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The International Renewable Energy Agency (IRENA) has called on
policymakers to display political will in pushing ahead with
decarbonization measures, despite mounting concerns over inflation
and potential energy shortages.
With recent spikes in oil and natural gas prices amid the
Russia-Ukraine war, many governments across the globe are shifting
their policy focus to energy security in recent weeks.
In its annual Energy Transitions Outlook
published in March, the 167-member intergovernmental organization
suggested that world's leaders can only solve the current energy
crisis by accelerating a low-carbon transition for the global
economy.
While countries have enacted national policies and net-zero
plans towards fulfilling their Paris Agreement pledges, IRENA
Director-General Francesco La Camera said more efforts are required
to limit global warming to 1.5 degrees Celsius above pre-industrial
levels.
"Governments are facing multiple challenges of energy security,
economic recovery and the affordability of energy bills for
households and businesses. Many answers lie in the accelerated
transition," La Camera said.
"Investing in new fossil fuel infrastructure will only lock-in
uneconomic practices, perpetuate existing risks and increase the
threats of climate change," he added.
To keep the 1.5-degree goal alive, IRENA estimates the world's
annual CO2 emissions need to fall by 36.9 billion metric tons (mt)
per annum between now and 2050.
Of the reduction, 25% could come from renewable energy, 25% from
energy efficiency, 20% from electrification, 14% from
renewables-based CO2 removals, 10% from hydrogen use, and 6% from
fossil fuels-based carbon capture and storage (CCS), according to
the IRENA report.
The Abu Dhabi-based agency estimates that cumulative energy
transition investments would need to exceed $115 trillion by
midcentury, including annual spending of $5.7 trillion per year
between now and 2030.
"Achieving the 2050 target depends on sufficient action by 2030.
Radical action is needed to change the current trajectory. This
will require political will and well-targeted policy packages," La
Camera said in a press briefing 30 March.
With policies like international collaboration and carbon
pricing, IRENA estimates policymakers can create 85 million jobs
worldwide in renewables and other transition-related industries by
2030, more than offsetting losses of 12 million jobs in fossil fuel
industries.
La Camera said there will be "more social-economic benefits,
more GDP, more jobs" for governments to pursue the energy
transition.
2030 and 2050 targets
According to IRENA's decarbonization roadmap, renewables will
need to account for 65% of the world's power generation of 42,189
TWh in 2030 and 90% of 78,698 TWh in 2050, compared with 25% of
26,379 TWh in 2018.
This will require the total installed capacity of renewables in
the power sector to expand from 2,353 GW in 2018 to 10,771 GW in
2030 and 27,799 GW in 2050. According to IRENA, such expansion
points to $1 trillion investment needs for 836 GW capacity
additions per year between now and 2050. This compared with 257 GW
in renewable expansion last year.
Specific policies and measures such as renewable targets, tax
incentives, and pricing mechanisms are needed to increase the
deployment of renewables, the outlook report said.
IRENA believes solar photovoltaic, onshore and offshore wind
power projects will make up most of the expansion as their
levelized costs of electricity have been falling over the past
decade.
"Renewables provide the most competitive capacity expansion
solution to deliver power sector decarbonization," La Camera
said.
Moreover, IRENA suggested the share of electricity in industry's
energy consumption needs to increase from 26% in 2019 to 28% in
2030 and 35% in 2050.
Its share in the transportation sector's energy consumption has
to grow from 1.2% in 2019 to 9% in 2030 and 49% in 2050. This will
require the fleet of electric cars to expand from 18 million units
in 2019 to 381 million units in 2030 and 1,780 million units in
2050.
"Policymakers should identify priorities for electrification
with a focus on hard-to-abate sectors and devise strategies for its
deployment," La Camera said.
To avoid climate disasters, IRENA said the production of green
or blue hydrogen and their derivatives also needs to rise from
800,000 mt in 2020 to 154 million mt in 2030 and 614 million mt in
2050.
IRENA believes blue hydrogen—produced from gas with
CCS—will be more exposed to geopolitical conflicts like the
ones seen in the currently fossil fuels-dominated global economy.
"Policymakers should identify priorities for indirect
electrification using green hydrogen with a focus on hard-to-abate
sectors and devise strategies for its deployment," La Camera
said.
Climate worries
IRENA is joining a growing chorus of
multinational organizations warning that countries are pursuing
policies that will push up demand for fossil fuels when dealing
with disruptions to energy supplies from Russia, one of the world's
largest producers of fossil fuels.
"We are really close to the vanishing of the 1.5-degree goal …if
we don't act in changing dramatically the way we produce and use
energy," La Camera said.
In the Sixth Assessment Report
released in February, the Intergovernmental Panel on Climate Change
renewed its call for the world to accelerate decarbonization as
climate breakdown is accelerating.
"Short-term measures might create long-term fossil fuel
dependence … Countries could become so consumed by the immediate
fossil fuel supply gap that they neglect or [renegade on] policies
to cut fossil fuel use," UN Secretary General António Guterres said
in a recent web forum.
"Addiction to fossil fuels is mutually assured destruction, as
current events made all too clear our continued reliance on fossil
fuels puts the global economy and the energy security at the mercy
of geopolitical shocks and crisis."
Posted 30 March 2022 by Max Tingyao Lin, Principal Journalist, Climate and Sustainability
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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