What the International Energy Agency is actually telling us

The International Energy Agency (IEA) recently published “Net Zero by 2050 – A Roadmap for the Global Energy Sector”,[1] in which they document details of a scenario (Net-Zero Emissions Scenario, or NZE) taking the world to a time 29 years from now when global humanity will produce net-zero greenhouse gas emissions.

The report is long – 190 pages plus appendices. It addresses in considerable detail what must happen in all major energy consumption areas – transportation, buildings, and industry – to take us to a point at which much of our energy is created using non-emitting sources, and greenhouse gases (GHGs) that cannot be abated are sequestered underground or converted to useful products. While assuring us that the roadmap is achievable, the agency recognizes that “the route mapped out here is a path, not necessarily the path.” In other words, the IEA acknowledges that great uncertainties exist in exactly how we might reach net-zero goals.

Many commentators have celebrated this report as the definitive roadmap – a definite plan – to reach NZE by 2050, even though the IEA takes pains to say this is not the case. But the buzz is that we can get to 2050 NZE because the IEA says we can.

Let’s dig into the report to find out. I will let the IEA speak for itself in a series of direct quotes from the report.

• “Governments must drive innovation. The pathway to net-zero emissions by 2050 will require an unprecedented level of co-operation between governments.”
• “In the NZE, consumers and companies move together in adopting behavioural changes, with governments setting the direction of those changes and facilitating them via effective and sustained policy support.”
• “Without a major acceleration in clean energy innovation, reaching net-zero emissions by 2050 will not be achievable. It requires technologies that are not yet available on the market to be demonstrated very quickly at scale in multiple configurations and in various regional contexts.”
• “There are multiple milestones on the way to global net-zero emissions by 2050. If any sector lags, it may prove impossible to make up the difference elsewhere.”

So the IEA says that if NZE 2050 is going to work, essentially, every government and all people in the world must agree overnight that emissions reduction is the world’s top priority. New and effective policies will appear quickly in all nations, and everyone will play their part (and everyone will have a part – no free rides here). As well, everyone must work together to focus innovation down tightly defined pathways, and that innovation must succeed and be commercialized, in multiple areas, in record times with no room for delay, dispute, financing, or environmental and stakeholder concerns.

That sounds quite difficult. What about the details? More IEA quotes:

• “Almost all buildings with available roof space and sufficient solar insolation are equipped with solar thermal water heaters by 2050.”
• “Building energy use drops by changes in temperature settings (less heating and air conditioning), reducing hot water temperatures, and greater use of cold temperature clothes washing and line drying.”
• “In heavy industrial sectors – steel, cement and chemicals – most deep emissions reductions technologies are not available on the market today.”
• “Passenger rail almost doubles its share of total transport activity by 2050, particularly rapid growth in urban and high-speed rail. Aviation growth drops to half its pace from 2010-2019, constrained by government policies that promote a shift toward high-speed rail.”
• “For oil, the OPEC share of a much reduced global oil supply increases from around 37% in recent years to 52% in 2050.”
• “Nuclear power output rises steadily by 40% to 2030 and doubles by 2050.”
• “The NZE sees a major increase in demand for critical minerals such as copper, lithium, nickel, cobalt, and rare earth elements that are essential for many clean energy technologies. There are several potential vulnerabilities that could hinder the adequate supply of these minerals and lead to price volatility.”

I am trying to imagine how any of these aspirations can be achieved and issues solved, let alone all of them simultaneously. Maybe I don’t have a good enough imagination. Let’s ask some other people with knowledge and skin in the game.

• “On a continent where millions of families are using traditional, hazardous biomass for cooking, where 600 million people lack access to reliable electricity, the idea of leaving valuable oil and, especially, natural gas in the ground seems neither practical, palatable, nor appropriate.”[2]

– NJ Ayuk, executive chairman, Africa Energy Chamber

• “Norwegian oil and gas does not share the assumption that OPEC members alone should account for more than half of oil and gas production in a 2050 perspective. If demand does not decline as rapidly as the IEA assumes and the supply side is simultaneously choked off, global energy provision could be threatened and lead to very high energy prices.”

– Norwegian Oil & Gas Association

• “The developed world has occupied almost 80% of the carbon space already, you have 800 million people who don’t have access to electricity. You can’t say that they have to go to net zero, they have the right to develop, they want to build skyscrapers and have a higher standard of living, you can’t stop it.”[3]

-Raj Kumar Singh, India’s Minister for Power

J.P. Morgan’s 2021 Annual Energy Paper 2021 makes some very relevant points:

• Carbon capture and storage buildout, just to sequester an amount equal to 15% of current U.S. GHG emissions, would require infrastructure whose throughput volume would be higher than the volume of oil flowing through U.S. distribution and refining pipelines
• DACC (direct air carbon capture, which IEA says will sequester at least 10% of necessary CO₂ volumes) is unfortunately an energetically and financially costly distraction in effective mitigation of climate changes at a meaningful scale.
• Even if all announced sustainable aviation fuel projects were completed, volumes would reach just ~1% of expected global jet fuel demand in 2030.
• Even if renewable natural gas (RNG) from all landfills and other sites were channeled into central processing facilities, RNG could offset ~2.5% of annual US gasoline demand.[4]

A somewhat more cynical observer than me (Michael Lynch at Forbes.com) summarized his thoughts about the likelihood of following the IEA roadmap:

“Redirecting a large system such as the global energy industry has been likened to try to change the steering of an aircraft carrier; it must be done slowly, and requires a lot of effort. The IEA’s Net Zero 2050 roadmap is more like reversing the direction of an aircraft carrier and making it stand on its stern and tap dance to Singing in the Rain.”

Unlike Mr. Lynch, I believe that IEA’s NZE 2050 roadmap is a tremendous document. It shows us just how challenging emissions reduction will be in the future. It’s not saying “we are going to get to NZE 2050 – we just have to do these things;” it’s really saying “if we actually want to achieve NZE 2050, here is the immense scope of challenges in front of us, and if we miss even one of them, we’re not reaching our goal.”

That is a very honest assessment, and it is convincingly backed by pretty deep analysis. I am sure that when IEA says that NZE 2050 “requires technologies that are not yet available on the market to be demonstrated very quickly at scale in multiple configurations and in various regional contexts,” it does not mean to say “let’s all pull together and we can do this.” I believe that the IEA is saying “we need to rethink our targets, because we can’t get there from here, at least not in 29 years.”

Political leaders should think hard about IEA Net Zero by 2050, and use it to decide on realistic targets for energy transition – and enact reasonable, thoughtful policy that has a chance to achieve those realistic targets. In particular, policy acknowledging that people everywhere aspire to better lives supported by abundant and available energy at a reasonable price. Policy that realizes innovation cannot be driven toward specific goals on specific timetables – and that when innovation is successful, it takes significant time to develop and build out. And policy that addresses geopolitical realities, does not cede >50% of world oil supply to OPEC, and does not rely completely on alternative energy technologies before securing reliable supply chains for critical minerals.

Thanks IEA. Your roadmap is extremely useful – as long as we hold it right side up and don’t take a wrong turn.

[1] https://www.iea.org/reports/net-zero-by-2050

[2] https://www.africanews.com/2021/05/25/net-zero-not-for-africa-not-yet-africa-must-fight-energy-poverty-with-oil-and-gas-development-by-nj-ayuk/

[3] https://www.bbc.com/news/science-environment-56596200

[4] https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/future-shock-amv.pdf