Unleashing 400 milestones for reaching net zero by 2050, the International Energy Agency (IEA) has warned that "the world has a huge challenge ahead of it".
In its latest report, the IEA detailed a global roadmap to net zero it dubbed the Net Zero Emissions by 2050 (NZE) pathway. This scenario sets out sectoral pathways to reach net zero by 2050, covering - among others - electricity, transport and buildings.
Renewables dominate electricity with support from battery storage
While the electricity sector is the first to achieve net zero emissions –due to the low costs, widespread policy support and maturity of an array of renewables – within the IEA’s pathway, it will require large capacity additions for all low-emissions fuels and technologies.
Global renewables capacity more than triples to 2030, and increases ninefold to 2050. Between 2030 and 2050, over 600GW of solar PV capacity is added per year on average and 340GW of wind including replacements. Offshore wind, meanwhile, becomes “increasingly important”, the IEA said, with it representing 20% of total wind additions from 2021 to 2050 compared with 7% in 2020.
The UK so far has led in terms of offshore wind deployment, and it is a key factor in the country’s decarbonisation plan with a target of 40GW by 2030 announced by the government in 2020. According to the IEA, it is poised for rapid deployment globally having matured substantially in recent years.
Battery deployment is also set to see a significant boost, and needs to scale in parallel with the increases in renewables, from 3GW in 2019 to 120GW in 2030, and over 240GW in 2040. Pairing battery storage with solar and wind therefore becomes commonplace in the late 2020s in the IEA’s pathway, complemented by demand response for short duration flexibility and hydropower or hydrogen for flexibility across days or seasons.
This increase in global generation from renewables raises the share of renewables in total output from 29% in 2020 to over 60% in 2030 and nearly 90% in 2050. Solar and wind jump ahead, becoming the leading sources of electricity globally before 2030. Each generates over 23,000TWh by 2050.
The IEA noted that solar is already the cheapest new source of electricity in most markets with policy support in over 130 countries. This follows the agency crowning solar the “new king” of global electricity markets in a report released on 11 May, in which it predicted annual solar PV additions globally are set to surpass 160GW by 2022.
Beyond solar, onshore wind is also a market-ready low cost technology that is widely supported and can be scaled quickly. In the UK, while both solar and onshore wind have been unable to compete in recent Contracts for Difference (CfD) auctions – the primary support mechanism for new renewable capacity in the UK –– the fourth round, opening in December, will include so called Pot One technologies such as solar and onshore wind.
Global electricity demand is set to climb to 60,000TWh in 2050 in the NZE scenario, with an average increase of 3.2% growth per year. Emerging markets and developing economies account for 75% of this increase, while in advanced economies electricity demand returns to growth after a decade-long lull, nearly doubling between 2020 and 2050. This is driven largely by end-use electrification and hydrogen production.
In order to achieve a net zero power system, investment in the electricity networks will be “crucial”, with total grid investment needing to rise to US$820 billion by 2030 and US$1 trillion in 2040. This will then fall back after electricity is fully decarbonised and the growth of renewables slows to match demand growth.
While the NZE was the main scenario modelled by the IEA, it also looked at a low nuclear and CCUS case, assuming that global nuclear power output is 60% lower in 2050 than in the NZE and that only the currently announced CCUS projects are completed.
This scenario would require solar PV and wind power to take their place, resulting in the need for an additional 2,400GW of capacity than in the NZE. Alongside this, there would be a need for around 480GW of battery capacity above the 3,100GW deployed in the NZE, plus 300GW of other dispatchable capacity to meet demand in all seasons.
Electric vehicles, hydrogen fuel cells and the challenge of transport
Decarbonisation of the transport sector relies on two major technology transitions; the first shift being to electric mobility, with the IEA classing this as both electric vehicles (EVs) and fuel cell electric vehicles (FCEVs), and the second shift being to higher fuel blending ratios and direct use of low-carbon fuels.
Both are these shifts are likely to require interventions to stimulate investment in supply infrastructure and to incentivise consumer uptake.
In the NZE, the number of battery electric, plug-in hybrid and fuel cell electric light duty vehicles on the world’s roads reaches 350 million in 2030 and almost 2 billion in 2050, up from 11 million in 2020. Electric buses also increase from 0.5 million in 2020 to 8 million in 2030 and 50 million in 2050.
Light-duty vehicles are electrified faster in advanced economies over the medium term and account for around 75% of sales by 2030, while in emerging and development economies they account for around 50% of sales. Almost all light-duty vehicle sales in advanced economies are battery electric, plug-in hybrid or fuel cell electric by the early 2030s.
Battery electric vehicles (BEVs) sales in the UK surged 566.1% year-on-year in April, while demand for BEVs grew 185.9% throughout 2020 as consumers and businesses increasingly adopt EVs ahead of the ban on the sale of new petrol and diesel vehicles in 2030.
To achieve the emissions reductions required by the NZE for transport, governments will need to move quickly to signal the end of sales of new internal combustion engine cars, with early commitments helping the private sector to make the necessary investment in new powertrains, relative supply chains and refuelling infrastructure.
By 2025, the large-scale deployment of EV public charging infrastructure in urban areas needs to be sufficiently advanced to allow households without access to private chargers to opt for EVs. Governments should therefore ensure sustainable business models for companies installing chargers, remove barriers to planning construction and put in place regulatory, fiscal and technological measures to enable and encourage smart charging to ensure that EVs support electricity grid stability and stimulate the adoption of renewables.
Rapid scaling up of battery manufacturing is also integral to realising the decarbonisation of transport, as well as the rapid introduction on the market of next generation battery technology, such as solid state batteries between 2025 and 2030.
As with the power sector, the IEA looked at a separate scenario for decarbonising transport, an all-electric route. This assumes the same rate of road transport decarbonisation as the NZE but achieved via BEVs alone. This scenario depends on even further advances in battery technologies than the NZE, and would mean 30% more BEVs – an additional 350 million – would be on the road in 2030.
To support the vehicles, over sixty five million public chargers would be needed, requiring a cumulative investment of around US$300 billion, 35% higher than in the NZE.
The increased use of electricity for road transport would also create additional challenges for the electricity sector, the IEA said, with this largely surrounding the impact this demand would have on the grid. In the all-electric case, when taking into consideration the flexibility that enables smart charging of cars, peak power demand is one third higher than in the NZE (2,000GW). This is due to the additional overnight/evening charging of buses and trucks, which are not fully electrified in the NZE scenario.
This is despite the total demand for road transport being roughly the same in both cases – 11,000TWh or 15% of total electricity consumption – when the demand for green hydrogen is taken into account. However, this hydrogen can be produced flexibly in regions and times when there is surplus renewables-based capacity as well as from dedicated off-grid renewable power.
A further challenge identified by the IEA is the potential for additional spikes in demand resulting from ultra-fast chargers for heavy duty vehicles that are not coupled with energy storage devices, with this putting even more strain on electricity grids.
Heat pumps as the primary choice for space heating
When it comes to decarbonising housing, energy efficiency and electrification are the two main drivers. The transformation relies largely on technologies already available on the market, including heat pumps, improved envelopes – the separator between the conditioned and unconditioned environment of a building – for new and existing buildings, energy-efficient appliances and bioclimatic and material-efficient building design.
Digitalisation and smart controls also enable efficiency gains that reduce emission from the buildings sector by 350 Mt CO2 by 2050.
Space heating is transformed in the NZE, with homes heated by natural gas falling from nearly 30% of the total today to less than 0.5% in 2050, while homes using electricity for heating rise from nearly 20% of the total today to 35% in 2030 and around 55% in 2050.
In the UK, the number of buildings heated by gas is much higher with around 85% of residential buildings using a gas boiler according to the Committee on Climate Change. Decarbonising the heating sector is a key focus for the country, but the deployment of clean technologies like heat pumps has thus far been slow, and hampered by a lack of support including the Green Homes Grant shuttering early.
Globally, high efficiency electric heat pumps are set to become the primary technology choice for space heating in the NZE, with worldwide heat pump installations per month rising from 1.5 million today to around 5 million by 2030 and 10 million by 2050.
However, not all buildings are best decarbonised by heat pumps, with bioenergy boilers, solar thermal, district heat, low-carbon gas networks and hydrogen fuel cells all playing a role by 2050. From 2025, there are no new coal or oil boilers sold globally in the NZE, with sales of gas boilers falling by more than 40% from current levels by 2030 and by 90% by 2050.
Wider implications for the energy system
Aside from looking in depth at the pathways for the varying sectors, the IEA also explored the wider effects of the NZE scenario on the energy system within its report. It explained that while electricity demand increases more than two-and-a-half times, the rapid transformation of industry means that total electricity supply costs triple from 2020 to 2050.
The electricity supply industry also becomes much more capital intensive, accelerating what the IEA described as a recent trend. The share of capital in total costs rises from less than 60% in 2020 to about 80% in 2050, with this largely being due to a massive increase in renewable energy and the corresponding need for more network capacity and sources of flexibility, including battery storage.
Already, network operators around Britain are finding constraints that limit the number of new additions to the grid, and are looking at increased flexibility amongst other innovative projects like National Grid’s deployment of technology from US-based Smart Wires.
In the late 2020s and 2030s, upgrading and replacing existing solar and wind as they come to the end of their operating lives also boosts capital needs.
This rising capital intensity increases the importance of limiting risk for new investment and ensuring sufficient revenues in all years for grid operators to fund rising investment needs, according to the IEA. It added that this need has been underlined by financial difficulties experienced by some network companies in 2020, due to the reductions in electricity demand due to COVID-19.
In addition, the rising share of renewables in the electricity generation mix has important implications for the design of electricity markets, with the IEA explaining that when the shares of solar, wind and other variable renewables and nuclear reach high levels, available electricity supply at no marginal cost is often above electricity demand, resulting in a wholesale price of electricity that is zero or negative.
This has been seen in Britain’s electricity market increasingly over the past few years, in particular during storms when wind generation has been driven up, such as in March when prices dipped to -£61/MW.
By 2050, without changes in electricity market design, around 7% of wind and solar output worldwide in the NZE would be above and beyond what can be integrated and will therefore be curtailed, with the share of zero-price hours in the year increasing to around 30% in major markets.
Therefore, significant changes in the design of electricity markets should be enacted to provide signals for investment, including in sources of flexibility such as battery storage and dispatchable power plants.
Meanwhile, for the electricity networks – which will need to modernise and expand – some of the main considerations include the need for new substations as a result of the massive expansion of solar and wind, the digitalisation of the networks which will support better management of renewables and more efficient demand response and the wider use of rooftop solar meaning surplus electricity will be available more often, while heat pumps and EV chargers will need electricity to be more widely available, together requiring substantial increases in distribution network capacity.