In Conversation: World Energy Outlook’s Role is to Reflect Current Policy Plans, Push Decision-Makers to Do More, IEA’s Wanner Says
Brent Wanner is Power Sector Modelling Lead with the team that produces the annual World Energy Outlook (WEO) for the International Energy Agency. In this feature interview, he talks about the path to 1.5°C, the breakaway growth potential in renewable energy, and why the WEO’s purpose is to model the climate implications of current government policies and plans as a way to nudge policy-makers toward more ambitious climate action.
The Energy Mix: The IEA describes the World Energy Outlook as the “gold standard of energy analysis”. What do you see as the criteria for any piece of modelling or analysis to become the gold standard in its field?
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Wanner: That’s a very good question, and one we ask ourselves when we look at what we need to accomplish with the WEO. The first word that comes to mind is transparency. We need to be very clear about the purpose of the work and the approach the work takes. It should be data-driven, so we find it’s very valuable to be linked to the real world, collecting as much data as possible about the state of the energy world today. And it should be a collaborative work, taking in inputs and feedback from various sectors and many different perspectives, in order to understand and recognize what a balanced approach actually is.
The Mix: How important is it for the IEA to align the WEO with a 1.5°C pathway for average global warming, and if it’s important, why hasn’t it happened yet?
Wanner: What’s most important is that we represent collectively agreed ambitions. That means aligning with the Paris Agreement and the aspiration that we limit global temperature increase to “well below” 2°C. That’s the primary metric of sustainability, and to understand how our work fits that framework, the Sustainable Development Scenario (SDS) within the WEO is fully consistent with Paris. In that scenario, emissions fall to zero around 2070, and if emissions were to remain at zero, it would provide a global stabilization of 1.65°C with a 50% probability, so that’s clearly well below two degrees. Then if you have negative emission technologies, biomass energy with carbon capture and storage (BECCS) for example, you can achieve a 1.5° average temperature increase with a 50% probability. And that would be without a huge amount of negative emissions relative to other work, including the IPCC special report on global warming of 1.5°C.
So it already fits very much within the range of 1.5° scenarios, and we’re exploring more ambitious reductions in CO2 emissions within the IEA. Our Energy Technology Perspectives colleagues have done work on a faster innovation case that moves emissions toward zero by 2050, and in WEO 2020 we’ve looked at what needs to be done over the next decade to keep the door open to net-zero emissions globally by 2050, which would obviously give us a higher probability of reaching stabilization at 1.5°C.
The Mix: So no one is suggesting we should be satisfied with a 50% probability?
Wanner: This is where it comes down to the collective agreements versus your own ambitions. We definitely need to cut emissions globally as fast as we can. That’s why we focus on what needs to happen over the next decade. If we don’t start bringing down emissions, talking about how fast we can get to zero is irrelevant. We need to curb emissions now and start declining very rapidly, taking 2020 as a turning point.
We’ve had significant reductions in global emissions in 2020, not for the right reasons, but it still offers an opportunity to really change the trajectory. The technologies are ready. So let’s start cutting emissions as fast as we can and see how fast we can get to zero, and possibly even to negative. Rather than thinking of a temperature number we can all agree on, I think it should be the lowest number we can possibly achieve with the highest probability.
The Mix: The IEA is by no means the only agency facing this challenge: the past isn’t a great guide to the future when disruptive technologies are in the mix. How do you factor in the dramatic shifts we’re seeing with renewable energy and energy storage and match those changes up with the greenhouse gas reductions the climate crisis demands?
Wanner: It’s a question of how much we can represent those changes. We recognize that these technologies are moving very quickly. Technology costs for solar photovoltaics, for example, have come down 90% in the last decade. Battery storage is on a similar trend. And while there have been some amazing and very impressive cost reductions, they’ve actually followed a predicted or projected cost curve that was originally put forward before 1990. What has moved us so quickly is how much policy support there’s been for deployment. We moved further along the cost curve faster than could have been foreseen because it rested with policy-makers to make those decisions.
And that’s how we see the evolution of the World Energy Outlook. Each successive edition is a reflection of the policy at the time, of the ambitions and measures and targets at that time, then we update them accordingly. By holding a mirror up to policy-makers, we say where their policies could lead us if these conditions become reality, and in most cases, we’re saying they need to realize this is not fast enough action. And happily, we regularly see more ambitious policies supporting renewables.
We’re still in a world where nearly all the renewable energy deployment is policy-based. Very little happens based on a purely market-based decision. That’s good news and bad news. The good news is that policy decisions have a big influence. But it also means that if you want to predict what will happen next, you have to get into the minds of policy-makers and the decisions they haven’t made yet.
We don’t try to predict what decisions policy-makers might make tomorrow. That would be political fortune-telling rather than energy system modelling. We do talk about the link between the falling cost of renewables, battery storage, and other low-carbon technologies and the cycle to get more ambitious policies to take advantage of that. Our consistent message is that those technology costs are falling, and every year there’s more potential to be more ambitious and still have an affordable, reliable energy system.
The Mix: The WEO has been criticized for consistently underestimating future adoption of renewable energy, based on what is now the historical record for time periods covered by your past projections. Do you agree with the critique, and if so, how is the IEA addressing it?
Wanner: Most often these critiques result from a misunderstanding or mischaracterization of the scenarios, in both the WEO and Energy Technology Perspectives. The spectacular growth of renewables has gone well beyond most projections, but we were reflecting exactly those policies that were in place at the time. And the significant new policies should be given the credit they deserve. China is deploying 20 to 25 times more solar PV per year than they had planned to have in total in 2020—the number always stays with me that up until 2007, they were targeting two gigawatts in total for this year, and now they’re adding 40 to 50 GW per year. The EU has raised ambitions on renewable energy. In the United States, renewable portfolio standards in many states have raised ambitions. You look at Canada, Japan, Korea, India—it’s true everywhere. It’s often presented as a critique, but in fact we hope policies continue to be ratcheted up, ambition is raised, and that countries continue to out-perform the projections of past WEOs.
The Mix: If that’s been the trajectory, how could the WEO shift into anticipating what the next round of policy and innovation could achieve, and giving policy-makers a roadmap to get there?
Wanner: The market will drive a level of deployment. But from our analysis, if we’re going to get anywhere near the level of deployment we need to achieve our sustainability goals, policy-makers need to be in the driver’s seat to accelerate that deployment. So in China, for example, maybe the market-based deployment now would be 30 GW per year of solar PV, but we need 100 GW per year or more. That’s the gap that will continue if policy-makers take their hands off the wheel.
That’s why it’s important to understand the policies that are in place today, or are being discussed. The targets and ambitions in China’s 14th five-year plan will matter—they will really direct what happens in China, and that will have a big impact on global CO2 emissions. The conversations in the European Commission on renewable energy targets will matter and provide direction for markets and technologies. Policies and governments are helping to make the markets what we need them to be, but first it’s reasonable to look at where they’re already targeted, and that’s a big task: it means following policy-makers very closely, recognizing how hard it is to raise those ambitions, but also kindly pointing out where that leads. That gap is at the core of our work, and it’s ultimately a comparison between where we’re going and where we need to go. The Sustainable Development Scenario provides the roadmap for achieving our sustainability goals, including those in the Paris Agreement, while reducing air pollution and providing energy access to all.
The Mix: But media still report the WEO’s main scenario as a prediction. That same assumption drives investments worth tens or hundreds of billions of dollars or Euros, and the net result is that future fossil fuel development plans now exceed the carbon budget for a 1.5°C pathway by 120%. If this is all just a tragic misunderstanding, how and when does the IEA plan to change the way it tells the story?
Wanner: We have our role. We’re very consistent in messaging that this is about identifying where we’re going, where we need to go, and the difference between the two. And we’re confident that this does provide clear benchmarks to assess whether those actions and investment decisions align with a sustainable pathway. Ultimately, the responsibility for those decisions rests with the companies, investors, citizens, and governments setting the framework, not with us.
We can inform those decisions, but we’re not making the investments. And the difference between the scenarios is quite stark. So if you’re looking at the scenarios and understand their purpose, then you can see that continuing to use fossil fuels as we have in the past can present a serious risk to our climate objectives. We need to make policy changes and investment decisions accordingly. In this way, our scenarios provide a “warning” to act, where further growth in oil demand and coal use, in particular, leads to a much less appealing future than if we cut their use as described in the Sustainable Development Scenario.
The Mix: But isn’t it a serious problem of your analysis is being misunderstood, or misrepresented?
Wanner: The only way we can address that is to be consistent, to be as clear as we can. If you look at the primary source, if you look at the WEO presentation, it should be very clear that those other representations are not accurate. If you look no further than the table of contents in this year’s WEO, the first chapter you come to under projections is the SDS. The second is the Net Zero Emissions by 2050 case. So the representation and centrality of the work, of where we’re headed and where we need to go, are in equal parts. And the desire from a number of communities for various reasons for a single view, for a single projection or pathway, is for their own purposes.
Depending on who you talk to, different interests might prefer one of the scenarios and treat it as the primary one. But all four are there to inform policy-makers, to inform investors and companies, and then to drive the right decisions that are in line with our collective goals and ambitions.
The Mix: The IEA has faced repeat requests to develop a 1.5°C-compliant pathway and put it at the centre of the WEO. How do you decide which scenario will lead off the analysis, knowing that news reporting and investors’ analysis will focus predominantly on the primary scenario?
Wanner: The scenarios are of equal importance. They cover where we’re headed under today’s policy environment and compare that to the more sustainable energy pathway that is consistent with our overall goals. We need both sides of that story to measure the gap. So we do treat them with equal weight across all our work. We’ll continue to do that and to highlight the kind of effort we need, particularly the millions of decisions we need to take over this next decade toward the overarching goals.
We need companies to innovate, developing new low-carbon technologies that we’re going to need tomorrow, whether it’s in the 2020s or the 2030s. We need citizens to contribute through behavioural change and everyday decisions like the efficiency of your home, the kind of vehicle you drive. And we see very much that the investor community is getting the message from the clients they represent. They’re being held to a higher standard, and they’re developing the mechanisms to make sure the funding and financing is available for low-carbon technologies. All those actors can do the right thing, but governments need to set the overall frameworks to harness the profit motive of companies and investors and build on the good will of citizens, so that everyone is looking and moving in the same direction.
Follow-up: @WannerBrent, @IEA