The International Energy Agency (IEA) has just published Tuesday its latest energy generation and renewable energy annual report ahead of the United Nations COP28 climate summit in Dubai in late 2023. According to the 2023 World Energy Outlook, electric vehicle registrations will surge nearly tenfold by the end of this decade under the existing policies.
“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us. 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. Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”
IEA Executive Director Fatih Birol
Methodology
The IEA’s 2023 World Energy Outlook, released on October 24, provides the industry with a thorough understanding of the world’s energy generation and predictions on the energy sector’s future changes.
The report indicated numerous important insights into the world’s shift to clean energy, as noted by Teslarati. In order to do that, the IEA assessed inputs involving the following three possible scenarios under the Global Energy Climate (GEC) model:
- The Stated Policies Scenario (STEPS) – evaluates existing policies per sector and country. It also considers planned manufacturing capacities for clean energy technologies. It serves as a benchmark to evaluate the achievements and limitations of recent energy and climate policies.
- The Announced Pledges Scenario (APS) – ensures the timely achievement of the government and industry’s climate goals. Assumes climate commitments, including NDCs, long-term net zero targets, and goals for electricity and clean cooking access, will be fully met on time.
- The Net-Zero Emissions (NZE) by 2050 Scenario – monitors particular carbon emissions trajectory set to maintain temperature changes below 1.5 degrees Celsius. It also considers planned manufacturing capacities for clean energy technologies.
Forecast highlights
The STEPS scenario indicated that electric vehicles currently account for 15% of global car sales. The IEA forecasts this percentage to surge to 40% by the end of this decade.
Moreover, the IEA expects renewable energy to grow from approximately 30% today to contribute 50% of the world’s electricity mix by the same year.
Apart from these, the IEA stunned the industry with its new forecast that demand for coal, oil, and natural gas will peak within this decade. For the first time in history, the agency forecasted that energy-induced C02 emissions would reach its pinnacle by 2025 and start to decline.
Interestingly, the report also indicated the agency’s prediction that the market share of fossil fuels will decline by an astounding 73% by the decade’s end. It would demonstrate a notable decline from reaching approximately 80% in recent decades.
“In particular, the speed at which emissions decline will hinge in large part on our ability to finance sustainable solutions to meet rising energy demand from the world’s fast growing economies. This all points to the vital importance of redoubling collaboration and cooperation, not retreating from them.”
IEA Executive Director Fatih Birol
Investments growth
The IEA also projects renewable energy-related investments to surge, including solar PV generation and heat pumps. Moreover, it sees electric heating equipment sales surpassing fossil fuel boilers globally by the forecasted date.
According to the report, every $1 investment in fossil fuels correlates to $1 in clean energy five years ago. However, it changed this year as fossil fuels investment stayed the same for every dollar, while renewable energy investments increased to $1.80.
Presented below is the IEA’s investment flow chart:
As you can see, investments in oil declined while low-emissions power sources continued growing.
Despite the significant advancement in renewable energy investments, the IEA still calls for stricter policies to maintain global warming to 1.5 degrees Celsius. It is indeed crucial, as the agency warned that the current global warming rate is high enough to push the temperature to about 2.4 degrees Celsius in this century.
You can check the IEA’s full live stream replay on the World Energy Outlook below:
