On 10 June the International Energy Agency published its most recent report on climate change in the World Energy Outlook series.
Warning that the world is not on track to limit the global temperature increase to 2 degrees Celsius, the IEA urged governments to swiftly enact four energy policies that would keep climate goals alive without harming economic growth.
"Climate change has quite frankly slipped to the back burner of policy priorities. But the problem is not going away – quite the opposite," said IEA executive director Maria van der Hoeven in London at the launch of the report ‘Redrawing the Energy-Climate Map’, which highlights the need for intensive action before 2020. "Today we launch a report that focuses on one of the defining challenges of our time, climate change. It is timely because, despite efforts to mitigate climate change, we recently passed a grim milestone with the concentration of carbon dioxide in the atmosphere topping 400 parts per million at the Mauna Loa Observatory in Hawaii. This is uncharted territory in the history of humans. While it does not represent a tipping point per se, that milestone is symbolic of our failure to respond adequately, and to fulfil our own national and international pledges to limit average global temperature increase to 2 degrees Celsius over the long term. If we continue with business as usual [there are likely to be] disastrous implications in terms of extreme weather events, rising sea levels, and the huge economic and social costs that these can bring."
Noting that the energy sector accounts for around two-thirds of global greenhouse-gas emissions, she added: "This report shows that the path we are currently on is more likely to result in a temperature increase of between 3.6 °C and 5.3 °C but also finds that much more can be done to tackle energy-sector emissions without jeopardising economic growth, an important concern for many governments."
New estimates for global energy-related carbon dioxide emissions in 2012 reveal a 1.4% increase, reaching a record high of 31.6 gigatonnes, but they also mask significant regional differences. In the United States, a switch from coal to gas in power generation helped reduce emissions by 200 million tonnes (Mt), bringing them back to the level of the mid‑1990s. China experienced the largest growth in CO2 emissions (300 Mt), but the increase was one of the lowest it has seen in a decade, driven by the deployment of renewables and improvements in energy intensity. Despite increased coal use in some countries, emissions in Europe declined by 50 Mt. Emissions in Japan increased by 70 Mt.
The report presents the results of a ‘4-for-2 °C Scenario’, in which four energy policies are selected that can deliver significant emissions reductions by 2020, relying only on existing technologies that have already been adopted successfully in several countries.
"We identify a set of proven measures that could stop the growth in global energy-related emissions by the end of this decade at no net economic cost," said IEA Chief Economist Fatih Birol, the report’s lead author. "Rapid and widespread adoption could act as a bridge to further action, buying precious time while international climate negotiations continue."
In the 4-for-2 °C Scenario, global energy-related greenhouse-gas emissions are 8% (3.1 Gt CO2‑equivalent) lower in 2020 than the level we are heading for under present policies.
1. Targeted energy efficiency measures in buildings, industry and transport account for nearly half the emissions reduction in 2020, with the additional investment required being more than offset by reduced spending on fuel bills.
2. Limiting the construction and use of the least-efficient coal-fired power plants delivers more than 20% of the emissions reduction and helps curb local air pollution. The share of power generation from renewables increases (from around 20% today to 27% in 2020), as does that from natural gas.
3. Actions to halve expected methane (a more potent greenhouse gas than CO2) releases into the atmosphere from the upstream oil and gas industry in 2020 provide 18% of the savings.
4. Implementing a partial phase-out of fossil fuel consumption subsidies accounts for 12% of the reduction in emissions and supports efficiency efforts.
Limiting physical damage
The report finds that the energy sector is not immune from the physically damaging impacts of climate change and must adapt. In mapping energy-system vulnerabilities, it identifies several sudden and destructive impacts, caused by extreme weather events, and other more gradual impacts, caused by changes to average temperature, sea level rise and shifting weather patterns. To improve the climate resilience of the energy system, it highlights governments’ role in encouraging prudent adaptation (alongside mitigation) and the need for industry to assess the risks and impacts as part of its investment decisions.
Financial implications
The financial implications of climate policies that would put the world on a 2 °C trajectory are not uniform across the energy sector. Net revenues for existing renewables-based and nuclear power plants increase by $1.8 trillion (in year-2011 dollars) collectively through to 2035, offsetting a similar decline from coal plants. No oil or gas field currently in production would need to shut down prematurely. Some fields yet to start production are not developed before 2035, meaning that around 5% to 6% of proven oil and gas reserves do not start to recover their exploration costs. Delaying the move to a 2 °C trajectory until 2020 would result in substantial additional costs to the energy sector and increase the risk of assets needing to be retired early, idled or retrofitted. Carbon capture and storage (CCS) can act as an asset protection strategy, reducing the risk of stranded assets and enabling more fossil fuel to be commercialised.
