A Steep Path to 1.5°C Needs Leadership

As of October 2021, 192 parties had ratified the Paris Agreement and 194 parties had submitted Nationally Determined Contributions (NDCs).

To reach the 1.5°C climate goal, there is a need to reduce global greenhouse gas emissions by 45% from 2010 levels by 2030, with the aim to reaching net zero emissions by 2050. Climate pledges made in NDCs thus far translate into an increase in emission levels compared to 2010, by about 16%, still resulting in a temperature rise of 2.7°C by the end of the century.

Reaching net zero emissions by 2050 requires bold choices and prompt actions, especially from the 20 highest-emitting countries and G20 members.

IRENA’s analysis shows that over 90% of the solutions shaping a successful outcome in 2050 involve renewable energy through direct supply, electrification, energy efficiency, green hydrogen and bioenergy combined with carbon capture and storage.

The technological avenues leading to a decarbonised energy system have crystalised, dominated by solutions that can be deployed cost-efficiently, rapidly and at scale.

Considerable progress can be achieved with existing options.

Bold choices made today that will lead to a positive outcomes globally.

Innovative and affordable solutions are available. The necessary deployment levels at a speed compatible with 1.5°C, will require increased ambition and targeted policies and measures.

A total of 180 parties cited renewable energy as part of their mitigation strategy in NDCs, making renewables the most often mentioned mitigation option.

142 Parties included specific renewable energy targets in their NDCs: 108 targets focus on the power sector, and 31 on heating, cooling or transport.

Yet, NDCs are non-binding pledges.

Translating pledges into action will depend on how well these commitments are transformed into more binding national policies and plans.

By early 2021, only 160 countries had active targets for renewable power at the national level, as included in national laws and official strategies and plans.

The national targets are only effective if translated into concrete policies and measures.

Taking concrete actions and implementing these targets could bring an additional 0.9 TW of renewable power installed capacity by 2030, taking the global renewable power installed capacity stock to 3.7 TW.

Still, this would only meet a third of what is required to stay in line with IRENA’s 1.5°C Pathway.

Choosing IRENA’s 1.5°C Pathway and accelerating the transition translates into the creation of up to 122 million energy-related jobs in 2050, more than doubling today’s 58 million.

Renewable energy alone will account for more than a third of all energy jobs employing 43 million people globally, supporting the post-COVID recovery and long-term economic growth.

The world’s economy can grow by 2.4 per cent over the expected growth of current plans within the next decade with targeted actions taken.

A USD 33 trillion funding gap stands between the world and its goal of limiting energy related emissions by 2050. The costs for reducing emissions vary by technology and sector, but the incremental costs are significantly lower than the savings achieved by cutting external costs.

While the investment into efficiency, renewables, end-use electrification, power grids, flexibility, hydrogen and innovations may look steep, each dollar invested yields benefits of between USD 2 and USD 5.

In cumulative terms, the additional USD 30 trillion cost implied by the 1.5°C Scenario over the period to 2050 will result in a payback of between USD 61 and USD 164 trillion.

Sharp adjustments in capital flows and a reorientation of investments are necessary to align energy with a positive economic and environmental trajectory.

Energy transition is a big business opportunity for multiple stakeholders including the private sector, shifting funding from equity to private debt capital. The latter will grow from 44 per cent in 2019 to 57 per cent in 2050, an increase of almost 20 per cent over planned policies.

Energy transition technologies will find it easier to obtain affordable long-term debt financing in the coming years, while fossil fuel assets will increasingly be avoided by private financiers and therefore forced to rely on equity financing from retained earnings and new equity issues.

But public financing will remain crucial and will need to grow almost two-fold to catalyse private finance and ensure just and inclusive unfolding of the energy transition.

Socio-economic impacts vary at the regional and country level. Governments’ involvement in the transition should be accompanied by international co-operation to ensure that the benefits and burdens of the transition are equitably shared.

A holistic global policy framework is needed to bring countries together to commit to a just transition that leaves no one behind and strengthens the international flow of finance, capacity and technologies.

In 2009, developed countries agreed to mobilise USD 100 billion per year by 2020 for climate mitigation and adaptation in developing countries. The OECD estimates that these funds have consistently fallen short by USD 20 billion or more each year.

More must be done for the transition to be just.

The technology is readily available to be deployed at scale. The roadmap to 1.5°C is clear. The gap between where we are and where we should be is widening. And the pathway to a net zero future is narrowing.

Agencies like IRENA can connect the dots between countries, sectors, and organizations to unlock barriers and establish practical, national pathways.

Ultimately, the energy transition leads to greater prosperity, climate resilient economies and a cleaner future.

It is action, not words that shape the Decade of Action. Leadership and Bold Choices will bring the change.