IEA "net zero" scenario shows little faith in renewables

“If you continue to invest in dirty energy, you risk losing money. If you invest in clean energy, you can make some handsome profit”, said Fatih Birol, head of the IEA when he launched its annual World Energy Outlook (WEO) in October. The new WEO marks a substantial change for the organisation and the international establishment. That change is a victory for NGOs’ efforts to make Paris and 1.5 degrees the new normal.

The International Energy Agency IEA was formed by the OECD in 1974 as a countermove against high oil prices set by the oil-producing countries in the Middle East. This objective has remained constant ever since, under the banner “security of supply”, meaning an ample supply of oil and gas at low prices for the rich countries. Most of the time it was to be accomplished with more coal, more nuclear and more oil and gas production in Europe and America, including tar sands and fracking.

As recently as 2017, Fatih Birol, executive director of the IEA, told upstream oil industry leaders in Houston, Texas to “Invest, invest, invest” .

For a long time the IEA has claimed to be a climate champion, but all its scenarios have accepted big temperature increases. Those high-fossil scenarios have been used by the fossil fuel industries and the entire financial sector to justify continued use of fossil fuels.

That is now changing.

At long last, in May 2021, the International Energy Agency produced a Net Zero scenario that aims to keep temperature rise below 1.5°C. It has now been integrated, more or less, into the new WEO just in time for COP26 in Glasgow.

It calls for an immediate stop to fossil investments and a speed limit of 100 km/h on motorways by 2030. But it relies heavily on nuclear power and CCS.
NGOs welcomed one message in May: “From today no investment in new fossil fuel supply projects”.

“Finally the IEA is starting to get it,” said Greenpeace International.

“Big oil and gas companies like Shell and BP have relied on previous, less ambitious IEA scenarios to justify inadequate climate plans and pledges. That hiding place is now gone,” commented Oil Change International , a group that has campaigned specifically against the IEA’s self-fulfilling prophecies.

“For years, we’ve seen fossil fuel companies and governments justify their fossil fuel expansion plans – from the TransMountain tar sands pipeline expansion to Arctic oil drilling to the Adani coal mine – on the backs of scenarios from the International Energy Agency (IEA),” they said earlier.

This shift has put some fossil companies in an awkward position, for example in Norway, where investments in oil and gas are rising .

In the WEO presentation on October 13, Birol claimed that even if the climate targets are not reached, they are already disrupting the energy markets. He also said that the new energy economy will be cheaper, cleaner, fairer, more resilient and safer. He specifically said that it was wrong to blame the high energy prices in late 2021 on clean energy.

The IEA’s chief energy modeller, Laura Cozzi, also pointed out that we are now beginning to bend down the CO₂ curve.

But it is not a completely new IEA that has appeared, especially not at the detailed level of the scenario numbers.

Their “net zero” does not mean zero. It does not mean the end of coal mining or oil and gas drilling. It still projects consumption figures of 85 exajoules of gas, 35 of coal and 89 of oil in 2050. That is a billion tonnes of coal, two billion tonnes of oil and 1.6 billion tonnes of gas. The fossil emissions are to be counteracted mainly by CCS, see below.
The IEA has a track record of underestimating the growth of solar and wind. It seems hard to kick the habit. Photovoltaic growth is projected to be 21% per year during the first decade, 2020–2030, slowing to 9% in 2030–2040 and a mere 3% in the final decade to 2050. Wind power growth falls from 15% per year in the first decade to 3% in 2040–2050.
Does renewable growth decelerate because the power system can’t integrate more? If so, why does the Energy Transitions Commission  – no less illustrious and established than the IEA – project twice as much solar by 2050 in its scenario from April 2021?

The slow growth of solar and wind is important, as the holes have to be filled up with something else: biomass, nuclear or CCS.

Biomass use is projected to increase 64 per cent from 2020 to 2050. A large share (some 25 per cent) of that biomass comes from short-rotation woody crops.
One of the great sources of CO2 is deforestation, which must be reversed. Is there enough land for both large-scale afforestation and so much more biofuels?
Nuclear energy is projected to increase to twice what it is now. This has been the modus operandi of the IEA since 1974. They always expect nuclear to grow.
Reality check: nuclear power peaked in 2006 at 2661 TWh and has never exceeded that figure. It will contract further over the next several years. A large number of reactors will close in Europe and America, in Korea and Taiwan. Construction of new reactors is not enough to stop the decline.
But the IEA has built its save-the-world scenario on the hope of a nuclear revival.

Carbon capture: The IEA’s Net Zero scenario projects that 7.6 billion tonnes of CO₂ will be captured per year by 2050. In other words the weight of captured CO₂ will be greater than current global oil consumption (4.4 billion tonnes in 2019). Pipelines would carry more CO₂ than they currently carry natural gas, and a large share of world shipping will be transporting CO₂.

As carbon storage increases from 2030 through 2040 to 2050, the scenario does not mention when CCS will stop. The implication is that 200 billion tonnes of CO₂ or more would be stored, safely and forever.

Direct carbon capture (DAC), using giant vacuum cleaners that draw down CO₂ from the air, features high in the IEA future. By 2050, 663 million tonnes of CO₂ are to be removed that way. That would require 112–150 million tonnes of oil equivalent, according to an IEA calculation  and much more according to other sources .

What CO₂ price would be needed to cover such costs?

CCS has been heavily hyped for 20 years, but the results are meagre and in minor niches, as it is far too expensive.

DAC hardly exists and would be still more expensive. It will not happen.

If fossil fuels are phased out earlier and replaced with more solar and wind, emissions would be cut faster and much, much cheaper.

A strange feature of the report is also that 40 per cent of the hydrogen in 2050 will come from natural gas with CCS (“blue hydrogen”). In the same year 1713 TWh electricity will be produced from hydrogen. One third of this hydrogen would be “blue”, which would be very helpful for the fossil gas industry. The rest would be electrolytic and a huge waste.

Net Zero is only one of four scenarios in the WEO. The other three are:

• “Stated Policy”. This would result in a 2.6°C temperature rise.
• “Announced Pledges”, e.g. Paris commitments in the NDCs. (These keep coming in by the day.)
• “Sustainable Development” results in a 1.65°C rise. It is not sustainable but is retained for the sake of continuity with earlier IEA projections.

The momentous choice the scenarios represent may well be compared to a turning point in the Second World War, say the Battle of Moscow in December 1941, and somebody had presented the Red Army with four options on how to counter the Nazi assault:

1) we give up right now; 2) we continue the trend to lose c) we lose, but not so fast and d) we will use our troops as best we can to fight back and win the battle and eventually the war, but only if we are allowed use magic. (The Net Zero.)

One reason why it is so difficult for the IEA to give a straight answer to a simple question: "1.5, how?" is that they keep using the same methodology that has produced so many wrong results before. The real thing in energy and climate is coal, gas, oil and CO2. But the IEA's model has the GDP at its core, and uses derived concepts such as energy intensity” and “carbon intensity” as if they were real.

They also assume a 3% growth in world GDP, which is more than we had in 2010–2020.

The Red Army generals in 1941 were stupid and crude enough, but they did not see defeat as an option. And they did not lay down "3% GDP real growth for 1942-45" as a condition for fighting.

Fredrik Lundberg

¹ https://jpt.spe.org/ceraweek-iea-chief-upstream-industry-invest-invest-a...
² http://priceofoil.org 2021/10/13
³ https://www.reuters.com/article/norway-economy-oil-idUSL5N2ND13B
⁴ https://www.energy-transitions.org/wp-content/uploads/2021/04/ETC-Global...
⁵ www.iea.org/reports/direct-air-capture
⁶ e.g. https://www.nature.com/articles/s41467-020-17203-7

Figure: The world is starting to bend the emissions curve. New Policies, cost reductions, and the pandemic have pulled the projected emissions curve down. Updated NDCs and long-term net zero pledges decouple emissions and economic growth this decade.