Time is running out on climate change, says a new report

For those of us who analyze the energy sector, the publication of the International Energy Agency’s (IEA) Annual Energy Outlook is a much anticipated event. It is the gold standard for the assessment and forecasting of the world energy system, albeit from the perspective of the High-Income OECD countries.   For the past two years it has focused on the energy policies needed to curb climate change. This year I find its message very alarming.

In its 2009 Energy Outlook, the IEA developed a scenario that shows how the world’s energy system could evolve to the year 2035 so as to keep carbon dioxide (CO₂)concentrations from exceeding 450 parts per million CO₂ (equivalent).   This is the plateau level consistent with an increase in global temperatures of at most 2⁰C.   Last year this novel analysis showed that such a “450 Scenario” would require a massive shift in energy policies and investments. It gave me pause for thought. A year later, as the IEA develops its assessment, I am very worried.  

Between the lines of its careful appraisal of the global energy situation, the IEA all but says that achieving the changes needed to hold global average temperature to a 2⁰ C increase is almost impossible in the current global context. The IEA states that such a goal is still not “completely out of reach.” But, in a sentence that should be chilling to anyone familiar with the inflexibility of the world’s energy system, the IEA says: “the speed of the energy transformation that would need to occur after 2020 is such as to raise serious misgivings about the practical achievability of cutting emissions sufficiently to meet the 2⁰ C goal.” In other words, unless global energy policies and investments undergo a huge and unprecedented change over the next few years, our energy system may be too far gone to allow us to curb climate change to levels that are generally agreed to be manageable.  

So what might happen without such a huge shift in energy sector priorities? The IEA provides an answer with its central “New Policies Scenario”, which assumes that governments do most of the good things they have already promised. In the New Policies Scenario, the share of renewables in global electricity generation grows from 19% in 2008 to 32% in 2035. Other low-carbon technologies (nuclear, biofuels, carbon capture and storage (CCS) also make substantial progress, energy efficiency improves rapidly, and OECD-wide Carbon trading emerges. Yet even with all this effort, CO₂ concentrations would stabilize at 650 ppm, consistent with an increase in temperatures of over 3.5⁰ C – a level most scientists agree is dangerous. 

Holding at a 2⁰C increase is only possible if the powerful trends embodied in the current energy system are reversed:  large subsidies will cause the growth of renewables to accelerate greatly, so that renewables account for nearly half of the power generation in 2035; coal use declines and CCS is required for most plants;  transport systems are converted from petroleum to electricity and biofuels; all of the efficiency gains possible are captured in energy use; all existing energy subsidies are rapidly scrapped; and world carbon prices rise to $120/ton CO2 by 2035.

Such a transition would be most difficult for developing countries. The IEA believes they will account for almost all of the growth in energy consumption going forward.   They need a lot more energy to fuel development. As the IEA shows, 1.4 bn people still have no access to electricity, and 2.7 bn rely on traditional biomass for cooking - with many dying from its smoke. Remedying this also requires a massive shift in energy priorities, one that needs to be incorporated into new policies to deal with climate change.  

The bottom line is that putting the world onto a sustainable energy path will require a massive global effort on two fronts in the next two decades: changing completely the way in which energy is supplied and used in all countries to address climate change, and implementing much more vigorous policies to ensure that developing countries and the poor get the energy that they need to thrive and grow.    As I read the Energy Outlook I can only hope that the world’s leaders receive all its messages - loud and clear.