IEA outlines climate challenge in cheap fossil fuel world

Clean energy transition must be at the heart of a Paris climate deal, says agency chief Fatih Birol, to hold warming to 2C

Low oil prices choke investment, increasing reliance on Middle East suppliers (Flickr/Paul Lowry)

Low oil prices choke investment, increasing reliance on Middle East suppliers (Flickr/Paul Lowry)

By Megan Darby

Governments should ban inefficient coal power plants, International Energy Agency chief Fatih Birol said on Tuesday.

They also need to boost support for renewables, regulate to improve energy efficiency and crack down on methane leaks from oil and gas production.

Those were Birol’s top four recommendations to close the gap between an international goal to limit global warming to 2C and inadequate voluntary national efforts.

“The IEA is ready to help the [UN climate body] and governments to transform hopefully an agreement from Paris into action to accelerate the transition to clean energy,” he said. It has also volunteered to monitor the progress of efforts to curb greenhouse gas emissions.

More than 150 countries have submitted climate plans towards a global deal to be finalised in Paris next month.

These collectively hold warming to 2.7C, the IEA found, independently confirming calculations by analysts at Climate Action Tracker.

As temperatures breach the 2C threshold, scientists warn the risk of severe and irreversible impacts increases.

“The difference between 2C and 2.7C is not something you just take your jacket off and adapt to,” said Birol. “It has major implications.”

He was launching the IEA’s annual World Energy Outlook in London, which foresees fierce competition between cheap fossil fuels and developing low carbon technology to 2040.

Over the next 25 years, more than half of power generation capacity installed will come from renewable sources, it predicts. Coal’s share will shrink from 41% to 30% of the mix.

Governments are also set to roll out regulations to make cars, homes and appliances more efficient. In 2014, such rules covered 27% of final energy consumption worldwide.

“We see that energy efficiency and renewable energies are the two most important tools for the countries to address climate change problems and reach their targets,” said Birol.

Those trends must be accelerated to avoid catastrophic climate change, the report outlines, as energy accounts for two thirds of emissions.

Low fossil fuel prices threaten to hold them back, however.

The IEA expects oil prices to recover from their present doldrums to around US$80 a barrel in 2020. With these trends being notoriously difficult to predict, the agency also modelled a $50 scenario.

That could stimulate higher oil demand – as seen with a recent surge in SUV sales – and choke off some $800 billion of investment in energy efficiency, it found.

It also comes with geopolitical risks, increasing dependence on the volatile Middle East for its cheap oil. Producers in North America, Brazil and Russia would cut investment in more expensive sources.

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