Pathway for 1.5C

Achieving clean electricity worldwide by 2040

The global electricity sector is the biggest CO2 emitter and the first sector that needs to be decarbonised for the world to achieve net zero, as it helps unlock clean electrification of other sectors. To understand progress on climate goals, we must also closely track the electricity transition.

First sector to hit net zero

The electricity sector needs to move from being the highest emitting sector to being the first sector to reach net zero emissions globally by 2040 so the world has a chance to achieve economy-wide net zero by 2050. 

Electricity generation is the single biggest contributor to global CO2 emissions, responsible for over a third of world’s total energy related emissions in 2021. As of 2021, about three-quarters of power sector emissions were from coal, and almost a quarter from gas. With proven solutions already available to tackle this challenge, decarbonising the power sector offers one of the most cost-effective routes to achieving rapid emissions reductions. 

A Paris Agreement-compatible pathway for the global power sector was set out in detail by the International Energy Agency (IEA) in its ‘Net Zero Emissions’ (NZE) scenario published in May 2021 in the pioneering report Net Zero by 2050. It was then updated in the World Energy Outlook report in 2022, where NZE is now a central scenario. We reference this scenario throughout this report as a realistic pathway to put the global power sector on track for 1.5 degrees.

Although there are many possible ways the power sector could reduce emissions in line with a 1.5 degree trajectory, the IEA NZE scenario is well respected by industry stakeholders, provides detailed benchmarks and is also largely in line with the IPCC scenario for power sector decarbonisation.

Across all models, wind and solar are set to lead this shift, offering low cost and quick-to-deliver clean capacity. The IPCC showed that wind and solar can deliver over a third of the emissions cuts required this decade, and half of those emissions reductions would actually save money compared to the reference scenario. In many countries wind and solar are also economically attractive: lower cost than fossil fuels, and without the potential energy security risks of dependence on the global fossil fuel market.

Milestones for a 2040 global net zero power sector

The IEA NZE scenario shows a clear route to a net zero global power sector by 2040, and by 2035 for OECD countries. The pathway requires a massive expansion of clean power generation, requiring multiple technologies. In the IEA modelling, wind and solar are vital linchpins, providing 75% of the increase in clean power from now to 2050. Interconnections, networks, demand-side management and storage will all play a vital role alongside this deployment of clean power, and they will all need to expand to support the energy transition. 

By 2030, wind and solar need to have increased to 41% of global electricity generation, up from 10% in 2021. Coal generation needs to fall by 54% and gas generation by 24%. At the same time, electricity demand will rise dramatically, by an average of 3.7% per year from 2021 to 2030, as electrification picks up pace. 

While the shape of the path ahead is broadly clear, it is interesting to note the adjustments made by the IEA when updating the NZE scenario from 2021 to 2022. The scenario remains largely the same except for a much larger forecasted fall in gas power from 2021 to 2030 (previously 5%, now 24%), and a smaller fall in coal power (previously 71% fall, now a 54% fall). This change likely reflects the slower progress in 2022 on coal phaseout, but also a newfound possibility that gas power could begin its phasedown this decade. Regardless, either version reflects the need for rapid declines in all fossil fuel power. 

By 2040, the power sector needs to be net zero: to achieve this unabated coal power must be phased out globally, and unabated gas will only provide only 0.3% of global electricity.

Expanding role of electricity on the path to net zero

Investment in clean electricity will ensure the most cost effective path to achieve net zero, not only in the power sector, but the entire energy system.

For developing countries, investment in clean sources will play a crucial role in meeting rising electricity demand, which is expanding as the world’s population grows and countries increase standards of living. Globally, one in ten people still do not have access to electricity, mostly across Sub-Saharan Africa and Asia. Leapfrogging fossil fuels and moving directly to clean power will provide multiple benefits to health, the economy and climate, while increasing access to affordable energy as recommended by the United Nations in Sustainable Development Goal 7 (SDG7).

But it’s not only developing countries where electricity demand will expand and clean investment needs to keep pace. Electricity underpins the decarbonisation of other sectors, as clean electricity replaces fossil fuel combustion in transport, heating, cooling and industry. In 2022, electricity accounted for 20% of world’s final energy consumption. By 2030, it is predicted to account for 27%. 

2022 was the year in which electric cars, heat pumps and electrolysers (to produce green hydrogen) were pushed into the next level of growth. This trend is expected to continue, but to deliver on necessary emissions reductions it must be matched by investment in clean electricity to feed into the expanding electrified economy.