Renewables didn’t cause the energy crisis — but they can help to resolve it

In analyzing last winter’s power outages in Texas, the recent energy price spikes in Europe or the reoccurring electricity shortages in China, some speculate the low-carbon transition may in part be to blame. But is it fair to link these problems to the transition? This question takes on particular importance heading into the United Nations Climate Change Conference (COP26) as there are concerns the linkage might weaken the willingness of governments to advance climate action. 

To evaluate the possible responsibility of the transition, it is useful to gauge to what extent it has actually materialized. The data just released by the International Energy Agency indicates that the energy transition has yet to really take hold — but significant change awaits us.

To achieve the climate goals of the Paris Agreement, we must substantially reduce energy emissions. Given that projections consistently point to global energy use increasing, or at best plateauing, we cannot rely on shrinking energy consumption to significantly reduce these emissions.  Rather, we must dramatically reduce the emissions from the energy we do use. The energy transition is the vehicle to do so. 

The key is changing our energy mix, with renewables as the central fuel. We are repeatedly told that this low-carbon energy source is expanding. Yet, we are also warned that carbon-intensive new coal plants are being built and natural gas consumption is growing. To assess whether these and other energy trends are in the aggregate advancing or hindering the energy transition, we need to understand their cumulative impact on emissions.

Measuring the carbon dioxide intensity of our energy consumption (i.e., how much carbon dioxide is emitted per unit of energy consumed, or the “CIEC”), and particularly changes in that intensity, provides insights into this cumulative impact and our progress in transitioning the energy system to a low-carbon state.

Looking ahead, achieving our climate goals requires the CIEC to drop dramatically over the next several decades. For example, under the IEA’s scenario to meet the “well below 2 degrees Celsius” temperature target of Paris, the CIEC needs to drop 75 percent over the next 30 years, and 97 percent under its more ambitious net-zero scenario.

How does this compare to what we have experienced? The CIEC has moved little over the past 30 years. In 2016, the year the Paris Agreement entered into force, the CIEC was largely the same as it was in 1990.  Since then, it has improved slightly but the improvement represents a reduction of less than 4 percent over four years. Moreover, the International Energy Agency warns: “For all the advances being made by renewables and electric mobility, 2021 is seeing a large rebound in coal and oil use,” foreshadowing a possible deterioration in the CIEC.  

Analyzing the CIEC at the global level is important to track the total worldwide emissions that drive temperature change, but it is also useful to evaluate what is happening at the country level where climate policy is made and energy woes are felt. For example, the U.S., China and the European Union reduced the carbon intensity of their respective energy systems on average by a mere 1 percent or less per year over the preceding 10 years. 

These modest movements in the CIEC indicate that we have yet to experience a significant shift in our energy system. This is also unsurprising since it is only relatively recently that we have seen a significant uptick in climate pledges, including from the U.S. and China, the world’s two largest energy systems.

Significantly, historical changes are markedly smaller than what should happen as the recent climate pledges are implemented. For example, the U.S. and EU will need to nearly triple their rates of change over the next decade as compared to the past one. China’s change is once again in the 1 percent annual range, reflecting the fact that it has a relatively modest climate pledge to peak carbon emissions only sometime by 2030 — but its CIEC will need to fall dramatically thereafter (potentially by more than 50 percent through 2050) to draw near to its goal of carbon neutrality by 2060.

At a global level, the announced pledges would entail a drop in the CIEC that is about three times bigger than what the world experienced last decade.  

What all these figures highlight is that the amount of change in our energy system which we can expect over the next 10 years and beyond is much larger than what has occurred to date. For example, renewable power capacity (which is already generating record output) will need to almost triple by 2030 so that countries have the clean energy they need to grow their economies.

The transition will have differing impacts on different fossil fuels. For example, even as the CIEC falls nearly 20 percent by 2030 under the IEA’s “well below 2 degrees Celsius, the level of natural gas consumption remains largely unchanged. Oil drops by a mere 2 percent relative to 2020 (albeit, over 10 percent lower than its pre-COVID peak). In contrast, coal faces a nearly 30 percent drop over the same period, a reduction that is key to driving down the global CIEC. 

While it is yet unclear the extent to which climate policy might be responsible for some of the energy woes currently being felt in different parts of the world, what is certain is that countries need to better prepare their energy systems and economies to adjust to the more marked energy transition that will be implemented going forward. Stronger analytic tools, policies that better anticipate the needed changes in our fuel mix and more investment in clean energy are among the keys. 

Philippe Benoit has over 20 years of experience working on international energy and climate issues, including in management positions at the World Bank and International Energy Agency.  He is currently managing director, Energy and Sustainability, with Global Infrastructure Advisory Services 2050.