The International Energy Agency (IEA) has unveiled its latest World Energy Outlook (WEO) for 2023, shedding light on sweeping transformations in the global energy sector anticipated by the end of this decade. Based on existing policy frameworks, the report presents a vision of an energy landscape that could see clean technologies such as solar, wind, electric cars and heat pumps taking centre stage, bringing about substantial shifts in the way the world powers industries, vehicles, and households.
The newly released World Energy Outlook describes a paradigm shift, with a world in 2030 where clean energy technologies – including solar, wind, electric vehicles, and heat pumps – play a far more prominent role than they do today. Key findings within the IEA report suggest the number of electric cars on the road will surge to nearly ten times current levels, solar photovoltaic (PV) generation eclipsing the entire U.S. power grid’s output, and renewables approaching a 50% share of the global electricity mix, a significant increase from today’s approximately 30%. Additionally, electric heating systems, led by heat pumps, are set to outsell traditional fossil fuel boilers on a global scale, and investments in offshore wind projects are predicted to outstrip those in new coal and gas-fired power plants by a factor of three.
All these transformations are contingent upon existing government policies around the world. If nations adhere to their energy and climate commitments and enact them on schedule, the transition to clean energy will proceed at an even faster pace. Nevertheless, to maintain the aim of limiting global warming to 1.5°C, even more stringent measures will be essential.
The surging adoption of clean energy tech, coupled with global economic changes, has significant repercussions for fossil fuels. For the first time under existing policies, peaks in worldwide coal, oil, and natural gas demand are anticipated this decade. Fossil fuels’ share in the global energy mix, historically around 80%, is projected to drop to 73% by 2030. Moreover, energy-related CO2 emissions are set to peak by 2025, marking a pivotal shift in the energy landscape.
This global transition to clean energy is unstoppable and essential, as affirmed by IEA Executive Director Fatih Birol. He commented, “The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us. Governments, companies and investors need to get behind clean energy transitions rather than hindering them. There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone. Taking into account the ongoing strains and volatility in traditional energy markets today claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”
However, the IEA report suggests that the demand for fossil fuels may remain too high to meet the Paris Agreement’s goal of limiting global temperature increases to 1.5°C. This not only endangers the climate but also undermines energy system security, originally designed for a milder climate with fewer extreme weather events. While redirecting emissions to align with the 1.5°C target is feasible, it remains a formidable challenge. Failure to act could result in high global emissions, pushing average global temperatures up by approximately 2.4°C this century, well beyond the Paris Agreement’s critical threshold.
To combat these challenges and set the world on the right course by 2030, the WEO-2023 introduces a five-pronged strategy. This strategy, which could also serve as a foundation for the forthcoming COP28 climate conference, includes tripling global renewable capacity, doubling the rate of energy efficiency improvements, reducing methane emissions from fossil fuel operations by 75%, implementing innovative, large-scale financing mechanisms to triple clean energy investments in emerging and developing economies, and introducing measures to ensure a gradual decrease in fossil fuel usage, including halting approvals for unabated coal-fired power plants.
“Every country needs to find its own pathway, but international cooperation is crucial for accelerating clean energy transitions,” Dr Birol said. “In particular, the speed at which emissions decline will hinge in large part on our ability to finance sustainable solutions to meet rising energy demand from the world’s fast-growing economies. This all points to the vital importance of redoubling collaboration and cooperation, not retreating from them.”
In a world where escalating geopolitical tensions in the Middle East have renewed concerns about energy security and countries are still grappling with the aftermath of last year’s global energy crisis, the WEO-2023 explores a wide range of evolving energy security issues. A particularly notable aspect is the expected easing of pressures in natural gas markets, which have been dominated by concerns about security and price fluctuations. An influx of new liquefied natural gas (LNG) projects, set to come online from 2025, is projected to increase global LNG capacity by approximately 45% by 2030, thereby alleviating supply concerns. However, the surge in capacity also brings the risk of a supply glut, given the slowdown in global gas demand growth, compared to the explosive expansion seen in the 2010s.
IEA’s WEO report highlights the importance of China, a significant influencer of global energy trends, as its economy undergoes substantial changes. The country’s total energy demand is expected to peak in the mid-2020s, with dynamic growth in clean energy causing a decline in fossil fuel demand and emissions.
Furthermore, the IEA report delves into the potential for accelerated growth in solar photovoltaic (PV) capacity. While renewables are anticipated to provide 80% of new power generation capacity through 2030 based on current policies, solar PV is projected to account for over half of this expansion. However, the WEO report suggests this is just a fraction of solar’s potential. By reaching a deployment of 800 GW of new solar PV capacity by 2030, the world could reduce coal-fired power generation by an additional 20% in China. This achievement would also lead to a 25% decrease in electricity generation from coal and natural gas across Latin America, Africa, Southeast Asia, and the Middle East.