 30% rise in demand by 2040 driven by South and East Asia, the WEO found for the first time that demand in advanced economies could slip into “slight decline”.

“The era of global oil demand growth will come to an end in the next decade,” Birol said. “But without a large shift in government policies, there is no sign of a rapid decline. Based on today’s policy settings, a global economic rebound would soon push oil demand back to pre-crisis levels.

“Despite a record drop in global emissions this year, the world is far from doing enough to put them into decisive decline. The economic downturn has temporarily suppressed emissions, but low economic growth is not a low-emissions strategy – it is a strategy that would only serve to further impoverish the world’s most vulnerable populations,” he said.

“Only faster structural changes to the way we produce and consume energy can break the emissions trend for good. Governments have the capacity and the responsibility to take decisive actions to accelerate clean energy transitions and put the world on a path to reaching our climate goals, including net-zero emissions.”

‘Robust investment’ in grids

To reach the sustainable development scenario targets, the rapid build-out of solar and wind and technologies globally would have to be joined over the next ten years by “a major scaling up” of hydrogen and CCUS, and a “new momentum” in developing nuclear power. There would also need to be “robust investment” in electricity grids to channel the vast volumes of clean-energy production in order to ensure reliability and security of electricity supply around the world.

The WEO highlighted that world’s governments would need to place “significant” focus on cutting emissions from existing energy infrastructure, including coal plants, steel mills and cement factories, or see international climate goals pushed “out of reach, regardless of actions in other areas”. Business-as-usual operations of existing energy infrastructure would on its own lock the planet into a temperature rise of 1.65°C, according to IEA calculations.

“Despite such major challenges, the vision of a net-zero emissions world is increasingly coming into focus,” said the report authors. “The ambitious pathway mapped out in the sustainable development scenario relies on countries and companies hitting their announced net-zero emissions targets on time and in full, bringing the entire world to net zero by 2070.

“Reaching that point two decades earlier, as in the net zero emissions by 2050 scenario, would demand a set of dramatic additional actions over the next ten years.”

Bringing about a 40% reduction in emissions by the end of the decade would require low-emissions sources providing nearly 75% of global electricity generation by this date, up from less than 40% in 2019, noted the IEA, and that more than 50% of passenger cars sold worldwide in 2030 would need to be EVs, up from 2.5% in 2019.

“Electrification, innovation, behaviour changes and massive efficiency gains would all play roles. No part of the energy economy could lag behind, as it is unlikely that another would be able to move fast enough to make up the difference,” said the IEA.

Transition

'King' solar to lead charge in 'pivotal' decade for energy transition: IEA