As the world reflects on the outcomes of the recent UN Climate Change Conference (COP28) in Dubai, it is worth taking a broader perspective on how the energy world has changed in the eight years since the Paris Agreement was concluded. The ambition of the Paris Agreement is to limit global warming to “well below” 2 °C above pre-industrial levels and “pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels.” Signatories agreed that doing so would significantly reduce the risks and impacts of climate change.
In these eight years, considerable progress has been made in accelerating clean energy transitions globally, which is the result of ambitious policymaking, technological advancement, and expanding clean energy markets. In 2015, for every rupee invested in fossil fuel infrastructure globally, only 80 paise was spent on clean energy. Today, for every rupee spent on fossil fuels, 1.8 rupees are spent on clean energy.
The rapid growth in clean energy investment can be witnessed in the increasing electrification of economies and uptake of clean electricity generation. In 2015, wind and solar contributed to only 4% of total electricity generated globally. This share has already tripled to 12% today. If existing policies are adopted in full and on time, it is on track to reach 30% by the end of this decade. Adding in hydropower and nuclear, clean energy generation would account for more than half of all electricity generated by 2030.
Similarly, in 2015, only 1% of all cars sold globally were electric. Today, it is almost 20%. Around the world, the total number of electric cars on the road has reached 40 million, and it is on track to exceed 200 million by the end of this decade, leading to a reduction in oil demand. It’s not just cars. Today, nearly half of the three-wheelers sold in India are electric.
These changes, along with others, such as improving energy efficiency, have resulted in a marked change in the trajectory of emissions and the rise in global temperatures.
Fossil fuel demand has slowed in China, rich countries…
A turning point for the global energy system is approaching. The International Energy Agency (IEA) now projects a peak in global demand for each of the fossil fuels within this decade, according to analysis in our recently published World Energy Outlook.
Rich countries already reached a peak in demand for oil and coal more than 15 years ago. Demand for both fuels has been declining since, while natural gas demand in advanced economies recently plateaued.
China has contributed to half the global energy demand growth, two-thirds of global oil demand growth, and one-third of global gas demand growth in the past two decades. However, its growth in fossil fuel demand has slowed in recent years due to a variety of factors. Many of the drivers of energy demand in China have already peaked or are close to peaking, including the working-age population and cement and steel production. China is reorienting its economy around domestic consumption rather than high investment in infrastructure. Importantly, China has also been a leader in clean energy adoption, accounting for over 40% of global renewable capacity additions and more than half of global electric car sales.
..But grown in developing countries
Under today’s policy settings that push up demand for all fuels and technologies, the balance is shifting. In India, Southeast Asia, Africa, Latin America and the Middle East, energy demand continues to grow, particularly for electricity. But, an accelerating pace of clean energy adoption in these regions, especially since the Paris Agreement, has moderated the need for extra fossil fuels. It has also changed the trajectory of global CO2 emissions. Before the Paris Agreement was signed, the world was on track to exceed 50 billion tonnes of carbon dioxide (CO2) by 2050. However, due to the rapid scaling up of clean energy technologies and energy efficiency since 2015, annual CO2 emissions are now likely to be limited to 30 billion tonnes by 2050. Recent progress has, therefore, already shaved off 1 °C of projected global warming. This is worth celebrating.
Nonetheless, these advancements are not enough to limit global temperature rise to 1.5 °C, as envisaged under the Paris Agreement. Doing so would require additional effort.
COP Dubai’s lessons
The IEA has outlined the need to triple renewable energy capacity and double energy efficiency improvements by 2030, which have both been accepted by countries in the recently concluded COP in Dubai. Further, clean energy investment in developing countries would need to triple by the end of the decade, requiring much greater technical and financial assistance from the international community.
It is also important to note that CO2 reductions, even among developing countries, do not come at the cost of development or energy security. Firstly, this is because clean energy is increasingly affordable. As an example, solar is already the cheapest source of electricity in most countries, and battery prices have fallen by 70% in the past decade. Secondly, countries are investing in clean energy to reduce their dependence on imports of fuels with volatile prices. And thirdly, countries including India are already expanding clean energy manufacturing domestically to facilitate job creation and economic growth.
As a result of these dynamic shifts in the global energy landscape – fuelled by policy changes, technological advancements and market development – the world has already made significant progress since the Paris Agreement was signed. The journey to contain climate change is long and requires additional effort now. But the direction of travel is clear.
Tim Gould is the chief energy economist of the International Energy Agency. The IEA was a key contributor to COP28, which was held in Dubai. The views expressed are personal
