Global Investments in Clean Energy to Reach $1.8 Trillion in 2023: IEA
Failure to increase climate ambitions would make achieving the 1.5°C goal difficult
Global investments in clean energy could reach an unprecedented $1.8 trillion in 2023, but this must increase significantly to about $4.5 trillion annually by early 2030 to align with the Net Zero Emissions (NZE) scenario, the International Energy Agency (IEA) has said.
Nearly 5 gigatonnes (GT) of CO2 would need to be extracted from the atmosphere each year during the latter half of this century. If carbon removal technologies fall short of achieving this scale, it would render the goal of returning the global temperature to a 1.5°C increase unattainable.
Bending Emission Curve
In 2022, emissions from the global energy sector reached a historic high of 37 GT, marking a 5% increase compared to 2015. However, thanks to advancements made since the 2015 Paris Agreement, the Stated Policies Scenario (STEPS) anticipates a different trajectory.
The IEA report foresees emissions hitting their highest point by the mid-2020s and declining to approximately 35 GT by 2030. This projection significantly contrasts with the Pre-Paris Baseline scenario, which had estimated emissions to be around 43 GT by the same year.
India’s CO2 Emissions
By 2030, India’s projected CO2 emissions will be 1.3 GT lower compared to the Pre-Paris Baseline scenario. This reduction is partly attributed to a remarkable eightfold increase in the contribution of solar energy to power generation, leading to savings of nearly 400 MT of emissions in 2030 within the STEPS framework.
This transformation can be primarily attributed to the adoption of an ambitious target in 2021, aiming for 500 GW of renewable energy capacity by 2030. However, when it comes to wind power, the progress has been less substantial. This discrepancy reflects challenges in addressing issues related to land acquisition and tariff setting for wind power projects.
Clean Energy Adoption
The pace of adopting clean technology has notably accelerated in recent years. A substantial portion of all solar installations up to this point occurred in 2021 and 2022, accounting for about one-third of the total. The increase is even more pronounced for several other clean energy technologies, with roughly 60% of the growth in electric car sales and stationary battery installations occurring during the same period.
Emerging technologies like electrolysis for hydrogen production are also making significant strides, as global installed electrolyzer capacity has more than doubled over the past two years, reaching nearly 700 MW in 2022.
Emissions and Temperature Trends
In the NZE Scenario, CO2 emissions from the energy sector will substantially decline. They are expected to drop sharply from 37 GT in 2022 to 24 GT by 2030, a 35% fall. By 2035, these emissions are projected to decrease to around 13.5 GT, equating to a reduction of nearly 65% compared to the 2022 levels. Total greenhouse gas emissions are anticipated to diminish by about 40% by 2030 and a more significant 60% by 2035.
Energy-related emissions will reach approximately 2.3 GT in advanced economies by 2035, 4.2 GT in China, and 6 GT in other emerging and developing markets. Advanced economies are on track to achieve net-zero emissions around 2045 and China by 2050. However, other emerging markets and developing economies will attain net-zero emissions only well after 2050.
Achieving net-zero emissions in the energy sector by 2050 necessitates utilizing all available strategies to curtail emissions, according to the report.
Foremost among these measures is the rapid deployment of solar and wind energy sources, collectively contributing to a reduction of 4 GT of CO2 emissions by 2030.
Looking at the period from 2022 to 2050, the most substantial contribution to emissions reductions within the energy sector will come from solar and wind power, accounting for 25% of all cumulative emissions reductions in the NZE Scenario.
Solar energy is projected to furnish nearly 140 exajoules (EJ) by 2050, equivalent to the total energy supply currently generated by unabated natural gas. Modern bioenergy is expected to contribute approximately 100 EJ, with wind energy contributing around 85 EJ. Renewable energy sources will comprise nearly three-quarters of the total energy supply by 2050.
On the other hand, unabated fossil fuels are predicted to dwindle from roughly three-quarters of the total energy supply in 2022 to a mere 5% by 2050.
In the NZE Scenario, the supply of low-emissions fuels, which includes modern bioenergy, hydrogen, and hydrogen-based fuels, experiences a rapid and substantial expansion. In the NZE Scenario, the demand for low-emissions hydrogen and hydrogen-based fuels is expected to surge, with an average annual growth rate of 80% until 2030 and 9% from 2030 to 2050.
The production of low-emissions hydrogen is projected to increase from 0.6 MT to 70 MT in 2030 and 420 MT by 2050.
The IEA report points out that in the NZE Scenario, there will be a substantial projected increase in global electricity generation from 2022 to 2050, expanding more than two and a half times.
The initial of the four significant milestones for the electricity sector in the NZE Scenario involves tripling the global capacity for renewable energy by 2030, starting from the 2022 level of 3,630 GW. This transition will result in the proportion of renewable energy in electricity generation surging from 30% in 2022 to approximately 60% by 2030.
The second milestone involves a twofold increase in grid investments by 2030. Global annual investments in grids are expected to reach $680 billion by 2030 and will remain at this elevated level until 2050.
The third key milestone for the electricity sector is a 95% reduction by 2040 in the unabated use of fossil fuels to generate electricity, including the complete phase-out of unabated coal.
The fourth key milestone for the electricity sector is for nuclear power to more than double from 417 GW in 2022 to 916 GW in 2050.
Tripling Renewable Capacity
The installed capacity for electricity generation based on renewable sources is set to triple by 2030, making it the most significant contributor to the reduction of global CO2 emissions by 2030 within the NZE Scenario. The global installed capacity is expected to surge from 3,630 GW in 2022 to 11,000 GW in 2030, with solar and wind power leading the way.
Achieving this threefold increase in renewables capacity will necessitate a substantial escalation in the annual rate of capacity additions. This rate is projected to rise from 336 GW in 2022 to over 1,250 GW by 2030, constituting an average annual growth of 18%. In the NZE Scenario, the proportion of electricity generated from renewables will climb from 30% in 2022 to nearly 60% in 2030, with the combined contribution of solar and wind power increasing from 12% in 2022 to 40% in 2030.
Electrification in Transport
The share of transport energy consumption accounted for by oil will fall from about 90% today to 80% in 2030; the share of electricity will increase from 1% to almost 8% over the same period. More than 90% of this increase in electricity demand will be attributable to the switch from internal combustion engine vehicles to EVs, and 50% of that will be attributable solely to electric cars.
According to another report published by IEA in June, global renewable capacity additions are set to soar by an unprecedented 107 GW to over 440 GW in 2023.