Emissions ‘past peak’ in IEA/IMF green recovery plan
The world could be put “on track for net-zero emissions by 2050” if governments implement the partnering institutions’ “build back better” post-pandemic economic recovery plan
The IEA and the IMF have been working feverishly in recent months to come up with proposals for a post-pandemic economic recovery plan.
The sense of urgency has been palpable, given the proposals had to be ready in time for governments to incorporate them into the economic rebuilding packages that will follow the short-term rescue measures hurriedly put together to deal with the immediate impacts of Covid-19.
The IEA wanted the proposals to be ready in time for a clean energy transitions summit it is convening on 9 July, which it claims will gather 40 ministers from countries representing four-fifths of global energy use. It hopes to leverage the $9tn that it estimates governments will be spending on recovery from Covid-19 and policy responses to it; others put the figure higher.
Unveiling the three-year “sustainable recovery plan” on 18 June, the IEA’s executive director, Fatih Birol, made bold assertions about what the plan could achieve if governments chose to implement its recommendations.
“If governments take this path, they can make 2020 the year when the world starts beating climate change as well as the coronavirus” Doig, ECIU
Global economic growth would be on average 1.1pc/yr higher than without such measures (so 3.5pc higher over the three years of the plan), some 9mn jobs would be created or saved each year, and annual energy-related greenhouse gas (GHG) emissions would be 4.5Gt lower by the end of 2023.
The measures—which would require global investment of $1tn/yr over three years, a third coming from governments and the rest from private sources—would also help progress towards meeting the UN sustainable development goals (SDGs): a 5pc reduction in air pollution emissions; bringing access to clean cooking to c.420mn people; and providing access to electricity to c.270mn people.
“Perhaps the most startling line,” says Alison Doig of London-based think tank the Energy and Climate Intelligence Unit (ECIU), “is that if governments take this path, they can make 2020 the year when the world starts beating climate change as well as the coronavirus, with emissions never again rising above 2019 levels and setting a new course to deliver the goals of the Paris Agreement.”
Once in a lifetime
“Governments have a once-in-a-lifetime opportunity to reboot their economies and bring a wave of new employment opportunities while accelerating the shift to a more resilient and cleaner energy future,” says Birol. “Policymakers are having to make hugely consequential decisions in a very short time as they draw up stimulus packages.”
The IEA set about working on the report four months ago because “we received several calls from governments asking us what kind of role the energy sector could play”, says Birol. It is essential, he adds, to learn the lessons of a decade ago, when GHG emissions fell during the financial crisis of 2008-09, only to rebound strongly in 2010.
“Global emissions increased by much more in 2010 than the decline of 2009,” says Birol. “With the recovery of the economy, global emissions increased by 1.7Gt, the largest annual increase in history. With this report, we want to avoid that rebound and put the world on a sustainable energy track.”
Recognising how concerned governments and people are about the coming global depression and the prospect of widespread job losses, the IEA and the IMF are at pains to emphasise that their sustainable recovery plan makes it possible to address these issues while simultaneously addressing the issue of climate change.
Figure 1 shows the results of the agency’s analysis of how the plan would affect the future trajectory of GHG emissions. “The plan would,” says Birol, “make 2019 the definitive peak in global emissions, reducing GHG emissions by 4.5Gt and putting them on a path towards achieving long-term climate goals, including the Paris Agreement. It keeps open the possibility of net-zero emissions in 2050.”
The expected fall in emissions of 8pc this year is no cause for celebration, says the IEA’s chief energy modeller, Laura Cozzi, given the huge costs in terms of the economy, society and human lives. It does, however, provide a starting point for the sustainable recovery path and the low end of the uncertainty in that path would be a good starting track for the Paris Agreement goals.
4.5Gt – Potential energy-related reduction in GHG emissions by 2023
“Of course, there are ranges here,” says Cozzi, “because there are uncertainties about what happens to energy markets, what happens to investments that are market-driven and what happens to behaviours.”
Same as it ever was?
While not everyone is convinced, there has been very little public criticism of the plan to date—perhaps because the IEA and the IMF make a formidable and until now unusual combination—though some journalists at the launch event inevitably asked why things should be different this time around.
Birol was ready with an answer. “Compared with 2009 we have at least three major advantages. Number one is that the cost of clean energy technologies is much cheaper now. Number two is that the current decline of emissions this year is very steep. And third, many governments around the world are taking environmental climate challenges much more seriously than ten years ago. So, we are hopeful that governments will this time pass the test.”
Birol added that the US secretary of energy and the Chinese energy minister have confirmed their attendance at the 9 July summit.
The sustainable recovery plan is based on detailed assessments of more than 30 specific energy policy measures in three broad categories: electricity, including new renewable generation, the expansion and strengthening of electricity grids and electric vehicles and charging infrastructure; energy efficiency measures in buildings, industry and vehicles; and an ‘other’ category that groups, among other things, new technologies such as batteries, hydrogen, carbon capture, utilisation and storage (CCUS) and small modular nuclear reactors.
Cozzi is bullish about the “incredible role” of natural gas and specifically LNG in coal-to-gas switching and its impact on reducing GHG emissions—but does not see a need for dedicated government intervention in this sector because of “market conditions”.
The role of oil is another matter entirely, with Birol cautioning that the oil industry will “surely be affected by clean energy transitions” and that it is “high time for oil-producing countries to embark on diversification”.