Fossil fuel demand to peak before 2030 even with no new climate policies: report

Even if no new government climate policy is introduced before 2030, global demand for fossil fuels will still increase before the end of the decade, a new report by the International Energy Agency states.

The report released on Tuesday says the global rollout of key technologies such as renewable power, electric vehicles and heat pumps is happening so fast that demand for coal, oil and natural gas is set to increase in within the next 10 years.

The IEA says this means no new major oil and gas extraction projects are needed anywhere in the world, nor any new coal mines, mine extensions or unrestricted coal plants.

“If the world is successful in reducing fossil fuel demand fast enough to reach net zero emissions by 2050, new projects will face significant commercial risks,” the IEA said.

However, the report’s authors point out that while the transition is happening, more needs to be done to keep global warming at the 1.5-degree Celsius target agreed by the international community at the 2015 climate summit in Paris.

While 1.5 C is still achievable, the IEA says, the paths available to get there are narrow. Global carbon dioxide emissions from the energy sector will reach a record high of 37 billion tons by 2022.

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The world is set to invest a record US$1.8 trillion in clean energy by 2023, but the IEA says that will need to climb to US$4.5 trillion in the early 2030s to achieve net zero by 2050.

“The energy sector is changing faster than many people think, but more needs to be done and time is short,” the report said.

For all countries, measures including ramping up renewables, improving energy efficiency, cutting methane emissions and increasing electrification are needed to achieve the world’s climate targets, said the IEA.

All these things are possible using existing and cost-effective technologies, it said. For example, reducing methane emissions from oil and natural gas operations by 75 percent from today’s levels would cost US$75 billion in aggregate spending through 2030, the IEA estimates – equivalent to just two percent of the net income brought in by the industry. in 2022.

While major investment in new oil production is not necessary, continued investment in existing oil and gas assets and approved fossil fuel projects is necessary, the IEA said, to avoid damaging price increases. or excess supply during energy transfer.

In addition, it said that rapid progress in carbon capture and storage is needed before 2030 to keep temperatures below 1.5 C. While the number of proposed carbon capture projects worldwide has nearly tripled in 2021 and has doubled again since then – thanks to strong policy support, particularly in the US – only about five percent of announced projects have reached the final stage of investment.

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“While the recent surge of announced projects for CCUS and hydrogen is encouraging, the majority have not yet reached a final investment decision and require additional policy support to boost demand and facilitate new infrastructure that enables,” the IEA said.

The IEA report also urges governments to adopt a “build big” mentality. Electricity transmission and distribution grids would need to expand by about two million kilometers per year by 2030 to reach the IEA’s net-zero scenario, but the organization pointed out that grids under construction today could take more. in a decade.

“We need massive growth in battery energy storage and demand response; expanded, modernized grids; more dispatchable low-emission capacity, including fossil fuel capacity with CCUS, hydropower, biomass, nuclear and hydrogen and ammonia-based plants,” the report said.

In total, to keep global temperatures to 1.5 C and avoid the most catastrophic effects of warming, by 2035, emissions need to fall by 80 percent from 2022 levels in developed countries and by 60 percent in developing countries, says the IEA.

Failure to make significant progress before 2035 will result in steeper temperature rises and force reliance on carbon removal technologies in the latter half of this century, the report warns.

“Removing carbon from the atmosphere is costly and uncertain,” the IEA said. “We must do everything possible to stop putting it there in the first place.”

© 2023 The Canadian Press