The rise of clean energy technologies, including solar, wind, electric cars, and heat pumps, are poised to reshape the future but much stronger policies are needed for 1.5 °C. The latest World Energy Outlook (WEO) for 2023 from the International Energy Agency (IEA) forecasts significant changes in the global energy landscape by the end of the decade.
VISION FOR FUTURE ENERGY
The WEO describes a vision for the energy system in 2030, where clean technologies will play a far more substantial role. The future includes nearly ten times the number of electric cars globally, solar photovoltaic (PV) generating more electricity than the entire U.S. power system currently does, renewable energy accounting for nearly 50% of the global electricity mix (up from around 30% today), electric heating systems outselling fossil fuel boilers worldwide, and three times more investment in offshore wind projects than in new coal- and gas-fired power plants.
INCREASED ADOPTION
These projections are based on current government policies worldwide. If nations uphold their energy and climate commitments as planned, the transition to clean energy could happen even faster. However, more stringent measures may still be necessary to achieve the goal of limiting global warming to 1.5°C.
The increased adoption of clean energy technologies, along with global economic shifts, has significant implications for fossil fuels. The IEA foresees peaks in global demand for coal, oil, and natural gas in this decade, marking the first time such peaks have been visible in a WEO scenario under today’s policy settings. In this scenario, the share of fossil fuels in global energy supply, which has been around 80% for decades, is projected to drop to 73% by 2030, with global energy-related carbon dioxide (CO2) emissions peaking by 2025.
Dr. Fatih Birol, Executive Director of the IEA, emphasized the unstoppable transition to clean energy. He stated, “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.”
However, the study suggests that current fossil fuel demand is still too high to align with the Paris Agreement’s goal of limiting global temperature increases to 1.5°C. This poses a risk of worsening climate impacts and jeopardizing energy system security, which was designed for a world with less extreme weather conditions. Meeting the 1.5°C target remains possible but challenging. Failing to act could result in global emissions pushing temperatures up by around 2.4°C this century, well above the Paris Agreement threshold.
FIVE KEY PILLARS
The WEO-2023 proposes a global strategy with five key pillars to bring the world on track by 2030, which could form the basis for successful climate change discussions at COP28. These pillars include tripling global renewable capacity, doubling the rate of energy efficiency improvements, reducing methane emissions from fossil fuel operations by 75%, innovative financing mechanisms to triple clean energy investments in emerging and developing economies, and measures to facilitate an orderly decline in fossil fuel use, including ending new approvals of unabated coal-fired power plants.
International cooperation is crucial in accelerating clean energy transitions, and the pace of emissions reduction depends largely on financing sustainable solutions to meet the rising energy demand in fast-growing economies.
ENERGY SECURITY CHALLENGES
Amidst rising geopolitical tensions in the Middle East and ongoing concerns about energy security, the report also examines the evolving energy security challenges. Natural gas markets, which have been characterized by security and price concerns, are expected to see some easing in the coming years due to a surge in new liquefied natural gas (LNG) projects. This surge in capacity is set to alleviate price concerns and gas supply challenges.
China, a major influence on global energy trends, is undergoing significant changes, with its total energy demand projected to peak in the middle of this decade. Continued growth in clean energy is expected to result in a decline in fossil fuel demand and emissions in China.
Finally, the study highlights the potential for stronger growth in solar PV, with renewable expected to contribute 80% of new power generation capacity by 2030, with solar accounting for over half of this expansion. However, this scenario only takes into account a portion of solar’s potential. By the end of the decade, the world could have the capacity to manufacture over 1,200 GW of solar panels per year, yet it is projected to deploy only 500 GW in 2030. Deploying 800 GW of new solar PV capacity by 2030 could lead to a 20% reduction in coal-fired power generation in China and lower coal and natural gas electricity generation in other regions.
