The energy sector holds the keys on climate

Executive Director, International Energy Agency (IEA)

©Phil Noble/Reuters

When the International Energy Agency (IEA) was formed in 1974, concern over climate change was in its infancy. While the greenhouse effect was known it was not widely recognised, and the debate about the long-term effect of CO2 emissions was confined more or less to academia. 

However over the decades leading up to the first assessment report of the Intergovernmental Panel on Climate Change (IPCC) in 1990, the world slowly began to take notice. Climate change spilled out of the pages of scientific journals and into the realm of global politics.

Now, in 2015, climate change is globally accepted to be one of the defining challenges of the 21st century. There is no escaping it, and collective efforts to overcome this challenge must involve every region of the world, and every sector of the economy.

No sector is more important to these efforts than energy. If we are to have any hope of meeting our collective climate target of limiting global average temperature rise to 2º Celsius, future energy demand cannot be met using the methods we used in the past. The rising energy demand of the last half-century was met principally by fossil fuels, the burning of which accounts for two-thirds of global greenhouse gas (GHG) emissions. Future energy demand must be significantly less carbon-intensive. This is why it is so critical that when decision-makers gather in Paris for the UN summit on climate change, known as COP21, they build a climate agreement that has the energy transition at its core.

Thankfully, there are positive signs. As of October 2015, the more than 150 countries that have submitted their pledges on climate, known as Intended Nationally Determined Contributions (INDC), account for around 90% of global economic activity and almost 90% of global energy-related GHG emissions. These countries also account for around 90% of global fossil fuel demand, and almost 80% of fossil fuel production. If these pledges are fulfilled, then growth in energy sector GHG emissions will slow dramatically by 2030, marking a significant step towards decoupling emissions from economic growth.

So how can we ensure that these pledges are met? What can be done immediately, and in the short term, to put the energy sector on a path that ensures that COP21 does not join the list of climate summits that produced agreements long on ambition but short on results? The IEA is coming to COP21 with four keys based on realistic and pragmatic actions that would open the door not only to a successful agreement, but more importantly, to successful implementation as well.

1. Achieve a peak in emissions. This first key focuses on the fact that before we can see a decline in global emissions, we must see a peak. Reaching this peak, while maintaining (and indeed supporting) economic growth, can be achieved through cost-effective measures and proven technologies. These efforts are outlined in the IEA’s Bridge Scenario, which describes five actions that could be taken to see a peak in global emissions around 2020, while supporting the same level of GDP growth as in current climate pledges.

Globally, about half of the emissions savings in the Bridge Scenario are achieved through energy efficiency measures in the industry, buildings, and transport sectors. These measures are designed to improve the energy performance of new products and appliances, industrial processes, building energy services, and the fuel economy of vehicles.

About 9% of the emissions savings are achieved through a gradual reduction in the use of subcritical coal plants and a ban on new construction, and another 17% through the use of appropriate policy signals to increase investment in renewable energy to US$400 billion by 2030, up from $270 billion today. Some 15% of emissions savings are achieved through policies to reduce methane releases from upstream oil and gas production, as methane’s effect on the atmosphere is considerably more potent than CO2. Finally, a further 10% of the emissions savings are achieved through an almost complete phase-out of fossil fuel consumption subsidies by 2030. These subsidies encourage wasteful energy expenditure and contribute to air quality problems, and can be replaced with less costly policies to promote energy access for the poor.

2. Combine short-term actions with long-term goals. This second key to success at COP21 requires an agreement that signals a transformational shift to a low-carbon energy system. This is crucially important, as much of the energy infrastructure that is being built today will still be in service in 2050. How can we expect to meet targets for 2050 if we have not yet put in place the policies, technologies and infrastructure necessary to get us there? Tracking progress is essential for long-term, transformational change in the energy sector, and to enable this, the Paris framework must build in a credible process for periodic review and strengthening of countries’ targets every five years. This would create an expectation of rising ambition and ensure that political commitments reflect changing circumstances in the energy sector, including the falling cost and improving performance of low-carbon technologies. A variety of metrics can help decision-makers ascertain whether short-term policy actions are producing outcomes in the energy sector that are in line with longer-term decarbonisation objectives.

3. Accelerate energy technology innovation. Reducing the cost and improving the performance of low-carbon technologies is an essential key to making the transformation of energy systems affordable and feasible. Unfortunately, the IEA’s 2015 assessment Tracking Clean Energy Progress finds that no technology is currently on track. To get to where we need to be, we will need a tripling of public energy investment in RD&D (research, development and demonstration), and a scaling up of collaboration between public and private entities in both developed and developing countries. We will need policies and funding to bring low-carbon technologies from development and demonstration to market maturity.

4. Increase energy sector resilience. This last key is all too often overlooked. It is the importance of ensuring that any climate change that occurs does not threaten our energy infrastructure. Thermal and hydro power plants, for example, are particularly susceptible to water stresses that may be more frequent due to climate change, such as reduced river runoff. Businesses are key actors in this regard, in designing and implementing resilient and adaptive practices. Yet governments can also play a role in creating an enabling environment and appropriate policy frameworks to support and encourage resilience-building actions by businesses. Put simply, current and future energy systems must be climate-proof.

These four keys are not revolutionary. Indeed, these are issues and technologies that we have been aware of for many years. Yet this is where they draw their strength. Countries, businesses and households should not be waiting for tomorrow’s technology or market development to reduce our collective emissions footprint and make progress on climate change. We already have the tools that we need, right here, today.

The test for governments in Paris will be whether or not they are willing to take these first steps. These steps are critical if we are to realise the deeper systemic changes needed once and for all to decouple growth and development from emissions, and set along a path to a dynamic, low-carbon future.

References

IEA (2015), Energy Efficiency Market Report 2015, OECD Publishing.

IEA (2015), World Energy Outlook Special Briefing on COP21, OECD Publishing.

IEA (2015), World Energy Outlook Special Report 2015: Energy and Climate Change, OECD Publishing.

IEA (2014), World Energy Outlook 2014, OECD Publishing

©OECD Observer No 304, November 2015




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