Despite growing momentum, a huge acceleration is required to transform energy and industrial systems in line with a 1.5°C pathway. As the International Energy Agency has confirmed, keeping to this goal means no new fossil-fuel projects. This transition will create many jobs, but more focus is needed on ensuring a just transition.

Radical changes to energy systems are required to limit global temperature rise to 1.5°C

Potential emissions from developed fossil-fuel reserves exceed carbon budgets in order to maintain a sustainable climate. Recent announcements have only closed the gap to 1.5°C by 11-14%.

Figure 77: Emissions from developed fossil-fuel reserves, compared with carbon budgets within range of Paris goals
Emissions1.5°C carbon budget2°C carbon budget300 GtCO₂400 GtCO₂500 GtCO₂600 GtCO₂700 GtCO₂800 GtCO₂900 GtCO₂1,000 GtCO₂1,100 GtCO₂1,200 GtCO₂
Emissions
Coal
Gas
Oil
Land use change
Cement
Total

“Developed reserves“ refers to those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (for example, when compared to the cost of drilling a well) to put the reserves on production.

Increase from pre-industrial levels
We are here1.2ºC
Pledges and targets2.4ºC
Current policies2.9ºC
Optimistic targets2ºC

Even if global coal use were phased out overnight, developed oil and gas reserves would still push the world beyond 1.5°C

Oil Change International/Reclaim Finance, “NGFS scenarios: Guiding finance towards climate ambition of climate failure?“

Net-zero targets continue to proliferate

Net zero targets are being set at all kinds of scales and types of organisations. There are now hundreds of cities with such targets.

RegionNumber of cities
Europe291
LATAM209
East Asia/Pacific164
North America121
E Europe/C Asia15
SS Africa13
MENA8
South Asia5

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Emissions have quickly rebounded towards and beyond pre-COVID-19 levels

The initial lockdowns in March/April 2020 put a huge dent in emissions, but they have quickly come back to near pre-pandemic levels as economies have reopened. In the first quarter of 2021 China’s CO2 emissions grew at their fastest pace in more than a decade, increasing by 15% year-on-year, new analysis for Carbon Brief shows.

Figure 81: CO₂ emissions from fossil fuel and industrial purposes in China, 2014-21
Emissions (million metric tonnes)
2014201520162017201820192020H12020H22021Q102,0004,0006,0008,00010,00012,00014,000

Half-year and quarterly figures are expressed at an annual rate.

Change
JanFebMarAprMayJunJulAugSepOctNovDec-20%-18%-16%-14%-12%-10%-8%-6%-4%-2%0
Power
Industry
Surface transport
Public
Residential
Aviation

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Coal consumption is plateauing globally but needs to fall rapidly to meet climate goals

Though some countries continue to invest in coal, global demand is now clearly at a tipping point, and is in decline.

Amount
19701980199020002010020EJ40EJ60EJ80EJ100EJ120EJ140EJ160EJ
Non-OECD
OECD

EJ = exajoule.

Renewables hit a tipping point in 2020

Renewables were the only source of electricity generation to grow last year, despite the pandemic. The International Energy Agency raised its forecasts for wind and solar capacity growth by 25% in a single year. Estimates also suggest that renewables investment will surpass upstream oil and gas investment in 2021.

GW
200020102020050100150200250300350
Actual
May 2020 accelerated case
Nov 2020 main case
May 2020
May 2021
2010201120122013201420152016201720182019202020210$100bn$200bn$300bn$400bn$500bn$600bn$700bn$800bn$900bn$1,000bn$1,100bn$1,200bn$1,300bn02%4%6%8%10%12%14%16%18%20%22%24%26%
Upstream O&G (LHS)
Renewables (LHS)
Renewables share of total capex (RHS)

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Green hydrogen is key to decarbonising many harder-to-abate sectors, including aviation, steel and shipping

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We also need to see a step change in energy efficiency

US GDP is on a long-term rising trend even as primary energy consumption declines, a sign of gradual improvements in energy efficiency.

Real disposable income per person
Energy use per person (kg/oil E)
1960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820190$5,000$10,000$15,000$20,000$25,000$30,000$35,000$40,000$45,000$50,00001,0002,0003,0004,0005,0006,0007,0008,0009,00010,000
Disposable income per person
Energy use per person

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Richer people account for most emissions today and in the past

The distribution of energy consumption remains along income lines, though the historical responsibility for emissions is contested terrain.

According to the Global Carbon Project, for fossil fuel-related CO2 emissions between 1850 and 2019, the US is responsible for 25% and China for 13%. But if you shorten the timeframe to 1990-2019, then China is responsible for 21% and the US for 19%. China’s annual emissions are now larger than all OECD countries combined.

Metric tonnes of CO2
196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019024681012141618202224
China
European Union
United States
Heavily indebted poor countries

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The cost of renewables continues to fall

The cost reductions in photovoltaic technology and wind are astonishing.

Total installed cost
20102011201220132014201520162017201820192020500USD/kw1,000USD/kw1,500USD/kw2,000USD/kw2,500USD/kw3,000USD/kw3,500USD/kw4,000USD/kw4,500USD/kw5,000USD/kw5,500USD/kw6,000USD/kw
Solar PV
Onshore wind
Offshore wind
Hydro

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Renewables are meeting an ever-growing share of energy consumption

Renewables are still small, but account for a fast-rising share of global energy consumption.

1800181018201830184018501860187018801890190019101920193019401950196019701980199020002010010%20%30%40%50%60%70%80%90%100%
Other renewables
Biofuels
Solar
Coal
Gas
Oil
Wind
Nuclear
Hydropower
Biomass

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The pace must accelerate ~5x over the next decade to meet net-zero goals

Though daunting, this rate of change has already been seen in some markets. The rate of deployment in UK offshore wind has increased from an average of 250MW/yr across 2005-2010, to 1200MW/yr over the last five years.

2001-052006-102011-152016-202021-2502GW4GW6GW8GW10GW12GW14GW16GW18GW20GW22GW
GW capacity additions
Cumulative capacity

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UK CO₂ emissions are back to 1880s levels

The UK is now half way to net zero, compared with emissions in 1990, a drop largely achieved via reduced coal consumption.

mtCO2
185018601870188018901900191019201930194019501960197019801990200020102020050100150200250300350400450500550600650700
CO₂ emissions
1880 CO₂ emissions

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Energy transition investments are growing, enabling ever-higher penetration of renewables on the grid

There are, however, question marks over whether developing countries are receiving enough investment for energy transition.

Flow
200420052006200720082009201020112012201320142015201620172018201920200$50bn$100bn$150bn$200bn$250bn$300bn$350bn$400bn$450bn$500bn$550bn

There is no shortage of money worldwide, but it is not finding its way to where it is most needed. Governments need to give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world.

Fatih Birol, IEA Executive Director

The energy-storage market is growing, especially in Europe, though not as fast as it once was
Annual growth rate
201620172018201920202021020%40%60%80%100%120%140%
Figure 95: Research, development and design (RD&D) in energy storage, rich countries, 2000-19
RD&D
200020012002200320042005200620072008200920102011201220132014201520162017201820190$50m$100m$150m$200m$250m$300m$350m$400m$450m$500m$550m
Total
Total excluding the US

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Low-carbon electricity supply has surpassed coal, an important recent tipping point

For the first time ever, low carbon energy (renewables plus nuclear) accounts for a higher share of global electricity supply than coal. In the EU, renewables now contribute more to the electricity mix than all fossil fuels combined.

Figure 96: Share of low-carbon sources and coal in world electricity generation, 1971-2021
Share
1980199020002010202024%26%28%30%32%34%36%38%40%42%
Coal
Low-carbon
%
2010201120122013201420152016201720182019202005101520253035404550
Fossil fuels
Renewables

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China is embracing renewables and will peak coal consumption in about 2025

2020 was a tipping point for wind power in China. China’s renewable-energy generation is expected to soar over the next few decades.

TWh
201520162017201820192020202120222023202420252026202720282029203005001,0001,5002,0002,5003,0003,5004,0004,5005,000
Hydro
Nuclear
Biomass
Wind
Solar

China will strictly control coal-fired power generation projects, and strictly limit the increase in coal consumption over the 14th five-year plan period [2021-2025] and phase it down in the 15th five-year plan period.

President Xi Jinping, Leaders Summit on Climate, 2021

Additional capacity added
200020012002200320042005200620072008200920102011201220132014201520162017201820192020010GW20GW30GW40GW50GW60GW70GW

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Coal continues to fall away rapidly in the US

Industrial coal consumption has fallen by 75% since the 1970s and 50% in the past six years. Coal power stations are being retired in their dozens.

Thousand tons
Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018Q1 2019Q2 2019Q3 2019Q4 2019Q1 2020Q2 2020Q3 2020Q4 2020100,000120,000140,000160,000180,000200,000220,000240,000260,000
Coal is being replaced by renewables and fossil gas

Coal is being slowly squeezed out of the United States’s energy supply.

Share
20102011201220132014201520162017201820192020010%20%30%40%50%60%70%80%90%100%
Renewables (inc hydro)
Natural gas
Nuclear
Coal

Spotlight topics

International pressure on coal phase-out continues to grow

Over the past year, significant progress has been made towards ending overseas coal finance. The UK announced that it would end international support for fossil fuels in December 2020, including export finance, aid funding and trade promotion. It said very few exceptions would be made (and few if any will be made for coal).

In the months since, first South Korea and then Japan and the rest of the G7 countries, plus the EU, agreed to end international support for coal in 2021. This leaves only China as a major financier of coal projects without such a commitment.

Countries are also stepping up their domestic commitments to phase out coal. Globally coal retirements are accelerating, but in 2020 there was still a net-capacity addition.

Recognising that continued global investment in unabated coal power generation is incompatible with keeping 1.5°C within reach, we stress that international investments in unabated coal must stop now and commit to take concrete steps towards an absolute end to new direct government support for unabated international thermal coal power generation by the end of 2021

G7 Climate and Environment: Ministers’ Communiqué, 21 May 2021

200020012002200320042005200620072008200920102011201220132014201520162017201820192020-40,000-20,000020,00040,00060,00080,000100,000120,000-40,000-20,000020,00040,00060,00080,000100,000120,000
Operating
Retired
Net
3745910012345678910
Coal-free today
Phase-out by 2025
Phase-out by 2030
Phase-out after 2030
Phase-out under discussion
No Phase-out discussion
No coal in electricity mix
Some regions remain very coal-reliant

Indonesia and Vietnam remain reliant on coal. That said, there is some cause for optimism. Both countries have recently cancelled a significant amount of coal and, Vietnam in particular, built a huge amount of new solar capacity last year. The Indonesian government will only allow the completion of coal plants that are already under construction or have reached their financial close, Energy and Mineral Resources Ministry director-general Rida Mulyana told a parliamentary hearing in May.

Amount
196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015201620172018201900.5EJ1EJ1.5EJ2EJ2.5EJ3EJ3.5EJ
Demand for hydrogen is soaring

Global demand for pure hydrogen is rising steadily. Hydrogen consumption reached an all-time high in 2020. The most attractive use cases seem to be industrial processes that require temperatures of 1,000°C and higher. The emphasis, however, needs to be on green hydrogen: the current approach to generating hydrogen relies almost entirely on fossil fuels.

1980199020002010202005Mt10Mt15Mt20Mt25Mt30Mt35Mt40Mt
Refining
Ammonia
Other

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Further investments in hydrogen are on the way

After declining during the global financial crisis, hydrogen investments across the rich world are rising again.

Figure 106: Research, development and design (RD&D) in hydrogen, rich world, 2004-19
RD&D
2004200520062007200820092010201120122013201420152016201720182019$160m$180m$200m$220m$240m$260m$280m$300m$320m$340m$360m$380m

Spotlight topics

At a global level, the pandemic has hit energy access

In Africa about 10m-20m extra people lost access to energy in 2020, as incomes declined and poverty rates rose.

People
200020012002200320042005200620072008200920102011201220132014201520162017201820192020500m510m520m530m540m550m560m570m580m590m600m610m

2020 is an estimated figure

Spotlight topics

Billions of people have no access to cooling

In addition to the impact on health and quality of life, this is a drag on productivity. People in this position are disproportionately poor and living in some of the fastest-warming areas of the world.

CountryShare
Japan91%
United States90%
Korea86%
Saudi Arabia63%
China60%
Brazil16%
Mexico16%
Indonesia9%
South Africa6%
India5%
Million units
199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040204120422043204420452046204720482049205005001,0001,5002,0002,5003,0003,5004,0004,5005,0005,500
United States
China
Japan and Korea
European Union
India
Indonesia
Mexico
Brazil
Middle East
Rest of world

There is of course a potential emissions downside of this rapid growth in air conditioning, unless we phase out HFCs and radically improve the efficiency of air conditioners. This can become a devastating feedback loop, whereby warming leads to more demand for air-conditioning which in turn creates more demand for air-conditioning.

Spotlight topics

Over time, energy access and affordability have been improving

Practically everybody in the rich world has access to electricity, and in rich countries such as the US, the share of people's total expenditure devoted to energy has been in long-term decline. The share of people with access to electricity is rising fast in poorer countries but there is a long way to go.

Share
20002001200220032004200520062007200820092010201120122013201420152016201720182019010%20%30%40%50%60%70%80%90%100%
High-income
Middle-income
Low-income
Figure 111: Share of total expenditure devoted to gasoline and energy, US, 1929-2020
Share
19301940195019601970198019902000201020201.5%2%2.5%3%3.5%4%4.5%5%5.5%6%

Spotlight topics

Access to cleaner fuels has also increased at a global level

A growing share of the global population has access to clean fuels.

Share
20002010202048%50%52%54%56%58%60%62%64%66%68%70%72%74%

Spotlight topics

Efficient electric cooking could be a game changer for indoor air quality

Electric cooking is already cheaper than firewood and charcoal in some settings and costs are coming down.

Deaths per 100,000
1990200020102020020406080100120140160
World
Low-middle development
Low development

Spotlight topics

Off-grid solar investment is rising

This is likely to increase global access to energy.

Funding
2012201320142015201620172018201920200$50m$100m$150m$200m$250m$300m$350m$400m
Grant
Equity
Debt

Spotlight topics

Off-grid investment is rising
Figure 115: Corporate investment into off-grid energy access companies, pre-2010-2019
Investment
Pre-201020102011201220132014201520162017201820190$50m$100m$150m$200m$250m$300m$350m$400m$450m$500m$550m$600m$650m
There is concern that fossil gas could play a big role in Africa’s energy expansion

Despite the cost and climate advantages of renewables, there is a risk that rising energy demand in African countries will be met by gas or other fossil fuels.

Capacity
20192030050GW100GW150GW200GW250GW300GW350GW400GW450GW500GW
Coal
Gas
Oil
Renewable/other

African decision-makers need to act quickly if the continent wants to avoid being locked into a carbon-intense energy future.

Alova et al, 2021

Spotlight topics

China’s overseas investments are key to how energy systems evolve globally

Clean energy accounted for over half of energy investments in China's Belt & Road initiative in the first half of 2020. Coal investments are still a big concern.

Figure 117: Energy investments, Belt and Road Initiative, 2014-20 (first half only)
Share
2014201520162017201820192020010%20%30%40%50%60%70%80%90%100%
Fossil fuel (%)
Renewable (%)

Spotlight topics