Humanity is on the cusp of radical changes in how we produce and consume energy, according to a new evaluation by the International Energy Agency. And that leaves us in a place where small changes can produce huge differences in the energy economy by the end of the decade—even a slight drop in China's economic growth, for example, could cut coal use by an amount similar to what Europe currently consumes.
Amidst the flux, governments are struggling to set policies that either meet our needs or reflect the changing reality. By 2030, the IEA expects that we'll have the capacity to manufacture more than double the solar panels needed to meet current policy goals. And those goals will leave us falling well short of keeping warming below 2° C.
The IEA's analysis focuses on two different scenarios. One of them, which it terms STEPS, limits the analysis to the policies that governments have already committed to. Those are sufficient to have energy-driven emissions peak in the middle of this decade—meaning within the next few years. But they stay above net zero for long enough to commit us to 2.4° C warming, a level that climate scientists indicate will lead to severe consequences.
A second scenario, NZE, has the world reaching net-zero emissions by the middle of the century, which is a necessary step for limiting warming to 2° C or below. Obviously, that will require policy changes beyond those currently in force.
How sensitive are these analyses to policy changes? The report highlights how its 2021 version, completed before the passage of the US's Inflation Reduction Act, had predicted 12 percent of the cars sold in the US would be electric by 2030. The passage of the IRA now has that figure rising to 50 percent. Globally, we may reach similar levels based on current trends. Only 4 percent of cars sold were electric in 2020, but that figure has shot up to 25 percent this year.
But it's not just policy changes that are altering the landscape. Lower prices for renewables, combined with expanding manufacturing capacity to meet expected demand, have also dramatically changed the IEA's expectations. For example, its estimates of both solar and offshore wind in China have tripled in the two years since its 2021 World Energy Outlook.
During that same period (2020–2023), investments in renewable energy have risen by 40 percent. As a result, this year will see an average of a billion dollars invested in solar power every day, and a half-Terawatt of renewable capacity added overall. All of this change means that the IEA expects fossil fuel use (the combined coal, oil, and gas) to peak before the decade is over.