This week, the International Energy Agency (IEA) – an intergovernmental organisation whose modelling is used by governments and industry for energy planning and investment – released their Net Zero 2050 Roadmap.
This report explained what it will take to decarbonise the atmosphere and achieve this critical goal. And if you were to focus on just one key takeaway, it’s that there can be no investment in new fossil fuel supply projects from now on and an immediate phase-out is needed.
This is a watershed moment for the IEA, who have traditionally promoted fossil fuels and underplayed renewables as the essential pathway to net zero emissions, and it should leave business leaders with no doubt as to the direction that global regulation will be heading. If you’re a corporate executive and have been waiting for a sign that you need to accelerate your transition to net zero emissions: this is it.
“Global commitments are growing, but they still fall well short of what is needed to limit the rise in global temperatures to 1.5 degrees and avert the worst effects of climate change.”
The IEA methodology uses a hybrid modelling approach which utilises long-term projections from their World Energy Outlook and also their Energy Technology Perspectives Series to analyse technology and uptake in renewables, hydrogen and other areas. Based on this modelling, they found that:
- Net Zero 2050 is achievable, but tough. All of the technical solutions exist. It will be hard, and the chances are narrow, but if we can collaborate and commit to the pathway, we can do it.
- Net Zero will be better for the world. More total jobs. More local jobs. Higher GDP. Lower energy costs as a share of GDP. Approximately three million lives saved from pollution-linked deaths. Reduced energy security stress. Access to energy and clean cooking for those without. Energy justice.
- Governments must lead the change through building infrastructure, and regulation of industry.
- Net Zero will be disruptive for incumbents. Oil and coal have peaked. Gas sales will shortly peak. Fossil fuel prices will fall, therefore so will tax revenues from them. So tax revenues will need to be replaced with carbon taxes.
So what does this mean for business?
Priority: Switch to 100% renewable energy
This report is a total game-changer, and serves to highlight how we must rapidly switch to renewable energy, and prioritise the electrification of our industry, manufacturing and supply chains as much as possible – to make the 2020’s the decade of massive clean energy expansion.
For business, that means immediately making the commitment to 100% renewable energy to zero all scope 2 emissions, and then electrifying as many of your scope 1 emissions as possible, as quickly as you can. This will include sourcing technology like electric cars, buses and trucks on the roads, heat pumps in buildings and electrical furnaces for steel production.
Priority: Set ambitious net zero targets with short-term and medium-term milestones
If your business does not already have a net zero goal, now is the time to crank into action and set ambitious targets. For companies who have already announced a formal net zero target, then you should be interrogating the pathway that has been set to get there, and asking what is required to achieve it. Articulating a credible step-by-step plan will help to build confidence amongst investors, employees and consumers, and ensure that you are future-proofing your business to survive this transformational decade.
This report emphasises the necessity of comprehensive roadmaps to give credibility to net zero targets, so corporations who have made net zero announcements as part of a greenwashing strategy will no longer be able to kick the can down the road: net zero is not zero, unless it has a clear pathway with interim goals.
Priority: Cease all investments in fossil fuels
The IEA report states that any expansion of fossil fuel use is incompatible with their net zero pathway. As pressure mounts on global financial institutions to cease all investment in fossil fuels, corporations in broader industries must also play their part by moving money away from coal, oil and gas. One of simplest (but most significant) changes a business can make is to switch your default superannuation and pension fund. If your default institution is investing in fossil fuels, then switching to an ethical fund that invests in renewables can have a powerful positive impact.
“Making net zero emissions a reality hinges on a singular, unwavering focus, from all governments, working together with one another, and with businesses, investors and citizens. All stakeholders need to play their part.”
This IEA Net Zero 2050 report provides a bold vision for the next three decades if we are to meet the commitments of the Paris Agreement, and prevent the catastrophic rise of global temperatures. As pressure mounts, and governments around the world establish their pathways to net zero emissions, it is increasingly likely that corporations will face regulation in order to transform their operations.