Paris-based energy watchdog the IEA said today that new oil and gas projects could challenge the "later stages of the transition" and are not needed under its updated net zero emissions (NZE) by 2050 scenario, as demand falls and clean energy investment surges. The path to limiting global warming to 1.5 ̊C remains open as a result of record growth of key clean energy technologies, the IEA said.
Governments are rightly concerned about energy security, but new conventional field approvals cannot provide immediate relief for tight markets and may well make the later stages of the transition even more challenging, the IEA said today in its Net Zero Roadmap update.
In its 2021 roadmap, the IEA had already said that for the world to achieve net zero emissions by 2050, no new oil and gas fields should be approved beyond those already committed that year.
According to the 2023 IEA scenario, additional oil and gas projects since 2021 are likely to add around 4mn b/d and 170bn m³ of production in 2030, mainly in the Middle East and South America. This, combined with lower gas demand — natural gas use is 10pc lower in 2030 and 45pc lower in 2050 in the updated NZE scenario — could mean that some fields close earlier than planned.
"The drop in Russian production to date is smaller than the additional production from new projects that have recently been approved for development," the IEA said. But investment in existing fossil fuel projects is still needed to ensure that supply does not fall faster than demand, with the IEA warning that this "would reduce the chances of an orderly transition ".
On the "pressure" created by higher energy prices, especially on emerging markets, IEA executive director Fatih Birol said today that "this has nothing to do with clean energy policies... This is a deliberate oil production policy led by two top oil producing countries and I think it would be unfair to relate the $100/bl oil prices to clean energy policies," he added.
Under the updated scenario, a "huge policy-driven ramping up of clean energy capacity" pushes down fossil fuel demand by 25pc by 2030, reducing emissions by 35pc compared with the all-time high recorded in 2022. By 2050, fossil fuel demand falls by 80pc, the IEA said.
Coal demand falls to 3,250mn t of coal equivalent (mtce) in 2030 and 500mtce by 2050, from 5,800mtce in 2022. Oil demand declines to 77mn b/d by 2030 and 24mn b/d by 2050, from around 100mn b/d and natural gas demand drops to 3,400bn m³ in 2030 and 900bn m³ in 2050 from 4,150bn m³ in 2022, the IEA said.
As global oil and gas markets shrink, production is concentrated in a small number of producers, with the Mideast Gulf's share rising from 25pc today to 40pc in 2050. Asia's natural gas dependency rises to 45pc in 2050 from 27pc in 2022, leaving importers exposed to geopolitical events and disruptions in the Mideast Gulf, the IEA said.
But record growth in solar power capacity and electric car sales since 2021 is in line with a net zero by 2050 pathway, the IEA said. Under the scenario, global clean energy spending rises to $4.5 trillion yearly by the early 2030s, from $1.8 trillion in 2023, as electricity becomes the "new oil" of the global energy system.
In developing economies other than China, clean energy investment rises sevenfold by the early 2030s, to $80bn-100bn.Global renewables capacity triples by 2030 from 3,630GW in 2022, grid investment doubles by 2030, unabated coal is phased out by 2040 and nuclear capacity more than doubles to 916GW by 2050. The annual rate of energy efficiency improvements doubles, sales of electric vehicles and heat pumps rise sharply, and energy sector methane emissions fall by 75pc.
"These strategies, which are based on proven and often cost-effective technologies for lowering emissions, together deliver more than 80pc of the reductions needed by the end of the decade," the IEA said. The report highlighted that "rapid progress is needed by 2030" for carbon capture, utilisation and storage (CCUS), as well as hydrogen, hydrogen-based fuels, and sustainable bioenergy, even though "the history of carbon capture, utilisation and storage (CCUS) has largely been one of underperformance".
On the slower pace of the CCUS scale-up compared with solar and electric vehicles, IEA chief energy technology officer Timor Gul said: "CCUS is still needed but we have scaled back our expectations since the 2021 report. We do need CCS, particularly for cement and other industries, but the current momentum is not enough. We hope this is a warning for the CCS industry that we need to make it happen."
