22 June 2017: Achieving the objective to limit global temperature rise to well below two 2°C above pre-industrial levels requires an unprecedented transition towards a global clean energy system. The International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA) have published a joint scientific study showing technically feasible pathways towards achieving this transition.

Published ahead of the G20 Summit, held from 7-8 July 2017, in Hamburg, Germany, the joint IEA/IRENA study explores the investments needed for an energy sector transition that would be consistent objective of the Paris Agreement on climate change to limit the rise in global temperature to well below two 2°C above pre-industrial levels. IEA and IRENA performed separate studies based on which the two agencies developed a joint set of key messages.

IEA and IRENA note that investments in financing the clean energy transition would yield important co-benefits.

One of these messages is that a transformation of the energy system in line with the 2°C goal is “technically possible but will require significant policy reforms, carbon pricing and additional technological innovation.” Other joint key messages address the preconditions for achieving this transition, such as: additional policy interventions such as power market reform; significantly increased levels of investment in energy supply and end-use sectors; low-carbon fossil fuel technologies; steady, long-term price signals; near-term scaled-up budgets for technological innovation; and stronger price signals from phasing out fossil fuel subsidies and carbon pricing.

Regarding the incremental cost of financing the transition, the IEA assessment concludes that financing needs would not exceed 0.3% of global GDP, whereas IRENA’s calculations arrive at a slightly higher estimate of 0.4% of global GDP. Both institutions note that these investments would yield important co-benefits, such as less air pollution and lower energy costs for households, thus highlighting the linkages among the SDGs on climate action (SDG 13), health and well-being (SDG 3) and access to affordable and clean energy (SDG 7).

While the two assessments use the same assumptions and core scenarios, they differ with regard to the assumed pathways taken towards decarbonization. For instance, the IRENA study states that by 2050 energy efficiency and renewable energy would deliver 90% of the required emission reduction needs. IEA’s assessment, on the other hand, assumes a greater role for low-carbon fossil fuel technologies, nuclear energy and fossil fuel switching. [UNFCCC Press Release] [IRENA Press Release] [Publication: Perspectives for the Energy Transition: Investment Needs for a Low-carbon Energy System] [Executive Summary]