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3 Years and $3 Trillion Could Shift the Climate Change Narrative

3 Years and $3 Trillion Could Shift the Climate Change Narrative

A new report from the International Energy Agency details what it will take to lock in this year’s drop in emissions.

Greenpeace Say South Africa No. 2 Sulfur Dioxide Hotspot
Photographer: Waldo Swiegers/Bloomberg

Plummeting carbon emissions and big government spending—two of the defining narratives of 2020 so far—could create an unprecedented opportunity for the world to meet the goals enshrined in the 2015 Paris climate change agreement, according to the International Energy Agency. With $1 trillion of investment over each of the next three years, global energy-related CO₂ emissions could end up falling in 2023 by 4.5 billion metric tons, or 14% of last year’s total.

So says a special edition of the IEA’s annual World Energy Outlook, released today, which looks at more than 30 individual policies with the potential to both lift the world out of its Covid-19 economic slump and generate climate-safe growth. Together they would create 9 million jobs across a variety of energy-intensive sectors and push global GDP 3.5% higher by 2023 than it would otherwise have been, according to a joint IEA-International Monetary Fund analysis.

“The plan would make 2019 the definitive peak in global emissions, putting them on a path towards achieving long-term climate goals,” the report states.

The new analysis focuses on potential job gains and targeted policies in six sectors: electricity, transport, buildings, industry, fuels, and technology. Retrofitting buildings to make them more efficient users of energy would create the most jobs, followed by the solar and power-grid work. Many of the recommended policies would accelerate changes already enabled by technology and welcomed by markets, such as the rise of electric vehicles, batteries and renewable power, industrial energy efficiency and recycling, and cutting oil-and-gas methane emissions. The policy catalog also encourages urgent development of expensive or new technologies that have yet to reach market scale, including carbon-capture and storage, modular nuclear reactors, and high-speed rail networks.

Read More: 26 Ways to Launch a Clean Energy Future Out of the Pandemic Recovery

The majority of private investment would flow into the industrial and buildings sectors, guided by public policy incentives or mandates. The economic impacts from Covid-19 have hit energy and related industries particularly hard. About 8% of their combined workforce, or 3.2 million people, have been or are at risk of being put out of work this year. Vehicle manufacturing faces the biggest hurdles coming out of the pandemic, with 2 million jobs potentially at risk, followed by the oil-and-gas sector, with more than 1.2 million jobs on the line. Global energy investment is projected to be down 20% for the year, and renewable power generation may be the only energy-related industry to grow this year.

The report also mentions energy-rich developing nations such as Nigeria and Iraq, whose national balance sheets are already under siege and may see oil-and-gas income drop 80% this year.

“Investors want Covid-19 economic recovery plans that deliver a cleaner and greener future. The IEA has shown this is not only desirable, but economically astute and essential in addressing the climate crisis,” says Stephanie Pfeifer, CEO of the Institutional Investor Group on Climate Change. “It’s vital governments pursue a sustainable recovery. The IEA’s grand coalition provides an important opportunity to ensure this happens and investors are fully committed to playing their part in this process.”

Not everyone was full of praise, however. “The IEA assumes very high levels of public and private spending in developing countries,” says Brian O’Callaghan, a climate researcher at the University of Oxford. “Their numbers are completely unrealistic without significant external support.”

Lockdown Slowdown

Daily carbon emissions fell drastically in response to Covid-19 restrictions

Source: Le Quere et al / Nature Climate Change

While global CO₂ emissions from energy plateaued in the mid-2010s, they began to grow again in 2018 and 2019. Even the slowdown wasn’t enough to bring the world in line with international climate goals. In September, the UN Environment Programme suggested that climate pollution must fall by 7.6% each year through 2030 if the world is to maintain a chance of limiting global warming to 1.5° C.

The economic pain inflicted this year by Covid-19 may cause an emissions drop of as much as 8%. That itself won’t affect climate change in the long run. To reduce emissions permanently, the world must accelerate the transformation of energy-related industries.

IEA’s Executive Director Fatih Birol points to the 2008 financial crisis as an example of what happens if emissions reductions due to economic pain aren’t converted into systemic change. CO₂ emissions fell 400 million metric tons in 2009 then leaped by 1.7 billion metric tons in 2010. The climate can’t afford to repeat, much less exceed that, he says.

“This was the highest increase in the history of global emissions,” Birol says. “Let’s first avoid the rebound.”

The report further positions the IEA, founded by rich nations in 1974 in the wake of the first oil shock, as a bridge between debates about climate change and the future of energy.

“One thing is clear for me: The problem is not the energy,” Birol says. “The problem is the emissions. We need energy—energy is a good thing. But we have to reduce emissions.”

 

Source:  Bloomberg

By: 

LINK:  https://www.bloomberg.com/news/articles/2020-06-18/3-years-and-3-trillion-could-shift-the-climate-change-narrative

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IEA article:

LINK: https://www.iea.org/reports/sustainable-recovery/a-sustainable-recovery-plan-for-the-energy-sector#abstract

A sustainable recovery plan for the energy sector

Summary
  • We have designed a global sustainable recovery plan for the energy sector which has three goals: to maintain and create jobs, boost economic growth, and improve energy sustainability and resilience. This plan, which is specific, detailed and time-limited, was developed using the quantitative assessments of potential energy sector measures in Chapter 2. It takes account of the circumstances of individual countries, as well as existing energy project pipelines and current market conditions.
  • We estimate that the overall spending need for the plan is around $1 trillion per year over the next three years: this represents about 0.7% of global GDP today, and includes both public spending and private finance that would be mobilised by public policies. The public spending required would be equivalent to less than 10% of fiscal expenditure in recovery plans announced to date; after the 2008-09 financial crisis, green measures accounted for around 16% of total stimulus measures.
  • Our modelling indicates that this plan would create nearly 9 million new energy-related jobs in construction and manufacturing over the next three years: this compares with a figure of 6 million jobs at risk from the Covid-19 crisis in energy supply, efficiency, and vehicles. There would also be more than 0.5 million permanent jobs associated with operating and maintaining the assets constructed by the sustainable recovery plan.
  • Analysis done jointly with the International Monetary Fund indicates that this plan would also increase global GDP by 1.1% in each of the next three years, and would lead to global GDP being 3.5% higher in 2023 that it would have been without a spending stimulus.
  • A wide range of policies would be required to support the deployment of this plan with the aim of delivering shovel-ready clean energy projects that boost resilience; developing a strong pipeline of new projects; tailoring support for distressed industries; mobilising large levels of private finance; and strengthening international co-operation.
  • Energy systems would become more sustainable as a result of the plan. Globally, annual energy-related CO2 emissions would be nearly 3.5 Gt lower than they would have been otherwise, and methane emissions would be cut by 0.8 Gt CO2-eq. Air pollutant emissions would be around 5% lower. In addition, around 420 million people would gain access to clean cooking solutions in low-income countries, and nearly 270 million people would gain access to electricity.
  • Energy systems would also become more resilient as a result of the plan. Investment in better electricity grids and improved efficiency would improve electricity security by lessening the risks of outages, boosting flexibility, reducing losses and helping to integrate larger shares of variable renewables. Energy consumer bills would also be lower across all regions, freeing resources for spending in other sectors.
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