What We Need To Know About Decarbonization Policy

A country can express its decarbonization policy as an announced pledge (APS) or a stated policy (STEPS). Yes, both have the same temperature goals:

https://iea.blob.core.windows.net/assets/ed3b983c-e2c9-401c-8633-749c3fefb375/WorldEnergyOutlook2021.pdf

But the results are very different.

Decarbonization Policy

The World Energy Outlook 2021 summarizes the world’s carbon transition possibilities. In 386 pages, it has all we need to know (and more) for the soon-to-start Glasgow Climate Change Summit.

The Report’s four scenario approach did a good job of comparing the probable, the possible, and the really tough stuff. Closest to what I suspect will really happen are its Stated Policies Scenario (STEPS). STEPS projections are based on policies in place and actually being developed. Next though, we have what we will do in the Announced Pledges Scenario (APS). As you would expect, APS expresses our commitments. Then, from there, with Net Zero and Sustainable Development, we move to the most challenging goals.

Below, you can see an “implementation gap” between STEPS and APS:

https://iea.blob.core.windows.net/assets/ed3b983c-e2c9-401c-8633-749c3fefb375/WorldEnergyOutlook2021.pdf

Saying the energy sector is at the center of the progress we need, the Report compared the scenarios. With STEPS, fossil fuel demand peaks during the mid-2030s, plateaus, and then declines slightly by 2050. More rosy, APS predicts a peak soon after 2025 and a decline to 75m barrels per day by 2050. Then, it gets even better as Net Zero projects 25m barrels per day by 2050.

We can say, though, that the different scenarios have similar problems. To satisfy announced pledges, oil demand has to peak in 2025. But oil producers have not indicated their willingness to limit production. In addition, we have a mismatch between reduced oil and gas supply and the renewables that will replace it. And still, the APS is not enough. Because developing nations and emerging markets need more energy-hungry infrastructure, their policies offset what developed nations can achieve.

Our Bottom Line: Climate Goals

The Report cites four key areas that should be targeted. We can close the scenario gaps through clean electrification. We also need to emphasize energy efficiency and methane reduction. And finally, the fourth initiative that touches all of the others is innovation.

You can see what needs to change:

https://www.wsj.com/articles/energy-crisis-fossil-fuel-investment-renewables-gas-oil-prices-coal-wind-solar-hydro-power-grid-11634497531

You can see that so much is necessary to achieve our 1.5°C goal without even mentioning the counterproductive incentives created by short term costs and long term gains.

My sources and more: Today, FT, here and here, and WSJ. were ideal places to start. But then, for gargantuan up-to-date decarbonization policy details, do look at the 386-page World Energy Outlook 2021.

Lastly, you might find it handy (as did I) to take a look at Reuters brief primer for the Oct. 31st to Nov. 12th COP26 (Conference of the Parties):