Back in 2015, the Paris Agreement aimed to address the climate change due to the possible rise in the temperatures by 1.5 degrees Celsius, which has been translated into net zero greenhouse gas emissions by 2050. In the same vein i.e., to meet Paris Agreement goals, the International Energy Agency in its recent report ‘Net Zero by 2050’ has called the world for curbing fossil fuels. However, what has caught the spotlight is its appeal to stopping all new investments in oil, gas and coal supply from next year, retiring coal-fired plants in advanced economies by 2030, banning sales of new internal combustion engine cars by 2035 while global electricity sector reaching net zero emissions by 2040.
While there has been a general consensus in the developed world over reducing reliance on coal and fossil fuels to reduce carbon footprint – and a consensus over the direction IEA has taken in its recent policy shift towards renewables – the oil and gas industry and many developing and oil and coal producing countries have gone into frenzy over the abrupt recommendations with such short timelines.
Many countries have outrightly refused to stop oil and gas investment from next year. OPEC has warned that such a sudden action would lead to oil price volatility, while UK says it has no plans to stop new oil exploration. Japan has also refuted the suggestions saying that they do not necessarily fit in with the Japanese government’s policy. Australia’s oil and gas industry and mining lobby has said that decarbonization has no one-size-fit-all.
For one, the qualms by these economies stand valid because of such short notice, no halt in such investments is in sight. Fossil producers have pledged millions of dollars of investments and tax incentives in the coming year, whereas fossil fuel particularly coal is meant to be a powerhouse for developing countries like Philippines, Pakistan etc. despite the increased focus on renewables and willingness to decrease carbon footprint.
Secondly, the IEA admits in the report that that huge international investment will be needed to add 1,020 gigawatts of solar and wind power every year by 2030 to compensate, which is more than 4 times of what has been installed in 2020. This goes on to show how ambitious these targets and recommendations are. It further goes on to highlight that the required technology and innovation is not yet available.
More than a few global associations have also demurred these recommendations for being unrealistic and ambitious such as World Coal Association, International Gas Union, World Nuclear Association., etc.
So yes, countries are decrying the unrealistic decarbonization targets set forth by IEA and given how strong the oil and gas and coal lobbies are, it looks like the policy prescription will remain only on paper.