In 2021, the International Energy Agency (IEA) published its landmark report, Net Zero by 2050: A Roadmap for the Global Energy Sector. Since then, the energy sector has seen major shifts.
Based on the latest data on technologies, markets and policies, IEA has released an updated version of the Net Zero Emissions by 2050 (NZE) Scenario.
According to the update, global carbon dioxide (CO2) emissions from the energy sector reached a new record high of 37 billion tonnes (Gt) in 2022, 1 per cent above their pre-pandemic level, but are set to peak this decade.
“The speed of the roll-out of key clean energy technologies means that the IEA now projects that demand for coal, oil and natural gas will all peak this decade even without any new climate policies. This is encouraging, but not nearly enough for the 1.5 °C goal,” the report noted.
In the NZE Scenario, strong growth in clean energy and other policy measures together lead to energy sector CO2 emissions falling by 35 per cent by 2030 compared to 2022.
Cutting methane emissions from the energy sector by 75 per cent by 2030 is one of the least cost opportunities to limit global warming in the near term. Strong reductions in both energy sector CO2 and methane emissions are essential to meeting the 1.5 °C goal.
“Without efforts to reduce methane emissions from fossil fuel supply, global energy sector CO2 emissions would need to reach net zero by around 2045, with important implications for equitable pathways.
“Reducing methane emissions from oil and natural gas operations by 75 per cent costs around USD 75 billion in cumulative spending to 2030, equivalent to just 2 per cent of the net income received by the oil and gas industry in 2022. Much of this would be accompanied by net cost savings through the sale of captured methane.”
The update also projects oil declines from around 100 million barrels per day (mb/d) to 77 mb/d by 2030 and 24 mb/d by 2050. Natural gas demand drops from 4 150 billion cubic metres (bcm) in 2022 to 3 400 bcm in 2030 and 900 bcm in 2050.
IEA confirmed once again that no new long-lead time upstream oil and gas projects are needed in the NZE Scenario, but continued investment is required in existing oil and gas assets and already approved projects.
Australian Energy Producers Chief Executive Samantha McCulloch said the IEA’s Net Zero Roadmap Update identified the importance of gas in providing affordable and reliable energy as we transform to net zero.
“In Australia, new gas supply will provide a safety net for the energy system — avoiding blackouts and putting downward pressure on prices. The IEA highlights the importance of gas is amplified if renewables and other technologies are not able to be deployed at the scale and pace required under this ambitious global pathway,” Ms McCulloch said.
The IEA stated “some new sources of supply would need to be approved for development over the next few years” if we see delayed action elsewhere.
Ms McCulloch said the IEA had always emphasised that every country had to chart its own path and the need for new gas supply in Australia and the region had only escalated since the original 2021 Net Zero report.
“Australia’s own energy market authorities, the Australian Energy Market Operator and the Australian Competition & Consumer Commission, are repeatedly highlighting future shortfalls and the need for new gas supply,” she said.
Ms McCulloch also called on governments to heed IEA warnings that carbon capture utilisation and storage (CCUS) and all low-carbon hydrogen pathways need more policy support to boost deployment.
“The momentum for CCUS is growing in Australia and around the world but the IEA says rapid progress is needed by 2030 and hinges on cutting project lead times,” she said.
“Global CCUS deployment needs to increase by over 130 times by 2050, and low-carbon hydrogen by over 400 times, with action urgently needed from policy makers for both technologies.”
The full report can be downloaded here.