The International Energy Agency (IEA) has set out a sustainable recovery plan, drawn up in cooperation with the International Monetary Fund (IMF), requiring global investment of about $1trn annually over the next three years to revitalise economies and boost employment, while making energy systems cleaner and more resilient.
The IEA's Special Report on Sustainable Recovery offers the energy sector a roadmap for governments to spur economic growth, create millions of jobs and put global emissions into structural decline. By integrating energy policies into government responses to the economic shock caused by the Covid-19 crisis, the plan would also accelerate the deployment of modern, reliable and clean energy technologies and infrastructure.
The largest portion of the millions of new jobs created through the Sustainable Recovery Plan would be in the electricity sector, particularly in grids and renewables; and in retrofitting buildings to improve energy efficiency. The other areas that would see higher employment include energy efficiency in industries such as manufacturing, food and textiles; low-carbon transport infrastructure; and more efficient and new energy vehicles.
In an analysis the report shows that the set of policy actions and targeted investments over the 2021-2023 period outlined in the Sustainable Recovery Plan can achieve a range of significant outcomes. These are to boost economic growth by an average of 1.1 percentage points a year; to save or create roughly 9 million jobs a year; and to reduce annual global energy-related greenhouse gas emissions by a total of 4.5bn tonnes by the end of the plan.
The plan would deliver other improvements to human health and wellbeing, including driving a 5% reduction in air pollution emissions, bringing access to clean-cooking solutions to around 420 million people in low-income countries, and enabling nearly 270 million people to gain access to electricity.
The sum of $1trn annually over the next three years represents about 0.7% of today’s global GDP, and includes both public spending and private finance that would be mobilised by government policies.
“Governments have a once-in-a-lifetime opportunity to reboot their economies and bring a wave of new employment opportunities while accelerating the shift to a more resilient and cleaner energy future,” said IEA executive director Fatih Birol. “Policy makers are having to make hugely consequential decisions in a very short space of time as they draw up stimulus packages.
“Our Sustainable Recovery Plan provides them with rigorous analysis and clear advice on how to tackle today’s major economic, energy and climate challenges at the same time. The plan is not intended to tell governments what they must do. It seeks to show them what they can do.”
Based on detailed assessments of more than 30 specific energy policy measures, the plan considers cost-effective approaches, the circumstances of individual countries, existing pipelines of energy projects, and current market conditions. It spans six key sectors - electricity, transport, industry, buildings, fuels and emerging low-carbon technologies.
The IEA’s new energy employment database shows that last year, the energy industry – including electricity, oil, gas, coal and biofuels – directly employed around 40 million people globally. The special report estimates that 3 million of those jobs have been lost or are at risk due to the impacts of the pandemic, with another 3 million jobs lost or at risk in related areas such as vehicles, buildings and industry.
Recent IEA analysis has shown that global energy investment is set for an unprecedented plunge of 20% in 2020, raising serious concerns for energy security and clean energy transitions.
As a result of the Sustainable Recovery Plan, the global energy sector would become more resilient, making countries better prepared for future crises. Investment in enhancing electricity grids, upgrading hydropower facilities, extending the lifetimes of nuclear power plants, and increasing energy efficiency would improve electricity security by lowering the risk of outages, boosting flexibility, reducing losses and helping integrate larger shares of variable renewables such as wind and solar.
Electricity grids, the backbone of secure and reliable power systems, would see a 40% increase in capital spending after years of declining investment. This would put them on a stronger footing to withstand natural disasters, severe weather and other potential threats.
The plan is designed to avoid the kind of sharp rebound in carbon emissions that accompanied the economic recovery from the 2008/2009 global financial crisis and instead put them into structural decline. The IEA report highlights key aspects of today’s situation that make it a unique opportunity for government action. Compared with the 2008/2009 crisis, the costs of leading clean energy technologies such as wind and solar are lower, and some emerging technologies like batteries and hydrogen are ready to scale up.
Global carbon emissions flat-lined in 2019 and are set for a record decline this year. While this drop, which results from the economic trauma caused by Covid-19, is nothing to celebrate, it provides a base from which to put emissions into structural decline.
“This report lays out the data and analysis showing that a cleaner, fairer and more secure energy future is within our reach. The Sustainable Recovery Plan would make 2019 the definitive peak in global emissions, putting them on a path towards achieving long-term climate goals,” said Birol.