Marrakech COP22: IEA issues a Paris reality check

Key points:

1. The International Energy Agency’s World Energy Outlook 2016 makes clear Paris commitments equal near full decarbonisation of energy around 2040 – IEA scenarios are often misused to justify half measures, but after Paris, they provide nowhere to hide for governments, businesses and investors.
2. Australia backs long term Paris objectives in High level session – meaning it needs to move on from its excessive focus on 2030 targets to longer term modernisation and decarbonisation planning.
3. More countries do just that and release or announce 2050 and decarbonisation plans – Canada, US, Mexico, Sweden and others join Germany in releasing 2050 plans or objectives to guide investment and boost competitiveness in a world moving to clean energy.

IEA makes clear Paris commitments = modernisation and decarbonisation of energy

The first International Energy Agency “World Energy Outlook” since the Paris agreement enables a clearer perspective on how users interpret its analysis and projections for unabated fossil fuels and renewable energy. Overall, the traditionally conservative IEA is more bullish on renewables and sceptical on coal than it has ever been. It notes energy emissions have stalled in recent years and that China’s coal consumption appears to have peaked in 2013. Globally, coal consumption actually fell in 2015 (but hasn’t necessarily peaked).

Energy infrastructure investments have long 30-50 year lifetimes and the  report has expanded its outlook from 2030 to 2040. The IEA has presented three core scenarios examining the implications of:

• continuation of current energy policies;
• policies required to meet  emissions targets made prior to Paris (such as Australia’s 2030 target), and;
• requirements for a “450 Scenario” (based on limiting CO2 to 450 parts per million in the atmosphere), which it acknowledges amounts to just 50 per cent chance of avoiding two degrees warming and not fully consistent with the Paris objectives.

Usually reflecting a fossil fuel heavy energy future, the “current policies scenario” has been used by Bjorn Lomborg, some fossil fuel companies and others to say fossil fuel dependent and/or exporting nations have little to fear. But that game is up after Paris.

The Paris Agreement of over 190 countries to limit global warming now puts into stark relief the interpretation of the IEA World Energy Outlook scenarios. It’s no longer a matter of current policies being the most likely and the 450 Scenario representing “ambitious climate policies”.

The first two scenarios while still revealing strong trends towards clean energy, are now mostly useful just for indicating the scale of the shortfall in required action. The latter reveals a 2040 energy mix that is 58% renewables and 24 % fossil fuel:

But the commitment that countries including Australia made in Paris was to help limit warming to well below 2 degrees and pursue just 1.5 degrees.  The IEA recognises its 450 scenario is outside that envelope and flags extra policies that might assist. They are developing scenarios for next year but make the overall implications graphic:

Under the 450 scenario global coal demand is the inverse of past 25 years – a decline of 2.6 per cent/year, steeper than the average 2.4%/year increase in the past 25 years. By 2040 coal is only providing 7per cent of electricity, and 70 per cent of that coal has Carbon Capture and Storage. So there’s only a sliver of conventional coal that can be around globally under this conservative scenario.

The IEA is clear that to make the most of renewable energy, markets need to evolve to ensure that energy efficiency, demand response, dispatchable renewables, intermittent renewables can all play their best part in secure, affordable, decarbonising energy.

But countries reaffirming their commitment to the Paris agreement and the required transition now have nowhere to hide when it comes to the task at hand. So what of Australia? Well. 

Australia reaffirms commitment to Paris 

Today political leaders from Australia and many other countries spoke to their commitments. The government made clear that “Australia is a strong supporter of the Paris Agreement” and repeated a list of recent actions as well as its medium term 2030 target. That target was offered prior to Paris at which it agreed to help avoid 1.5 – 2C warming, help achieve net zero emissions as well as build greater climate resilience.

The 2030 target has been the focus of the government’s policy development to date but has been widely criticised as not providing sufficient guidance for investment let alone emissions certainty, as the IEA report makes clear today.

This makes the final two sentences of Australia’s statement today even more important:

The long term challenge is integrating our climate actions across policy, business and industry decisions to achieve the global transition we signed up to last year.

Australia is committed to this long-term goal and we look forward to working across the climate landscape to make this happen.

The government’s 2017 review has mostly been characterised at home as a review to ensure policies can deliver on the 2030 target, but as far back as the Abbott government, also included a commitment to consider longer term targets.  Under the Paris agreement, countries were invited to submit mid century plans and we’ve seen a couple, such as Germany’s, detailed in yesterday’s update. But today saw an escalation.

More countries do just that and release or announce 2050 and decarbonisation plans

Following on from Germany’s 2050 plan yesterday, today the U.S., Canada, Mexico and  Sweden joined in.  Germany noted this was part of a strategy to ensure it remained competitive is a decarbonised world.

The US plan for deep decarbonisation by 2050 is comprehensive in scope, taking into account opportunities to cut emissions across different sectors of the economy, including the electricity, transportation, industry, and buildings sectors. It also highlights the need to invest in low-carbon technology development, and safeguard and enhance natural resources—such as forests, soils, and grasslands—that help remove carbon from the atmosphere and store it.

These plans are important to send clear signals to investors, give give guidance to regulators as well as to assist international diplomacy and accountability.  Australia should be joining in.

Connor is the CEO of The Climate Institute, www.climateinstitute.org.au