It’s not enough to add more renewable energy; we must begin pushing fossil fuels out.
We’ve come a long way with renewables. But we’ve got a long way to go in dismantling the fossil fuel industry they must ultimately replace to stop global warming.
That’s the combined message of two critical reports released this week. The first is the International Energy Agency’s annual assessment of renewable energy progress, including a global forecast for the next five years. And what a forecast: the largest ratcheting up of the agency’s projections ever. Renewables are booming, driven by the sea change in politics in the United States and the energy re-think caused by Russia’s invasion of Ukraine.
Carbon Tracker’s ominous new oil production plans
Meanwhile, on a much less jubilant note, climate watchdog group Carbon Tracker released a report on global oil and gas companies’ new production investment plans over the next decade. They’re extensive and more than enough to push the world beyond the optimistic limit of 1.5 degrees Celsius of warming and the 2 degrees Celsius ceiling to avoid the worst impacts of climate change.
Last year, the IEA said new investments in conventional oil and gas projects would need to stop to achieve the goal of net zero emissions by 2050. Carbon Tracker notes that this means oil and gas production would fall by 22% by 2030 and 44% by 2035, compared to 2019 levels. Those declines would require nearly every major oil and gas company to cut production. Yet, only one company envisions production cuts. The rest have investment plans wildly out of line with progress towards a net-zero world, the group concludes.
The energy transition is: somehow, both progressing rapidly and stuck simultaneously.
The overall good-news, bad-news scenario indicates where the energy transition is: somehow, both progressing rapidly and stuck simultaneously. It turns out it won’t be enough to add more renewable energy. We must also begin pushing fossil fuels out of the system. We don’t have the luxury of building the new energy system before switching over from the old one, as one senior petrostate official suggested at the recent COP27 climate summit.
Unimaginable progress in renewable fuels
This dose of reality isn’t to diminish the good news — progress on renewables that was almost unimaginable even just a few years ago. The IEA projects renewable energy will be the world’s largest source of electricity a mere three years from now, the result of an 85% acceleration in deployment over the next five years. Virtually all new electrical power capacity will be renewable, it projects. Solar power alone will surpass coal, the largest source of electricity, in terms of power generating capacity. Wind power capacity will double as off-shore installations proliferate. And the agency notes that a further 25% expansion is within reach during that period if countries continue to refocus policies and regulations to facilitate renewables while streamlining regulatory red tape and opening new financing channels.
China and India, have taken on some of the same lessons about energy security and plan massive expansions of renewable energy, even as they plan to continue using plenty of coal.
What’s spurring renewables growth? Three big factors. First, the U.S. has finally fully entered the game with the Biden administration’s massive climate and infrastructure legislation this year. Second, the war in Ukraine has driven home to the world the importance of the sort of energy security renewable energy delivers in spades. Europe will double its renewable electricity generation in the next five years, the IEA projects, a pace nearly one-third faster than the agency project just last year. Germany is projected to pick up the previously expected pace by another half. Spain by 60%. Third, the world’s two most populous countries, China and India, have taken on some of the same lessons about energy security and plan massive expansions of renewable energy, even as they plan to continue using plenty of coal. China alone is forecast to account for fully half of the global renewable growth.
Boom times, not doomsday, for oil and gas
Yet, when paired with the Carbon Tracker report, it’s clear the global oil and gas companies are not interpreting this rapidly changing energy landscape as a doomsday scenario for their industry. Indeed, the almost insatiable energy demand growth projected for China, India, and much of the developing world, coupled with U.S. ambitions to expand fossil fuel exports, underpin vast planned investments in new oil and gas production.
The report tallied up $136 billion of investments in planned new oil and gas projects that 20 major fossil fuel companies initiated in 2021. They approved another $30 billion in the first quarter of this year. All this investment runs contrary to any scenario that might keep global warming to 1.5 degrees, and fully 62% of it is inconsistent with keeping warming below even 2 degrees, Carbon Tracker said.
The hard truth is that the world has to do more than grow renewables quickly to curb global warming in time, though that’s required. The good news is that we’re beginning to do what’s needed, though even the IAE’s projected gains will only be a start in the coming years. Beyond that, the production of fossil fuels must begin to fall, even as we adopt many new technologies to decarbonize fossil fuels for use during the transition to 2050 (and very likely beyond).
This project of demand destruction is starting to get off the ground. Deals struck with South Africa, Indonesia, and, likely soon, Vietnam to substitute renewable energy for coal in the coming years is a hopeful sign for phasing out coal.
The oil and gas industry, however, has yet to get the memo.