The International Energy Agency has released its updated 2023 Net Zero Roadmap, which takes into account major shifts in the energy sector and states that the case for transforming the global energy sector has never been stronger.
The original landmark report, released in 2021, provided a roadmap for the energy sector to reach net zero by 2050. As expected, the report noted that a large increase in renewables was required and that the world would need to wean itself off fossil fuels.
The updated Roadmap has been released at a time when temperatures are still rising (August 2023 was the hottest month on record by a large margin and the hottest ever after July 2023). As the world recovers from the global pandemic, global CO2 emissions from the energy sector reached a new record high of 27 billion tonnes in 2022, 1% above pre-pandemic levels.
Despite appearing to head in the wrong direction, the report notes a number of improvements that suggest that the path the Net Zero is still achievable, albeit with a narrower pathway.
Solar PV installations and electric vehicle sales are all tracking in line with the milestones set out in 2021. Recent sales of electric vehicles are on-track to account for two thirds of new car purchases by 2030, whilst the invasion of Ukraine by Russia has accelerated the uptake of clean energy technologies.
Particular attention needs to be paid to bridging the looming supply and demand gap for critical minerals. Announced mining projects for minerals such as nickel and lithium fall short of booming demand in the Net Zero Scenario in 2030. New projects, innovative extraction techniques, more recycling and material-efficient design are highlighted as methods that can help to bridge this gap.
Innovation gets a special mention in the updated Roadmap, something that is likely to be picked up upon by Australian media and politicians. The Coalition went to the last election stating that technologies were always changing and that new innovations would make it cheaper to achieve Net Zero in the future.
The IEA seems to be thinking along the same lines, to some degree. In the 2021 Roadmap, technologies not available on the market at the time delivered nearly half of the emissions reductions needed in 2050 to reach net zero. In the updated report, that number has fallen to 35% with the commercialisation of sodium-ion batteries and the commercial-scale demonstrations of solid oxide hydrogen electrolysers now underway.
Carbon capture, utilisation and storage (CCUS), hydrogen and hydrogen-based fuels and sustainable bioenergy are critical for Net Zero, however more needs to be done over the next decade. If all of the announced CCUS projects proceed, this would result in an eightfold increase on current levels. This is one area where Australian investment and research is playing a big part, with new gas developments in the NT including CCUS in their plans and there are several ambitious hydrogen projects underway.
Although there seems to be consensus that fossil fuel usage needs to decline in order to meet Net Zero, even amongst the oil and gas producers, the Roadmap is clear that the sequencing the decline of fossil fuels needs to be matched with the uptake in clean energy if damaging price spikes or supply gluts are to be avoided. Part of the sequencing includes a transition phase, whereby high emitting sources are replaced with lower CO2 emitting sources over time, contributing to the downwards shift.
Whilst the Roadmap sets out an overall 2050 target, it notes that advanced economies will need to get to Net Zero by around 2045, China by 2050 and other emerging market and developing economies well after 2050.
Rounding out the report on a positive note, the Roadmap notes that total household energy expenditure in emerging markets will decrease by 12% from today’s levels, and even more in advanced economies like Australia. Welcome news to households facing higher inflation and a cost-of-living crisis.
Source: “Net Zero Roadmap: A Global Pathway to Keep the 1.5 °C Goal in Reach” – https://www.iea.org/reports/net-zero-roadmap-a-global-pathway-to-keep-the-15-0c-goal-in-reach
White Noise communications is provided a fee for service working with companies which may have exposure to commodities or securities mentioned in these articles. All articles are the opinion of the author and are not endorsed by, or written in collaboration with, our clients.
Photo by Navi
