IEA World Energy Outlook 2021

The World Energy Outlook (WEO) is the IEA's annual flagship report on trends in energy supply and demand and their implications for environmental protection, energy security and economic development.  The energy market analysis has been published since 1977, with this year's report aiming to be "an essential guidebook for COP26 and beyond".

The 2021 WEO has found that net zero commitments already pledged by over 50 countries would reduce the output of greenhouse gas emissions by 40% to 2050 if implemented in full and on time. It notes however that more action needs to be taken by governments to fully deliver on their pledges. The measures actually implemented and stated policies of governments, would in the IEA scenarios, result in a gradual decline in the power sector's emissions, but this would be offset by emissions from industries such as cement and steel and from heavy-duty transport.

The announced pledges would result in a shortfall of effort needed by 2030 to maintain a 1.5 degree path, the ultimate target of the Paris Agreement, as a result from "sharp divergences" in how quickly countries are pledging to effect the transition to net zero.  The WEO identifies four key measures that could be used to close this gap:

• A massive clean electrification programme, including doubling of solar photovoltaic and wind deployment above existing pledges, a major expansion of other low emission electrification, a huge build-out of electricity infrastructure, a rapid phase-out of coal and push for use for electricity for transport and heating. 
• A relentless focus on energy efficiency, and measures to counterbalance energy demand through behavioural change and materials efficiency.
• A drive to cut methane emissions from fossil fuel operations.
• More investment in clean energy innovation.

The report notes that more than 40% of the actions required would result in greater cost savings overall for consumers than what would result under existing pledges.

The WEO estimates that the cost of clean energy projects and infrastructure needed for a 1.5 degree path would be nearly USD4 trillion per year for the rest of the decade, primarily from the private sector.  Achieving the necessary flows will require policy and regulatory reform, as well as a catalystic role by public financial institutions.  It notes this will be crucial in "areas where private players do not yet see the right balance of risk and reward".

This year's report is a call to "unambiguous" action to the leaders at COP26, and focuses on the critical role of governments in directing action.

Author: Kelly Sporn