There is a big dif­fer­ence of opin­ion on how quick­ly the world will tran­si­tion away from oil and gas to re­new­ables but what is clear in the lat­est re­port from the In­ter­na­tion­al En­er­gy Agency (IEA) the ride will be bumpy and not enough is be­ing done now to meet the most am­bi­tious tar­gets.

In its World En­er­gy Out­look (WEO) re­leased ear­li­er than nor­mal in an­tic­i­pa­tion of the start of to­day’s COP26 meet­ing, the IEA said liq­uids and gas­es are caught be­tween sce­nar­ios. Oil de­mand, for the first time, goes in­to even­tu­al de­cline in all the sce­nar­ios ex­am­ined in the WEO-2021, al­though the tim­ing and speed of the drop vary wide­ly.

In the Stat­ed Poli­cies Sce­nario (STEPS) of gov­ern­ments post the 2015 Paris agree­ment, the high point in de­mand is reached in the mid-2030s and the de­cline is very grad­ual. In the An­nounced Pledges Sce­nario (APS), a peak soon af­ter 2025 is fol­lowed by a de­cline to­wards 75 mil­lion bar­rels per day (mb/d) by 2050.

The WEO pre­dicts that nat­ur­al gas de­mand in­creas­es in all sce­nar­ios over the next five years, but there are sharp di­ver­gences af­ter this.

“Many fac­tors af­fect to what ex­tent, and for how long, nat­ur­al gas re­tains a place in var­i­ous sec­tors as clean en­er­gy tran­si­tions ac­cel­er­ate. The out­look is far from uni­form across dif­fer­ent coun­tries and re­gions,” the re­port reads.

En­er­gy Min­is­ter Stu­art Young re­cent­ly told the Sen­ate that nat­ur­al gas was go­ing to be around for a long time as the world has seen that there needs to be a more de­lib­er­ate ap­proach in the tran­si­tion to re­new­able en­er­gy.

The IEA warned that there is a loom­ing risk of more tur­bu­lence ahead for en­er­gy mar­kets.

“The world is not in­vest­ing enough to meet its fu­ture en­er­gy needs, and un­cer­tain­ties over poli­cies and de­mand tra­jec­to­ries cre­ate a strong risk of a volatile pe­ri­od ahead for en­er­gy mar­kets. Tran­si­tion-re­lat­ed spend­ing is grad­u­al­ly pick­ing up, but re­mains far short of what is re­quired to meet ris­ing de­mand for en­er­gy ser­vices in a sus­tain­able way. The deficit is vis­i­ble across all sec­tors and re­gions. At the same time, the amount be­ing spent on oil and nat­ur­al gas, dragged down by two price col­laps­es in 2014-15 and in 2020, is geared to­wards a world of stag­nant or even falling de­mand for these fu­els,” the WEO stat­ed.

IEA analy­sis has re­peat­ed­ly high­light­ed that a surge in spend­ing to boost de­ploy­ment of clean en­er­gy tech­nolo­gies and in­fra­struc­ture pro­vides the way out of this im­passe, but this needs to hap­pen quick­ly or glob­al en­er­gy mar­kets will face a tur­bu­lent and volatile pe­ri­od ahead.

Clear sig­nals and di­rec­tion from pol­i­cy mak­ers are es­sen­tial it said, if the road ahead is paved on­ly with good in­ten­tions, then it will be a bumpy ride.

Tran­si­tions it said can of­fer some shel­ter for con­sumers against oil and gas price shocks. En­er­gy tran­si­tions can pro­vide a cush­ion from the shock of com­mod­i­ty price spikes, if con­sumers can get help to man­age the up­front costs of change.

“As elec­tric­i­ty takes up a pro­gres­sive­ly larg­er share of house­hold en­er­gy bills, gov­ern­ments have to en­sure that elec­tric­i­ty mar­kets are re­silient by in­cen­tivis­ing in­vest­ments in flex­i­bil­i­ty, ef­fi­cien­cy and de­mand-side re­sponse.

“Across all sce­nar­ios, the share of vari­able re­new­ables in elec­tric­i­ty gen­er­a­tion ex­pands to reach 40-70% by 2050 (and even high­er in some re­gions), com­pared with an av­er­age of just un­der 10% to­day,” the re­port not­ed.

Ac­cord­ing to the IEA a new en­er­gy econ­o­my is emerg­ing one that is more elec­tri­fied, ef­fi­cient, in­ter­con­nect­ed and clean.

It used the ex­am­ple of 2020, when economies bent un­der the weight of COVID-19 lock­downs, re­new­able sources of en­er­gy such as wind and so­lar PV con­tin­ued to grow rapid­ly, and elec­tric ve­hi­cles set new sales records.

“Its emer­gence is the prod­uct of a vir­tu­ous cir­cle of pol­i­cy ac­tion and tech­nol­o­gy in­no­va­tion, and its mo­men­tum is now sus­tained by low­er costs. In most mar­kets, so­lar PV or wind now rep­re­sents the cheap­est avail­able source of new elec­tric­i­ty gen­er­a­tion. Clean en­er­gy tech­nol­o­gy is be­com­ing a ma­jor new area for in­vest­ment and em­ploy­ment—and a dy­nam­ic are­na for in­ter­na­tion­al col­lab­o­ra­tion and com­pe­ti­tion,” the re­port read.

The IEA said every da­ta point shows the speed of change in en­er­gy can be coun­tered by an­oth­er show­ing the stub­born­ness of the sta­tus quo. It said the rapid but un­even eco­nom­ic re­cov­ery from last year’s COVID-in­duced re­ces­sion is putting ma­jor strains on parts of to­day’s en­er­gy sys­tem, spark­ing sharp price ris­es in nat­ur­al gas, coal and elec­tric­i­ty mar­kets.

For all the ad­vances be­ing made by re­new­ables and elec­tric mo­bil­i­ty, 2021 is see­ing a large re­bound in coal and oil use. Large­ly for this rea­son, it is al­so see­ing the sec­ond-largest an­nu­al in­crease in CO2 emis­sions in his­to­ry.

“Pub­lic spend­ing on sus­tain­able en­er­gy in eco­nom­ic re­cov­ery pack­ages has on­ly mo­bilised around one-third of the in­vest­ment re­quired to jolt the en­er­gy sys­tem on­to a new set of rails, with the largest short­fall in de­vel­op­ing economies that con­tin­ue to face a press­ing pub­lic health cri­sis. Progress to­wards uni­ver­sal en­er­gy ac­cess has stalled, es­pe­cial­ly in sub-Sa­ha­ran Africa. The di­rec­tion of trav­el is a long way from align­ment with the IEA’s land­mark Net Ze­ro Emis­sions by 2050 Sce­nario (NZE), pub­lished in May 2021, which charts a nar­row but achiev­able roadmap to a 1.5 °C sta­bil­i­sa­tion in ris­ing glob­al tem­per­a­tures and the achieve­ment of oth­er en­er­gy-re­lat­ed sus­tain­able de­vel­op­ment goals.”

The re­port not­ed that the pres­sures on the en­er­gy sys­tem are not go­ing to re­lent in the com­ing decades as the en­er­gy sec­tor is re­spon­si­ble for al­most three-quar­ters of the emis­sions that have al­ready pushed glob­al av­er­age tem­per­a­tures 1.1 °C high­er since the pre-in­dus­tri­al age, with vis­i­ble im­pacts on weath­er and cli­mate ex­tremes. The en­er­gy sec­tor has to be at the heart of the so­lu­tion to cli­mate change it added.

At the same time, it not­ed that mod­ern en­er­gy is in­sep­a­ra­ble from the liveli­hoods and as­pi­ra­tions of a glob­al pop­u­la­tion that is set to grow by some 2 bil­lion peo­ple to 2050, with ris­ing in­comes push­ing up de­mand for en­er­gy ser­vices, and many de­vel­op­ing economies nav­i­gat­ing what has his­tor­i­cal­ly been an en­er­gy- and emis­sions-in­ten­sive pe­ri­od of ur­ban­i­sa­tion and in­dus­tri­al­i­sa­tion. To­day’s en­er­gy sys­tem is not ca­pa­ble of meet­ing these chal­lenges; a low emis­sions rev­o­lu­tion is long over­due.

It added that in the run-up to COP26, many coun­tries have put new com­mit­ments on the ta­ble, de­tail­ing their con­tri­bu­tions to the glob­al ef­fort to reach cli­mate goals; more than 50 coun­tries, as well as the en­tire Eu­ro­pean Union, have pledged to meet net ze­ro emis­sions tar­gets. If these are im­ple­ment­ed in time and in full, as mod­elled in de­tail in its new An­nounced Pledges Sce­nario (APS), they start to bend the glob­al emis­sions curve down, says the IEA re­port.

“The APS sees a dou­bling of clean en­er­gy in­vest­ment and fi­nanc­ing over the next decade, but this ac­cel­er­a­tion is not suf­fi­cient to over­come the in­er­tia of to­day’s en­er­gy sys­tem. In par­tic­u­lar, over the cru­cial pe­ri­od to 2030, the ac­tions in this sce­nario fall well short of the emis­sions re­duc­tions that would be re­quired to keep the door open to a Net Ze­ro Emis­sions by 2050 tra­jec­to­ry. One of the key rea­sons for this short­fall is that to­day’s cli­mate com­mit­ments, as re­flect­ed in the APS, re­veal sharp di­ver­gences be­tween coun­tries in the pledged speeds of their en­er­gy tran­si­tions. Along­side its achieve­ments, this sce­nario al­so con­tains the seeds of new di­vi­sions and ten­sions, in the ar­eas of trade in en­er­gy-in­ten­sive goods, for ex­am­ple, or in in­ter­na­tion­al in­vest­ment and fi­nance.” The re­port read.

It said look­ing sec­tor-by-sec­tor at what mea­sures gov­ern­ments have ac­tu­al­ly put in place, as well as spe­cif­ic pol­i­cy ini­tia­tives that are un­der de­vel­op­ment, re­veals a dif­fer­ent pic­ture, which is de­pict­ed in its Stat­ed Poli­cies Sce­nario (STEPS). This sce­nario sees an ac­cel­er­at­ing pace of change in the pow­er sec­tor, suf­fi­cient to re­alise a grad­ual de­cline in the sec­tor’s emis­sions even as glob­al elec­tric­i­ty de­mand near­ly dou­bles to 2050. How­ev­er, this is off­set by con­tin­ued growth in emis­sions from in­dus­try, such as the pro­duc­tion of ce­ment and steel, and heavy-du­ty trans­port, such as freight trucks.

It said a suc­cess­ful, or­der­ly and broad-based en­er­gy tran­si­tions de­pend on find­ing ways to lessen the ten­sions in all coun­tries. the IEA not­ed the need to do more by em­bark­ing on at least four key mea­sures.

The four mea­sures are:

a) A mas­sive ad­di­tion­al push for clean elec­tri­fi­ca­tion that re­quires a dou­bling of so­lar PV

and wind de­ploy­ment; a ma­jor ex­pan­sion of oth­er low-emis­sions gen­er­a­tion, in­clud­ing the use of nu­clear pow­er where ac­cept­able; a huge build-out of elec­tric­i­ty in­fra­struc­ture and all forms of sys­tem flex­i­bil­i­ty, in­clud­ing from hy­dropow­er; a rapid phase out of coal; and a dri­ve to ex­pand elec­tric­i­ty use for trans­port and heat­ing. Ac­cel­er­at­ing the de­car­bon­i­sa­tion of the elec­tric­i­ty mix is the sin­gle most im­por­tant lever.With im­proved pow­er mar­ket de­signs and oth­er en­abling con­di­tions, the low costs of wind and so­lar PV mean that more than half of the ad­di­tion­al emis­sions re­duc­tions could be gained at no cost to elec­tric­i­ty con­sumers.

b) A re­lent­less fo­cus on en­er­gy ef­fi­cien­cy, to­geth­er with mea­sures to tem­per en­er­gy ser­vice de­mand through ma­te­ri­als ef­fi­cien­cy and be­hav­iour­al change.

c) A broad dri­ve to cut methane emis­sions from fos­sil fu­el op­er­a­tions. Rapid re­duc­tions in methane emis­sions are a key tool to lim­it near-term glob­al warm­ing, and the most cost-ef­fec­tive abate­ment op­por­tu­ni­ties are in the en­er­gy sec­tor, par­tic­u­lar­ly in oil and gas op­er­a­tions. Methane abate­ment is not ad­dressed quick­ly or ef­fec­tive­ly enough by sim­ply re­duc­ing fos­sil fu­el use; con­cert­ed ef­forts from gov­ern­ments and in­dus­try are vi­tal to se­cure the emis­sions cuts .

d) A big boost to clean en­er­gy in­no­va­tion. This is an­oth­er cru­cial gap to be filled in the 2020s, even though most of the im­pacts on emis­sions are not felt un­til lat­er. All the tech­nolo­gies need­ed to achieve deep emis­sions cuts to 2030 are avail­able. But al­most half of the emis­sions re­duc­tions achieved in the NZE in 2050 come from tech­nolo­gies that to­day are at the demon­stra­tion or pro­to­type stage. These are par­tic­u­lar­ly im­por­tant to ad­dress emis­sions from iron and steel, ce­ment and oth­er en­er­gy-in­ten­sive in­dus­tri­al sec­tors – and al­so from long-dis­tance trans­port.

Ac­cord­ing to the IEA get­ting the world on track for 1.5 °C re­quires a surge in an­nu­al in­vest­ment in clean en­er­gy projects and in­fra­struc­ture to near­ly USD 4 tril­lion by 2030.

It warned the costs of in­ac­tion on cli­mate are im­mense, and the en­er­gy sec­tor is at risk.

Ex­treme weath­er events over the past year have high­light­ed the risks of unchecked cli­mate change, and the en­er­gy sec­tor will feel the im­pacts. To­day, the world’s en­er­gy in­fra­struc­ture is al­ready fac­ing in­creas­ing phys­i­cal risks re­lat­ed to cli­mate change, which em­pha­sizes the ur­gent need to en­hance the re­silience of en­er­gy sys­tems. We es­ti­mate that around one quar­ter of glob­al elec­tric­i­ty net­works cur­rent­ly face a high risk of de­struc­tive cy­clone winds, while over 10% of dis­patch­able gen­er­a­tion fleets and coastal re­finer­ies are prone to se­vere coastal flood­ing, and one-third of fresh­wa­ter-cooled ther­mal pow­er plants are lo­cat­ed in

ar­eas of high wa­ter stress.