The World Energy Outlook 2020 reveals that demand for coal in the Asia Pacific will grow in coming years and that a global target of net zero emissions by 2050 is unachievable in practice. The Outlook is the flagship report produced annually by the International Energy Agency (IEA). It provides “a comprehensive view of how the global energy system could develop in the coming decades.” This year’s report focusses on the next 10 years and “near-term actions that could accelerate clean energy transitions.”
Nick O’Malley, the Sydney Morning Herald’s National Environment and Climate editor, covered the Outlook report on October 14, 2020, under the headline “Old king coal dethroned by solar power.” He featured the report’s description of solar power as “the new king of electricity,” highlighted that in all four scenarios the IEA considered, “coal’s peak use has passed,” drew attention to coming peaks in oil demand, the question marks over the environmental credentials of gas, and noted that “investors are looking with increased scepticism at oil and gas projects.” He cited Tim Buckley, of the Institute for Energy Economics, as saying the IEA’s prediction for coal “deprives Australian state and federal governments of a crutch. They have relied on the IEA modelling in the past to say there was evidence of continued growth, so has the industry.”
The World Energy Outlook 2020 considers four scenarios over the timeframe to 2030. Its main one, the Stated Policies Scenario (STEPS), is based on today’s policy settings and an assumption that the COVID-19 pandemic is brought under control in 2021. In this scenario, global coal demand to 2030 stabilises at about current levels, which means it remains about 8 per cent lower than the pre-crisis levels. The reasons for this are “a combination of expanding renewables, cheap natural gas and coal phase-out policies” (emphasis added). That is, it is at least in part the outcome of deliberate anti-coal policies, not a free-market rebalancing of supply, demand, and price.
This flat and lower global demand masks two distinct regional trends: coal demand falls in North America and Europe, but this is balanced by growth in the Asia Pacific. “Demand for coal in the power and industry sectors continues to grow in India, Indonesia and Southeast Asia,” and rebounds in China. Southeast Asian coal demand is particularly strong, projected to increase by nearly 30 per cent and to account for six per cent of global coal demand by 2030.
Asia Pacific markets overwhelmingly dominate Australia’s coal export trade. Consequently, the STEPS scenario does not herald the demise of Australia’s coal export industry. This is fortunate, as coal exports were worth nearly $70 billion in 2018-19, enough to pay for our imports of cars, liquid fuels, telecommunications equipment, and computers.
Nick O’Malley’s article demonstrates Greg Sheridan’s observation that Australian commentators tend to focus on trends in North America and Europe and neglect trends in Asia. On coal, Sheridan wrote in September that “It is a crazy woke fantasy to think coal is being phased out. Such thinking reflects a spectacular ignorance of Asia, which is becoming an ever bigger part of the global economy.”
In line with the Outlook report and Sheridan’s comment, Whitehaven Coal at its recent annual meeting told shareholders that “coal prices are back on the way up as Asian economies recover from the coronavirus crisis.” Whitehaven’s CEO, Paul Flynn, said, “In the long term, with continued economic and population growth in Asia, there will be increasing demand for energy generation, infrastructure requirements and manufacturing and industrial output…”.
The IEA’s Outlook confirms rather than contradicts Australian governments’ views about the continued demand for Australian coal, because almost all of it goes to the Asia Pacific, where the IEA expects demand to continue to grow over the next decade.
O’Malley followed up with a second piece on the Outlook report on 17 October headlined “Path to zero emissions begins at home”. This piece draws on the Outlook’s scenario for net zero emissions by 2050, included in the report for the first time. He highlighted a “nugget that lies buried in the report,” which he reveals to be that “simple changes in household behaviour could save thousands of millions of tonnes of greenhouse gas.” It is accompanied by a table reproduced from the Outlook report listing a range of behaviours, such as lowering heating temperatures by 3 °C, raising cooling temperatures by 3 °C, drying clothes on the line, working from home, driving more slowly, walking or cycling for trips under a few kilometres, and cutting down on flights. It doesn’t mention vegetarianism, nor that perennial favourite of the household bill-payer, turning off the lights.
This list of domestic energy-saving practices has been well-known for a long time. Trouble is, they generally involve more discomfort (e.g., sitting in a colder room in winter), less convenience, take longer, and involve more effort. Few people in developed countries who have modern heating, cooling, washer/driers and cars are likely to sustain them as a daily practice for the rest of their lives. For example, despite the investments in cycling infrastructure in the last decade, the 2019 National Cycling Survey found that “Australian cycling is in free-fall, and has been since the National Cycling Participation strategy was launched in 2011.”
Bjorn Lomborg has an economic critique of this issue in his new book False Alarm: “… the first great myth of climate activism is that individuals can make a significant difference.” Lomborg says that although we might care about climate change and might want to do our bit, the “problem is that the changes we can make to our personal lifestyle and habits at best make only a tiny difference,” and this is “true even if all of us do them.” He quotes former UK chief climate science advisor, the late David MacKay, who wrote: “Don’t be distracted by the myth that ‘every little bit helps.’ If everyone does a little, we’ll achieve only a little.”
Lomborg highlights the following challenges: the cuts are typically small; we almost always save money and then spend it on something else and that creates emissions; and we tend to treat ourselves with a reward after doing something good. He cites the example of a family who at great personal cost over a year reduced their emissions by around 20 per cent and then treated themselves by buying plane tickets for a family holiday in South America.
But what does the Outlook report say about this issue? What it calls “behaviour changes” form part of its Net Zero Emissions by 2050 case (NZE2050), which sets out what additional measures would be required over the next ten years to put the world as a whole on track for net zero emissions by mid-century — measures additional, that is, to its already demanding Sustainable Development Scenario, which “sees a near-term surge of investment in clean energy technologies over the next ten years, making 2019 the peak year for global carbon dioxide emissions.”
The IEA comments on the NZE2050 case that:
The various changes that would be required to achieve the objective of net-zero emissions globally in 2050 in terms of technology deployment, innovation, investment and behaviour changes would be extremely demanding even if they were to happen in isolation. The biggest challenge, however, is that these changes would need to be realised simultaneously…
The NZE2050 case includes some 6,600 million tonnes of global emissions savings in 2030 above and beyond the already ambitious Sustainable Development Scenario, which, for example, already includes 40 per cent of new car sales in 2030 being electric, substantial building retrofits, accelerated deployment of renewables beyond what’s already envisaged in the STEPS scenario, etc. The IEA says these additional savings would “would be very hard to achieve entirely through structural changes in the energy sector alone” so behaviour changes are “essential to achieve the pace and scale of emissions reductions in the NZE2050.”
Of this extra 6,600 million tonnes, 4,600 million tonnes “require a broad set of very ambitious and co-ordinated policies to be implemented by all countries worldwide.” The last 2,000 million tonnes of emissions reductions come from behaviour changes. The IEA does not allow for Lomborg’s rebound and reward effects. What’s more, the behaviour changes are modelled in the NZE2050 case to deliver almost immediately a high proportion of their emissions reduction.
More than half the savings from changing behaviour come from transport. These include lowering driving speeds by 7 km/h on average, more walking or cycling for short trips, and significant reductions in flying of all flight durations, including 75 per cent reduction in business air travel longer than six hours by using teleconferencing, and the replacement of all flights of up to an hour with low-emission alternatives like high-speed rail running on low-emission electricity. These concepts might look plausible from the IEA headquarters in Paris, which sits at the centre of France’s high-speed rail network with its electricity system dominated by nuclear power. But for many other countries they look implausible or impossible in anything like the timeframe envisaged.
Let’s consider Australia (although North and South America, as well as Africa and much of Asia, face similar issues). Lower speed limits in our vast continent and sprawling cities? And, apart from New Zealand and a few small Pacific Island states, you can’t get to international destinations from major Australian cities (other than Perth) without flying for much longer than six hours. Many Australians would have to get used to teleconferences at all hours of the night, forever. Eliminate flights of up to an hour or so? Sydney-Canberra would be a no-no. What about Melbourne-Hobart, Melbourne-Canberra, and Melbourne-Adelaide? And what about the Sydney-Melbourne route, one of the busiest in the world, with a scheduled flight time of 1 hour 25 minutes, but generally under an hour in the air? The Sydney-Melbourne rail journey is 11 hours, it is diesel-electric, and high-speed rail might be able to get that to three hours, but it’s certainly not going to happen by 2030, if ever. Many regional medical services depend on flying in doctors and specialists and on flying patients to specialist centres in our cities. And what about fly-in/fly-out workers in the enormous states of Western Australia and Queensland?
Most of the remaining savings from behaviour changes are in residential energy use, principally setting lower temperatures for heating in winter, and higher temperatures for cooling in summer. These behaviour changes go against major trends that for decades have been aspired to, achieved by many, and indeed celebrated: homes and buildings that are comfortably heated and cooled; travel by car that is reasonably quick, convenient, and can carry things; and mass access to air travel. An advertising campaign to promote these behaviour changes would be a challenge. Instead of quick, convenient, comfortable, and easy it would have to sell slow, inconvenient, uncomfortable, and hard work! Or, it could be a moralising campaign promoting salvation through sacrifice. But the IEA does not expect everyone to make these changes, describing its purpose as being “to illustrate the scale of behaviour change that is implied by the NZE2050 case.”
In summary, the Outlook report says:
Realising the pace and scale of emissions reductions in the NZE2050 would require a far-reaching set of actions going above and beyond the already ambitious measures in the [Sustainable Development Scenario]. A large number of unparalleled changes across all parts of the energy sector would need to be realised simultaneously, at a time when the world is trying to recover from the Covid-19 pandemic.
One could reasonably conclude that this is international bureaucrat speak for ‘next to impossible’. And the IEA is only focussing on the energy and emissions scenarios. It doesn’t go into the economic costs and social dislocations involved, nor the cost to governments. The NZE2050 scenario reveals what many have instinctively known, and realist analysis has confirmed. Net zero emissions globally by 2050 is impossibly impractical and will not be achieved. As green-oriented energy expert Vaclav Smil puts it:
Proper recognition of energetic, engineering and economic realities means that the decarbonization of global energy supply will be much more difficult and it will take much longer than is often assumed by uncritical proponents of “green” solutions.
The complete decarbonization of the global energy supply will be an extremely challenging undertaking of an unprecedented scale and complexity that will not be accomplished – even in the case of sustained, dedicated and extraordinarily costly commitment – in a matter of a few decades.[i]
What is so special about 2050 anyway? A third of all emissions in a given year are still in the atmosphere a century later, and a fifth are still there in a thousand years.[ii] This means it is total emissions over time that really matter. Getting to zero by a specific year is relatively unimportant. Labor is wrong to criticise the Government’s Technology Investment Roadmap as a “road map without a destination” or a “road to nowhere” simply because it doesn’t have net zero by 2050 as its objective.
Achieving net zero emissions sometime in the second half of this century is the Australian Government’s current goal, has the benefit of plausibility, and as long as we take step after practical step in the right direction and keep it up year after year, it could actually be do-able.
Dr Michael Green has a PhD in Systems Engineering
[i] Vaclav Smil, “What we need to know about the pace of decarbonisation,” Substantia 3(2) Suppl.1: 13-28.
[ii] J Hanson and other authors, “Dangerous human-made interference with climate: a GISS modelE study,” Atmospheric Chemistry and Physics, 7, 2287–2312, 2007.