By 2030, the current policy settings are set to result in significant shift of global energy system, including renewables’ share of the global electricity mix nearing 50%, but much stronger policies are needed for 1.5°C
According to the IEA’s new World Energy Outlook 2023, major shifts underway today are set to result in a considerably different global energy system by the end of this decade. According to the scenario based on today’s policy settings (STEPS), the IEA projected that in 2030, there will be almost 10 times as many electric cars on the road worldwide. Other projections include solar PV generating more electricity than the entire US power system does currently, renewables’ share of the global electricity mix nearing 50% up from around 30% today, heat pumps and other electric heating systems outselling fossil fuel boilers globally, and three times as much investment going into new offshore wind projects than into new coal-and gas-fired power plants.
All of those increases are based only on the current policy settings of governments around the world. If countries deliver on their national energy and climate pledges on time and in full, clean energy progress would move even faster, the report said. However, even stronger measures would still be needed to keep alive the goal of limiting global warming to 1.5°C.
More of clean energy, less of fossil fuels
The report said that the world is on track to see all fossil fuels peak before 2030. The share of coal, oil and natural gas in global energy supply — stuck for decades around 80% — starts to edge downwards and reaches 73% in the STEPS by 2030, with global energy-related CO2 emissions peaking by 2025.
“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if’, it’s just a matter of ‘how soon’ — and the sooner the better for all of us,” said IEA executive director Fatih Birol. “Governments, companies and investors need to get behind clean energy transitions rather than hindering them. There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone. Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”
In focus: India
According to the report, in the STEPS, India sees the largest energy demand growth of any country or region in the world over the next three decades. As a result, demand for oil and natural gas increases in the STEPS by nearly 70% between 2022 and 2050, while coal demand increases by 10%, even as solar PV makes inroads into electricity generation. Consequently, India’s annual CO2 emissions still rise nearly 30% by 2050, which is one of the largest increases in the world.
The report noted that over the past five decades, India has witnessed over 700 heat wave events, which have claimed more than 17,000 lives. Fuelled by its geographic and meteorological conditions, air conditioner ownership in India has been steadily rising with growing incomes, tripling since 2010 to reach 24 units per 100 households. The report found that electricity consumption due to space cooling increased 21% between 2019 and 2022, and today nearly 10% of electricity demand comes from space cooling requirements.
Household air conditioner ownership is estimated to expand ninefold by 2050 across the IEA scenarios, outpacing the growth in ownership of every other major household appliance including televisions, refrigerators and washing machines. Residential electricity demand from cooling increases ninefold in the STEPS by 2050. By 2050, India’s total electricity demand from residential air conditioners in the STEPS exceeds total electricity consumption in the whole of Africa today, the report estimated.
Moving on to RE production, the report said that India is expected to meet its 2030 target to have half of its electricity capacity be non-fossil well before the end of the decade. If the new solar PV module manufacturing capacity under the PLI programme comes fully online by 2026, it would progress the solar PV module manufacturing capacity in India to well over what is needed until the end of this decade not just in the STEPS but also in the Announced Pledges Scenario (APS), which assumes all national energy and climate targets made by governments are met in full and on time.
1.5°C still out of reach
As things stand, the report noted, demand for fossil fuels is set to remain far too high to keep within reach the Paris Agreement goal of limiting the rise in average global temperatures to 1.5 °C. This risks not only worsening climate impacts after a year of record-breaking heat, but also undermining the security of the energy system, which was built for a cooler world with less extreme weather events.
The report proposed a global strategy for getting the world on track by 2030 that consists of five key pillars. They are tripling global renewable capacity, doubling the rate of energy efficiency improvements, slashing methane emissions from fossil fuel operations by 75%, innovative and large-scale financing mechanisms to triple clean energy investments in emerging and developing economies, and measures to ensure an orderly decline in the use of fossil fuels, including an end to new approvals of unabated coal-fired power plants.
The report considered in detail a major variable for energy markets in the coming years. China, which has a major influence on global energy trends, is undergoing a major shift as its economy slows and undergoes structural changes. China’s total energy demand is set to peak around the middle of this decade, the report projected, with continued dynamic growth in clean energy putting the country’s fossil fuel demand and emissions into decline.
By the end of the decade, the world is set to have manufacturing capacity for more than 1,200 gigawatts (GW) of solar panels per year, but it is projected to actually deploy only 500 GW in 2030. If the world were to reach deployment of 800 GW of new solar PV capacity by the end of the decade, it would lead to a further 20% reduction in coal-fired power generation in China in 2030 compared with a scenario based on today’s policy settings.
According to the report, the key difference between the 1970s and today is that the solutions to today’s energy dilemmas are at our disposal. In 2020, one in 25 cars sold was electric, whereas in 2023, this is now one in 5. More than 500 GW of renewable generation capacity is set to be added in 2023, which will be a new record and for every $1 spent on fossil fuels, $1.8 is now being spent on clean energy, the ratio for which five years ago was 1:1.