IEA: roadmap to net zero emissions in 2050 – no new oil and gas fields

The International Energy Agency published on 18 May 2021 the report "Net Zero by 2050: A Roadmap for the Global Energy Sector", in which it described a path to net zero CO₂ emissions from the energy sector in 2050. The report is the first scenario of this type in the IEA's history and has great political significance, because it comes from an institution traditionally associated with the fossil fuel sector.

Key conclusions

According to the scenario:

• no new oil and gas fields should be approved beyond those already approved, nor new coal-fired power plants without CO₂ capture;
• by 2030, annual additions of photovoltaic capacity should reach about 630 GW, and wind about 390 GW, i.e. several times more than the records of 2020;
• sales of new cars with internal combustion engines should end by 2035;
• electrification and energy efficiency provide the largest share of reductions by 2030;
• the scale of CO₂ capture, hydrogen and sustainable bioenergy grows faster after 2030.

The IEA stresses that the path is narrow and requires immediate action by governments.

Biogas, biomethane and bioenergy

In the scenario, sustainable gaseous fuels – including biogas and biomethane as well as hydrogen – play a complementary role in sectors that are hard to electrify: industry, heavy transport and heating in some regions. The IEA points out that feedstock resources for bioenergy are limited and must be used where they bring the greatest benefits, without pressure on agricultural and forest land. This is consistent with the findings of the IEA biogas report of March 2020, which pointed to waste and residues as the main sources of feedstock.

Reactions and significance

The report sparked a discussion on the pace of moving away from fossil fuels. For countries dependent on gas and coal, including Poland, it meant pressure to accelerate the transition. For the biogas industry it is an argument for building domestic sources of renewable gas, but also a reminder that the biomethane market will operate in a world of declining natural gas consumption.

What next

The report was a contribution to preparations for the COP26 climate conference in Glasgow. Governments could use it to justify updating national emission reduction plans, and investors – to assess the risk of long-term investment in fossil fuel infrastructure.

What it means for the gas market

The decline in natural gas consumption in the IEA scenario is significant, which has consequences for network operators and suppliers. At the same time, the decarbonisation of gas – through biomethane, hydrogen and CO₂ capture – makes it possible to limit the costs of the transition in those applications where electrification is expensive or impossible. For biomethane investors, this is a signal that it is worth planning projects with a horizon of a dozen or so years, but taking into account declining demand for fossil gas and the growing role of emission prices.

The report met with criticism from some fossil fuel producing countries, which pointed out that the scenario does not take into account their economic situation. Supporters stressed, in turn, that it is precisely this kind of analysis that is needed to assess the compatibility of investments with the 1.5°C target.